2007 (5) TMI 638 - SC - Customs

Imposition of fiscal penalty for non fulfillment of export obligation under the licence as well as for mis-utilization of the goods - Held that - there was infractions of the conditions imposed under the licence - However, quantum of penalty reduced.

Summary

Issues:
Challenge to order dismissing Letters Patent Appeal against Single Judge's order.

Analysis:
The appeal challenged an order dismissing a Letters Patent Appeal against a Single Judge's decision. The case involved a show cause notice issued under the Imports and Exports (Control) Act, 1947, for non-fulfillment of export obligations and mis-utilization of imported goods. The appellants had used an advance license for importing raw materials but failed to export the required quantity of finished goods. The authorities imposed a penalty for the shortfall in export obligations. The appellants argued that the conditions were unrealistic and compliance was impossible due to the quantity of raw materials allowed for import.

The respondents contended that the penalty imposed was within the legal limits. The show cause notice detailed the conditions of the license, including export obligations and utilization of imported goods. The adjudicating authority and the Appellate Committee upheld the penalty, noting infractions of license conditions. The Single Judge and the Division Bench concurred with this view.

The appellants claimed that compliance with the export obligation was impossible due to the license conditions. However, their requests for extensions were rejected, indicating awareness of the obligations. The penal provision under Section 4-I(1) of the Act allowed for penalties not exceeding five times the value of goods. The authorities rejected the argument of impossibility of compliance, leading to the imposition of the penalty.

The Supreme Court reduced the penalty from Rs. 45 lakhs to Rs. 20 lakhs, considering the value of the goods involved. The appellants had already deposited Rs. 20 lakhs as per a previous court order. Therefore, no further deposit was required. The appeal was disposed of with no costs awarded.