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of <h1>Tribunal Upholds Importers' Liability, Lessors Not Liable</h1> <h3>ICICI BANK LTD. Versus COMMISSIONER OF CUSTOMS, TUTICORIN</h3> The tribunal upheld joint and several liability for duty and penalties against importers M/s. ETKSL and M/s. ORJ, while lessors M/s. SFL and M/s. ICICI ... Stay/Dispensation of pre-deposit - Demand and penalty Issues Involved:1. Misdeclaration of origin and specifications of imported goods.2. Eligibility for duty exemption under specific customs notifications.3. Joint and several liability for duty and penalties.4. Validity of the extended period of limitation under Section 28(1) of the Customs Act.5. Financial hardship claims for waiver of pre-deposit and stay of recovery.6. Definition and identification of the 'importer' under Section 2(26) of the Customs Act.7. Applicability of the bond executed under customs notifications for duty demand.Issue-wise Detailed Analysis:1. Misdeclaration of Origin and Specifications of Imported Goods:The investigation revealed that the capital goods imported by M/s. ETKSL and M/s. ORJ were not of US origin as declared but were manufactured by M/s. ETK International Ferrites Ltd. (ETKIF) in India. The goods did not conform to the specifications permitted by the Development Commissioner. The expert from the Indian Institute of Science, Bangalore confirmed that the equipment was not capable of producing electronic grade iron oxide, supporting the finding of misdeclaration.2. Eligibility for Duty Exemption under Specific Customs Notifications:The appellants claimed duty exemption under Notification No. 94/96-Cus. However, the tribunal found that this exemption was not applicable as the goods were exported by a 100% EOU and subsequently re-imported. The EOU status of ETKIF was withdrawn before the re-import, rendering the exemption inapplicable as per the second proviso to the notification.3. Joint and Several Liability for Duty and Penalties:The Commissioner demanded duty and imposed penalties on M/s. SFL and M/s. ETKSL, and M/s. ICICI Bank and M/s. ORJ 'jointly and severally.' The tribunal upheld the joint and several liability for the importers (M/s. ETKSL and M/s. ORJ) but found that the lessors (M/s. SFL and M/s. ICICI Bank) were not liable as they did not hold themselves out as importers.4. Validity of the Extended Period of Limitation under Section 28(1) of the Customs Act:The tribunal found that the prerequisites for invoking the extended period of limitation under Section 28(1) were established due to the misdeclaration and suppression of facts by the importers. Therefore, the extended period of limitation was validly invoked against M/s. ORJ and M/s. ETKSL.5. Financial Hardship Claims for Waiver of Pre-deposit and Stay of Recovery:M/s. ORJ claimed financial hardship and submitted a balance sheet as of 31-3-2005. The tribunal did not accept this as evidence of the current financial condition and directed M/s. ORJ to pre-deposit Rs. 1 crore to avail of the waiver of pre-deposit and stay of recovery for the balance amount.6. Definition and Identification of the 'Importer' under Section 2(26) of the Customs Act:The tribunal held that the lessors (M/s. SFL and M/s. ICICI Bank) were not the importers under Section 2(26) as they did not hold themselves out to be importers before the customs authorities. The actual importers were M/s. ETKSL and M/s. ORJ, who filed the Bills of Entry and held the IE Code numbers.7. Applicability of the Bond Executed under Customs Notifications for Duty Demand:The demand of duty was based on the bond executed by M/s. ETKSL under clause (6) of Notification No. 53/97-Cus. M/s. SFL did not execute any such bond, and therefore, the demand could not be directed against them. The same reasoning applied to M/s. ICICI Bank concerning M/s. ORJ.Conclusion:The tribunal directed M/s. ORJ to pre-deposit Rs. 1 crore and granted waiver of pre-deposit and stay of recovery for the balance amount. M/s. SFL and M/s. ICICI Bank were granted a waiver of pre-deposit and stay of recovery for the duty and penalty amounts, as they were not considered importers under Section 2(26) of the Customs Act. The operative portion of the order was pronounced in open court on 5-3-2007.
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