2006 (7) TMI 64 - AT - Central Excise

Demand- Import of Capital goods under EPCG Scheme- Alleged that non-fulfillment of post-import condition relating to export Duty demanded by department- Adjudicating authority after considering all facts held that penalty not imposable on it.

Summary

Issues:
1. Duty quantification under EPCG scheme
2. Confiscation of impugned goods under Section 111(o)
3. Penalty imposition under Section 112(a)

Analysis:

Duty Quantification under EPCG Scheme:
The appellant imported capital goods under the EPCG scheme but failed to meet the export obligations within the stipulated period. The Adjudicating Authority confirmed a duty demand of Rs. 4,98,147/-, of which Rs. 2,62,784/- was released through a bank guarantee. The appellant argued that the duty demand exceeded the bank guarantee amount and should be reevaluated. The Tribunal agreed, setting aside the demand and remanding the matter for reevaluation. The appellant's export performance in the 4th and 5th years was also considered for potential relief in duty liability calculation.

Confiscation of Impugned Goods under Section 111(o):
The impugned goods were confiscated under Section 111(o) with an option for redemption on payment of a fine. However, once the differential duty is paid, the appellant exits the EPCG scheme, making confiscation unnecessary. The Tribunal deemed the confiscation unsustainable and set it aside, concluding that no redemption fine was imposable.

Penalty Imposition under Section 112(a):
Penalties were imposed on the appellant company and its Managing Director under Section 112(a) for non-fulfilment of export obligations. The appellant argued that penalties were unwarranted as they had made shipments within the specified time, attributing the failure to changing trade circumstances rather than wilful misconduct. The Tribunal agreed, ruling that penalties were not justified and disposed of the appeals accordingly.

This judgment highlights the importance of accurate duty quantification, the inapplicability of confiscation post-duty payment in the EPCG scheme, and the need for justifying penalties for non-compliance based on wilful misconduct rather than external factors.