TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Join Channel
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether, on failure to fulfil the export obligation under the EPCG scheme, the importer was liable to pay the full customs duty foregone under the exemption notification; (ii) whether interest could be levied on the duty foregone in the absence of any express provision in the notification; (iii) whether Modvat/Cenvat credit could be allowed in respect of the CVD component and whether immunity from penalty and prosecution was warranted.
Issue (i): Whether, on failure to fulfil the export obligation under the EPCG scheme, the importer was liable to pay the full customs duty foregone under the exemption notification.
Analysis: The exemption was availed under the EPCG scheme against a valid licence, subject to execution of the prescribed undertaking and compliance with the export obligation. The notification required the importer, upon non-compliance with the stipulated conditions, to pay the duty leviable but for the exemption. The Commission held that the failure to discharge the export obligation attracted liability for the entire duty foregone, including both basic customs duty and the additional duty component, because the concession itself stood undone on breach of the notification conditions.
Conclusion: The importer was held liable to pay the full duty foregone, and the balance amount remained payable by the assessee.
Issue (ii): Whether interest could be levied on the duty foregone in the absence of any express provision in the notification.
Analysis: The Commission found that Section 47 of the Customs Act, 1962 applies only to interest for delay in payment of duty assessed on the bill of entry and does not authorise interest on duty that was never assessed because exemption was availed. The notification itself contained no clause providing for interest on breach. The Commission also relied on judicial authority to hold that interest on tax or duty can be levied only when there is statutory authority, and that a departmental circular or administrative practice cannot substitute for such authority.
Conclusion: No interest was chargeable on the duty foregone, and the demand for interest was waived.
Issue (iii): Whether Modvat/Cenvat credit could be allowed in respect of the CVD component and whether immunity from penalty and prosecution was warranted.
Analysis: The Commission held that the CVD portion had not been actually paid at the time of import because the exemption had been claimed, and therefore there was no basis to grant equivalent Modvat credit retrospectively. It further held that the then-applicable credit regime did not permit such benefit on the facts of the case. However, taking into account the applicant's disclosure, cooperation, the circumstances causing failure to fulfil export obligation, and the absence of disputed wilful evasion, the Commission considered it appropriate to grant relief from penal consequences.
Conclusion: The claim for Modvat/Cenvat credit was rejected, while immunity from fine, penalty and prosecution was granted.
Final Conclusion: The settlement was concluded by directing payment of the remaining duty in instalments, waiving interest, rejecting the claim for credit on the CVD component, and granting immunity from penalty and prosecution in relation to the settled imports.
Ratio Decidendi: A customs duty exemption breached for non-fulfilment of export-obligation conditions can be withdrawn to the extent of duty foregone, but interest on such foregone duty is recoverable only when expressly authorised by statute or the exemption notification; administrative directions or general recovery provisions cannot create such liability.
TaxTMI 
