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Issues:
Challenge against redemption fine and penalties imposed under the impugned order for non-utilization of capital goods for export goods and failure to comply with customs formalities. Analysis: 1. The appellants argued that they had a unit approved for manufacturing and exporting software from a designated zone, importing capital goods duty-free under specific notifications. They contended that the capital goods were used in manufacturing export goods within the required timeframe, complying with exemption conditions. They claimed to have evidence supporting their compliance with regulations, including seeking approvals for premises and capital goods transfer. 2. The Revenue's representative highlighted that the appellants imported capital goods and procured goods without duty payment under relevant notifications for software manufacturing and export. They argued that unutilized capital goods were subject to confiscation under Customs Act provisions for violations. The Revenue insisted on dismissing the appeal based on these grounds. 3. The tribunal observed that the Department failed to prove non-utilization of capital goods by the appellants. It referenced Import-Export Policies permitting inter-unit transfers of goods within designated zones, subject to customs permissions. The tribunal noted the absence of permission for transfer, emphasizing the necessity for compliance with customs regulations. 4. Consequently, the tribunal upheld the impugned order but reduced the redemption fine and penalties imposed. The redemption fine was reduced from Rs. 4 lakhs to Rs. 3 lakhs and from Rs. 1,50,000 to Rs. 50,000. Additionally, the penalties were reduced from Rs. 1 lakh to Rs. 50,000 and from Rs. 50,000 to Rs. 25,000, recognizing the appellants' partial compliance and mitigating the financial burden based on the circumstances of the case.
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