2008 (6) TMI 120 - AT - Customs

Denial of exemption after 3 years of import commission and omission on part of revenue - department not objected at time of import and indigenous procurement of goods free of duty assessee cannot be blamed entirely finally even if goods are liable to confiscation responsibility should be squarely put only on the Customs/Central Excise Authorities and Director STPI redemption fine and penalty not imposable - If penalty is to be necessarily imposed it should be only on the Revenue

Summary

Issues:
1. Whether the goods imported by the respondent are entitled to exemption under Notification 140/1991-Cus.
2. Whether the goods are liable for confiscation under Section 111(o) of the Customs Act, 1962.
3. Whether penalty and redemption fine should be imposed on the respondent.
4. Whether the Revenue's appeal against the impugned order is justified.

Analysis:
1. The respondent imported various goods under the 100% EOU Scheme, which were not listed in the table annexed to Notification 140/1991-Cus. The Adjudicating Authority confirmed the demand for duty on these goods. The Commissioner found that the goods were imported duty-free without proper bonding, leading to a liability for confiscation and penalty. The Revenue contended that penalty should be imposed as the duty was paid only after detection by the department. However, the Tribunal observed that the goods were imported with the knowledge and approval of the Customs Authority, and the duty was paid voluntarily before a Show Cause Notice was issued. The Tribunal dismissed the Revenue's appeal, emphasizing that the Commissioner's decision not to impose penalty was appropriate given the circumstances.

2. The Commissioner held that the goods were liable for confiscation under Section 111(o) of the Customs Act, 1962, and Rule 25 of the Central Excise Rules. The Revenue argued that confiscation and penalty should have been imposed as per the law, citing relevant case laws. However, the Tribunal found that the goods were imported following proper procedures, with certificates issued by competent authorities. The Tribunal concluded that the responsibility for any irregularities lay with the Customs and Central Excise Authorities, not the respondent, and dismissed the Revenue's appeal on the grounds of confiscation.

3. The issue of imposing penalty and redemption fine on the respondent was extensively debated. The Revenue contended that penalty should be mandatory under Section 112(a) of the Customs Act, 1962, as the duty payment was post-detection. The Tribunal, however, noted that the respondent acted in good faith, paid the duty voluntarily, and had not intended to evade payment. Emphasizing the role of the Revenue in the irregularities, the Tribunal held that any penalty should be imposed on the Revenue, not the respondent. The Tribunal upheld the Commissioner's decision not to impose penalty, considering the peculiar circumstances of the case.

4. The Revenue's appeal against the impugned order was based on the contention that confiscation, redemption fine, and penalty should have been imposed. The Tribunal carefully analyzed the facts, including the procedural compliance by the respondent and the actions of the Revenue authorities. Ultimately, the Tribunal found that the Commissioner's decision not to impose penalties was justified, given the circumstances and the lack of objection by the Revenue at the time of import. The Tribunal dismissed the Revenue's appeal, highlighting the Revenue's involvement in the irregularities and the appropriateness of the Commissioner's decision.