Tribunal reduces fine from Rs. 1 crore to Rs. 30 lakhs due to machinery depreciation

The Tribunal upheld the confiscation of goods and duty demand, reducing the fine from Rs. 1 crore to Rs. 30 lakhs due to machinery depreciation. The penalty on the proprietor was upheld, with added interest on duty liability. The appeal succeeded only in fine reduction.

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Issues Involved:
1. Violation of EPCG Scheme and Customs Notification No. 97/2004-Cus conditions.
2. Legitimacy of the declared office address.
3. Non-submission of installation certificate.
4. Usage of imported machinery by a third party.
5. Imposition of penalties and fines.

Detailed Analysis:

1. Violation of EPCG Scheme and Customs Notification No. 97/2004-Cus conditions:
The appellant, M/s. Sushant Tradings, imported machinery under the EPCG scheme but installed and used it in the mines of M/s. KJS Ahluwalia, violating the conditions of Notification No. 97/2004-Cus and the EPCG licence. The machinery was seized under Section 110 of the Customs Act. The investigation revealed that the appellant did not fulfill the 'actual user' condition, as the machinery was not used in their own industrial unit but was rented out to M/s. KJS Ahluwalia. This contravened the requirement that the imported capital goods be installed and used in the importer's factory or premises.

2. Legitimacy of the declared office address:
The appellant declared a Kolkata address for obtaining the EPCG licence, which was actually a residential address of Shri Gautam Das, an assistant to the appellant's consultant. The investigation confirmed that no office of the appellant functioned from this address, indicating fraudulent intent to obtain the EPCG licence.

3. Non-submission of installation certificate:
The appellant failed to submit the installation certificate for one of the imported machines to Customs/DGFT as required under the conditions of the EPCG licence. This non-compliance further violated the conditions of Notification No. 97/2004-Cus.

4. Usage of imported machinery by a third party:
The machinery was rented out to M/s. KJS Ahluwalia for a consideration, and not used by the appellant for their own manufacturing activities. The appellant did not mention any supporting manufacturer in the EPCG licence, violating the 'actual user' condition and the terms of the EPCG scheme.

5. Imposition of penalties and fines:
A show cause notice was issued proposing to seize the imported capital goods, demand differential duty of Rs. 1,52,39,903/- with interest, and impose penalties under Sections 112(a) and 114A of the Customs Act. The adjudicating authority confiscated the machinery under Section 111(o) of the Customs Act, with an option to redeem on payment of a fine of Rs. 1 crore, and imposed a penalty of Rs. 10 lakhs on Shri Bidhyadhar Palei, proprietor of Sushant Trading. The duty demand was confirmed by denying the benefit of Notification No. 97/2004-Cus.

Conclusion:
The appellant's arguments that the machinery was used in the premises indicated in the EPCG licence and that the 'actual user' condition was satisfied were rejected. The Tribunal upheld the confiscation of goods and the duty demand but reduced the fine from Rs. 1 crore to Rs. 30 lakhs, considering the depreciation in the value of the machinery. The penalty on Shri Bidhyadhar Palei was upheld, and the appellant was also liable to pay interest on the duty liability. The appeal was allowed only to the extent of the reduction in fine.

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