2013 (8) TMI 101 - AT - Customs

Export obligation - Value Based Advance Licenses - import without payment of customs duty - Notification No.203/92-Cus - Amnesty Scheme - whether the appellant is to be punished by demanding a high amount for his default by adopting the method suggested by Revenue or by demanding minimum possible amount by adopting the method adopted by appellant. - confiscation of the goods under section 111(o) of Customs Act 1962 and penalty on the importer under section 112(a) and 114(a) of Customs Act, 1962. - Held that - if the appellants had paid about Rs.5 lakhs more as on 31.1.97,their entire liability under the 14 licences could have been discharged but for the issue that interest was paid through RG-23A account rather than through cash. The wording of the amnesty scheme was not very explicit that interest could not be paid by reversal of credit. When the payments were reported to the jurisdictional officers they did not take any immediate objection to such payment but took objection almost after six months. Immediately the appellants responded by paying the amount in cash. In such factual matrix non-payment of interest through cash is not a ground to deny the benefit of the amnesty scheme. In fact such issue is not raised in the impugned order because it is seen that payments made in respect of 12 licenses have been accepted for qualifying for amnesty. Once the High Court has ordered that amnesty scheme is to be extended considering each licence on a case to case basis, it is for the appellant to appropriate the payments made by them towards the liability under each licence. The Hon. High Court has not ordered any particular order in which licenses have to be considered for eligibility for amnesty. There is no undue benefit that is being granted to the appellant by following the method suggested by the appellant. Such method is not against any of the conditions of the amnesty scheme or order of Hon. Madras High Court. We do not find any legal backing for the argument of Revenue that the licences have to be first arranged in the chronological order and then appropriations of amounts paid prior to 31-01-1997 are to be made. The date of the licence by itself may not decide chronology but the date of import of the goods may be more relevant. But it is not as if only one import was made against any particular licence. In such a complicated situation, the rationale adopted by Revenue of arranging the licences according to the date of the licence has no logical support not to talk of legal support. It only results in a much higher liability to the appellant for a small default of about Rs.5 lakhs. Such approach is not warranted in the facts and circumstances of the case. - Decided in favor of assessee.

Summary

Issues Involved:

1. Compliance with Notification No.203/92-Cus conditions.
2. Eligibility for duty exemption under the VABAL scheme.
3. Validity of the Amnesty Scheme and its conditions.
4. Method of quantifying customs duty and interest.
5. Appropriation of payments made under the Amnesty Scheme.

Issue-wise Detailed Analysis:

1. Compliance with Notification No.203/92-Cus conditions:

The appellant, M/s. Shasun Chemicals and Drugs Ltd., imported raw materials duty-free under the VABAL scheme, which required that no relief of input stage duty be availed under Rule 56A/57A or other Central Excise rules. However, the appellant violated this condition by availing Modvat credit on indigenously procured raw materials. Consequently, the exported goods could not be counted towards the discharge of the export obligation, rendering the appellant liable for penalties under Section 114 of the Customs Act, 1962, and for the recovery of customs duty under Section 28(1) of the Customs Act, 1962.

2. Eligibility for duty exemption under the VABAL scheme:

The appellant was issued show cause notices demanding duty and proposing penalties due to non-compliance with the conditions of Notification No.203/92-Cus. The Government later introduced an Amnesty Scheme allowing exporters to reverse Modvat credits and pay interest to settle such contraventions. The appellant reversed the Modvat credit and paid interest as per the scheme, and the Assistant Commissioner of Central Excise issued certificates confirming compliance.

3. Validity of the Amnesty Scheme and its conditions:

The Amnesty Scheme required reversal of Modvat credit and payment of interest by 31st January 1997, to avoid customs duty demands and penal actions. The appellant complied with these conditions, albeit with some delays and misunderstandings regarding the payment method for interest. The Commissioner of Customs initially adjudicated in favor of the appellant, but the Tribunal later reversed this decision, holding the appellant liable for customs duty due to partial non-compliance with the scheme's deadline.

4. Method of quantifying customs duty and interest:

The Madras High Court directed that compliance with the scheme should be considered for each license separately. The High Court's order emphasized that the duty payable should be calculated license-wise, considering the individual reversals of duty and interest. Consequently, the Commissioner of Customs quantified the customs duty accordingly, leading to the appellant's appeal before the Tribunal.

5. Appropriation of payments made under the Amnesty Scheme:

The core dispute was whether the appellant could choose which licenses to cover under the Amnesty Scheme or if the Revenue could arrange the licenses chronologically for appropriating payments. The Tribunal found merit in the appellant's argument that they should have the option to appropriate payments towards the liabilities they chose. The Tribunal noted that the High Court did not prescribe a specific order for considering licenses and that the appellant's method did not contravene the scheme's conditions or the High Court's order. Therefore, the Tribunal modified the impugned order to restrict the demand of duty to the extent arising after appropriating payments made before 31-01-1997 against the advance licenses as chosen by the appellant.

Conclusion:

The Tribunal allowed the appeal, modifying the demand of duty based on the appellant's method of appropriating payments, thereby providing relief from the higher liability imposed by the Revenue's chronological arrangement method. The operative part of the judgment was pronounced in court on 11-07-2013.