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2025 (3) TMI 1324 - AT - CustomsMisdeclaration of the quantity and value of the imported goods - violation of provisions of the Customs Act 1962 and also a violation of the EPCG licence and the Foreign Trade Policy - on examination of the imported container one headstock and 12 drums were found in excess - excess quantity was not included in the EPCG License available with the appellant at the relevant time of import - HELD THAT - In this case the importer has subsequently obtained an EPCG licence covering the excess goods discovered. Although this was brought to the notice of the Original Authority no decision has been recorded on the same. Once the importer produces a licence it is for the Customs authorities to verify its validity and extends all benefits to the goods if covered by the same. Further now the appellant has also produced a copy of EODC dated 09.01.2024 purportedly evidencing the fulfillment of their export obligation which requires verification. It has been held by the Hon ble Supreme Court in Atul Commodities Pvt. Limited v. CC Cochin 2009 (2) TMI 18 - SUPREME COURT that if any doubt or question arises in respect of interpretation of Foreign Trade Policy or in the matter of classification of any item of the ITC (HS) or in the Handbook the said question or doubt shall be referred to DGFT whose decision thereon shall be final and binding. We find that a similar position obtains with regard to extending the benefit of an EPCG licence for which EODC is stated to have been issued. There has been a contravention of the provisions of the Customs Act 1962 in as much as there has been imports of goods in excess of the declaration made in the Bill of Entry and which was not covered by the EPCG license available with the appellant at the time of import. Tendering of an incorrect invoice was also alleged - The Customs Act 1962 and the Foreign Trade (Development and Regulation) Act 1992 (FTDR Act) operate in their own spheres. Hence this division of authority between the DGFT and Customs has to be adhered to in line with the jurisdiction granted by the respective statutes under which the authorities operate. However whether a penalty should be imposed for failure to perform a statutory obligation under the Customs statute is normally a matter of discretion of the authority to be exercised judicially based on the current facts and circumstances of the case unless stated otherwise in this statute. Conclusion - Verification of the subsequent EPCG licence and EODC certificate is essential to determine the applicability of benefits for the excess goods. The impugned order is set aside and the matter is remanded to the Original Authority for de novo adjudication - Appeal disposed off by way of remand.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS 1. Confiscation of Excess Goods The relevant legal framework includes the Customs Act, 1962, which governs the importation of goods and provides for penalties in cases of misdeclaration. The Court noted that the appellant declared a lesser quantity of goods than what was actually imported, which constitutes a violation of the Customs Act. The Court's reasoning emphasized that the excess goods discovered were not covered by the EPCG licence initially presented. Key evidence included the inspection report by the SIIB officers and the certification by the Chartered Engineer, confirming the presence of excess goods. The Court applied the law by recognizing the discrepancy between the declared and actual quantities, affirming the initial decision to confiscate the excess items. The appellant argued that the excess goods were supplied free of cost and were not intended for commercial benefit. However, the Court concluded that the misdeclaration warranted confiscation, though it allowed for redemption upon payment of a fine. 2. Subsequent EPCG Licence and Benefits The Foreign Trade (Development & Regulation) Act, 1992, and the associated policy framework were pertinent to this issue. The appellant obtained a subsequent EPCG licence covering the excess goods, which was presented to the authorities. The Court highlighted that the Customs authorities should verify the validity of such a licence and extend benefits if applicable. The appellant also produced an EODC certificate, evidencing fulfillment of export obligations, which required further verification. The Court acknowledged the precedent set by the Supreme Court in Atul Commodities Pvt. Limited, which mandates referring interpretative issues of the Foreign Trade Policy to the DGFT. The Court remanded the matter to the Original Authority for re-evaluation in light of the new licence and EODC certificate. 3. Imposition of Penalties The Customs Act, 1962, provides for penalties in cases of statutory violations, including misdeclaration. The Court recognized the appellant's contravention due to incorrect declarations. Despite the potential rectification through the subsequent EPCG licence, the initial misdeclaration was deemed blameworthy conduct. The Court stated that the imposition of penalties is at the discretion of the authority, which must be exercised judicially. The matter was remanded for the Original Authority to consider penalties based on the current facts and circumstances. SIGNIFICANT HOLDINGS The Court set aside the impugned order and remanded the matter for de novo adjudication by the Original Authority. The following principles were established:
The final determination involved remanding the case for a fresh decision, ensuring compliance with natural justice principles and allowing the appellant to present their case. The Court ordered the completion of the adjudication process within ninety days, granting the appellant eligibility for consequential relief as per law.
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