2019 (1) TMI 1449 - AT - Customs

Non-fulfillment of export obligation - import of capital goods at concessional rate of duty with a condition to export under EXIM policy with certain conditions - EPCG Scheme - Held that - It is a fact that the appellant has failed to fulfill the export obligation and therefore, ADGFT proceeded against the appellant and passed the order dated 7.11.2016 demanding the duty foregone and also imposed penalty. For the same offence of not fulfilling the export obligation, the customs department has also initiated proceedings and confirmed the demand and imposed the penalties - Further, the ADGFT has taken care of the interest of the revenue and initiating of proceedings by the customs department is not warranted in this case. Further, demanding the duty foregone and also imposing the penalties by the customs department in spite of the fact that for the same offence, the ADGFT has already passed the order dated 7.11.2016 amounts to double jeopardy which is not permissible in law. The impugned order demanding duty and also imposing penalty for non-fulfillment of export obligation amounts to double jeopardy and not legally sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against rejection of appeal by Commissioner (A) for non-fulfillment of export obligation under EPCG license; Confiscation of goods, imposition of fine, customs duty, interest, and penalty under Customs Act, 1962; Double jeopardy due to parallel proceedings by ADGFT and Customs Department.

Analysis:
The appeal was filed against the Commissioner (A)'s rejection of the appellant's appeal concerning the non-fulfillment of export obligation under an EPCG license. The appellant had imported goods under the license but failed to submit evidence of fulfilling the export obligation, leading to proceedings by the Customs Department. The Additional Commissioner of Customs imposed penalties, including confiscation of goods, fine, customs duty, and interest. The appellant argued that the ADGFT had already taken action by demanding duty and imposing penalties, making the Customs Department's proceedings redundant. The appellant contended that this amounted to double jeopardy, citing legal precedents and the integrated scheme of indirect taxation under Foreign Trade Policy, Central Excise Law, and Customs Law.

The appellant's counsel argued that the impugned order was not sustainable as it failed to consider the facts of the case. They highlighted that the ADGFT had already taken action by canceling the license, demanding duty, and imposing penalties. The counsel emphasized that continuing proceedings by the Customs Department would be superfluous and legally inadmissible. They also argued against the application of a previous court decision, stating that in this case, the revenue interest had been legally established by the ADGFT. Moreover, the counsel contended that imposing penalties again on the appellant for the same offense would constitute double jeopardy, which is impermissible under the law.

In response, the learned AR defended the impugned order, asserting that the ADGFT's action was based on the violation of the EXIM Policy, while the Customs Department had the right to proceed independently under the Customs Act for non-fulfillment of export obligations. However, after considering the arguments from both parties and examining the records, the Tribunal found that the appellant had indeed failed to meet the export obligation under the EPCG license. The Tribunal noted that the ADGFT had already taken action by demanding duty and imposing penalties, addressing the revenue interest. Therefore, the Tribunal concluded that the Customs Department's parallel proceedings and imposition of penalties amounted to double jeopardy, which was legally unsustainable. Citing relevant case law and the integrated taxation scheme, the Tribunal set aside the impugned order, allowing the appeal of the appellant.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the Customs Department's demands and penalties for non-fulfillment of export obligations under the EPCG license, citing the principle of double jeopardy and the actions already taken by the ADGFT to address the revenue interest.