2002 (9) TMI 190 - AT - Customs

Summary

Issues Involved:
1. Validity of DEPB scrips and entitlement to duty exemption.
2. Liability for duty payment and interest.
3. Confiscation of goods.
4. Imposition of penalty u/s 114A.

Summary:

1. Validity of DEPB scrips and entitlement to duty exemption:
The appellants, manufacturers of paints, imported raw materials duty-free using four DEPB scrips, which were later found to be forged and fake. The Customs authorities issued show cause notices (SCNs) for recovering duty and imposing penalties. The Commissioner confirmed the duty demand and imposed penalties, holding the goods liable to confiscation. The Tribunal upheld the finding that the DEPB scrips were forged and fake, rendering them null and void ab initio. Consequently, the appellants were not entitled to duty exemption under Notification No. 34/97.

2. Liability for duty payment and interest:
The Tribunal affirmed the Commissioner's order confirming the duty demand of Rs. 70,39,862/- against the appellants. The appellants were directed to pay the duty with interest from 25-8-2000 at the rate prescribed u/s 28AA of the Customs Act. The Tribunal noted that the appellants' challenge to the demand of interest was not raised in the appeal.

3. Confiscation of goods:
The Tribunal agreed with the adjudicating authority's finding that the imported goods were liable to confiscation u/s 111(o) of the Customs Act due to the violation of conditions under Notification No. 34/97. However, the Tribunal directed the adjudicating authority to examine the question of redeemability of the goods u/s 125 after giving the appellants a reasonable opportunity to be heard on this limited question.

4. Imposition of penalty u/s 114A:
The Tribunal set aside the penalty imposed on the appellants u/s 114A, stating that liability of goods to confiscation u/s 111 is not a ground for imposing a penalty u/s 114A. The Tribunal noted that the Commissioner's finding of the appellants' complicity in evasion of customs duty was insufficient to invoke Section 114A.

Conclusion:
The appeal was disposed of with the duty demand and order of confiscation affirmed, the question of redeemability to be examined, and the penalty u/s 114A set aside.