2010 (10) TMI 148 - HC - Customs

EPCG scheme penalty - non-fulfillment of export obligation global economic crises Held that - CESTAT view absolutely untenable and perverse - view taken could not be said to be a legal and valid in absence of any foundation in support thereof defence was not taken by the Respondent before either of the authorities - restore the Appeal to the file of CESTAT with direction to re-hear the Appeal and adjudicate the same by a reasoned order in accordance with law

Summary

Issues:
1. Setting aside of fine, penalty, and interest imposed on the Respondent/Assessee by the Customs, Excise and Service tax Appellate Tribunal.
2. Contention raised by the Revenue regarding the global crisis as a ground for exonerating the Respondent from export obligation.
3. Validity of the view taken by the CESTAT.
4. Direction to re-hear the Appeal by the CESTAT with principles of natural justice.

Analysis:
1. The High Court of Bombay heard an Appeal filed by the Revenue against the order of the Customs, Excise and Service tax Appellate Tribunal, which had set aside the fine, penalty, and interest imposed on the Respondent/Assessee due to the inability to fulfill export obligations during the global economic crisis in Asia. The Tribunal referred to previous judgments where penalties were set aside in similar cases, citing the global economic crisis as a valid reason.

2. The Revenue contended whether the global crisis could serve as a valid ground to exempt the Respondent from its export obligation. The Respondent's counsel failed to support the impugned order, leading to the High Court's scrutiny of the Tribunal's decision.

3. The High Court found the view taken by the CESTAT to be untenable and without legal foundation. The Court deemed the decision as perverse and lacking a basis supported by law. It noted that the Respondent had not raised the global crisis as a defense before any authorities previously, further questioning the validity of the Tribunal's decision.

4. Consequently, the High Court set aside the impugned order and directed the CESTAT to re-hear the Appeal. The Court emphasized the need for a reasoned order based on legal principles and natural justice. The parties agreed to remand the proceedings to be heard by the Bombay Bench of the Tribunal, with all rival contentions kept open. The Appeal was disposed of with no order as to costs, ensuring a fair and just re-hearing of the case.