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of <h1>Demand for Duty Upheld Due to Export Obligation Failures; Penalties Annulled, Goods Not Subject to Confiscation.</h1> <h3>SUN KNITWEAR PVT. LTD. Versus COMMISSIONER OF CUSTOMS, BANGALORE</h3> SUN KNITWEAR PVT. LTD. Versus COMMISSIONER OF CUSTOMS, BANGALORE - 2007 (207) E.L.T. 85 (Tri. - Bang.) Issues Involved:1. Time-barred Show Cause Notice2. Non-fulfillment of Export Obligation3. Installation of Imported Capital Goods in Different Premises4. Imposition of Penalties and Confiscation of GoodsIssue-wise Detailed Analysis:1. Time-barred Show Cause Notice:The appellants argued that the show cause notice (SCN) was time-barred as it was issued three years and nine months after the first block of export obligation ended on 28-07-2000. They contended that the notification cannot override Section 28 of the Customs Act, which prescribes a limitation period for issuing SCNs. The appellants cited the Supreme Court decision in Pushpam Pharmaceuticals Co. v. CCE to support their argument. However, the Tribunal upheld the adjudicating authority's view that the notification did not prescribe any limitation period, and hence, Section 28 could not be invoked. The importer was obligated to pay the duty without the need for an SCN as per Condition 3 of the notification.2. Non-fulfillment of Export Obligation:The appellants imported capital goods under the EPCG scheme, availing benefits under Notification No. 29/97-Cus. They were required to fulfill an export obligation equivalent to nine times the CIF value of the imported goods within six years. The adjudicating authority found that the appellants had not made any exports by the deadline, violating Condition No. 2 of the notification. Consequently, the appellants were liable to pay the entire duty saved along with interest at 24% per annum. The Tribunal agreed with the adjudicating authority's findings and upheld the demand for duty and interest.3. Installation of Imported Capital Goods in Different Premises:The investigation revealed that the imported capital goods were installed in the premises of M/s. Mangayankarasi Apparels Pvt. Ltd. and M/s. Tamori Textiles Pvt. Ltd., both located in the same premises as the importer. This was a violation of Condition No. 6 of the notification. The appellants contended that the goods were installed at the address mentioned in the import documents and had not been moved. The Tribunal found that since the duty and interest were to be paid, the goods would no longer be covered under the notification, making the issue of their installation in different premises irrelevant.4. Imposition of Penalties and Confiscation of Goods:The adjudicating authority had proposed penalties under Section 112(a) and (b) of the Customs Act for the illegal installation of goods and non-fulfillment of export obligations. However, the Tribunal held that once the duty and interest were paid, the goods would not be liable for confiscation under Section 111(o) of the Customs Act. Consequently, the penalties imposed could not be sustained. The Tribunal cited its decision in Steel Authority of India v. CCE, which held that goods not liable for confiscation could not attract penalties.Conclusion:The Tribunal upheld the demand for duty and interest but set aside the penalties and confiscation orders. The appellants were directed to pay the interest liability forthwith, failing which the Revenue could initiate further proceedings. The appeal was disposed of in these terms.
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