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TMI Blog2014 (12) TMI 1052X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The brief facts are as follows: The respondent had imported Mulberry raw silk and Dupion silk under Advance Licence dated 25.7.1997 and filed two Bills of Entry for the clearance of the goods, claiming benefit of Customs Notification No.80/95 dated 31.3.1995 under DEEC Scheme. As per condition No.(ii) of Notification 80/95, the importer had executed a bond undertaking to discharge the export obligation within the period specified in the certificate or within such extended period. However, the respondent failed to discharge the export obligation and as a result, paid duty on the imported raw material with interest at 24% per annum. In view of the breach of condition No.(v) of the Notification stated supra, a case was adjudicated by the Additional Commissioner of Customs by waiving the issuance of show cause notice to the importer. 3. The importer pleaded that the goods were imported under valid licence and if there is any breach of condition of the licence, duty and interest alone are liable to be paid. They pleaded that no penalty or fine would arise. The importer laid emphasis on clause 7.28 of the Export and Import Policy 1997-2002. 4. After considering the submissions mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-observance of the condition was sanctioned by the proper officer", shall be liable to confiscation. As such, since the condition of the Notification under which the goods were exempted at the time of import is not fulfilled, the goods have clearly been rendered liable to confiscation. The lower authority, while upholding the order of confiscation has observed that the goods are not available for confiscation. As a consequence of this liability, penalty of Rs. 1,00,000/- has been imposed. In terms of Sec.112(a) of the Customs Act, 1962, any person who in relation to any goods does or omits to do any act which act or omission would render such goods liable to confiscation under Sec.111 shall be liable to penalty. It is in terms of this provision that penalty has been imposed by the lower authority. I, therefore, find no infirmity in the order of the lower authority imposing the penalty for non-fulfillment of the condition of the exemption Notification No.80/95 dated 31.3.95." 6. Aggrieved by the said order, the importer pursued the matter before the Tribunal and was relieved of the penalty. The Tribunal was of the view that if condition No.(ii) was complied with by the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stoms Tariff Act, 1975 (51 of 1975) subject to the following conditions, namely (i) that the materials imported are covered by a Quantity Based Duty Exemption Entitlement Certificate (hereinafter referred to as the said certificate), issued by the Licensing Authority on or after 1st April, 1995 in the form specified in the Schedule annexed to this notification, in respect of the value, quantity, description, quality and technical characteristics. Provided that where quantity, allowed for a particular description of materials cannot be imported within the specified value under the said certificate, the Collector of Customs may allow adjustment of individual value within total value; (ii) that the importer at the time of clearance of the imported materials - (a) omitted (b) executes a bond with such surety or security and in such form and for such sum as may be specified by the Assistant Collector of Customs binding himself to pay on demand, an amount equal to the duty leviable on the imported materials but for the exemption contained therein, in respect of which the conditions specified in the notification have not been complied with together with interest at the rate of 24% pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n terms of quantity and value, the licence holder shall, for the regularisation, pay: (a) to the customs authority, customs duty on the unutilised imported material alongwith interest at the rate of 24% per annum theron; and (b) to the licensing authority, Special Import Licences of a value equivalent to five times the amount of CIF value of the unutilised imported material. However, the provision of this sub-paragraph (b) shall not be applicable if the unutilised imported material was freely importable on the date of its import. (c) to the licensing authority, a Special Import Licences of a value equivalent to three times the CIF value of import on prorata basis. (iv) In cases where the export obligation has been fulfilled in terms of quantity but there is shortfall in terms of value only to the extent of 5%, the licensing authority concerned may consider a request for reduction of the value of export obligation to that extent, for the purpose of regularisation, if there is enough justification supported with documentary evidence from the licensee for non-achievement of prescribed export obligation, provided the value addition achieved does not fall below the minimum value add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is redeemed. Hence, the copy of the legal undertaking is cancelled and retained in this office as part of office records. The advance licence in duplicate is retained with this office. This Certificate be treated as EXPORT OBLIGATION DISCHARGE CERTIFICATE (E.O.D.C.) for the purpose of Customs Authorities." 16. Consequently, the redemption letter of the Foreign Trade Development Officer dated 12.4.2000 makes the value of the licence '0'. The said letter reads as follows: "This REDEMPTION Sheet is attached exclusively to the Licence No:0004012013 Dated: 25.07.1997 by the Import & Export Trade Control Organization, the Custom Authorities and Licencee are requested not to make any endorsement on this Sheet. The total CIF value of the Licence is read as Rs. 0.00/US Dollars 0.00 The total FOB value of the Licence is read as Rs. 0.00/US Dollars 0.00 Export Obligation met in full. BG/LUT Condition imposed in the licence as per para 7.15 of Handbook has been redeemed in terms of para 7.26 of Handbook of Procedures 1997-2002." 17. However, the plea of the Department placing reliance on para 7.29 of the Export and Import Policy appears to be a tenable argument as we find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, it has been held as under: "14. ..... It was urged on behalf of the appellant that expression 'prohibition' in Section 111(d) must be considered as a total prohibition and that expression does not bring within its fold the restrictions imposed by clause (3) of the Imports Control Order, 1955. According to the learned counsel for the appellant clause (3) of that Order deals with the restrictions of import of certain goods. Such a restriction cannot be considered as a prohibition under Section 111(d) of the Act. While elaborating his argument the learned counsel invited our attention to the fact that while Section 111(d) of the Act uses the word 'prohibition'. Section 3 of the Imports and Exports (Control) Act, 1947, takes in not merely prohibition of imports and exports, it also includes 'restrictions or otherwise controlling' all imports and exports. According to him restrictions cannot be considered as prohibition more particularly under the Imports and Exports (Control) Act, 1947, as that statute deals with 'restrictions or otherwise controlling' separately from prohibitions. We are not impressed with this argument. What clause (d) of Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondents is that the goods imported by the appellants, which availed to the said exemption subject to the condition that they would not be sold, loaned, transferred or disposed of in any other manner, had been disposed of by the appellants. The Customs authorities, therefore, clearly had the power to take action under the provisions of Section 111(o). 23. Thus the above-said decisions clearly settles the issue relating to the power of the Customs Authority to take action in terms of para 7.29 of the Export and Import Policy 1997-2002. Hence, the finding of the Tribunal that no penalty is leviable is erroneous. Accordingly, we answer the first substantial question of law in favour of the Revenue and against the assessee. 24. In view of the subsequent event, namely, the documents now produced by the assessee showing that the assessee had discharged the export obligation for the purpose of regularising the bonafide default, the matter requires to be re-considered by the Adjudicating Authority on the issue of confiscation and penalty. Accordingly, we remand the matter back to the Adjudicating Authority. We answer the second substantial question accordingly. 25. In the light of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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