2007 (8) TMI 222 - AT - Customs

Tribunal upholds duty demand under Customs Act, sets aside redemption fine and penalty

ROYAL EMBROIDERIES PVT. LTD. Versus COMMISSIONER OF CUSTOMS, CHENNAI

The Tribunal upheld the duty demand under Section 28 of the Customs Act, 1962, on the appellant for non-utilization of imported goods for export, despite ... Import under Advance License in terms of Not. 30/97 not exported – Violation of condition of Not. 30/97 – Demand sustainable – Duty dues recovered through Bank guarantee & held that differential duty is payable by importer – Fine & penalty not imposable for non-fulfillment of post-import condition. Issues:1. Duty demand under Section 28 of the Customs Act, 1962.2. Imposition of redemption fine and penalty.3. Fulfillment of conditions of Notification 30/97-Cus under Advance Licensing Scheme.4. Liability to pay duty for non-utilization of imported goods for export.Analysis:1. The appellants imported Silk under the Advance Licensing Scheme with an obligation to fulfill export requirements. The Customs authorities invoked Section 28 of the Customs Act, 1962, to demand duty due to non-utilization of a part of the imported silk for export. The appellant argued that the demand was time-barred without suppression of facts. However, the Tribunal held that the duty demand was valid as the appellant failed to fulfill the conditions of the Notification, leading to the duty adjustment through the bank guarantee.2. The lower authority imposed redemption fine and penalty on the appellant, claiming the goods were liable for confiscation under Section 111(d) and (o). The appellant contested this imposition, stating that once duty was adjusted via the bank guarantee, there was no non-fulfillment of Notification conditions. The Tribunal agreed, citing that once duty was recovered, there was no basis for further penalties. The appellant was held liable to pay the differential amount, confirming duty payment but setting aside the fine and penalty.3. The Tribunal emphasized the obligation on the appellant to use the imported goods solely for manufacturing products meant for export, as per the conditions of Notification 30/97-Cus. The appellant's failure to fulfill this condition led to the duty demand, despite the bank guarantee adjustment. The Tribunal maintained that the appellant was liable to pay duty for the non-utilized silk, rejecting the argument of time-bar due to incorrect invocation of rules or sections.4. The Tribunal referenced case laws to support its decision that once duty was paid at the normal rate, there was no basis for imposing fines and penalties for non-fulfillment of post-import conditions. The Tribunal confirmed duty payment, set aside the fine and penalty, and directed the appellant to pay interest until the bank guarantee encashment date. The appeals were disposed of accordingly, confirming duty payment and rejecting the fine and penalty imposition.