2017 (1) TMI 1170 - AT - Customs

EPCG scheme - violation of EPCG license - failure to produce the EODC and installation certificate within 30 days of expiry of the Export obligation period of the license which was expired on 11.05.2011 - Held that - right from the beginning the appellant had taken a categorical stand that they had exported most of the goods but they are not in a position to substantiate the same on account of loss of file pertaining to the license in question - the appellant have already admitted their duty liability and interest and in the absence of any malafide intention of the assessee and by extending the benefit of doubt to them I set aside the penalty imposed upon them - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Violation of EPCG license conditions leading to recovery of duty, interest, and penalty.
2. Appeal challenging the penalty imposed under Section 112(b)(ii) of the Customs Act, 1962.

Analysis:
1. The appellant imported goods under an EPCG license but failed to fulfill the export obligation and other conditions. Subsequently, a Show Cause Notice (SCN) was issued for recovery of duty, interest, and penalty. The Deputy Commissioner confirmed the demand of duty and penalty under Section 112(b)(ii) of the Customs Act, 1962. The appellant appealed to the Commissioner (A) who upheld the penalty citing non-submission of Export Obligation Discharge Certificate (EODC) within the stipulated time after the license expired. The Commissioner found that the duty saved amount was significantly less than the demanded sum, but the appellant failed to submit necessary documents to the Directorate General of Foreign Trade (DGFT) for redemption, resulting in penal action.

2. The appellant, in the subsequent appeal, contested only the penalty of &8377; 90,000 imposed under Section 112(b)(ii) of the Customs Act, 1962. The appellant acknowledged the duty liability and interest but argued that the penalty should be set aside due to the loss of the file containing relevant license details, despite having exported goods worth approximately &8377; 20.62 lakhs. The appellant asserted that the penalty was unjustified as there was no malafide intention on their part.

3. The appellate authority considered the appellant's submission and noted the appellant's inability to substantiate their export claims due to the loss of essential documents. Despite admitting duty liability and interest, the authority, by giving the benefit of doubt to the appellant and observing the absence of malafide intent, decided to set aside the penalty imposed by the lower authorities. Consequently, the appeal was allowed, and the penalty of &8377; 90,000 was waived.

In conclusion, the judgment addressed the violations of EPCG license conditions, the imposition of duty, interest, and penalty, as well as the subsequent appeal challenging the penalty, ultimately resulting in the penalty being set aside due to the appellant's inability to provide necessary documentation and the absence of malicious intent.