Settlement proceedings under EPCG misuse can waive penalty yet still sustain interest, confiscation and redemption fine.

Settlement proceedings under an export-linked customs import scheme may grant immunity from penalty and prosecution where the applicant makes full disclosure, accepts liability and pays differential duty. Interest can still be imposed where duty was not paid on time and the importer derived financial benefit from breach of scheme conditions; in the text, interest at 15% was directed. Imported luxury vehicles used contrary to the EPCG conditions were treated as liable to confiscation, with redemption fine justified. The customs duty was settled at the admitted amount, with credit for amounts already deposited and adjustment of the balance against interest and other dues.

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Issues: (i) whether immunity from penalty and prosecution should be granted in settlement proceedings; (ii) whether immunity from interest could be granted on the settled customs duty; (iii) whether the imported vehicles were liable to confiscation and redemption fine; and (iv) the manner of settlement of customs duty under the applications.

Issue (i): whether immunity from penalty and prosecution should be granted in settlement proceedings.

Analysis: The applicants made full disclosure, accepted the liability, and paid the differential duty. The Commission distinguished the cited adverse precedent on facts and found no comparable material to deny relief on the penalty aspect. On the record before it, the case justified settlement relief from penal consequences.

Conclusion: Immunity from penalty and prosecution was granted in favour of the applicants.

Issue (ii): whether immunity from interest could be granted on the settled customs duty.

Analysis: The Commission held that the duty had not been paid when due and the applicants had enjoyed financial benefit by misuse of the EPCG arrangement and failure to discharge the export obligation. Relying on judicial authority, it held that interest was payable and that immunity from interest was not warranted.

Conclusion: Immunity from interest was refused and interest at 15% was directed to be paid.

Issue (iii): whether the imported vehicles were liable to confiscation and redemption fine.

Analysis: The Commission found that expensive luxury cars had been imported under the EPCG scheme for personal use in the guise of earning foreign exchange. It held that the goods were liable to confiscation under the Customs Act and that redemption fine was justified in view of the breach of the scheme conditions.

Conclusion: Confiscation was ordered and redemption fine was imposed.

Issue (iv): the manner of settlement of customs duty under the applications.

Analysis: The Commission settled the customs duty at the admitted amount, ordered appropriation of the amount already deposited, and directed adjustment of the balance against interest and other dues as determined in the order.

Conclusion: The customs duty stood settled in the amount determined by the Commission.

Final Conclusion: The settlement granted partial relief by waiving penal and prosecutorial consequences, but it sustained liability for interest and redemption fine while settling the customs duty at the admitted figure.

Ratio Decidendi: In settlement proceedings involving misuse of an export-linked import scheme, immunity may be granted for penalty and prosecution on full disclosure, but interest and redemption fine may still be imposed where duty was not paid on time and the import conditions were breached.

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