2020 (1) TMI 981 - AT - Customs

Failure to fulfill post import conditions - import of various parts of Aircraft classifiable under heading 8802 - shortage of miniscule 0.0133% of total inventory - benefit of exemption under Notification No 21/2002-Cus dated 01.03.2002 - requirement to maintain the proper inventory of the imported goods, so as to show the proper utilization of the goods in the manner as prescribed by the notification - HELD THAT - From the facts available on record it is evident that the auditors were appointed by the appellant for maintaining and verifying the records of inventory of the imported goods. It is on the basis of the report submitted by the appointed auditors, that shortages and excesses have been determined. The excesses and shortages were determined by the auditors/ chartered accountants appointed by the appellants themselves after undertaking physical verification of the inventory, we do not find any reasons to differ with the conclusions arrived at by the Commissioner - the demand of duty upheld as the appellants have not been able to satisfy the post importation conditions in respect of the shortages determined. Excesses stock - import without following the procedure - HELD THAT - The appellant has not been able to offer any justifiable reason for the excesses. These goods have been imported without following the procedure for clearance of the imported goods as per the Customs Act, 1962. Since these goods are have been imported without following the procedure as prescribed they have been held liable for confiscation and have been confiscated by the Commissioner. However though these goods are liable for confiscation, but were never seized and released provisionally to the appellants against Bond and Bank Guarantee. Thus while upholding the demand of duty made in respect of the excesses as these goods were cleared without filing proper import declaration as require under the Customs Act, 1962, the order of confiscation of goods and redemption fine imposed is set aside. Demand of interest under Section 28AB on the amount short paid - HELD THAT - The interest as provided by the statue is for the delay in the payment of duty from the due date. Since the demand has been upheld, demand for interest too is upheld. Appeal allowed in part.

Summary

Issues Involved:
1. Demand of Customs Duty
2. Demand of Interest
3. Confiscation of Excess Goods
4. Imposition of Redemption Fine
5. Imposition of Penalty
6. Limitation Period for Demand

Detailed Analysis:

1. Demand of Customs Duty:
The Commissioner confirmed the demand of Customs duty amounting to ?1,47,94,926 under Section 28 of the Customs Act, 1962. The imports were self-assessed by the appellants, who availed the benefit of exemption under Notification No. 21/2002-Cus, subject to condition 102. During an Onsite Post Clearance Audit (OSPCA), discrepancies were found in the inventory, leading to a show cause notice. The Tribunal upheld the demand, emphasizing that the appellants failed to satisfy post-importation conditions, thus making the goods liable for duty.

2. Demand of Interest:
The Commissioner also confirmed the demand of interest on the Customs duties under Section 28AB of the Customs Act, 1962. The Tribunal upheld this demand, stating that interest is for the delay in payment of duty from the due date. This view was supported by precedents such as P V Vikhe Patil SSK and Kanhai Ram Thakedar.

3. Confiscation of Excess Goods:
The Commissioner ordered the confiscation of excess goods valued at ?3,08,18,771.47 under Sections 111(l), 111(m), and 111(o) of the Customs Act, 1962, with an option to redeem on payment of ?50,00,000 as Redemption Fine. The Tribunal, however, set aside the order of confiscation and the redemption fine, citing the decision in Shiv Kripa Ispat Pvt Ltd, which held that goods not seized and released provisionally cannot be confiscated.

4. Imposition of Redemption Fine:
The Tribunal set aside the redemption fine imposed by the Commissioner, aligning with the precedent that goods not seized and released provisionally cannot be subjected to redemption fine.

5. Imposition of Penalty:
The Commissioner imposed a penalty of ?25,00,000 under Section 112(a) of the Customs Act, 1962. The Tribunal set aside this penalty, considering the enormity of the inventory managed by the appellant and the fact that it is a Public Sector Undertaking. The Tribunal found no deliberate act to evade duty and cited Hindustan Steel, which states that penalty should not be imposed unless there is a deliberate defiance of law.

6. Limitation Period for Demand:
The appellants argued that the demand was barred by limitation as the show cause notice was issued for imports made during 2010-12 on 21.12.2014. The Tribunal did not explicitly address this issue in the final decision, focusing instead on the merits of the case and the compliance with post-importation conditions.

Conclusion:
The appeal was partly allowed. The Tribunal upheld the demand for duty and interest but set aside the orders for confiscation, redemption fine, and penalty. The decision emphasized the importance of adhering to post-importation conditions and proper inventory management, while also considering the procedural fairness in the imposition of penalties and fines.