Confiscation and penalty on EOU imports were unjustified where duty and interest were later paid and no mala fides were shown.

Imported capital goods for use in a 100% EOU were cleared under Notification No. 52/2003-Cus., and when the exemption was later denied the duty and interest were paid. The Tribunal found no material showing mala fides or contravention warranting confiscation, redemption fine, or penalty, especially because customs had permitted clearance at the time of import. It also followed an earlier identical ruling rejecting the Revenue's challenge. Confiscation, redemption fine, and penalty were therefore held unjustified, and the Revenue's appeals failed.

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Issues: Whether confiscation of imported capital goods, redemption fine, and penalty were warranted when the import was made under an exemption notification and the duty with interest was subsequently paid.

Analysis: The respondents imported capital goods for use in a 100% EOU claiming benefit of Notification No. 52/2003-Cus. dated 31/03/2003. The goods were cleared under that claim. When the Revenue later denied the exemption and raised demands, the respondents discharged the duty liability along with interest. The Tribunal held that there was no material to establish mala fides or contravention justifying confiscation or penal consequences, particularly when the customs authorities had permitted clearance at the time of import. Reliance was also placed on an earlier identical decision rejecting the Revenue's appeal.

Conclusion: Confiscation, redemption fine, and penalty were not justified, and the Revenue's appeals failed.

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