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2019 (8) TMI 336

..... Customs Tariff Act, 1975 or otherwise - HELD THAT:- 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 event of failure to fulfil the obligation - 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. Confiscation of goods - HELD THAT:- 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 scope for invoking section 111(o) of Customs Act, 1962 to confiscate the imported goods. Section 111(o) of Customs Act, 1962 empower .....

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..... luded while the assessments, claimed to be provisional, was yet pending for finalisation for which the decision of the Hon'ble Supreme Court, in Commissioner of Central Excise & Customs, Mumbai v. ITC Ltd [2006 (203) ELT 532 (SC)], holding that 21. Concededly, in terms of the provisions of the Act and the Rules framed thereunder, the amount becomes payable only in the event, the assessee does not deposit the amount levied within a period of ten days from the date of completion of the order of assessment. A provisional assessment is made in terms of Rule 9B inter alia at the instance of the assessee. Such a recourse is resorted to only when the conditions laid down therein are satisfied, viz., where the assessee is found to be unable to produce any 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 .....

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..... ced reliance on the decision of Tribunal in Sanghi Industries Ltd v. Commissioner of Customs (Export Promotion), Mumbai [2012 (277) ELT 365 (Tri- Mumbai)] and that of the Hon'ble High Court of Bombay in Commissioner of Central Excise, Aurangabad v. Padmashri V V Patil SSK Ltd [2007 (215) ELT 23 (Bom)]. It was also pointed out by Learned Authorised Representative that the Tribunal, in Parasrampuria Synthetics Ltd v. Commissioner of Customs, Jaipur [2004 (173) ELT 164 (Tri-Del)], had held that incorporation of the provision for charging of interest when proceedings for failure to discharge export obligation had been initiated would suffice even in relation to imports effected earlier. Furthermore, it 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, neverthe .....

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..... rtaking and what is contained in the notification. The undertaking provides for recovery of proportionate duty, that is the duty other than the full amount of Customs duty saved . The meaning of the words occurring in the undertaking will only be that the duty is payable in case the export obligations is not completed has to be in proportion to the extent of shortfall in that export obligation. The notification, however, is clear that it is the entire duty that is to be paid. It requires the importer to pay duty leviable on such capital goods but for the exemption contained therein. That duty is obviously is the entire duty that has been exempted. As we have noted, there 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 .....

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..... the relevant time, Export Promotion Capital Goods Scheme was governed by Chapter VI of the Export Import Policy 1992-97. The capital goods in the instant case have been imported under the said provision. Vide Para 45 of the Exim Policy 1992-97, the importer was required to execute with the licensing authority a legal undertaking supported by a bank guarantee wherever necessary for the fulfilment of the export obligation as per the details specified in the Handbook of Procedures. As per the para 102 of the said Handbook of Procedures, the requirements were as under : 102. Execution of Bank Guarantee and Legal Undertaking : (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 sa .....

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..... which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer. In such an eventuality, the goods imported shall be liable to confiscation. In the instant case the goods were imported availing a concessional rate of duty on the condition that the goods will be put to use for manufacture and export of certain products up to certain value within a specified period. When the importer failed to fulfil the condition by not exporting the goods of required value within the stipulated 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 .....

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..... 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 scope for invoking section 111(o) of Customs Act, 1962 to confiscate the imported goods. Furthermore, in re Sanghi Industries Ltd, it was the deliberate defiance, noted by the Tribunal thus 6.9 We further note that 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 .....

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