2002 (6) TMI 221 - Commission - Customs

Issues Involved:
1. Compliance with Customs Notifications and End-Use Conditions
2. Allegations of Misuse and Manipulation of Records
3. Liability to Pay Customs Duty and Interest
4. Confiscation of Imported Goods
5. Immunity from Penalty and Prosecution

Detailed Analysis:

1. Compliance with Customs Notifications and End-Use Conditions:
The main applicant, a manufacturer of medical diagnostic equipment, imported parts and spares under various Customs Notifications (66/88-Cus., 57/95-Cus., 36/96-Cus., 11/97-Cus., 23/98-Cus., and 20/99-Cus.) availing concessional rates. They executed end-use bonds to utilize these goods as specified and produce proof of usage within stipulated periods. However, investigations revealed non-compliance with these conditions, leading to the issuance of a Show Cause Notice (SCN) alleging incorrect declarations and tampering with records to obtain end-use certificates.

2. Allegations of Misuse and Manipulation of Records:
The SCN alleged that the main applicant did not fully utilize the imported goods as required and closed end-use bonds by providing incorrect particulars. Specific allegations were made against a co-applicant for tampering with system reports and abetting the illegal removal of end-use files. The main applicant admitted to non-utilization due to obsolescence and explained the distribution and subsequent return of spares due to low demand.

3. Liability to Pay Customs Duty and Interest:
The main applicant accepted the duty demanded in the SCN and paid it during the investigation. They claimed interest should be calculated only from 28-9-96, when Section 28AB of the Customs Act came into effect. The Settlement Commission agreed, confirming the interest liability from this date. The applicant had paid the duty and interest voluntarily before the SCN was issued, modifying the earlier observation that such payments were illegal.

4. Confiscation of Imported Goods:
The imported goods, deemed obsolete and unutilized, were seized by DRI officers and were liable for confiscation under Section 111(o) of the Customs Act. The Settlement Commission acknowledged the duty liability and the liability to confiscation, but focused on the prayers for immunity.

5. Immunity from Penalty and Prosecution:
The main applicant sought immunity from penalties and prosecution, arguing that the non-utilization was due to bona fide reasons and not a calculated move to evade duty. The Settlement Commission noted the cooperation extended by the applicant during the investigation and their voluntary payment of duty and interest. Despite some attempts to mislead the Revenue, the Commission granted immunity from penalty and prosecution, considering the applicant's repentance and full disclosure.

Settlement Terms:
1. Total duty liability fixed at Rs. 1,47,60,218.01, already paid by the applicant.
2. Interest liability fixed at Rs. 51,63,709.86, already paid by the applicant.
3. Immunity from penalty under the Customs Act granted to the main applicant and co-applicants.
4. Immunity from prosecution under the Customs Act granted to the main applicant and co-applicants.
5. Seized parts/spare parts ordered to be released, and immunity from payment of fine granted.

Conclusion:
The Settlement Commission, exercising its powers under Section 127H of the Customs Act, settled the case by confirming the duty and interest liabilities paid by the applicant and granting immunities from penalties and prosecution. The Commission emphasized the applicant's cooperation and voluntary disclosure, while also noting the need for some accountability for the procedural lapses and attempts to mislead the authorities.

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