2016 (9) TMI 218 - AT - Customs

Rectification of mistake quantification of demand non-fulfillment of export obligation demand of tax Held that - there is an apparent error in mentioning the total duty foregone ₹ 23,86,928/- in notice dt. 23.8.2002 which should be ₹ 13,58,935/-. Accordingly the correct balance duty recoverable should be ₹ 12,23,041/- whereas incorrect amount of ₹ 22,51,034/- was proposed in the same was confirmed in the original order which appears to be incorrect and the same needs reconsideration matter remanded for re-quantification of the demand of duty and interest and also for appropriation of the duty already paid by the appellant after verification thereof - opportunity of personal hearing to be provided to the appellant. Demand of interest interest chargeable on the amount for which the Bank Guarantee was lying with the department Held that - in case of non-fulfillment of export obligation it is the appellant who was supposed to discharge the duty. It is also fact that the Bank Guarantee amount was not encashed by the department. The duty amount was not paid to the Government Exchequer - the interest chargeable on the entire amount of duty stand unpaid from the due date till the date of payment no relief from the payment of interest. Period of limitation section 28 of the Customs Act, 1962 - Held that - the goods were imported under EPCG Scheme for which the appellant executed the bond with bank guarantee, whereunder it was undertaken to fulfill the export obligation which is to be discharged in next five years from the import of the capital goods. Therefore, till the validity of the bond the demand does not get time barred as the obligation is continuous till it is fulfilled or as the case may be till the bond is alive section 28 does not apply demand not hit by limitation. Appeal allowed matter remanded.

Summary

Issues:
Quantification of demand under EPCG Scheme, Interest calculation, Limitation under Section 28 of the Customs Act, 1962

Quantification of Demand:
The appellant imported capital goods under the EPCG Scheme but failed to meet the export obligation, leading to a demand of duty and interest. The appellant contested the quantification of the demand, highlighting discrepancies in the duty amount shown in different notices. The Tribunal noted the errors in the duty foregone amounts stated in the notices and concluded that the correct balance due was lower than what was proposed and confirmed. The Tribunal ordered a re-quantification of the demand and interest, along with verification of the duty already paid by the appellant.

Interest Calculation:
The appellant argued that interest should not be charged on a specific amount covered by a bank guarantee, as the department did not encash it. However, the Tribunal disagreed, stating that in case of non-fulfillment of export obligations, the duty remains the appellant's responsibility. Since the duty amount was unpaid, interest was deemed applicable on the entire outstanding amount. The Tribunal ruled against providing relief to the appellant from paying interest.

Limitation under Section 28:
Regarding the limitation period under Section 28 of the Customs Act, 1962, the Revenue contended that the demand was not time-barred due to the continuous obligation under the EPCG Scheme bond until the export obligation was met. Citing a Supreme Court judgment, the Tribunal agreed that the demand was not limited by time constraints. Therefore, the Tribunal concluded that the demand was not hit by limitation and upheld the Revenue's argument.

In conclusion, the Tribunal allowed the appeal for remand to the original adjudicating authority for re-quantification of the demand and interest, as well as verification of the duty payments made by the appellant. The Tribunal emphasized that the appellant should be granted a fair opportunity for a personal hearing during the re-adjudication process.