2016 (11) TMI 36 - AT - Customs

Imposition of penalties - EPCG scheme - N/N. 97/2004-Cus dated 17.9.2004. - 2 star hotel status - import of car - Held that - There is no dispute to the factual position that the appellants were admittedly granted status of 2 star hotels and were entitled to EPGC Scheme during the relevant period. Subsequent action of authorities to take away the said 2 star hotels from the appellant cannot be adopted as a ground to deny them the benefit which also stands availed by them by following duty procedure of law. No mala fide can be attributed for imposition of penalty. So, I am of the view that imposition of penalty on the appellant is not justified. The same is accordingly set aside. Demand of duty with interest - as the appellant have not contested the duty demand and interest, the same is upheld.

Summary

Issues:
Imposition of penalty on the appellant for availing benefits under the EPGC Scheme after losing 2-star status.

Analysis:
The case involved the appellant, M/s Jukaso Inn, who imported an Audi car under the EPGC Scheme. The appellant had initially been granted 2-star status as a hotel, which entitled them to benefits under the EPGC Scheme. However, their 2-star status was later withdrawn by India Tourism. Despite this, the appellant imported the car under the EPGC Scheme and fulfilled all relevant conditions at the time of import. The Revenue claimed that the appellant had unauthorizedly availed benefits under the EPGC Scheme and demanded duty payment of &8377; 10,91,440 along with interest. The appellant, acknowledging the situation, paid the duty and interest even before a show cause notice was issued.

The main contention in the appeals was the imposition of penalty on the appellant. The appellant argued that since they had paid the entire Customs duty and interest before the show cause notice was issued, there was no need for the notice. They maintained that they had complied with all conditions at the time of import and were not at fault for the subsequent loss of their 2-star status. The Tribunal noted that the appellant had indeed been entitled to benefits under the EPGC Scheme during the relevant period when the car was imported. The withdrawal of their 2-star status later could not be a reason to deny them the benefits they had legitimately availed of by following the proper procedures. The Tribunal found no malafide intentions on the part of the appellant and concluded that the imposition of penalty was not justified, setting it aside.

While the penalty was set aside, the Tribunal upheld the duty demand and interest since the appellant did not contest these aspects. Therefore, the duty payment and interest were deemed valid. The appeals were disposed of accordingly, with the penalty being overturned, and the duty demand along with interest being upheld. The judgment was pronounced in open court on 16/09/2016.