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TMI Blog2022 (6) TMI 558X X X X Extracts X X X X X X X X Extracts X X X X ..... ook of Procedures which can hardly be claimed as a statutory prescription of the Foreign Trade Policy. It is a beneficial provision that enables a licence-holder to lay claim to regularization for breach of fulfilment of target of export obligation subject to compliance with the conditions therein. That is an internal disposal by the competent authority under the Foreign Trade (Development Regulation) Act, 1992 a far cry from the proceedings leading to the order impugned and not applicable to the present circumstances. It is clear that the appellant was not contracted, either directly or directly, to be liable for recovery of interest as laid down in COMMISSIONER OF CUSTOM VERSUS WIPRO LTD. [ 2011 (11) TMI 334 - KARNATAKA HIGH COURT] by the Hon ble High Court of Karnataka. The charging of interest and imposition of penalty is set aside - Appeal is allowed. - CUSTOMS APPEAL NO: 85648 OF 2020 - A /85535/2022 - Dated:- 9-6-2022 - MR C J MATHEW, MEMBER (TECHNICAL) AND MR AJAY SHARMA, MEMBER (JUDICIAL) Shri T. Jagapathi Rao, Consultant for the appellant Shri Ramesh Kumar, Assistant Commissioner (AR) for the respondent ORDER The challenge of M/s Yenkay Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d export of specified goods. He argued that absence of any such obligation to pay interest on such amount is intentional omission as other notifications, similarly framed, did provide for recovery of interest. It was his contention that the absence of legislated empowerment and lack of contractual obligation barred recourse to compensatory recovery in relation to the impugned import. He pointed out that there was no room for such doubt in notification no. 31/97-Cus dated 1st April 1997 stipulating interest liability and that, in notification no. 96/93-Cus dated 2nd March 1993, reference to Export Import Policy enabled recovery of interest to the extent of provisioning therein even if the notification did not stipulate so specifically. Reliance was placed on the decision of the Hon ble High Court of Karnataka in Commissioner of Customs, Bangalore-I v. Wipro Ltd (Infotech Group) [2012 (280) ELT (174) (Kar)] holding that 8. In the notification, admittedly it is not mentioned that any interest is payable on the duty foregone during the relevant period. Therefore, if only the Tribunal had carefully looked into the terms of the notification they would have realized in the notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Export), Mumbai [2019 (368) ELT 1113 (Tri-Mumbai)] in which it was held that 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 scheme did provide for furnishing of an undertaking on the part of the importer/licensee to commit themselves to payment of interest in addition to the duty foregone at the time of import in the ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of the provisions for levy of interest excludes the scope for such charge and, as the present dispute does not arise from a demand under Customs Act, 1962, is not relevant. In Akbar Knitting Co. v. Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 at least 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 holder on his own well before the expiry of the bank guarantee. having considered the very issue before us would erase any doubt that the impugned order was correct in charging interest on the duty saved. 8. Insofar as the confiscation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 111. Any person who abets or aids the commission of an act or omits to such an act (which renders the goods liable for confiscation) is also liable to penalty. Similarly when a person acquires possession or is in any way concerned in carrying, removing, depositing, har ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as a statutory prescription of the Foreign Trade Policy. It is a beneficial provision that enables a licence-holder to lay claim to regularization for breach of fulfilment of target of export obligation subject to compliance with the conditions therein. That is an internal disposal by the competent authority under the Foreign Trade (Development Regulation) Act, 1992 a far cry from the proceedings leading to the order impugned before us and not applicable to the present circumstances. It is clear that the appellant was not contracted, either directly or directly, to be liable for recovery of interest as laid down in re Wipro Ltd (Infotech Group) by the Hon ble High Court of Karnataka. 8. Likewise, in re Global Boards Ltd, it has been held that 9. However, a plethora of decisions of the Tribunal have held that the notifications issued in pursuance of the EXIM Policy, having provided for the alternative of payment of duty in the event of failure to fulfil 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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