2017 (10) TMI 761 - AT - Customs

100% EOU - N/N. 52/03-cus dated 31-3-2003 - non-fulfillment of conditions relating to clearance under STPI scheme - Held that - there was no malafide intention on the part of the appellant to violate any condition of licence provisions. Initially truck was supposed to be cleared under Notification no.52/03. When the appellant was unable to fulfill the condition they immediately paid the customs duty and cleared the goods, the conduct of the appellant is clearly bonefide. The goods were rightly confiscated but the appellant deserve some leniency in view of the conduct of the appellant and in absence of any malafide intention, therefore redemption fine reduced from ₹ 15 Lacs to ₹ 5 Lacs and penalty is reduced from ₹ 4 lacs to ₹ 1 lacs - appeal allowed in part.

Summary

Issues:
1. Confiscation of imported truck for contravention of import restrictions.
2. Imposition of redemption fine and penalty under Section 112(a) of Customs Act, 1962.
3. Applicability of Notification No. 52/03-cus dated 31-3-2003 for a 100% EOU unit.
4. Compliance with import license notes of Chapter 87 of the ITC HS Policy.
5. Consideration of leniency based on the conduct of the appellant.

Analysis:
1. The adjudicating authority confiscated the imported truck valued at ?55,00,359.10 and imposed a redemption fine of ?4 lacs under Section 112(a) of the Customs Act, 1962 for contravening import restrictions. The violations included the truck being Left Hand Drive instead of the required Right Hand Drive, having a speedometer in miles instead of kilometers, lacking appropriate headlamp photometry, and not submitting a Homologation Certificate as per the import license notes.

2. The appellant, though initially waiving the show cause notice, later sought leniency during the hearing. The Assistant Legal Counsel for the appellant argued that the truck was imported under Notification No. 52/03-cus as a 100% EOU unit but faced difficulties in meeting STPI scheme conditions. The appellant voluntarily paid full duty upon realizing the non-compliance but contended that the deficiencies were condonable, especially since the truck was designated for R&D purposes and not for road use. It was emphasized that there was no customs duty evasion involved.

3. The Revenue representative reiterated the findings of the impugned order, maintaining the stance on the confiscation and penalties imposed. However, upon careful consideration, the Member(Judicial) acknowledged the appellant's lack of malicious intent and prompt duty payment upon non-compliance discovery. The judgment recognized the appellant's bona fide conduct and reduced the redemption fine from ?15 lacs to ?5 lacs and the penalty from ?4 lacs to ?1 lac, citing leniency due to the circumstances and absence of malafide intentions.

4. The judgment concluded by partially allowing the appeal, modifying the impugned order to reduce the redemption fine and penalty. The decision was pronounced in court on 21/8/2017.