2012 (9) TMI 80 - AT - Customs

Demand of duty - appellants had not fulfilled the export obligation in terms of quantity of the goods to be cleared under the export licence Held that - Export obligation falling short in terms of quantity. There is no allegation in the show cause notice or finding in the order-in-original that the goods imported for fulfilling the export obligation had been diverted for some other purposes. In the absence of any evidence that the appellants had diverted duty free import for any other purposes for fulfilling the export obligation - penalty under Section 112 of Customs Act reduced

Summary

Issues:
1. Whether the appellants are liable to pay the duty confirmed by the adjudicating authority for not fulfilling the export obligation as per Notification No. 30/97-Cus., dated 1-4-1997.
2. Whether the appellants are liable to pay the penalty imposed by the adjudicating authority.

Analysis:
The appeal addressed an issue where the appellants had imported raw materials, brass scrap, against an advance license and were required to fulfill export obligations for brass artwares. The lower authorities found the appellants had not met the export obligation in terms of quantity, leading to a demand for the duty foregone. The adjudicating authority confirmed the demand, imposed a penalty, and ordered interest payment. The Tribunal remanded the case for reevaluation, and upon reevaluation, it was found that while the export obligation was exceeded in value by Rs. 43 lakhs, it fell short in terms of quantity. There was no evidence of diversion of duty-free imports for other purposes. Consequently, the Tribunal upheld the duty liability and interest but reduced the penalty from Rs. 4 lakhs to Rs. 1 lakh due to the appellants' fulfillment of the export value obligation.

In the case, the main issue revolved around the appellants' liability to pay the duty confirmed by the adjudicating authority for failing to meet the export obligation as specified in Notification No. 30/97-Cus., dated 1-4-1997. The appellants did not dispute the duty liability or the interest payable. The Tribunal upheld the duty liability and interest as the appellants did not contest these aspects.

Regarding the penalty imposed by the adjudicating authority, the Tribunal considered that the appellants had indeed exceeded the export obligation in terms of value by Rs. 43 lakhs. However, there was a shortfall in quantity. Notably, there was no evidence of diversion of imported goods for purposes other than fulfilling the export obligation. Thus, the Tribunal decided to reduce the penalty from Rs. 4 lakhs to Rs. 1 lakh, acknowledging the appellants' fulfillment of the export value obligation. The penalty reduction was deemed appropriate in the interest of justice.

In conclusion, the Tribunal disposed of the appeal with the modification of reducing the penalty to Rs. 1 lakh, maintaining the duty liability and interest payment obligations. The decision was based on the appellants' fulfillment of the export value obligation and the absence of evidence indicating diversion of imported goods.