2023 (2) TMI 495 - HC - Customs

Duplication of orders - EPCG Scheme - export obligations not satisfied within the time stipulated under the Scheme - petitioner was directed to regularize the export obligation by payment of customs duty with penal interest - Petitioner sought the exact quantum of amount to be paid, to ensure compliance with the appellate order - HELD THAT - Instead of simply informing the petitioner as to the quantum of outstanding demand, the officer has passed a second order in original on 06.02.2013. There was absolutely no necessity for the aforesaid order to have been passed as the same cause of action had been addressed vide orders dated 30.03.2005 and 11.09.2007. Be that as it may, the petitioner challenged the order in first appeal leading to the passing of the impugned order dated 31.03.2015 by the first appellate authority. Quite apart from being an aberration in procedure, all that the respondents needed to have done was to convey the quantification of duty and penalty to the petitioner and ensure its compliance. In fact the petitioner has on all occasions expressed its readiness to pay the amount on being informed of the amount to be paid - On 12.08.2015 when this matter had come up for admission, there was an order of interim stay upon condition that the petitioners remit 50% of the penalty within a period of four weeks from the date of receipt of copy of that order. The petitioner has admittedly complied with this order. Thus, let a demand be raised for the balance, which the petitioner, in light of its acquiescence as noted in the preceding paragraphs, will settle expeditiously. The impugned orders are clearly in violation of procedure apart from being duplication of the orders already passed, and are hence set aside - Petition disposed off.

Summary

Issues:
1. Export Promotion Capital Goods Scheme (EPCG Scheme) non-compliance.
2. Show-cause notice for failure to fulfill export obligations.
3. Customs duty and penal interest imposition.
4. Challenging orders in first appeal.
5. Passing of duplicate orders leading to litigation.
6. Compliance with appellate orders and interim stay.

Analysis:

Issue 1: Export Promotion Capital Goods Scheme (EPCG Scheme) non-compliance
The petitioner, engaged in manufacturing and exporting stainless steel utensils, ceased operations in 2003 but held an EPCG license. The license obligated the export of stainless steel kettles within five years, which the petitioner failed to fulfill due to procuring capital goods locally.

Issue 2: Show-cause notice for failure to fulfill export obligations
Upon non-compliance, a show-cause notice was issued under the Foreign Trade (Development and Regulation) Act, 1992, prompting the petitioner to explain the unmet export obligations.

Issue 3: Customs duty and penal interest imposition
Despite the petitioner's explanation, an order was passed imposing customs duty and penal interest at 15% for not fulfilling export obligations against the EPCG license, leading to a demand for payment.

Issue 4: Challenging orders in first appeal
The petitioner challenged the order in a first appeal, which was upheld, confirming the duty payment obligation. Subsequently, the petitioner accepted the order and communicated readiness to pay the amount due.

Issue 5: Passing of duplicate orders leading to litigation
An officer's unnecessary second order in 2013, duplicating previous actions, caused confusion and led to further litigation, despite the petitioner's willingness to comply upon being informed of the outstanding demand.

Issue 6: Compliance with appellate orders and interim stay
Following an interim stay order, the petitioner complied by remitting 50% of the penalty. The court deemed the duplicate orders as procedural violations and set them aside, directing the petitioner to settle the remaining balance promptly.

In conclusion, the High Court of Madras ruled in favor of the petitioner, highlighting the procedural irregularities in passing duplicate orders and emphasizing the importance of clear communication regarding outstanding dues to ensure timely compliance.