2018 (6) TMI 822 - AT - Customs

Benefit of N/N. 21/2002-Cus dated 01.03.2002 - import of Asphalt Hot Mix Plant - construction and maintenance of PMGSY Road in Raibareli and Barabanki district in the state of Uttar Pradesh - goods imported not used for intended purpose - violation of import conditions - Penalty - Held that - As per the conditions of the exemption notification, an importer can claim the benefit of exemption provided they are named as sub-contractor for construction of road. Even this condition was not satisfied. It clearly shows that the appellant never complied with the conditions of the exemption notification and has knowingly violated the conditions - since the conditions of the notification were not complied with and from the facts of the case it is very clear that the same were never intended to be complied with, the impugned order confirming demand, penalties and confiscation of goods has been rightly passed. Penalty on Shri V. S. Rao, Chief Manager (F A) - Interest u/s 114A - Held that - Shri V. S. Rao was only concerned with the taxation matter to the extent of availing benefit of exemption notification and was not concerned/ connected with the decision to use machine and his role in violation of condition is also not visible, he cannot be burdened with liability of penalty - the issue of penalty u/s 114A on interest arising due to confirmation of demand has not been addressed by the adjudicating authority while imposing penalty u/s 114A. It is appropriate to remand back the matter of imposition of penalty on interest under section 114A to the adjudicating authority. Appeal allowed by way of remand.

Summary

Issues:
1. Interpretation of conditions for duty exemption under Notification No. 21/2002-Cus.
2. Compliance with conditions of exemption notification for imported goods.
3. Imposition of penalties under various sections of Customs Act, 1962.

Analysis:
1. Interpretation of Exemption Conditions:
The case involved appeals against an Order-In-Original (OIO) passed by the Commissioner of Customs, Mumbai-I regarding the import of an "Asphalt Hot Mix Plant" by M/s Apco Infratech Ltd. The appellant claimed conditional duty exemption under Sr. No.230 of Notification No.21/2002-Cus. The issue revolved around whether the appellant fulfilled the conditions specified under the exemption notification, particularly regarding the usage of the imported goods for road construction.

2. Compliance with Exemption Conditions:
The Tribunal found that the appellant failed to comply with the conditions of the exemption notification. Despite claiming to have contracts for road construction in Uttar Pradesh, the imported plant was diverted to Rajasthan and Tamilnadu for projects where the appellant was not named as a sub-contractor. The Tribunal noted that the appellant did not provide evidence of using the plant as intended under the notification. Consequently, the Tribunal upheld the demand, penalties, and confiscation of goods due to the non-compliance with the exemption conditions.

3. Imposition of Penalties:
Regarding the penalties imposed, the Tribunal differentiated between the roles of the individuals involved. While the Managing Director was held liable for deliberate violation of the notification conditions, the Chief Manager (F & A) was found not directly connected to the decision of plant usage. As a result, the penalty on the Chief Manager was set aside. The Tribunal upheld the penalties against M/s Apco and the Managing Director but modified the order by allowing the appeal of the Chief Manager. Additionally, the Tribunal remanded the issue of imposing penalty under section 114A on interest back to the adjudicating authority in the appeal filed by the revenue.

In conclusion, the Tribunal affirmed the demand, penalties, and confiscation against the appellant company and the Managing Director while setting aside the penalty on the Chief Manager. The revenue's appeal was remanded for further consideration on the issue of imposing penalty on interest.