2023 (6) TMI 1088 - AT - Customs

100% EOU - diversion of goods - import as well as procured indigenously capital goods, raw materials, packing material and consumables free of duty vide Notification No.52/2003-Cus. and No.22/2003-C. Ex. both dated 31.03.2003 - said goods not used for intended purpose - HELD THAT - There is no dispute that the conditions of the notifications, were violated and the appellant had contravened the provisions of section 71 of the Customs Act 1962. Accordingly, the entire duty demanded was paid and the appropriation of the duty payment has been confirmed by the learned Commissioner vide paragraph (iv) and (v) in the findings portion of his Order. The commissioner has demanded interest on the duty demanded and imposed penalty equivalent to the duty demanded in terms of proviso to Section 114A of the Customs Act 1962. The fact that the goods were diverted to DTA from their bonded warehouse is not disputed and this fact has come to the notice of the department only after investigation, is also not contested. The only plea made by the appellants is that it was done on account of their inefficiency of the staff and there was no intention to evade duty. Based on the investigations the Commissioner has rightly held the appellant had wilfully suppressed and mis-declared the fact that the goods were used within the bonded warehouse. Therefore, the appellants were liable for penalty under Section 114A. The Commissioner has given an option to pay interest along with 25% of duty within 30 days from the date of receipt of his order in terms of Proviso to Section 114A of the Act - Appeal dismissed.

Summary

Issues Involved:
Violation of conditions of Notifications No.52/2003-Cus. and No.22/2003-C. Ex., diversion of goods to Domestic Tariff Area (DTA), demand of duty, imposition of penalty, compliance with Proviso to Section 114A of the Customs Act 1962.

Violation of Conditions of Notifications:
The appellants, a 100% Export Oriented Unit (EOU), were found to have installed and used certain goods outside the bonded area, in the Domestic Tariff Area (DTA), contrary to the conditions of Notifications No.52/2003-Cus. and No.22/2003-C. Ex. The Commissioner confirmed the violation and demanded duty amounting to Rs.30,30,182/- along with interest and imposed penalty equivalent to the duty.

Compliance with Proviso to Section 114A:
The appellants admitted the demand of customs duty for the items diverted to DTA and paid the duty along with interest. They argued that the lapses were due to operational inefficiency and not intentional evasion. The Commissioner imposed penalty under Section 114A, which requires payment of interest along with 25% of duty within 30 days. The appellants subsequently paid the duty, interest, and penalty as directed by the Commissioner.

Decision and Conclusion:
The Commissioner found that the appellants had willfully suppressed and mis-declared the use of goods within the bonded warehouse, making them liable for penalty under Section 114A. The Commissioner's order was upheld, and the appeal was rejected after the appellants paid the duty, interest, and penalty as directed. The appellants' plea of inefficiency was not accepted as a valid defense against the violation of customs regulations.