1997 (11) TMI 279 - AT - Customs

Summary

Issues:
- Import of capital goods without approval of Development Commissioner
- Alleged contravention of Import and Export Trade Control Act
- Denial of exemption under Notification No. 77/80-Cus.
- Confiscation of goods under Section 111(d) of the Customs Act
- Imposition of redemption fines

Import of Capital Goods Without Approval of Development Commissioner:
The appellants had set up a 100% EOU for manufacturing Industrial Batteries in KFTZ and imported capital goods without formal approval from the Development Commissioner. The adjudicating authority found a contravention of the Import and Export Trade Control Act due to the lack of approval at the time of import. However, subsequent approval was granted, leading to a lenient view by the authority. The Appellants argued that the subsequent approval validated the legality of the import, and the offense alleged in the show cause notice became irrelevant. The Tribunal acknowledged the technical contravention but emphasized the subsequent approval as a basis for leniency.

Denial of Exemption Under Notification No. 77/80-Cus.:
The adjudicating authority denied the appellants exemption under Notification No. 77/80-Cus., citing the requirement of a necessary license for import and satisfaction of the Development Commissioner regarding the use of goods for export purposes. The appellants contended that as actual users in the KFTZ, they were covered under O.G.L. 19/88 and subsequent O.G.L. 20/90, which did not necessitate a license for import. They argued that the subsequent approval from the Development Commissioner indicated satisfaction with the use of goods for export, thus fulfilling the conditions for exemption. The Tribunal agreed with the appellants, stating that the exemption could not be denied based on the subsequent approval granted by the Development Commissioner.

Confiscation of Goods and Imposition of Redemption Fines:
The adjudicating authority confiscated the goods under Section 111(d) of the Customs Act but allowed their release upon payment of redemption fines ranging from Rs. 5,000 to Rs. 70,000. The Tribunal, considering the subsequent approval and technical nature of the contravention, reduced the redemption fines significantly. They held that while the goods were technically liable for confiscation, the fines imposed were excessive. The Tribunal modified the redemption fines in favor of the appellants, indicating a lenient approach due to the subsequent approval and technical nature of the offense.

In conclusion, the Tribunal granted the appellants exemption under Notification No. 77/80-Cus. and reduced the redemption fines imposed by the adjudicating authority. The judgment highlighted the importance of subsequent approvals in mitigating technical contraventions and emphasized the fulfillment of conditions for exemption under relevant notifications.