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2008 (8) TMI 81 - AT - CustomsAppellants had obtained an EPCG licence for the import of Air Jet Looms and executed a bond and bank guarantee as required - Non-fulfillment of the export obligation - Since the export obligation undertaken to be fulfilled at the time of importation of the goods under EPCG scheme has not been fulfilled at all, demand of duty, imposition of interest, confiscation of goods, imposition of penalty & redemption fine, is totally justified
Issues: Non-fulfillment of export obligation under EPCG scheme, demand for duty with interest, confiscation of imported goods, imposition of fine and penalty.
Analysis: 1. The appellants had obtained an EPCG license for importing Air Jet Looms but failed to fulfill the export obligation, resulting in rejection of some exports by the Jt. DGFT. The DGFT imposed a penalty of Rs. 6 crores for non-compliance, which was confirmed upon appeal rejection. The Commissioner ordered payment of Rs. 32,93,783/- towards duty with interest, confiscation of looms, and imposed a penalty of Rs. 10 lakhs. 2. The appellants argued that since they deposited Rs. 30,54,000/- for a bank guarantee, interest should not be demanded. They claimed no violation of Customs Act conditions due to valid import license. However, the Tribunal found these arguments unacceptable, stating that depositing the amount for a bank guarantee does not equate to payment to the government treasury. The failure to fulfill the export obligation as confirmed by DGFT justified the duty demand, interest, and bank guarantee encashment. 3. The Tribunal upheld the Department's actions, citing the non-fulfillment of the export obligation as the basis for demanding duty with interest and confiscating the goods. The imposition of penalty was also deemed appropriate due to the appellants' failure to export goods, take timely remedial action, and pay the duty promptly. However, considering the circumstances, the Tribunal reduced the redemption fine to Rs. 10 lakhs and the penalty to Rs. 2 lakhs. The appeal was rejected except for the mentioned relief in the reduction of fine and penalty.
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