2014 (5) TMI 405 - AT - Customs

Waiver of pre-deposit - Importation of capital goods 100% EOU - Section 112A(ii) of the Customs Act, 1962 - Held that - The only grievance of the department is that LOP was not there at the time of import of capital goods - The same was regularized by Development Commissioner - The licence for warehousing is found valid and the goods are also within the period of warehousing Therefore, assessee has made out a prima facie case for waiver of pre-deposit - Thus, requirement of pre-deposit is waived of all dues adjudged against assessee and stay recovery thereof during the pendency of appeal - Stay petitions are allowed Decided in favour of assessee.

Summary

Issues: Waiver of duty and penalty under Section 112A(ii) of the Customs Act, 1962 for an EOU regarding import of capital goods without LOP from the Development Commissioner.

Analysis:
The judgment deals with an application for the waiver of duty amounting to Rs. 6,27,68,000/- and an equivalent penalty imposed under Section 112A(ii) of the Customs Act, 1962. The applicant, a 100% EOU, imported capital goods and raw materials without paying duty, but an audit objection was raised as they did not have the Letter of Permission (LOP) from the Development Commissioner at the time of import. The applicant argued that the Development Commissioner later regularized the import of goods, stating that they imported capital goods worth Rs. 47 Crores against the permitted Rs. 57 Crores. Additionally, they highlighted that their warehousing license was valid until 2014, and the capital goods were within the warehousing period of 5 years. Subsequently, the audit objection was dropped.

The Tribunal noted that the department's sole grievance was the absence of LOP at the time of capital goods import, which was later regularized by the Development Commissioner. It was observed that the warehousing license was valid, and the goods were within the warehousing period. Considering these facts, the Tribunal found that the applicant had established a prima facie case for the waiver of pre-deposit. Consequently, the Tribunal waived the requirement of pre-deposit for all dues adjudged against the appellant and stayed the recovery during the appeal's pendency. The stay petitions were allowed, emphasizing the applicant's compliance with warehousing regulations and the subsequent regularization of the import by the Development Commissioner.

This judgment highlights the significance of compliance with regulatory requirements, such as obtaining necessary permissions like the LOP, even in cases where subsequent regularization is sought. It underscores the Tribunal's discretion to grant waivers based on prima facie evidence of compliance and the fulfillment of warehousing obligations. The decision serves as a reminder for entities, especially EOUs, to ensure strict adherence to import regulations and licensing conditions to avoid potential duty liabilities and penalties.