2004 (7) TMI 606 - AT - Customs

Summary

Issues Involved:
1. Liability to penalty on the exporter for alleged misdeclaration and claiming ineligible DEEC licenses.
2. Duty liability on importers who imported items under transferred DEEC licenses.
3. Penalties imposed on various persons connected with the exports, transfers of licenses, and imports.
4. Consideration of waiver of pre-deposit requirements under Section 129E of the Customs Act, 1962.

Issue-wise Detailed Analysis:

1. Liability to Penalty on the Exporter:

The tribunal examined the liability to penalty on the exporter for allegedly misdeclaring and claiming ineligible DEEC licenses. It was found that the DEEC licenses had not been canceled by the DGFT authorities. The Commissioner concluded that goods imported and cleared duty-free were not liable for confiscation under Section 111(o) and Section 111(d) of the Customs Act. This finding suggested no contraventions of the exemption notification provisions, thus not warranting confiscation under the said sections. Consequently, the tribunal considered that no further pre-deposits under Section 129E of the Customs Act, 1962, were necessary at this prima facie stage and ordered a stay of recovery pending the hearing of the appeals.

2. Duty Liability on Importers:

The tribunal noted conflicting decisions regarding the liability to duty on importers who imported goods under transferred DEEC licenses. The existence of contrary views warranted a waiver of further deposits required under Section 129E of the Customs Act, 1962. The tribunal found that a sum of Rs. 1 crore had been deposited by the exporter, Rs. 7.50 lakhs by an importer, and bank guarantees of Rs. 40 lakhs furnished by an importer had been appropriated towards duty liabilities. Given these deposits and the unresolved legal questions, the tribunal waived further deposit requirements and ordered a stay of recovery pending the appeals.

3. Penalties Imposed on Various Persons:

Penalties were imposed on various individuals and entities connected with the exports, transfers of licenses, and imports. The penalties ranged from Rs. 10,000 to Rs. 5 crores. The tribunal considered the stay petitions filed by the penalized parties under Section 129E of the Customs Act, 1962, for waiver of the penalties and duties. The tribunal emphasized that the section mandates deposit of duty and penalty during the pendency of the appeal, except where undue hardship is proven. Only one counsel pleaded financial hardship. The tribunal noted that the imported materials were neither used nor required for manufacturing export products, and the exports were effected in contravention of Section 111 of the Customs Act, 1962, thus disqualifying them from duty exemption.

4. Consideration of Waiver of Pre-deposit Requirements:

The tribunal examined the grounds for waiver of pre-deposit requirements under Section 129E of the Customs Act, 1962. It was noted that the section allows waiver if the deposit causes undue hardship. The tribunal found that the amounts appropriated by the adjudicating authority should not be considered when deciding on the waiver application. Given the case's complexity, involving fraud and significant penalties and duties, the tribunal opined that a 50% deposit of the duty and penalty might safeguard the revenue's interests. However, for certain clients who had already deposited significant amounts, the tribunal considered these deposits sufficient for compliance with Section 129E.

Separate Judgments Delivered:

Majority Opinion:

The majority opinion, supported by the Member (Technical) and Member (Judicial), concluded that no further pre-deposit of duty and penalty was required from the importers and exporters, given the significant amounts already deposited and the unresolved legal questions. The tribunal ordered a stay of recovery pending the appeals and scheduled the final hearing.

Dissenting Opinion:

The dissenting Member (Judicial) argued that the amounts appropriated by the adjudicating authority should not be considered for waiver applications under Section 129E. The Member suggested a 50% deposit of the outstanding duty and penalty to safeguard the revenue's interests, given the case's complexity and the significant penalties and duties involved.

Final Order:

In view of the majority opinion, the tribunal waived further pre-deposit requirements and stayed recovery pending the appeals. The appeals were scheduled for final hearing on 9-9-2004.