2008 (9) TMI 264 - AT - Customs

Tribunal allows clearance of imported goods under expired licenses, sets aside penalty, upholds duty payment

The Tribunal allowed clearance of goods imported under EPCG licenses despite expired permissions, considering residual life and foreign exchange use. ... Import of second hand looms under “EPCG Scheme” - goods imported in 1996 and warehoused – appellant changed their mind on clearing the warehoused goods under EPCG licences and applied to the DGFT for treating the goods as goods imported under “100% EOU Scheme” – permission was granted and EPCG licences were cancelled – since appellant not acted with any sense of urgency by filing the B/E for clearance of goods, appellant is not entitled to clear goods under either any of the Scheme - However, taking into account that the goods still have some residuary life left, and goods have been imported using precious foreign exchange, goods are permitted to be cleared - confiscation is not justified Issues:Appeal against Commissioner's order dated 18-3-2005 in de novo proceedings following Tribunal's order dated 3-12-2003.Analysis:The appellant had obtained EPCG licenses for importing second-hand looms at a concessional duty rate of 10%. They later sought to convert the import under EPCG Scheme to the 100% EOU Scheme, which grants full exemption from customs duty. However, the warehousing period for the imported goods expired before this conversion was finalized, leading to a show cause notice for non-clearance of goods under EPCG conditions. The Tribunal's order directed a reevaluation considering the Board's Circular on warehousing periods. The Commissioner's subsequent order confiscated the goods but allowed redemption on payment of a fine.The appellant argued that the show cause notice post-conversion approval was improper, and the delayed decline of the warehousing extension affected their EOU operationalization. They contested the confiscation under Section 111(j) of the Customs Act, stating it was unwarranted given the circumstances and the favorable interpretation of the Board's Circular. They sought the release of the goods.The Department contended that warehousing is subject to Customs Act provisions, and goods unclaimed after the warehousing period are deemed cleared with duty payable. They justified the confiscation in this case.The Tribunal noted the delay in clearing the goods imported in 1996, emphasizing the lack of urgency despite permission for conversion to EOU Scheme. While ruling out clearance under EPCG or EOU Schemes due to expired permissions, they allowed clearance considering the residual life of the machines and the goods' import using foreign exchange. Confiscation under Section 111(j) was deemed inappropriate, and the redemption fine was set aside.The Tribunal upheld the duty payment, interest, and other charges, citing Section 72(1)(b) for duty payment at the warehousing period's expiry date. Penalties were deemed unnecessary in this case. The appellant was directed to clear the goods within three months, with the appeal disposed of accordingly.