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Issues involved: Confiscation of imported machineries not utilized for export under EPCG license, redemption fine, penalties, interest, violation of license terms, Bank Guarantees appropriation, Show Cause Notice issuance, setting aside redemption fine and penalty, non-imposition of penalty and redemption fine, duty payment before Show Cause Notice, applicability of judgments.
Confiscation of imported machineries not utilized for export under EPCG license: The appellants imported capital goods under concessional duty but failed to set up the industry due to Korean economy collapse, inability to procure export orders for ceramic goods, and competition from Chinese competitors. They approached the Commissioner to encash Bank Guarantees and deposit amounts due to the department, which was granted. The Show Cause Notice alleging violation of Customs Act was issued after the Bank Guarantees were realized. The impugned order confiscated the machineries and imposed redemption fine of Rs. 20,00,000/- along with penalties on the Company and Directors. The question was whether confiscation, redemption fine, penalties, and interest were justified. Violation of license terms and Bank Guarantees appropriation: The appellants contended that they did not violate license terms as the industry could not be established due to loss of export orders and foreign market conditions. They argued for setting aside redemption fine, penalties, and interest. The Tribunal's judgments cited by the Counsel supported the waiver of penalty and redemption fine in cases of unavoidable circumstances and duty payment before the Show Cause Notice issuance. The appellants' request to set aside redemption fine, penalty, and interest was deemed justified based on the cited judgments. Non-imposition of penalty and redemption fine: The Tribunal held that confiscation cannot be ordered when export obligation becomes impossible and when Bank Guarantee is realized before the Show Cause Notice. Citing relevant judgments, the impugned order confiscating machinery, imposing redemption fine, penalties, and interest was set aside, allowing the appeal. The judgments' ratio applied to the facts of the case, leading to the decision to overturn the penalties and redemption fine imposed on the Company and Directors.
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