2005 (4) TMI 183 - AT - Customs

Summary

Issues:
Confiscation of capital goods imported duty-free, Customs duty demand, failure to fulfill export obligations, imposition of penalties.

Confiscation of Capital Goods Imported Duty-Free:
The Commissioner of Customs ordered the confiscation of capital goods imported duty-free under Notification No. 133/94-Cus. for not fulfilling the export obligation. The order allowed redemption on payment of a fine of Rs. 5 crores and confirmed a Customs duty demand of Rs. 13,80,72,841 with interest. The appellants did not contest the duty demand, stating that payment arises only upon redeeming the goods. They argued that the failure to export atomized products from precious metals was due to the insolvency of an American company, resulting in no exports in the International Bullion Market. The Tribunal found that the failure to fulfill export obligations was not deliberate but due to genuine problems, leading to the setting aside of penalties.

Customs Duty Demand and Export Obligations:
The appellants did not contest the Customs duty demand but disputed the liability to penalty, attributing the failure to export to genuine reasons such as the insolvency of a collaborating company. They argued that some consignments were exported, and the remaining obligation was unmet due to circumstances beyond their control. The Tribunal, after considering both sides, concluded that the failure to meet export obligations was not intentional but due to bona fide difficulties. Citing precedents, the Tribunal set aside the penalties imposed on the company and its Director.

Imposition of Penalties:
The Commissioner imposed a personal penalty of Rs. 25 lakhs on the appellant-company and Rs. 5 lakhs on the Director for failure to fulfill export obligations. However, the Tribunal, after hearing arguments from both sides, found that the failure was not deliberate but due to genuine problems. Relying on previous judgments, the Tribunal set aside the penalties imposed on the company and the Director, as there were no appeals by the other Directors.

Conclusion:
The Tribunal partially allowed the appeals by setting aside the penalties imposed on the company and its Director, acknowledging that the failure to fulfill export obligations was not deliberate but due to genuine difficulties beyond their control.