Interim stay on penalty recovery granted where no prohibition order existed under foreign trade law for the alleged export violation.

At the interim stage, penalty recovery was stayed because the alleged export violation under the Foreign Trade (Development and Regulation) Act, 1992 had not been prima facie established. The notice assumed that contravention of Section 3(3) triggered confiscation under Section 113(d) of the Customs Act through Section 11 of the Foreign Trade Act, but the record indicated that no prohibition order under Section 3(2) had been issued for the goods. On that basis, the Tribunal waived deposit of the penalty and stayed its recovery.

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Issues: Whether, at the interim stage, the deposit of the penalty and recovery thereof should be stayed where the alleged export violation depended on the existence of a prohibition order under the Foreign Trade (Development and Regulation) Act, 1992.

Analysis: The show cause notice proceeded on the footing that contravention of Section 3(3) of the Foreign Trade (Development and Regulation) Act, 1992 attracted confiscation under Section 113(d) of the Customs Act, 1962 by virtue of Section 11 of that Act. The material placed before the Tribunal indicated that no order under Section 3(2) had been issued in respect of the goods, and the departmental representative did not dispute that position. On that prima facie basis, the alleged illegality in export was not established for the purpose of interim relief.

Outcome: Deposit of the penalty was waived and recovery of the penalty was stayed.

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