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2019 (8) TMI 336

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..... 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 .....

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..... able 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 provisional assessment till receipt of the compliance report of installation prescribed in the Regulations notified for the pu .....

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..... (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 scheme did provide for furnishing of an undertaking on the part of the importer/licensee to commit themselves to payment of interest in additio .....

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..... 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 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 .....

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..... 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 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 of the goods are concerned, it h .....

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..... unt 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, harbouring, keeping, concealing, selling or purchasing o .....

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..... 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 applicability of prior decision is highlighted before it. Even if the representatives of the assessee was derelict in doing so, the other side cannot be excused from its responsibility to bring settled law to the attention of the Tribunal. Failure to go along with judicial precedent is not attributable to the Tribunal in such cases but to failure of the representative o .....

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