2005 (5) TMI 596 - Commission - Customs

Summary

Issues involved:
- Duty demand on imported goods
- Waiver of interest and penalty
- Settlement terms under Customs Act, 1962

Duty demand on imported goods:
The case involved M/s. Innomedia Technologies Pvt. Ltd., an importer of capital goods as a 100 percent export-oriented unit. Due to unmet export obligations, a show cause notice was issued proposing a duty demand of Rs. 57,56,956/- along with interest and penalties under the Customs Act, 1962. The applicant sought settlement, stating that the duty demanded had been paid before the notice was issued. The Revenue contended that the goods were not utilized for commercial production as required and were instead used for software development by another entity. The applicant argued for waiver of interest and penalty, citing precedents and contractual obligations. The Settlement Commission examined the contentions, considering the relevant notifications and agreements, and concluded that while duty payment was settled, interest liability at 15% per annum from 5/2000 to 7/2003 was upheld. However, immunity from penalties and prosecution under the Customs Act was granted.

Waiver of interest and penalty:
The applicant, through their advocate, argued for the waiver of interest and penalty, emphasizing that duty payment was made before the show cause notice was issued. The Revenue highlighted the failure to start commercial production and the diversion of imported goods for software development. The advocate referenced judicial decisions to support the waiver request, distinguishing cases related to advance licenses from the current situation involving an Export-Oriented Unit (EOU). The Settlement Commission considered these arguments, noting that while duty payment was acknowledged, interest liability under the relevant notifications and agreements was upheld at 15% per annum. The Commission granted immunity from proposed penalties and prosecution under the Customs Act but did not entertain requests for immunity under other enactments due to lack of specific mention.

Settlement terms under Customs Act, 1962:
The Settlement Commission settled the case under Section 127C(7) of the Customs Act, 1962, determining the duty amount at Rs. 57,56,956/-, which had already been paid. The applicant was directed to pay the interest due on the settled amount within 15 days. Immunity from penalties and prosecution under the Customs Act was granted, subject to the settlement not being obtained through fraud or misrepresentation of facts. The terms of settlement were outlined, emphasizing compliance with the settlement conditions and the consequences of fraudulent practices as per the provisions of the Customs Act, 1962.