Appeals Granted, Confiscation Overturned, Appellants Acknowledged, Consequential Benefits Awarded

The Tribunal allowed the appeals on 21.01.2022, overturning the confiscation, fine, and penalties imposed on the appellants. The Tribunal found no malafide intent on the part of the appellants and acknowledged the confusion in the trade regarding the issue. The appellants were granted consequential benefits as per the law.

---

---

Issues Involved:
Whether fine and penalty under Section 112(a)/114AA on the appellant-assessee and its Partner have been rightly imposed.

Analysis:
The case involved the appellant, engaged in the manufacture of textile made-ups and fabrics, who imported capital goods under Zero duty EPCG Authorisation but also applied for SHIS script in the same financial year, violating Foreign Trade Policy conditions. The Revenue alleged that the appellant wrongly utilized benefits under both schemes. The appellant, upon realizing the mistake, repaid the duty saved along with interest. The show cause notice was issued after two years, proposing customs duty demand, appropriation of deposited amount, confiscation of imported machine, and imposition of penalties on the appellant and its Partner. The order-in-original confirmed the proposed demand, penalties, and confiscation. The Commissioner (Appeals) upheld the order, leading the appellant to file an appeal before the Tribunal.

The appellant argued that there was no malafide intent, presenting a timeline of events to show the sequence of actions taken. The appellant applied for SHIS script before the zero duty EPCG authorization, and upon understanding the error, immediately repaid the benefit of one scheme with interest. The appellant highlighted a Public Notice allowing flexibility in cases of incorrectly issued simultaneous benefits, stating that no penal action could be taken for bonafide errors. The Authorized Representative, however, contended that there was malafide on the appellant's part.

After considering the contentions, the Tribunal found no malafide on the appellant's part and noted the confusion faced by the trade due to different interpretations. Citing the Government's appreciation of contributory mistakes by the assessee, the Tribunal allowed the appeals, setting aside the confiscation, fine, and penalties imposed. The appellants were entitled to consequential benefits as per the law.

In conclusion, the Tribunal allowed the appeals on 21.01.2022, overturning the confiscation, fine, and penalties imposed on the appellants, considering the absence of malafide intent and the confusion prevailing in the trade regarding the issue.

---