2003 (1) TMI 437 - AT - Customs

Summary

Issues:
- Duty demand confirmation under Section 28(1) of the Customs Act
- Penalty imposition under Section 114A of the Act

Analysis:

1. Duty Demand Confirmation under Section 28(1) of the Customs Act:
The case involved the appellants who had obtained Quantity-based Advance Licences in the DEEC scheme for duty-free imports of raw materials. They were required to fulfill their export obligations within specified time limits. The appellants failed to fully discharge their export obligations under three licenses by the deadline of 31-12-97. The Customs department issued a show-cause notice proposing duty recovery under Section 28(1) of the Customs Act, along with interest and penalties. The Commissioner confirmed a duty demand of Rs. 1,27,484 and imposed a penalty of the same amount under Section 114A of the Act. The appellants contested the penalty imposition, arguing that they had been corresponding with the DGFT for an extension of time and had voluntarily paid Rs. 50,000 towards the duty demand.

2. Penalty Imposition under Section 114A of the Act:
The key issue in this appeal was the imposition of a penalty under Section 114A on the appellants. The appellants argued that there was no reasonable basis for the penalty as they had not suppressed any facts to evade duty payment. They highlighted their ongoing correspondence with the DGFT for an extension of time to fulfill export obligations. The Customs department contended that there was an admitted suppression of facts between 31-12-97 and 12-1-98 when officers discovered the non-fulfillment of export obligations. The department insisted on the penalty under Section 114A and proposed penalties under Section 112 (a) as well. The Tribunal examined the facts and found that the penalty under Section 114A was not justified as there was no evidence of mens rea on the part of the appellants. The Tribunal set aside the penalty and ordered the pre-deposit to be appropriated towards the duty demand, with the appellants required to pay interest on the delayed duty within four weeks.

In conclusion, the Tribunal upheld the duty demand confirmation under Section 28(1) of the Customs Act but set aside the penalty imposed under Section 114A. The decision was based on the lack of evidence of intentional wrongdoing or mens rea on the part of the appellants in failing to fulfill their export obligations. The appellants were directed to pay the remaining duty amount and interest within a specified timeframe, resolving the appeal in favor of the appellants on the penalty issue.