2019 (2) TMI 318 - AT - Customs

EPCG Scheme - non-installation of capital goods at the place indicated - N/N. 44/2002-Cus denied - Held that - It is on record that the imported goods had been deployed at the addresses that were originally, or subsequently by amendment, included in the licenses. It would appear that the facts now established are not in congruity with the facts that guided the adjudicating authority in arriving at his conclusions. That the capital goods were installed, and utilized, at locations which had been, either originally or through amendment, approved by the licensing authority is not in question - Notification no. 44/2002- Cus dated 19th April 2002 is a composite exemption for facilitating an export promotion scheme. That the export obligation in pursuance of the license had been fulfilled is also not in question. The objectives of the notification, and indeed of the export promotion scheme in the Foreign Trade Policy, should prevail over technical irregularities that were repaired in the fullness of time - Visiting detriment of confiscation and penalties under section 111 and 112 of Customs Act, 1964 in the light of such rectification, and compliance with export obligation, would not be appropriate. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Proceedings against M/s Marico Ltd for imports under Export Promotion Capital Goods scheme; Confiscation and penalty imposed under Customs Act, 1962; Compliance with conditions of notification no. 44/2002-Cus; Discrepancy in installation of capital goods; Discharge of export obligation; Applicability of previous tribunal and court decisions; Reasonableness of impugned order; Deployment of goods at approved locations; Exemption for export promotion scheme; Control on capital goods; Rectification of technical irregularities.

Analysis:

The case involved proceedings against M/s Marico Ltd for imports under the Export Promotion Capital Goods scheme. The Commissioner of Customs held the imported goods liable for confiscation under section 111(o) of the Customs Act, 1962, but allowed redemption on payment of a fine and imposed a penalty. The importer appealed against the confiscation and penalty, challenging the compliance with the conditions of notification no. 44/2002-Cus regarding the installation of capital goods.

The impugned order stated that the license holder failed to comply with the conditions by not installing the capital goods at the place indicated in the license without informing the customs authorities. The appellant argued that subsequent amendments had been made to incorporate the addresses where the goods were re-installed, and the export obligation was fulfilled as certified by the licensing authority.

The Authorized Representative opposed the appellant's submissions, relying on a High Court decision that emphasized the Tribunal's role in testing the reasonableness of the conclusion in the order based on established facts. Despite the undisputed claim of fulfilling the export obligation, the adjudicating authority's finding of non-compliance with the notification's conditions was deemed valid.

The Tribunal noted that the goods were deployed at approved locations, either originally or through subsequent amendments, contradicting the basis of the adjudicating authority's conclusions. The Tribunal emphasized that the objectives of the notification and the export promotion scheme should prevail over technical irregularities, especially when rectified over time.

Ultimately, the Tribunal set aside the impugned order and allowed the appeal, considering the rectification of irregularities and compliance with the export obligation as sufficient grounds to overturn the confiscation and penalties imposed under the Customs Act, 1962.

This judgment highlights the importance of fulfilling export obligations and rectifying technical irregularities in compliance with customs regulations, emphasizing the need to prioritize the objectives of export promotion schemes over minor discrepancies in documentation or installation locations.