2009 (3) TMI 102 - AT - Customs

Under a licence granted to the appellants under EPCG scheme, they were liable to import capital goods for a minimum value of Rs. 20 crores within the validity period of licence - non fulfillment of condition due to financial constraints even in extended period of licence - held that mere financial constraints cannot be a justification for exemption from the condition - impugned order directing confiscation, justified - impugned order not considered mitigating factors and also has failed to consider bona fide on the part of appellant in making efforts to comply with the obligation under the licence - matter remanded to consider rate of interest, penalty and fine

Summary

Issues:
1. Confiscation of goods and imposition of redemption fine and penalty under EPCG scheme for failure to comply with import conditions.
2. Justification of financial constraints for failure to meet import conditions.
3. Consideration of mitigating factors for penalty imposition and interest rate determination.

Analysis:
1. The appeal challenged an order directing confiscation of goods and imposing fines and penalties due to non-compliance with import conditions under the EPCG scheme. The appellant failed to import goods worth the required minimum value of Rs. 20 crores within the validity period of the license. Despite an extension, the appellant only imported goods worth Rs. 10,89,73,604.15p. Three show cause notices were issued, leading to the impugned order by the Commissioner of Customs, Jodhpur. The appellant argued financial constraints as the reason for non-compliance, but it was deemed insufficient by the Tribunal.

2. The appellant contended that financial constraints justified the failure to meet the import conditions. However, the Tribunal held that financial difficulties did not exempt the appellant from complying with the specific conditions attached to the license obtained under the EPCG scheme. The appellant's failure to import goods worth the required amount was established, and no valid justification was presented for exemption from the condition. The Tribunal found no fault in the Commissioner's order given the lack of alternative explanations.

3. The Tribunal also addressed the failure of the impugned order to consider mitigating factors for penalty imposition and interest rate determination. The appellant argued that efforts were made to comply with export obligations, showing bona fide intentions. The Tribunal noted that the adjudicating authority did not adequately consider these factors. Consequently, the matter was remanded for reconsideration of the rate of interest, penalty amount, and redemption amount, emphasizing the importance of considering mitigating circumstances and legal provisions in such determinations. The appellant and respondent were given the opportunity to present evidence, and the adjudicating authority was instructed to provide a reasoned order based on the materials presented.

In conclusion, the appeal partially succeeded, leading to a remand of the matter for a fresh decision regarding the rate of interest, penalty amount, and redemption amount, while upholding the remaining parts of the impugned order.