2013 (12) TMI 401 - AT - Customs

Penalty u/s 112 - Import of capital goods - Imports were made under EPCG licences and as per the said licences - Non fulfillment the export obligation - Commissioner refrained Revenue to confiscate goods and impose penalty - Held that - According to the Notification No. 110/95-Cus., dated 5-6-1995, if the importer does not fulfil the export obligation, the importer is required to pay duty leviable on the goods imported but for the exemption in the same proposition in the unfulfilled portion of the export obligation. The Notification itself provides the importer has to pay duty and interest and also proportionate of total export obligation. When the notification itself provides for a situation where an importer is not able to fulfil the obligation, the question of violation of conditions of notification does not arise - Decided against Revenue.

Summary

Issues:
1. Whether the failure to fulfill export obligations under Notification No. 110/95-Cus. warrants confiscation of goods and imposition of penalty.
2. Interpretation of the Notification's provisions regarding duty payment and export obligation fulfillment.
3. Comparison of the present case with relevant legal precedents.

Analysis:

Issue 1: The case involved a dispute regarding the consequences of a respondent's failure to meet export obligations after importing capital goods under a concessional rate of duty. The Revenue contended that confiscation of goods and penalty imposition were warranted due to the violation of conditions under the Notification.

Issue 2: The Tribunal analyzed Notification No. 110/95-Cus., which outlined the consequences of non-fulfillment of export obligations. The Notification required the importer to pay duty, interest, and a proportionate amount of the unmet export obligation. The Tribunal concluded that since the Notification itself provided for such situations, there was no breach of conditions leading to confiscation or penalty.

Issue 3: The Tribunal compared the present case with legal precedents cited by both parties. The Departmental Representative relied on the Supreme Court decision in Weston Components Ltd. case, emphasizing confiscation in case of bond execution. However, the Tribunal distinguished this case, stating it was unrelated to the circumstances at hand. The Tribunal found the respondent's reliance on the Suncity Synthetics Ltd. case appropriate, leading to the rejection of the Revenue's appeal.

In conclusion, the Tribunal upheld the decision of the learned Commissioner, ruling against confiscation and penalty imposition, as the failure to fulfill export obligations was addressed by the payment of duty, interest, and a proportionate amount as per the Notification's provisions. The Tribunal's analysis emphasized the specific terms of the Notification and distinguished the legal precedents cited by the parties, ultimately rejecting the Revenue's appeal.