2003 (1) TMI 494 - Commission - Customs

Settlement Commission Orders Payment of Duty, Penalty, and Interest with Immunity

IN RE: HI-TECH ENGINEERS-II

The Settlement Commission ordered the applicant to pay the balance duty of Rs. 23,83,287/- and imposed a penalty of Rs. 10,00,000. Interest at the rate of ... Settlement of case - Interest - Settlement - Prosecution Issues Involved:1. Duty liability on imported goods.2. Misdeclaration and diversion of imported goods.3. Eligibility for exemption under Section 90 of the Customs Act, 1962.4. Eligibility for exemption under Notification No. 291/84-Cus.5. Imposition of penalty and fine.6. Interest on duty evaded.7. Immunity from prosecution.Detailed Analysis:1. Duty Liability on Imported Goods:The applicant imported goods under three Bills of Entry (B/E) claiming them as ship stores for the Indian Navy, thereby availing duty exemption under Section 90 of the Customs Act, 1962. However, the investigation revealed that the goods were diverted to the local market. The applicant admitted a lesser duty amount of Rs. 9,22,280/- against the assessed duty of Rs. 83,18,742/-. The Settlement Commission ordered the duty liability to be settled at Rs. 83,18,742/-, with Rs. 59,35,455/- already deposited by the applicant to be appropriated towards this liability, leaving a balance of Rs. 23,83,287/- to be paid within 30 days.2. Misdeclaration and Diversion of Imported Goods:The investigation by the Directorate of Revenue Intelligence (DRI) found that the goods were not supplied to the Indian Navy as claimed but were instead sold in the local market. Statements from involved individuals confirmed the evasion of duty by misrepresenting the goods as ship stores. The modus operandi involved importing goods duty-free under Section 90 and then diverting them to the market.3. Eligibility for Exemption under Section 90 of the Customs Act, 1962:Section 90 allows duty-free import of stores for use on board a ship of the Indian Navy. The Commission found that the applicant did not fulfill the conditions for duty-free import under this section, as the goods were not consumed on board an Indian Navy ship but were diverted to the local market.4. Eligibility for Exemption under Notification No. 291/84-Cus:The applicant claimed exemption under Notification No. 291/84-Cus, which exempts certain articles required for construction or fitment to ships of the Coast Guard. The Commission found that the imported goods (Dracone Barges) did not fall under the categories specified in the notification. Additionally, the applicant did not claim this exemption at the time of import, which further invalidated their claim.5. Imposition of Penalty and Fine:The Commission considered the applicant's possible bona fide belief in their entitlement to duty exemption. Consequently, the Commission imposed a penalty of Rs. 10,00,000/- and granted immunity from any further penalty and fine.6. Interest on Duty Evaded:The Commission imposed simple interest at the rate of 10% per annum on the duty evaded from the date of removal of the imported goods from the warehouse until the date of deposit of the duty. The applicant was required to calculate and pay this interest within 30 days, with the Revenue checking the correctness of the calculation.7. Immunity from Prosecution:The Commission granted immunity from prosecution under the Customs Act, 1962, and the Indian Penal Code (IPC), considering the facts and circumstances of the case.Conclusion:The Settlement Commission ordered the applicant to pay the balance duty of Rs. 23,83,287/- and imposed a penalty of Rs. 10,00,000/-. Interest at the rate of 10% per annum was also imposed on the duty evaded. Immunity from prosecution was granted, but the settlement order was subject to being void if obtained by fraud or misrepresentation of facts.