2020 (9) TMI 225 - AT - Customs

EPCG Scheme - Exemption N/N. 104/94 dated 16th March 1994 - import of containers, free of duty on execution of Bond/Undertaking, on the condition that such containers will be exported within a period of six months from the date of import - Allegation that appellant failed to export containers within the stipulated time period and applied for extension of time - Confiscation alongwith Redemption Fine and Penalty. HELD THAT - It is undisputed that the Appellant had imported 75 containers and had availed the benefit of exemption N/N. 104/94 dated 16th March 1994. Under the said notification, the Appellant was required to re-export the containers within six months. The Appellant, admittedly, failed to re-export the containers within the stipulated time period and also failed to exercise the liberty to file for extension of time, granted to him under the said notification. The exemption notifications require strict interpretation and therefore, the Appellant is in gross violation of the conditions of the exemption notification. On perusal of the Survey Report, it is found that the containers have been declared unfit for export and the depreciated value has been calculated at ₹ 11.70 lakhs. The first adjudicating authority had valued the containers at ₹ 28,24,034/- (36 containers) and ₹ 30,79,820/- (39 containers) and accordingly, duties of ₹ 9,50,316/- and ₹ 10,36,390/- respectively had been demanded. Much time has elapsed since this valuation was confirmed by the first adjudicating authority. Confiscation of the said containers - HELD THAT - The valuation of the 39 containers at ₹ 30,79,820/-, as arrived at by the First Adjudicating Authority is upheld and accordingly, the demand of duty of ₹ 10,36,390/- along with interest is upheld. The Appellant has already paid the duty amount of ₹ 10,36,390/- vide challan No. 245 dated 22 nd January 2008, which has been appropriated in the impugned order. The order of confiscation of the 39 containers is upheld and the redemption fine reduced to ₹ 2,20,000/-. The Appellant had already paid redemption fine of ₹ 2,20,000/- vide challan No. 1119 dated 22nd January 2008, which has been appropriated in the impugned order. Appeal disposed off.

Summary

Issues:
1. Import of containers under EPCG scheme and failure to re-export within the stipulated time period.
2. Denial of extension request and issuance of Show Cause Notices proposing confiscation of containers, duty demands, penalties, and interest.
3. Adjudication of the case, valuation of containers, duty demands, confiscation, redemption fines, penalties, and interest.
4. Appeal filed before the Tribunal challenging the impugned order.

Issue 1: Import of containers under EPCG scheme and failure to re-export within the stipulated time period:
The Appellant, a steamer agent, imported 75 containers under the EPCG scheme but failed to re-export them within the specified time frame of six months from the date of import, as required by Exemption Notification No. 104/94. The Appellant belatedly applied for an extension of time, which was denied, leading to the issuance of Show Cause Notices proposing confiscation of containers, duty demands, penalties, and interest.

Issue 2: Denial of extension request and issuance of Show Cause Notices:
The Appellant's request for an extension of time to re-export the containers was denied, resulting in the issuance of Show Cause Notices dated 12th October 2007. The Notices proposed confiscation of containers under Section 111(o) of the Customs Act, 1962, along with duty demands of specific amounts for the containers imported under different dates, penalties under Section 112, and interest under Section 28AA of the Customs Act.

Issue 3: Adjudication and determination of penalties, fines, and duty demands:
After considering the submissions, the Adjudicating Authority determined the depreciated value of the containers and demanded duties accordingly. The Authority confirmed the confiscation of containers with options for redemption at specified fines under Section 125 of the Customs Act. Penalties were imposed under Section 112, and interest was levied under Section 28AA. The initial valuation and demands were later revisited upon appeal, leading to re-adjudication and revised orders dated 27th August 2018.

Issue 4: Appeal before the Tribunal and final judgment:
The Appellant filed an appeal before the Tribunal challenging the impugned orders. Upon review, the Tribunal upheld the valuation of containers, duty demands, and confiscation orders but made adjustments to the redemption fines and penalties imposed under Section 112 of the Customs Act. The Tribunal considered the strict interpretation of exemption notifications, the failure to seek an extension for re-export, and the conditionality of confiscation under Section 111(o) of the Customs Act in upholding the revised orders.

This detailed analysis covers the issues involved in the legal judgment delivered by the Appellate Tribunal CESTAT MUMBAI, providing a comprehensive overview of the case's progression, adjudication, and final resolution.