2001 (10) TMI 634 - Commission - Customs

Unauthorized Operation of Licenses and Duty Settlement under Customs Act

The Commission found that M/s. Vishal Exports Overseas Ltd. engaged in unauthorized operation of Advance Licences and abuse of concessions under the DEEC ... Settlement Commission - Duty liability - Immunity from fine and penalty Issues Involved:1. Unauthorized operation of Advance Licences.2. Abuse of the concessions and exemptions under the DEEC Scheme.3. Conditions of Notification No. 149/95-Cus., as amended by Notification No. 71/96-Cus.4. Settlement of duty liability under Section 127B of the Customs Act, 1962.5. Payment of admitted duty liability.6. Adjustment of deposits made during investigation.7. Immunity from prosecution, fine, and penalty.Issue-wise Detailed Analysis:1. Unauthorized Operation of Advance Licences:The applicant, M/s. Vishal Exports Overseas Ltd., was involved in importing duty-free polymers under Advance Licences issued for the export of fish and fish products. Investigations revealed that the applicant did not use these materials for the intended purpose but sold them in the local market. The applicant fabricated documents to cover up this fact and created a fictitious agent, M/s. Alpha Impex Services, to show compliance with the conditions of the Advance Licences.2. Abuse of Concessions and Exemptions under the DEEC Scheme:The applicant was found to have abused the duty exemptions provided under the DEEC Scheme. The investigation showed that the applicant did not fulfill the export obligations and instead diverted the imported materials for local sale. The applicant's actions were in violation of Notification No. 149/95-Cus., which provided for duty-free imports exclusively for use in fulfilling export obligations.3. Conditions of Notification No. 149/95-Cus., as Amended by Notification No. 71/96-Cus:The applicant amended the licences to include supporting manufacturers and imported polymers duty-free. However, the supporting manufacturers did not receive the exempt materials, nor were they equipped to process them. The applicant fabricated transport receipts and job work invoices to show compliance with the notification's conditions. The investigation revealed that the applicant's actions were contrary to the provisions of the notification.4. Settlement of Duty Liability under Section 127B of the Customs Act, 1962:The applicant filed an application under Section 127B for the settlement of the case, admitting a duty liability of Rs. 45,28,000/-. The Settlement Commission allowed the application to be proceeded with under Section 127C, directing the applicant to deposit the admitted amount within 30 days.5. Payment of Admitted Duty Liability:The applicant faced financial hardship and requested an installment facility to pay the balance admitted duty. The Commission allowed the applicant to pay the balance amount in monthly installments of Rs. 5 lakhs each. The applicant also sought the adjustment of the Rs. 58,31,000/- deposited during the investigation against the admitted duty liability.6. Adjustment of Deposits Made During Investigation:The Commission clarified that the adjustment of the deposit would be considered at the final hearing. The applicant had deposited Rs. 58,31,000/- during the investigation and paid Rs. 10 lakhs after the interim order. The Commission directed the applicant to fulfill the condition of payment of the admitted liability within the stipulated time.7. Immunity from Prosecution, Fine, and Penalty:The applicant sought immunity from prosecution, fine, and penalty. The Commission granted immunity from fine and penalty under the Customs Act, 1962, and the Indian Penal Code. The Commission also granted partial waiver of interest, directing the applicant to pay interest at 10% per annum instead of 24% as provided in the notification.Findings/Conclusions:The Commission found that the applicant had made a true and full disclosure of the duty liability and cooperated with the proceedings. The applicant admitted the full duty liability of Rs. 1,95,51,480/- and agreed to pay the balance amount in installments. The Commission ordered the applicant to pay the balance admitted duty of Rs. 91,92,480/- in six equal monthly installments and granted partial waiver of interest. The applicant was also given immunity from prosecution, fine, and penalty.Corrigendum:The applicant paid the entire duty and interest as directed by the Commission. The Commission confirmed the payment and revised the terms of settlement, stating that no further amount was required to be paid towards duty or interest. The orders regarding fine, penalty, and prosecution remained unchanged.