2013 (11) TMI 1426 - AT - Customs

Penalty u/s 112 - Import of goods using advance licenses without payment of customs duty undertaking to discharge export obligations specified in each such advance license. Due to certain reasons, the appellants did not meet the export obligations accepted by them while importing the goods free of customs duty, within the time frame specified in the Exim Policy and the corresponding Notification No.43/2002-Cus., dated 19.04.2002 - Held that - It proper to remand the matter to the adjudicating authority because the latest factual position relating to export obligation in respect of goods imported without payment of customs duty under each advance license and the relaxations granted by DGFT subsequent to the impugned order have to be re-examined for confirming duty demands and deciding on penalty if any to be imposed. So we set aside the impugned order and remand the matter to the adjudicating authority to examine all the contentions including facts that are now being presented as also the legal contentions raised - Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Duty liability on imported goods under advance licenses.
2. Conversion of export obligations under certain licenses.
3. Imposition of redemption fine and penalties.
4. Applicability of penalty after payment of duty.
5. Genuine difficulties faced by the appellants.
6. Remand of the matter for re-examination.

Analysis:
1. The appellants, a pharmaceutical company and its officials, imported goods under advance licenses without fully meeting the export obligations. Show-cause notices were issued for recovery of customs duty exemption, interest, confiscation of materials, and penalties. The duty amount, redemption fine, and penalties were imposed after adjudication. The appellants admitted liability for certain licenses and had paid a portion of the duty and interest before the show-cause notice.

2. The appellants contended that for some licenses, they had converted the export obligations into obligations for Export Oriented Units (EOU) with necessary permissions from the Director-General of Foreign Trade (DGFT). They requested no demand of duty, fine, or penalty for goods imported under these licenses. For other licenses where exports were completed but Export Obligation Discharge Certificates (EODC) were pending due to procedural issues, they sought the impugned order to be set aside for DGFT consideration.

3. Regarding the imposition of redemption fine and penalties, the appellants argued against the applicability of a redemption fine as the goods were not available for confiscation. They also contested the penalties, stating that once duty and interest were paid, penalties should not be imposed. They highlighted genuine difficulties faced, such as drastic market changes, and requested a more lenient approach in penalty imposition.

4. The Tribunal considered the submissions and remanded the matter to the adjudicating authority for re-examination. The latest factual position on export obligations under each license and relaxations granted by DGFT post the impugned order needed careful verification. The Tribunal set aside the impugned order, keeping all issues open for further examination.

In conclusion, the Tribunal decided to remand the matter for a comprehensive re-examination, considering the developments post-adjudication and the contentions raised by the appellants. The decision aimed to ensure a thorough review of all aspects, including factual and legal contentions, before confirming duty demands and deciding on penalties, if any.