EPCG licence breach penalty not sustained after duty and interest payment; redemption fine reduced for lack of stated basis.

Penalty under an EPCG licence breach was held not sustainable where the importer had already paid the duty and interest; on that basis, the penalty was set aside. The redemption fine was also found excessive because no basis had been stated for fixing it, and it was reduced accordingly. The document records partial relief to the assessee on both the penalty and fine issues.

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Issues: (i) whether penalty was imposable for breach of EPCG licence conditions when duty and interest had been paid, and (ii) whether the redemption fine required reduction.

Issue (i): whether penalty was imposable for breach of EPCG licence conditions when duty and interest had been paid.

Analysis: The coordinate Bench decision relied upon by the appellant was accepted. On that basis, the payment of duty and interest by the importer under the EPCG scheme was treated as sufficient to negate imposition of penalty in the circumstances of the case.

Conclusion: Penalty was not imposable and the penalty amount was set aside in favour of the assessee.

Issue (ii): whether the redemption fine required reduction.

Analysis: The basis for fixing the redemption fine was not indicated. In the absence of a stated basis, the fine was considered excessive and liable to be reduced.

Conclusion: The redemption fine was reduced in favour of the assessee.

Final Conclusion: The appeal succeeded on the penalty issue and also secured reduction of the redemption fine, resulting in partial relief to the appellant.

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