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Issues: Duty demand and penalty for failure to satisfy export obligation under DEEC licences.
In this case, the issue revolves around a duty demand of approximately Rs. 2.6 crores and a penalty of Rs. 25 lakhs imposed due to the appellant's alleged failure to meet the export obligation concerning steel imported under DEEC licences. The appellants imported 1377 MT of steel but only exported 764 MT, falling short of the required 1059 MT as per Input-Output Norms. The appellants argued that the shortfall was compensated by manufacturing and exporting from indigenously produced materials, and the higher wastage was permissible under DGFT authorities' discretion. On the other hand, the respondent contended that the demand was justified as the appellants did not meet the export norms and failed to obtain condonation from the DGFT authorities. Upon reviewing the records, it was observed that there was no evidence of diversion of imported materials for purposes other than export production. The discretion to approve production outside norms rested with the DGFT authorities. Consequently, the appellant had a prima facie case in their favor. As a result, the prayer for waiver pre-deposit was granted, and the recovery of duty demand and penalty was stayed pending the appeal's disposal. The judgment was dictated and pronounced in open court by the concerned authorities.
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