2024 (3) TMI 937 - AT - Customs

Recovery of duty foregone - non-installation of the capital goods and consequent non-fulfilment of post-importation condition - It is the contention that the capital goods had not been installed within the prescribed time period and that the export obligation could not, therefore, have been fulfilled - HELD THAT - It is on record that the capital goods were found to have been installed at premises other than that indicated in the licensing documents. It was held in the impugned order that, though the rent agreement for the said premises had been produced, documents evidencing shift of the capital goods was neither available nor furnished by the appellant. The imports had been permitted, and duty had been foregone, subject to condition that export obligation would be completed within six years. It is also on record that the licensing authority had extended the time-period for effecting the installation which, in effect, re-scheduled the date by which the export obligation would have to be fulfilled. There is nothing available on record to indicate that, after such installation, as claimed by the appellant in application for relaxation of time for fulfillment had been preferred, exports had been undertaken. It would also appear to us that the deferment of time for installation does not, of itself, re-schedule the deadline for completion of export obligation. The imports had been effected in October 2012 and December 2012 with post-import fulfilment of the export obligation by 2018. In the facts and circumstances of fulfilment of export obligation not having been evinced and the stipulated deadline prescribed in the authorisations not adhered to, the confirmation of duty liability, equal to the duty foregone, would appear to be reasonable. However, there is no finding on the entitlement for depreciation in proportion to the export performance established from the records. This would have a bearing on the other consequences under Customs Act, 1962. The rectification of that want requires that the impugned order be set aside and matter remanded back to the original authority for fresh decision after consideration of the facts and circumstances including evidence of exports undertaken by deployment of the said capital goods that may be furnished by the appellant herein. The appeal is disposed off by way of remand.

Summary

Issues:
The appeal involves denial of exemption for import of goods, recovery of duty, confiscation of goods, redemption option, penalty, and non-fulfillment of post-importation conditions.

Exemption Denial and Duty Recovery:
M/s Sunrise Industries India Ltd appealed against denial of exemption for import of goods covered by specific bills of entry under Customs Act, 1962, resulting in duty recovery and confiscation of goods. The duty foregone amounting to &8377; 4,60,15,779/- was to be recovered along with interest and penalties under relevant sections.

Non-Fulfillment of Post-Importation Conditions:
The imported goods were not installed post-clearance due to pending land acquisition for manufacturing facility setup. Despite extension granted for installation until December 2016, the appellant claimed to have met export obligations by February 2016. Challenges arose due to delays in land acquisition and non-issuance of export obligation discharge certification (EODC).

Discrepancies in Installation and Export Obligation:
The capital goods were found installed at a different location from the one specified in licensing documents. The non-issuance of EODC during the installation period raised concerns about export obligation fulfillment. The extension for installation did not automatically extend the export obligation deadline, leading to discrepancies in compliance.

Legal Arguments and Authorities' Positions:
The appellant argued for considering the extension granted by the Policy Relaxation Committee and questioned the authority's reliance solely on non-issuance of EODC for duty demand. The authorities emphasized strict adherence to notification terms, highlighting non-installation of capital goods within the stipulated period as the basis for non-compliance with export obligations.

Judgment and Remand Decision:
The Tribunal noted the lack of evidence regarding export performance and the absence of findings on depreciation entitlement based on export performance. Consequently, the order was set aside for a fresh decision, emphasizing the need to assess export evidence and consider the impact on Customs Act consequences. The appeal was disposed of by way of remand for further review and decision.

Conclusion:
The Tribunal's decision focused on the discrepancies in installation, export obligation fulfillment, and the need for a comprehensive assessment of export evidence before confirming duty liability. The case highlights the importance of meeting post-importation conditions and providing sufficient documentation to support compliance with regulatory requirements under the Customs Act, 1962.