2019 (5) TMI 613 - AT - Customs

Exemption under N/N. 97/2004-Cus dated 17th September 2004 - Utilization of the imported goods at a premises other than that of the importer - HELD THAT - The dispute is on the utilization of the imported goods at a premises other than that of the importer. Such utilization is not fatal to the benefit of the exemption notification as it may be appropriately regularized by the licensing authority. However, the continued utilization, without making any reference to the licensing authority, constitutes breach of the eligibility at the threshold that was not regularized. The precedential value of the decision of the Tribunal is not derogated from. It is the facts and circumstances that should apply and we find no variance in the facts and circumstances therein and the present dispute. A breach of condition of import is not at par with failure to fulfill export obligation which the notification itself has rendered flexible enough to be regularized and that breach, such as the present, must inevitably lead to confiscation. The imposition of penalty is a natural consequence. Penalty on Director - HELD THAT - There is no evidence of his role in deliberately utilizing the goods at a different location. It is also clear from the records that they had been advised that such utilization is within the scope of the scheme. Hence, it may be inappropriate to visit with penalty on the individual - the penalty on the director, Shri Vishnu Sureka is set aside. Appeal disposed off.

Summary

Issues:
Proceedings against import of capital goods under EPCG scheme - Eligibility for exemption under notification no. 97/2004-Cus - Confiscation of goods - Imposition of penalty under Customs Act, 1962.

Analysis:
The appeals were filed against the proceedings initiated regarding the import of capital goods valued at ?87,83,485 under the EPCG scheme. The impugned order held that the goods were not eligible for exemption under notification no. 97/2004-Cus as they were not installed at the designated address but at a different location. Consequently, a differential duty liability of ?22,71,520 was confirmed, and the goods were confiscated, with an option for redemption by paying a fine of ?15,00,000. Additionally, penalties were imposed on the appellant and the Director under section 114A of the Customs Act, 1962, leading to the present appeals.

The appellant contended that the demand for duty should not have been enforced through section 28 of the Customs Act, 1962, as the bond was executed in compliance with the exemption notification. The appellant relied on previous Tribunal decisions to support their argument that confiscation is not sustainable when full duty is demanded. However, the Authorized Representative emphasized that failure to install the goods at the designated premises renders the appellant liable for adverse consequences as per the conditions of the notification.

The Tribunal found that previous decisions related to failure in fulfilling export obligations did not apply to the present case, where the breach of condition led to confiscation. The utilization of goods at a different location without regularization constituted a breach of eligibility for exemption, leading to the confirmation of duty liability, confiscation of goods, and imposition of penalties. The penalty imposed on the Director was set aside due to lack of evidence of deliberate wrongdoing.

In conclusion, the appeal of M/s Prakash Roadlines Corporation Pvt Ltd was dismissed, while the appeal of the Director was allowed. The decision was pronounced in court on 07/05/2019.