2003 (5) TMI 461 - AT - Customs

Summary

Issues Involved:
1. Violation of Notification No. 160/92 and demand for duty.
2. Compliance with export obligation.
3. Rectification of mistake in the Tribunal's order.
4. Retrospective amendment by Section 115 of the Finance Act, 2001.
5. Extension of export obligation period by Licensing Authority.
6. Finality of orders and impact of retrospective amendments.

Issue-wise Detailed Analysis:

1. Violation of Notification No. 160/92 and demand for duty:
The assessee was initially demanded duty for violating Notification No. 160/92, which provided duty exemption contingent upon fulfilling an export obligation. The Tribunal's original order upheld this demand but dismissed penalties and confiscation, stating there was no provision for interest under the law or notification.

2. Compliance with export obligation:
The exemption claimed required the importer to undertake an export obligation equal to three times the CIF value of the capital goods over four years. The assessee failed to meet this obligation, exporting only 16% of the required value. Despite applying for an extension under the Import Policy, the Licensing Authority initially did not grant an extension.

3. Rectification of mistake in the Tribunal's order:
The assessee filed for rectification of the Tribunal's order, arguing that the confirmation of duty was based on the absence of a provision for extending the export obligation period in Notification No. 160/92. However, Section 115 of the Finance Act, 2001, retrospectively amended the notification to include such a provision.

4. Retrospective amendment by Section 115 of the Finance Act, 2001:
Section 115 amended Notification No. 160/92 retrospectively from April 20, 1992, to include a clause allowing for an extension of the export obligation period up to March 31, 2002. This amendment meant that the notification always had a provision for extension, impacting the basis of the Tribunal's original decision.

5. Extension of export obligation period by Licensing Authority:
After the retrospective amendment, the Licensing Authority granted an extension until March 31, 2002, nullifying the initial adjudication order. This extension was confirmed by a letter dated February 18, 2002, from the Foreign Trade Development Officer, which was not challenged by the Department.

6. Finality of orders and impact of retrospective amendments:
The Department argued that the finality of the Tribunal's order from November 2000 could not be affected by the retrospective amendment. However, the Supreme Court's judgment in Venkatachalam v. Bombay Dyeing clarified that retrospective amendments could affect completed assessments, allowing for rectification of mistakes.

Conclusion:
The Tribunal concluded that the retrospective amendment by the Finance Act, 2001, necessitated a reconsideration of their original order. The rectification application was allowed, the November 2000 order was recalled, and the show cause notice was deemed premature. Consequently, the appeal was allowed in full, and the Department's application for a stay was dismissed as infructuous.