2020 (2) TMI 237 - HC - Customs

Rejection of revision application - Duty Drawback - Section 129 DD of the Customs Act, 1962 - delay in getting foreign remittance - imposition of penalty u/s 117 of CA - HELD THAT - In this case a SCN was issued to the Petitioner on 27.08.2010. The Petitioner had failed to file the relevant BRCs/extensions from Reserve Bank of India in time. Therefore, the Third Respondent was justified in issuing the above mentioned Show Cause Notice to the Petitioner. The fact however, remains that the Third Respondent has come to a conclusion that there was export realization though belatedly and therefore dropped the proceeding but at the same time has imposed of penalty for late realization of the export proceeds. Section 117 makes it very clear that penalty is to be imposed where there is failure to comply or where there is a violation in law, penalty can be imposed. The exporters do face difficulties in realization of export proceeds and therefore not all cases where there is a delay in producing BRCs penalty is to be imposed. Further, imposition of penalty may result in denial of export incentive indirectly in several cases. This is not a fit case for imposition of ₹ 25,000/- as there is a realization of the export proceeds. However, since there is a failure of penalty imposed under Section 117 of the Customs Act, penalty of ₹ 25,000/- is reduced to ₹ 5,000/- - Petition disposed off.

Summary

Issues:
1. Rejection of Revision Application under Section 129 DD of the Customs Act, 1962
2. Imposition of penalty under Section 117 of the Customs Act, 1962 for late submission of Bank Realization Certificates (BRCs)

Analysis:

Issue 1: Rejection of Revision Application under Section 129 DD of the Customs Act, 1962
The Petitioner challenged the impugned order passed by the First Respondent, which rejected the Revision Application filed under Section 129 DD of the Customs Act. The First Respondent upheld the penalty imposed by the Second and Third Respondents amounting to ?25,000 on the Petitioner. The First Respondent justified the penalty by stating that the Petitioner submitted BRCs after the stipulated time, leading to the imposition of the penalty under Section 117 of the Customs Act. The Petitioner argued that the penalty should only apply in cases of failure or violation of Customs Act provisions, not for delayed BRC submission under the Draw Back Rules. The court examined the provisions and noted that penalty under Section 117 is warranted for non-compliance or violation. However, considering the realization of export proceeds, the court reduced the penalty from ?25,000 to ?5,000.

Issue 2: Imposition of penalty under Section 117 of the Customs Act, 1962 for late submission of Bank Realization Certificates (BRCs)
The Petitioner, an exporter, faced penalty under Section 117 for delayed submission of BRCs related to export proceeds realization. The Third Respondent issued a Show Cause Notice due to the Petitioner's failure to submit BRCs in time. Despite acknowledging the belated realization of export proceeds, the Third Respondent imposed a penalty for the delay in submission. The court observed that while penalties are justified for non-compliance, exporters may encounter challenges in realizing export proceeds promptly. The court, recognizing the export realization in this case, deemed the penalty of ?25,000 excessive. Consequently, the court reduced the penalty to ?5,000, concluding that penalizing for delayed BRC submission may indirectly impact export incentives.

In conclusion, the court disposed of the Writ Petition by reducing the penalty imposed under Section 117 of the Customs Act from ?25,000 to ?5,000, considering the circumstances of delayed BRC submission and the realization of export proceeds.