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TMI Blog2019 (8) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... the export obligation, renders the discharge of either of these option to be sufficient compliance with the condition to be fulfilled in the relevant notification issued under Customs Act, 1962, thus eliminating the scope for invoking section 111(o) of Customs Act, 1962 to confiscate the imported goods. Section 111(o) of Customs Act, 1962 empowers confiscation for non-fulfilment of post-importation conditions which have not been regularised by the appropriate authority - With the recovery of duty, the requirement to comply with the post-importation condition does not exist. Consequently, the imports stand regularised and section 111(o) of Customs Act, 1962 becomes inapplicable. With negation of section 111(o) of Customs Act, 1962, the imposition of penalty is not sustainable - Confiscation and penalty set aside. The recovery of differential duty and charging of interest in the impugned order are sustained and the order modified to set aside the confiscation and penalty - Appeal allowed in part. - Customs Appeal No. 178 of 2012 - FINAL ORDER No: A/86346 / 2019 - Dated:- 5-8-2019 - MR C J MATHEW, MEMBER (TECHNICAL) AND DR. SUVENDU KUMAR PATI, MEMBER (JUDICIAL) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny document or furnish any information necessary for assessment of duty on any excisable goods. 22. Whereas provisional duty is levied in terms of Sub-Rule (1) of Rule 9B, final assessment is contemplated under Sub- Rule (5) thereof by reason of which the duty provisionally assessed shall be adjusted against the duty finally assessed and in the event, the duty provisionally assessed falls short of or is in excess of the duty finally assessed, the assessee will pay the deficiency or will be entitled to a refund, as the case may be. Ultimately, thus, the liability of the assessee would depend upon the undertaking of exercises by the assessing officer to complete the assessment proceeding as contemplated under the Rules. 23. On a plain reading of the provisions of the Act and the Rules framed thereunder, we have no doubt in our mind that the Tribunal was correct in its finding that the impugned show cause notices were illegal. 4. On a perusal of the documents pertaining to the import, we find that, though the classification was originally claimed under heading no. 9801 of First Schedule to Customs Tariff Act, 1975 which is normally subject to provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was argued that the Hon'ble High Court of Delhi in Rai Agro Industries Ltd v. Director General of Foreign Trade [2006 (206) ELT 123 (Del)] had upheld the liability to interest based upon legal undertaking executed by the beneficiary of the scheme in the EXIM policy. 7. On a careful consideration of various cited decisions and the notification granting the benefit of exemption on import of capital goods, which, though not specifying levy of interest for the duty foregone, nevertheless, includes a reference to the provisions of EXIM policy which contains such a condition. The decisions cited on behalf of the appellant negated the chargeability of interest in the absence of provision in the parent statute and have held that the want of any contractual obligation on the part of the importer under the scheme would render it inappropriate to infuse such a provision subsequently to the detriment of the importer. We have no doubt that this is so and that interest is leviable on delayed payment of duty or on recovery of duty by invoking the Customs Act, 1962 only after incorporation of such provision therein. However, it cannot be disputed that the EXIM policy pertaining to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no provision in the notification for recovery of interest, while there is no provision in the case of the undertaking. 12. In the situation of this kind, we do not have any uncertainty in saying that it is the provisions of the notification that have to be implemented. The notification that has been framed under Section 25 of the Customs Act, which is administered by the Customs authorities, and it is that notification that has to be considered. This is obviously a case where there has been lack of co-ordination between the licensing authority and the Ministry of Finance, leading to what appear to be divergent views expressed by each of them. In that situation, we have to apply the provisions of the Customs Act and the notification issued thereunder. We therefore hold that there was no provision to recover interest under that law or that notification. The divergence between the notification and the Policy on the consequences of failure to fulfil the export obligation was held to favour the implementation of the former but such is not the issue in the present circumstances owing to there being no incongruity. In re VBC Industries Ltd, it was held that lack ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : (i) Before clearance of goods through Customs, but not later than six months from the date of issue of the licence, the importer shall execute a Legal Undertaking and Bank Guarantee in the manner indicated below, for fulfilment of the export obligation with the licensing authority in whose jurisdiction the licensee is situated or the Export Obligation Cell II in the Directorate General of Foreign Trade, Udyog Bhawan, New Delhi :- (a) A Legal Undertaking valid for six years for an amount equal to the value of the export obligation imposed plus the value of duty saved plus the interest at the rate of 24% per annum for a period of six years. (b) A Bank Guarantee for an amount equal to 50% of the value of duty saved, for a period of three years, where the importer is not an Export House/Trading House/Star Trading House. (c) Where the export obligation has not been fulfilled atleast to the extent of 50% of the total export obligation imposed, within a period of two and a half years from the date of issue of the licence, the bank guarantee shall be enforced and forfeited unless the same is renewed for another three years by the licence hol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipulated period, then he was no longer eligible for the concessional rate of duty and the duty liability has to be discharged in full without availing the benefit of the exemption. For the same conduct, the goods also became liable to confiscation under the provisions of Section 111(o). The duty liability arises on account of importation. The liability to confiscation or fine is for violation of the conditions of the importation. The act of importation and the conditions of importation are two different things and for violation of each of them, separate consequences would follow. In the instant case the duty liability has been imposed for the import of the goods and the goods have been confiscated for violating the terms and conditions of importation. Since the goods are liable to confiscation, the liability to penalty arises under Section 112 of the Customs Act. Penalty is an action (in personam) on the importer while the duty and fine are (action in rem) on the goods. As per Section 112 of the Customs Act, liability to penalty arises when a person who in relation to any goods acts or omits any act which act or omission would render the goods liable to confiscation under Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the instant case the duty liability was confirmed by this Tribunal vide order dated 25- 11-2005. However, in spite of such confirmation the appellant failed to discharge differential duty liability and made payment towards duty liability only on 5-9-2011 after a period of more than six years from the date of passing of the order and after a period of 9 years from the date of order of the adjudicating authority and almost two decades after the importation of the goods. Such deliberate defiance of law needs to be dealt with in an exemplary manner so that respect for law is maintained and people do not take the law for granted. that appeared to have influenced the outcome therein. 10. It would also appear that the Tribunal when rendering the decision had not been appraised of the significance of the earlier decision of the Tribunal in re Philips (India) Ltd. The issue, therefore, for consideration is the binding nature of the decision in re Sanghi Industries Ltd to the present dispute. One of the essential requirements of jurisprudence is consistency that is manifested by judicial discipline. The Tribunal is enabled to exercise such discipline when the applicabi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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