2008 (2) TMI 163 - AT - Customs

Partial fulfillment of the export obligation appellant have also shown export performance in three years - it is not proper to demand the entire duty liability without taking into account the export performance - duty liability is to be re-quantified taking into account the partial fulfillment of export obligations - there is no warrant for imposition of any penalty - relevant Notifications at that time did not provide for demand of any interest - appeal is allowed by way of remand

Summary

Issues:
Violation of Foreign Trade Policy and Customs Act, duty foregone, penalty imposition, failure to fulfill export obligation, demand of interest, legal validity of impugned orders.

Violation of Foreign Trade Policy and Customs Act:
The appeal was filed against the Order-in-Appeal passed by the Commissioner of Central Excise (Appeals) regarding duty foregone by the Revenue due to the import of goods under the 100% EOU Scheme. The appellants failed to fulfill the export obligation, leading to a violation of the Foreign Trade Policy and the Customs Act. The Original Authority confirmed the duty foregone and imposed a penalty under Section 112 of the Customs Act. The Commissioner (Appeals) upheld this decision, prompting the appellants to approach the Tribunal for relief.

Partial Fulfillment of Export Obligation:
The appellants argued that they had partially fulfilled the export obligation and requested proportionate abatement from duty liability. They cited export values for different years and relied on tribunal decisions to support their case. The appellants attributed their failure to fulfill the export obligation to a sudden slump in demand due to a change in technology and global recession. They contended that the recovery of interest was not sustainable as the relevant notifications did not provide for demanding interest during the material period.

Imposition of Penalty and Demand of Interest:
The appellants argued against the imposition of any penalty, stating that their failure to fulfill the export obligation was not intentional but due to factors beyond their control. They referenced tribunal decisions where penalties were not imposed in similar circumstances. The learned SDR contended that the appellants failed to fulfill the conditions of the notification and should pay the duty demanded. However, the Tribunal found that the appellants had utilized the imported goods and showed export performance in three years, leading to a decision to re-quantify duty liability considering partial fulfillment of export obligations. The Tribunal ruled against imposing any penalty and demanding interest, remanding the matter to the original authority for re-computation of duty liability with a personal hearing for the appellants.

This detailed analysis of the judgment highlights the key issues involved, including the violation of trade policies, duty foregone, penalty imposition, failure to fulfill export obligations, and the legal validity of the impugned orders. The Tribunal's decision to re-quantify duty liability, rule against penalty imposition, and demand of interest provides a comprehensive understanding of the case.