2006 (5) TMI 317 - AT - Customs

EPCG Scheme - Non-fulfilment of export obligation - Particle counter - Classification - Interest - Confiscation and penalty

Summary

Issues:
- Classification of imported goods under the EPCG Scheme
- Calculation of the amount of the differential duty
- Demand for interest under Notification No. 160/92
- Confiscation of goods and imposition of penalties

Classification of Imported Goods:
The appellants imported Particle Counter and Accessories under the EPCG Scheme but faced issues regarding the correct classification of the goods. The Revenue claimed the goods fell under CTH 9029.10, while the appellants argued for CTH 9026.80 based on HSN classification. The Tribunal found that the impugned goods, which determine the number of particles in gas, are more appropriately classified under 90.26 for instruments measuring variables of liquids or gases. This led to a significant difference in the differential duty amount demanded, ultimately supporting the appellants' contention.

Calculation of Differential Duty:
The dispute over the calculation of the amount of the differential duty arose, with the Revenue claiming Rs. 5,72,477/- and the appellants asserting it as Rs. 2,73,120/- based on the Bank Guarantee. The Tribunal noted that the appellants paid the amount demanded, but the disagreement stemmed from the classification issue. By accepting the appellants' classification argument, the Tribunal determined the correct amount of the differential duty as Rs. 2,73,120/-, aligning with the Bank Guarantee terms.

Demand for Interest and Confiscation:
The Revenue demanded interest at 24% despite no provision for it under Notification No. 160/92 during the relevant period. The Tribunal deemed this demand unsustainable. Additionally, the Tribunal found no deliberate violation of the Notification's conditions regarding export obligations, leading to the decision to set aside the confiscation of the impugned goods. Consequently, as confiscation was annulled, no penalty could be imposed, resulting in the appeals being allowed with consequential relief.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Bangalore highlights the key issues of classification, differential duty calculation, interest demand, and confiscation of goods with penalties, providing a comprehensive overview of the legal reasoning and decisions made in the case.