2019 (6) TMI 1277 - AT - Customs

Import of Capital goods under EPCG Scheme - non-fulfillment of export obligations - benefit of N/N. 49/2000 dt. 27/04/2000 - HELD THAT - In the present case, the appellant could not fulfill the export obligation on account of reasons beyond his control as he has suffered huge financial loses and his factory was closed in 2007 - further the appellant have paid the entire customs duty foregone amounting to ₹ 22,14,833/- as on date. There is no force in the contention of the appellant that they had fulfilled the export obligation by earning foreign exchange of ₹ 28,28,526/- because both the authorities have not considered the same as export. Further there is no deliberate default in fulfilling the export obligation and therefore there is no justification for confiscation of the goods and imposition of redemption fine in terms of Section 125 of the Act - the confiscation, redemption fine of ₹ 5 lakhs in lieu of confiscation and penalty of ₹ 2.5 lakhs is set aside. Demand of Interest - HELD THAT - The appellants are liable to pay interest on the delayed payment of customs duty foregone - case remanded back to the original authority for quantification of interest which the appellant would be liable to pay. Appeal allowed by way of remand.

Summary

Issues:
- Appeal against impugned orders passed by the Commissioner(Appeals) regarding customs duty, redemption fine, and penalty under the EPCG Scheme.
- Non-fulfillment of export obligation leading to demand of customs duty and imposition of fines.
- Appellant's claim of having paid the entire duty foregone and fulfilling export obligation.
- Confiscation of goods, imposition of redemption fine, and penalty under Sections 111(o) and 112(a)(ii) of the Customs Act.

Analysis:
1. The appellant imported capital goods under the EPCG Scheme but failed to submit the required Installation Certificate and Export Obligation Discharge Certificate. Consequently, a show-cause notice was issued proposing to demand the customs duty foregone along with interest and penalties. The Additional Commissioner confirmed various demands, including confiscation of goods, redemption fine, denial of concessional duty rate, and penalties.

2. The Commissioner(Appeals) upheld most aspects of the Order-in-Original but remanded the matter regarding customs duty payment verification. Subsequently, the appellant filed appeals challenging the orders, leading to the current proceedings before the Tribunal.

3. The appellant argued that they have paid the entire duty foregone and fulfilled the export obligation to a significant extent. They cited financial losses, factory closure, and external factors beyond their control for non-compliance. The appellant emphasized that no pecuniary benefit was derived from the situation and sought relief based on legal precedents supporting their case.

4. The respondent defended the impugned orders, asserting that redemption fines and penalties were rightly imposed due to the appellant's failure to meet certain EPCG license conditions.

5. After reviewing the submissions and evidence, the Tribunal found that the appellant's failure to fulfill the export obligation was due to uncontrollable circumstances leading to financial losses and factory closure. The Tribunal noted that the appellant had paid the entire duty foregone and that there was no deliberate default in meeting obligations. Relying on legal precedents, the Tribunal set aside the confiscation, redemption fine, and penalty but confirmed the interest liability on delayed duty payment.

6. In conclusion, the Tribunal set aside the redemption fine and penalty but confirmed the interest liability, remanding the case back to the original authority for quantification. The judgment was pronounced on 24/06/2019.