2014 (5) TMI 292 - AT - Customs

Liability for duty on capital goods with interest - Non-fulfilment of export obligation Non-production of export obligation discharge certificate from the Director, STPI since 9 years - Non extension of period beyond 3 years - Held that - The demand for duty on capital goods with interest has been made because assessee did not produce export obligation discharge certificate from the Director, STPI - Even the letter dated 22-6-2004 makes it clear that LOP issued by the appellant has not been extended and appellants have achieved only Rs. 33,000/- of exports - Therefore, stand taken by the department that appellant is liable to pay Customs duty on the imported capital goods with interest cannot be found fault with. In any case the whole obligation to be fulfilled was Rs. 26.6 crores and the fact that appellant has achieved or received foreign currency of Rs. 1.71 crores also does not help the appellant - Even though the learned counsel made a plea that further time should be granted to enable them to produce a certificate from STPI unit, in view of the fact that export obligation fulfilled is only to the extent of Rs. 1.71 crores and it is more than 9 years since the Director STPI unit had written a letter informing that LOP has not been extended, no purpose would be served by giving further opportunity to the appellant or time for furnish any such certificate - Appeal has no merit and is thus, rejected Decided against assessee.

Summary

Issues: Non-fulfilment of export obligation by STPI unit leading to demand for duty on capital goods with interest.

Analysis:
The judgment deals with the issue of the non-fulfilment of export obligation by the appellant STPI unit, leading to a demand for duty on capital goods with interest. The appellant failed to produce the export obligation discharge certificate from the Director, STPI, despite the demand made by the department. The letter of permission was issued to the appellant on a specific date, and subsequently, the Director of STPI confirmed that the appellant had achieved only a minimal amount of exports, far below the required obligation. The department's stance on the appellant's liability to pay customs duty on the imported capital goods with interest was deemed justified due to the lack of proper documentation to prove fulfilment of export obligations.

The appellant's argument that they had produced a Foreign Inward Remittance Certificate showing a substantial amount received was countered by the legal requirement of a certificate from the Development Commissioner or, in the case of an STPI unit, the Director STPI. The absence of such a certificate rendered the FIRC insufficient for the customs department to acknowledge the fulfilment of export obligations. Despite the appellant's plea for additional time to obtain the necessary certificate, the tribunal emphasized that the appellant had not met the substantial obligation amounting to Rs. 26.6 crores, making the receipt of Rs. 1.71 crores irrelevant in this context.

The tribunal concluded that granting further time or opportunities to the appellant would serve no purpose, given the significant shortfall in meeting the export obligation and the extended period since the Director STPI had communicated the non-extension of the Letter of Permission. Consequently, the appeal was deemed to lack merit and was rejected by the tribunal, affirming the department's demand for duty on the imported capital goods with interest.