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Issues: (i) Whether the penalties imposed on the appellants were sustainable on the facts showing diversion of imported goods and participation in the evasion scheme. (ii) Whether the plea of limitation was available where the import was made under an exemption notification subject to continuing conditions and a bond.
Issue (i): Whether the penalties imposed on the appellants were sustainable on the facts showing diversion of imported goods and participation in the evasion scheme.
Analysis: The imported HDPE granules were cleared under an exemption notification subject to conditions that the goods be used for the specified manufacturing purpose and not be diverted or otherwise transferred. The material on record, including the statements recorded under Section 108 of the Customs Act, 1962, established that the goods were diverted to the local market. The evidence also established the respective roles of the Chairman and the Executive Director in the import arrangement, the diversion, and the resultant duty evasion. The statements were not retracted and were treated as admissible corroborative evidence. The grievance regarding cross-examination did not displace the documentary and oral evidence showing contravention.
Conclusion: The penalties on the appellants were rightly sustained.
Issue (ii): Whether the plea of limitation was available where the import was made under an exemption notification subject to continuing conditions and a bond.
Analysis: The exemption was conditional and the imported goods had to satisfy the prescribed end-use and export-linked obligations before the bond could be discharged. Such conditions were treated as continuing obligations, and limitation was held not to run until the conditions were fulfilled and the bond was discharged.
Conclusion: The plea of limitation was not available.
Final Conclusion: The impugned order was sustained and the challenge to the penalties failed.
Ratio Decidendi: Where imported goods are cleared under a conditional exemption subject to continuing end-use obligations, diversion of the goods and unretracted statements under Section 108 of the Customs Act, 1962 can sustain penalty and defeat a limitation plea until the bond is discharged.
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