2012 (11) TMI 443 - AT - Customs

Tribunal remands case for duty re-computation, imposes interest and penalties, grants fair chance for appeal

The Tribunal remanded the case back to the adjudicating authority for re-computation of duty demand, considering eligibility for depreciation and the date ... Import of goods – non-fulfillment of condition - Confiscation – held that:- Therefore, the relevant date for determination of the rate of duty and Customs valuation in respect of imported capital goods would be the rate prevailing on the date of deemed removal, which is 31-3-2001 in the instant case. Coming to the issue of depreciation, inasmuch as the appellants have put to use the capital goods at least for part of the period, they are eligible for depreciation and, accordingly, the Customs duty is liable to be demanded on the imported capital goods on the depreciated value as provided for in Board's Circular No. 14/2004 dated 13-2-2004 and at the rate prevailing on 31-3-2001. Duty on Depreciated value of raw material - held that:- In the case of indigenously procured capital goods and raw materials lying unutilized, there are no specific provisions for grant of depreciation or relevant date for their demand and, therefore, the excise duty foregone at the time of procurement of these goods are liable to be paid by the appellants and we hold accordingly. Interest - held that:- A combined reading of the provisions make it clear that the place where the goods are deposited should be a warehouse at the time of deposit of the goods. On the date of removal, it is not necessary that the place where the goods have been deposited remains a warehouse. Therefore, reading the provisions of Section 61 with Section 2(44) of the Customs Act, the goods are liable to interest on the delayed payment of duty. Penalty - Held that:- Appellant imported the goods subject to the condition that he would fulfil the export obligation which obligation he failed to fulfill - goods became liable to confiscation under Section 111(o). Since the goods are liable to confiscation under Section 111(o), penalty under Section 112(a) is attracted. In this case, penalty has been imposed under Section 112(a) and there is no illegality or infirmity in imposing penalty apart from demanding differential duty Redemption fine – Held that:- When the goods are liable to confiscation, the adjudicating authority has the power to allow the redemption of the goods on payment of fine in lieu of confiscation under Section 125 of the Customs Act - goods were allowed to be cleared by the appellants at the time of importation under a bond executed by the appellant. The clearance of the goods was thus provisional - when the assessment is finalized subsequently, even if the goods are not available for confiscation, redemption fine in lieu of confiscation can be imposed - imposition of redemption fine in the instant case permissible under the law Matter remanded back to the adjudicating authority for re-computation of the duty demand Interest - appellant is also liable to interest on the said duty demand under the provisions of Section 61(2) and in terms of the bond executed by them Fine and penalty, on account of non-fulfilment of export obligation would automatically follow but their quantum again will depend on amount of duty demand - appeals are allowed by way of remand Issues Involved:1. Impleading the Official Liquidator as a party.2. Determination of duty liability and date of de-bonding.3. Eligibility for depreciation on capital goods.4. Liability for interest on duty.5. Confiscation of goods and imposition of penalties.Detailed Analysis:1. Impleading the Official Liquidator as a Party:The miscellaneous application seeking to implead the Official Liquidator as a party in the appeal was dismissed as infructuous since the appellant had received back the company from the Official Liquidator.2. Determination of Duty Liability and Date of De-bonding:The appellant, a 100% Export Oriented Unit (EOU), did not fulfill the export obligation as stipulated in their Letter of Permission (LOP). The duty liability on imported goods was contested, with the appellant arguing that the date of de-bonding should be 31-3-2001, the date when the LOP and warehouse license lapsed. The Tribunal agreed, citing the Apex Court judgment in the Kesoram Rayon case, determining that the relevant date for duty and customs valuation would be 31-3-2001.3. Eligibility for Depreciation on Capital Goods:The Tribunal held that since the appellant had used the capital goods, they were eligible for depreciation as per Board's Circular No. 14/2004 dated 13-2-2004. Customs duty should be demanded on the depreciated value of the capital goods as of 31-3-2001.4. Liability for Interest on Duty:The appellant argued against the imposition of interest, contending that once the goods were deemed removed on 31-3-2001, they ceased to be warehoused goods, and thus Section 61(2) of the Customs Act would not apply. The Tribunal, however, held that interest liability would accrue as per the bond executed under Section 59 and the provisions of Section 61, supported by precedents from the Tribunal and the Hon'ble High Court of Delhi. The Tribunal concluded that the appellant was liable to pay interest on the defaulted duty payment.5. Confiscation of Goods and Imposition of Penalties:The appellant contended that the goods were not liable for confiscation under Section 111(o) of the Customs Act as they had the option to pay duty upon failing to fulfill export obligations. The Tribunal rejected this argument, explaining that duty demand and confiscation are distinct issues. The goods were liable to confiscation for violating import conditions, and penalties were justified under Section 112 of the Customs Act. The Tribunal upheld the imposition of redemption fine and penalties, noting that even if the goods were not available for confiscation, redemption fine could still be imposed.Conclusion:The Tribunal remanded the matter back to the adjudicating authority for re-computation of the duty demand, considering the eligibility for depreciation and the date of deemed removal. The appellant was also held liable for interest on the duty demand and penalties for non-fulfillment of export obligations. The adjudicating authority was directed to provide the appellant a reasonable opportunity to present their case. The appeals were allowed by way of remand.