TaxTMI 
TaxTMI 
2021 (2) TMI 842
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.... appellants for the period 17.03.1994 to 04.10.1995 for demanding duty during the said period? (iii) Whether the imposition of penalty under Section 112 against the appellants is sustainable when Tribunal has not got any power to impose penalty under Section 112 of Customs Act for the first time, when there was no proposal in the show cause notice, nor the adjudicating authority has imposed such penalty under Section 112? 3. Heard Mr.T.Ramesh, learned counsel appearing for the appellant and M/s.R.Hemalatha, learned Standing Counsel appearing for the respondents. 4. The 1st Appellant is engaged in Manufacture and Export of Silk Sarees and the 2nd and third Appellants are the sister concerns of the first Appellant. The fourth appellant is the Managing Partner of the first appellant and he is a partner of the second and third appellants and he takes care of the import and utilization of the goods. The first Appellant has obtained eight advance licenses from the Joint Director General of Foreign Trade (JDGFT), Bangalore for the import of Mulberry Raw Silk without payment of customs duty with an obligation to export finished goods like Silk Sarees. The said condition form....
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....), South Zonal Bench, Bangalore. The Tribunal observed that the earlier order was passed exparte and hence one more opportunity should be given to the Appellant. By so observing, the matter was remanded to the Adjudicating Authority for de-novo consideration. After affording an opportunity to the appellants, the Adjudicating Authority passed a fresh order in O-I-O No.5988 /2007 dated 14.03.2007. The effect of the above order of the Adjudicating Authority is as under :- (i) The demand of duty for Rs. 83,00,745/- on the first appellant under Section 28(1) of the Customs Act 1962 was confirmed. (ii) The demand of interest as applicable at appropriate rate on the amount of duty evaded from the date of import. (iii) A fine of Rs. 20,00,000/- was imposed in lieu of confiscation under Section 125 of the Customs Act 1962. (iv) A penalty of Rs. 83,00,745/- equal to the amount of duty was imposed on the first appellant under Section 114A of the Customs Act. (v) A penalty of Rs. 10,00,000/- was imposed on the fourth appellant under Section 112(a)(ii) of the Customs Act. (vi) A penalty of Rs. 5,00,000/- was imposed on the second and third a....
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....tracted to the facts of the present case. 10. The First Appellant being an entrepreneur involved in export business he was given with the benefit of importing Mulberry Raw Silk duty free as per the Customs notification No.203/92-Cus dated 19.05.1992 and Exemption Notification No.204/92-Cus, dated 19.05.1992. The First Appellant has got a valid license to enjoy the above said benefit under Duty Exemption Entitlement Certificate (DEEC) which has certain conditions. As per the said conditions, the exemption of customs duty can be enjoyed only if the First Appellant exports finished goods of Raw Silk sarees of a prescribed Foreign Exchange value. 11. The First Appellant did not deny the fact that he did not comply the export condition. Instead of utilizing the imported raw materials for the purpose of manufacturing and exporting finished goods of silk sarees, he sold them in the local market through the Second and Third Appellants. If the post import obligation is not fufilled the statutory consequences will follow automatically . But the contention of the Appellants before this Court by raising the first question of law is that they did not suppress any material facts and hen....
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....L.T. 311 (S.C.) ................ 21. For the reasons stated above, we agree the conclusion in Lady Amphthil (Supra) that the duty can be recovered by the Department when the post importation conditions of an exemption notification are not fulfilled. We however do not agree with the observation in Lady Amphthil (supra)that the period of limitation in such cases will commence from the date of issue of notice. Since the time limit prescribed under section 28 has been held to be not applicable in such cases, and since there is no other time -limit prescribed under the Customs law to cover such cases, we are of the view that the notice of demand will not be subject to any limitation of time in cases of non-fulfillment of post importation conditions casting a continuous obligation as noted by us in paragraph 12 above. 22. Accordingly we answer the reference as follows:- (i) When a post-importation condition in an exemption notification is not fulfilled, the Department has the power to recover the escaped duty in terms of Section 12 of the Customs Act, 1962. Paragraph 12of the Apex Court decision in Mediwell (Supra) also provides an authority for recove....
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....to 5 years. 19. Even if the point on suppression of fact is analysed for the sake of completion, the records would show that the First Appellant had sold the Mulberry Raw Silk imported on Exemption Certificate, in the local market through the second and third appellants. After Inspection the First Appellant remitted Rs. 17,00,000/- under challan dated 03.02.1999 and 17.02.1999 towards the appropriation of the duty liability. Knowing fully well about the export obligations on Exemption Certificate and having violated it , the First Appellant had sold them in the local market through the Appellants 2 and 3. The mere delay on the part of the Authorities to detect the violation of export obligation and issue show cause can not be construed as a permissive violation. The Suppression of Facts and materials is very much visible from the conduct and the pattern in which the Appellants caused the disappearance of the raw materials. 20. Had the Tribunal rightly interpreted the the dictum laid down in Bombay Hospital Trust case on the point of limitation for cases falling under post import obligations, it would not have occasioned the Appellants to make a claim on the point of lim....
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....her the undertakings given by the applicants are being duly complied with after getting the benefit of the exemption notification and importing the equipment without payment of customs duty and if on such enquiry the authorities are satisfied that the continuing obligation are not being carried out then it would be fully open to the authority to ask the person who have availed of the benefit of exemption to pay the duty payable in respect of the equipments which have been imported without payment of customs duty. Needless to mention that the Government has granted exemption from payment of customs duty with the sole object that 40% of all outdoor patients and entire indoor patients of the low income group whose income is less than Rs. 500/- p.m. would be able to receive free treatment in the Institute. That objective must be achieved at any cost, and the very authority who have granted such certificate of exemption would ensure that the obligation imposed on the persons availing of the exemption notification are being duly carried out and on being satisfied that the said obligations have not been discharged they can enforce realization of the customs duty from them." The A....
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....ion notification and Lady Amphthil (supra) has correctly concluded that the Customs authorities have jurisdiction for demanding of duty for violation of post-importation conditions by placing a reliance on the decision of the Apex Court in Sheshank Sea Foods Pvt. Ltd. v. UOI - MANU/SC/1806/1996. 23. The First Appellant imported the Mulberry Raw Silk on Exemption Certificate under DEEC Scheme, since the exemption of customs duty given vide the notification Nos. 203/1992 and 204/1992. The post import condition as prescribed in the above documents was not complied by the first appellant. During the inspection also the unused raw materials were not found to be available for confiscation. If the post import conditions of Exemption Certificate are not complied, the character of the goods which have been imported duty free revert back to goods duty bound prohibited goods and hence they are liable to be confiscated. The penalty for importation of goods by breaching the conditions prescribed under Section 112. The various clauses of Section 112 set out the method in which the penality should be quantified. In the show cause notice dated 10.03.1993 issued to the Appellants, in para 17 ....