2001 (6) TMI 400 - AT - Customs

Sewing machines imported under EPCG licence without payment of duty claiming benefit of Notification No. 29/97-Cus

Summary

Issues:
1. Denial of benefit of duty exemption for sold machines.
2. Confiscation of machines installed at a different location.
3. Imposition of penalty on the appellant.

Analysis:
1. The appellant imported sewing machines under a duty exemption notification but sold a portion without notifying the authorities or paying the duty. The Customs department initiated action, leading to the appellant depositing the duty later. The Commissioner denied the benefit of the notification for the sold machines, proposed confiscation, and imposed a penalty. The Tribunal found the appellant's financial hardship justification unacceptable, emphasizing the lack of compliance with legal obligations. The penalty imposed for the sale of machines was upheld as reasonable at Rs. 10 lakhs, representing 25% of their value. The appellant did not contest the fine for redemption of seized machines.

2. Regarding machines installed at a different factory than specified in the import license, the appellant argued that they were used for export production fulfilling the obligation. However, the Tribunal held that strict construction of the notification is required, and non-compliance with the specified factory location invalidated the duty exemption. The penalty was set aside due to export use but confirmed the confiscation, imposing a redemption fine of Rs. 1 lakh.

3. The Tribunal partially allowed the appeal, confirming the denial of duty exemption for sold machines and those installed at a different location. The penalty for non-compliance with factory location specifications was set aside due to export use but upheld the confiscation with a redemption fine. The appellant's financial hardship explanation was not considered a valid defense, emphasizing the importance of complying with legal obligations in importation cases.