2023 (10) TMI 760 - AT - Customs

Advance Authorization Scheme - Non-fulfilment of Export obligation - levy of redemption fine and penalty - denial of concessional rate of duty - import of prime non alloy steel slabs falling under customs tariff item 7207 1290 - whether the appellants have violated the provisions of Customs notification No.64/2008-Cus. dated 09.05.2008, in terms of the show cause proceedings or not, and the impugned order confirming the adjudged demands, confiscation of goods and penalty is sustainable? HELD THAT - From the perusal of Notification No.96/2009-Customs dated 11.09.2009, it is clear that the import of goods specified in the Import Authorisation issued by DGFT in the name of the appellants, are exempt from the whole of the duty of customs, additional duty of customs and safeguard duty or anti-dumping duty, if any, leviable on such imported goods. However, the said exemption was subjected to certain conditions specified therein. From the records of the case, it is clear that the appellants have produced the Advance Authorisation at the time of import of goods through the notified sea port Mumbai, and executed the Bond for Rs.47,58,98,750/- along with necessary undertaking before the Customs authorities in respect of Advance License No. 0310746001 dated 20.08.2013. There is no case of sale or transfer of advance authorisation in this case. Thus, it is found that prima facie the appellants have fulfilled the conditions (i), (ii), (iv) and (vi). In respect of the conditions (iii) and (v), since the competent authority as per the Notification No.96/2009-Customs is the DGFT, who would issue an export obligation fulfilment or discharge certificate, redemption, regularization certificate upon scrutiny of exports and other relevant details as in ANF 4F document, these conditions will be able to be met upon production of such certificate from DGFT authorities. The appellants were liable to pay customs duty against 12514.22 MTs of unutilised raw material, calculated on prorata basis after deducting the imported raw material used in the exported quantity, as per Annexure-A worksheet of the show cause notice dated 04.03.2021, as these were imported by availing the customs duty exemption notification but failed to fulfil the proportionate export obligation. From the records of the case, it is also seen that the appellants had written a letter on 06.02.2018 to the Additional DGFT, Mumbai, i.e., the licensing authority for extension of the export obligation period due to adverse international business scenario faced by them and had also requested the Policy Relaxation Committee of DGFT to allow export obligation period upto 19.08.2018. Further, as claimed by the appellants it is seen from the record that the appellants had taken a demand draft No.478828 dated 19.09.2018 for Rs.9,10,69,948/- drawn on HDFC Bank, Nariman Point Tulsiani Cahmbers, Mumbai payable to the account of Commissioner of Customs, Mumbai a/c Namco Industries Private Limited, towards the customs duty and interest payable on account of non-fulfilment of export obligation by submitting it in writing to the Deputy Commissioner of Customs, DEEC Monitoring Cell of New Custom House, Mumbai. The Notification No.96/2009-Customs dated 11.09.2009 provide that for the purpose of this notification, the Licensing Authority or Regional Authority would mean the Director General of Foreign Trade appointed under section 6 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992) or an officer authorized by him to grant a licence under the said Act, in terms of Explanation to the said notification. Thus, it is clear that the export obligation discharge certificate shall be issued by the DGFT and the same would be submitted by an importer to the Customs authorities for completion of the Advance Authorisation imports and cancellation of bond and undertaking. The appellants have fulfilled the conditions of export obligation after the expiry of the export obligation period but upon payment of an amount of Rs.6,46,63,619/- towards differential customs duty and Rs.4,48,80,062/- towards interest thereon to the government. These payments made by the appellants have been duly taken into account by the DGFT in their letter dated 19.02.2020 while giving the redemption cum regularisation permission to the appellants. There are no reason to agree with the findings of learned Commissioner that the imported goods have violated the conditions of Customs Notification No.96/2009-Customs dated 11.09.2009 and thus it is liable for confiscation under Sections 111(o) and 143 ibid and that the appellants are liable to penalty for their omission in respect of non-fulfilment of export obligation and non compliance with the conditions of the above notification - Since the appellants have already paid the amounts of Rs.6,46,63,619/- towards differential customs duty and Rs.4,48,80,062/- towards interest thereon before the issuance of show-cause notice, the order of the learned Commissioner in confirming the adjudged demands and appropriating the same to the account of government exchequer is upheld - the impugned order insofar as it has imposed redemption fine and penalty on the appellants is set aside. Appeal allowed in part.

Summary

Issues Involved:
1. Violation of the conditions of Advance License under Customs Notification No.96/2009-Cus.
2. Liability for confiscation of imported goods under Section 111(o) of the Customs Act, 1962.
3. Recovery of duty foregone and applicable interest.
4. Imposition of penalties under Section 112(a) of the Customs Act, 1962.

Summary:

1. Violation of the conditions of Advance License under Customs Notification No.96/2009-Cus:
The appellants, M/s Namco Industries Pvt. Ltd., imported goods under Advance Authorization No.0310746001 dated 20.08.2013, which allowed import at a concessional duty rate with an export obligation. The appellants were alleged to have not fulfilled the export obligation, leading to an investigation by the Directorate of Revenue Intelligence (DRI). The appellants contended that they had paid the differential duty and interest, obtained necessary permissions from DGFT, and fulfilled the proportionate export obligation.

2. Liability for confiscation of imported goods under Section 111(o) of the Customs Act, 1962:
The Commissioner of Customs held that the appellants failed to complete the export obligation within the stipulated period, leading to the confiscation of imported goods under Section 111(o) of the Customs Act, 1962. However, the Tribunal found that the appellants had fulfilled the conditions of the Customs Notification No.96/2009-Cus after paying the differential customs duty and interest and obtaining the Redemption cum Regularisation letter from DGFT.

3. Recovery of duty foregone and applicable interest:
The appellants paid the differential customs duty and interest before the issuance of the show-cause notice. The Tribunal upheld the order confirming the adjudged demands and appropriating the amounts paid by the appellants to the government exchequer.

4. Imposition of penalties under Section 112(a) of the Customs Act, 1962:
The Commissioner imposed a redemption fine of Rs.60,00,000/- and a penalty of Rs.30,00,000/- on the appellants. The Tribunal set aside the imposition of the redemption fine and penalty, noting that the appellants had cooperated with the department and paid the entire amount of duty and interest before the issuance of the show-cause notice.

Conclusion:
The appeal was partly allowed in favor of the appellants by setting aside the redemption fine and penalty imposed in the impugned order. The Tribunal upheld the order confirming the adjudged demands and appropriating the amounts paid by the appellants towards differential customs duty and interest.