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Issues: (i) Whether the demand of customs duty with interest for non-fulfillment of export obligation under the EPCG scheme is sustainable; (ii) Whether confiscation of imported capital goods, imposition of redemption fine and penalty for non-fulfillment of export obligation are sustainable.
Issue (i): Whether the demand of customs duty with interest for non-fulfillment of export obligation under the EPCG scheme is sustainable.
Analysis: The Appellant imported capital goods under Notification No. 102/2009-Cus dated 11.09.2009 claiming EPCG benefits and did not comply with condition at Sl.no.2(8) of the said Notification. The Appellant admitted non-fulfillment and paid the differential duty; interest under Section 28AA of the Customs Act, 1962 was claimed by Revenue and remains unpaid. The Tribunal recognises that non-fulfillment arose from factors beyond the Appellant's control and there is no allegation of fraudulent activity.
Conclusion: The demand of customs duty with interest is upheld and remains payable; Revenue is entitled to recover interest in accordance with law.
Issue (ii): Whether confiscation of imported capital goods, imposition of redemption fine and penalty for non-fulfillment of export obligation are sustainable.
Analysis: Prior Tribunal precedents establish that once the differential duty is paid and the importer exits the EPCG scheme, confiscation, redemption fine and penalty are not sustainable in the absence of evasion or fraud. The Appellant established non-fulfillment due to circumstances beyond their control and there is no finding of fraudulent conduct affecting Customs revenue.
Conclusion: Confiscation of goods, imposition of redemption fine and penalty are set aside.
Final Conclusion: The appeal is partially allowed by confirming the demand of duty with interest while setting aside confiscation, redemption fine and penalty, leaving recovery of interest to proceed as per law.
Ratio Decidendi: Where non-fulfilment of export obligation under the EPCG scheme occurs without fraud or duty evasion and the differential duty is paid, confiscation, redemption fine and penalty are not sustainable, although duty and interest remain recoverable.
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