2014 (11) TMI 816 - AT - Customs

Customs duty appeal victory: License conditions, retrospective amendment, and duty recovery decision overturned.

The appellant successfully appealed against a customs duty demand, redemption of goods, and penalty under the Customs Act. The High Court ruled in favor ... Confiscation of goods - Redemption fine and penalty - Violation of condition 5 of the Notification 29/97 - Held that:- As in this case the appellant has opted to shift from zero duty EPCG licence to 10% duty EPCG licence, the same has been accepted by the DGFT and the amendment of the licence has been made retrospective. Therefore, the customs authorities have no authority to demand duty in violation of the condition 5 of the Notification 29/97 from the appellant - Decided in favour of assessee. Issues: Customs duty demand, redemption of goods, penalty under Customs Act, EPCG licence violation, retrospective amendment of licence, authority of licensing and customs authorities, High Court decision impact.Customs Duty Demand:The appellant appealed against an order demanding customs duty of Rs. 1,30,10,568 along with interest, where goods were liable for confiscation, allowed redemption on payment of Redemption Fine, and penalty under Section 112A of the Customs Act, 1962 was imposed.EPCG Licence Violation:The appellant, engaged in yarn manufacture and sale, had a zero duty EPCG licence with an obligation to import capital goods worth Rs. 20 crores. Failure to meet this obligation led to show cause notices for confiscation and duty recovery. The appellant applied for conversion to a 10% duty EPCG licence to avoid violation, which was approved by the EPCG Committee.Retrospective Amendment of Licence:The Larger Bench of CESTAT held that licensing authorities cannot retrospectively amend licences, and customs authorities cannot challenge such amendments. The matter was remanded to consider duty quantum. The High Court observed that if licence conditions are fulfilled, customs authorities cannot take action against the licensee, setting aside the duty recovery decision.Authority of Licensing and Customs Authorities:The appellant successfully shifted from a zero duty to a 10% duty EPCG licence, with retrospective amendment by the DGFT. This shift prevented customs authorities from demanding duty for alleged violation of Notification 29/97, as per the High Court decision.High Court Decision Impact:The High Court's ruling favored the appellant, setting aside the duty recovery decision based on the alleged violation of licence conditions. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.In conclusion, the Tribunal set aside the impugned order and allowed the appeal, emphasizing that the retrospective amendment of the licence prevented customs authorities from demanding duty for the alleged violation, in line with the High Court's decision.