2008 (4) TMI 560 - AT - Central Excise

Summary

Issues:
Stay petitions and appeals against Order-in-Original No. 01/2007 u/s 111(j) and 111(o) of the Customs Act, 1962, involving duty foregone on gold bars, non-realization of export proceeds, and penalty u/s 112(a).

Details of the Judgment:

Issue 1: Duty Demand and Confiscation of Gold Bars
The first appellant, a Nominated Agency, supplied gold bars to the second appellant for export. The Adjudicating Authority held that duty foregone on the gold bars was demandable u/s 28(1) read with Section 125 of the Customs Act, 1962. The duty liability on the first appellant arises only if the gold articles made from the imported gold are not exported within the stipulated time. The duty liability does not arise for non-realization of export proceeds, which is governed by FEMA, outside the Customs Authorities' jurisdiction.

Issue 2: Penalty u/s 112(a)
The second appellant failed to realize export proceeds, leading to penalty action u/s 112(a) of the Customs Act. The appellant argued that they fulfilled export obligations, evidenced by export documents, and the Customs Authorities cancelled the bond. The Tribunal found that the second appellant had a strong case on merit, with evidence of export and no diversion or misuse of gold. Therefore, a full waiver of pre-deposit of duty and penalties was ordered, with a stay on recovery for 180 days.

Separate Judgment by Shri Kiran Javali
The second appellant procured gold locally, manufactured and exported jewelry, and was not involved in the import process. Due to financial pressure and the rupee's strengthening, any pre-deposit would cause extreme hardship. The Tribunal acknowledged the financial strain and ordered a full waiver of pre-deposit and penalties, with a stay on recovery.

Separate Judgment by Shri P.R.V. Ramanan
The second appellant failed to realize export proceeds, violating Hand Book of Procedures provisions. The non-execution of the bond and lack of oversight over foreign exchange realization constituted critical procedural non-compliance. The Tribunal agreed with the Revenue's case, emphasizing the importance of procedural adherence to prevent fraud and administrative inconveniences.

Conclusion
The Tribunal allowed the stay applications, granting a full waiver of pre-deposit of duty and penalties for both appellants due to strong merit and financial considerations. The Revenue was barred from recovery even after 180 days, with the appeals scheduled for a hearing on 22nd May, 2008.