2013 (9) TMI 585 - AT - Customs

Customs Act: Tribunal reverses penalties, upholds duty liability.

The Tribunal set aside the confiscation of imported machinery and penalties imposed on the appellant under Section 112 of Customs Act, 1962, while ... 100% EOU - validity of LOP - Confiscation of goods – demand of duty u/s 111(o) – redemption fine u/s 112 r.w. 72 – assesses were directed by the lower authorities to produce extension of the validity of a Letter of Permission from the Development Commissioner in order to install the said machinery - relied upon the judgement of NAVA BHARAT ENTERPRISES LTD. Versus COMMR. OF C. EX., GUNTUR [2009 (12) TMI 396 - CESTAT, BANGALORE] – Held that:- Order confiscating the capital goods and raw materials and imposing redemption fine and penalty on the EOU - the machinery imported by the assesse were liable for confiscation - penalties imposed on the assesse set aside - uphold the confirmation of duty liability and interest thereof, we find that the - Assesse had made out a case for setting aside the confiscation ordered by the adjudicating authority and also for setting aside the penalties imposed u/s112 – Decided partly in favor of assessee. Issues:Challenge against the confiscation and penalties imposed by the adjudicating authority under Section 112 of Customs Act, 1962.Detailed Analysis:1. Background and Facts:The appellant, a 100% EOU, imported capital goods under Notification No.53/97 without paying Customs duty, committing to export obligations. The goods were re-warehoused without being commissioned due to failure in obtaining an extension for installation. A Show Cause Notice was issued demanding duty, interest, and penalties, leading to the appeal against Order-in-Original No.25/BVR/ Commr/2006.2. Appellant's Submission:The appellant acknowledged the duty liability but contested the confiscation and penalties. They tried to secure funds for unit revival but failed. The appellant argued that confiscation and penalties were unwarranted under the self-composing Notification No.53/97, citing relevant case laws to support their stance.3. Department's Response:The Department reiterated the adjudicating authority's findings, supporting the confiscation and penalties imposed.4. Tribunal's Decision:After considering both sides' arguments and case records, the Tribunal noted the appellant's inability to install the imported machinery despite duty foregone. Upholding duty liability, the Tribunal found the confiscation and penalties unjustified, citing a precedent involving a similar issue where confiscation was set aside due to failure in export obligations beyond the appellant's control.5. Precedent and Legal Analysis:The Tribunal referenced previous judgments to support setting aside confiscation and penalties, emphasizing that penalties should be imposed judiciously considering all circumstances. Following the legal principles laid down in relevant cases, the Tribunal ruled in favor of the appellant, setting aside the confiscation and penalties while upholding duty liability and interest.6. Final Verdict:The Tribunal concluded by setting aside the confiscation of imported machinery and penalties imposed on the appellant under Section 112 of the Customs Act, 1962. The impugned order was modified accordingly, disposing of the appeals in favor of the appellant.7. Operative Order:The Tribunal pronounced the operative portion of the order in court, indicating the setting aside of confiscation and penalties while upholding duty liability and interest, ultimately resolving the issues raised in the appeal.This detailed analysis outlines the key aspects of the legal judgment, including the background, arguments presented by both parties, the Tribunal's decision based on legal precedents, and the final verdict in favor of the appellant regarding the challenge against confiscation and penalties imposed by the adjudicating authority.