TaxTMI 
TaxTMI 
2024 (12) TMI 1037
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....alties of Rs.5,00,000/- on the Appellant A1 and Rs.2,00,000/- each on Chairman(A2) and Managing Director(A3) of the Appellant company under Section 112(a) of the ACT ibid. Customs Appeals No. 42171/2014 and 42172/2014 were filed by the Appellants A2 and A3, and as all the above three appeals are connected matters involving the same impugned order, the appeals are being taken up together for decision by this common order. 2. Briefly stated the facts are that Directorate General of Central Excise Initelligence (DGCEI) conducted an investigation into imports of capital goods valued at Rs.20,01,60,280/- made by the Appellant during March 1997 under zero duty EPCG Scheme but could not export the resultant products resulting in issuance of a Show Cause notice dated 02.12.05 alleging contravention of EPCG scheme and seeking to deny the benefit of Customs-Notification No. 111/95-Cus dated 05.06.1995 and consequently proposed to demand Customs duty of Rs.7,89,45,622/- along with applicable interest and to impose penalty under Section 112(a) of the ACT on the Appellant company and its officials besides, proposing to confiscate the goods imported duty free in terms of Section 111(o) of the A....
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....Hospital Trust was misplaced as the goods imported by Bombay Hospital Trust were seized by the Customs Authorities and were available for confiscation whereas in the case of the appellants admittedly the goods in question were not even available for seizure more particularly when the duty assessed in respect of the goods was available with the customs in the form of BG which was encashed by the Department leaving no scope for any action under Sec. 111 [o] of the Customs Act to warrant invocation of Sec. 125 [2] of the Customs Act and rightly so the notice only invoked Sec. 12 and not Sec. 28 or 125 of the Act. iv. It was submitted that non-fulfilment of the Export Obligation was due to South Asian Crisis and Global recession in the infrastructure industry but the penalty imposed by the respondent on the appellants even after realising the duty on the imported goods and when Sec. 111 [o] of the Act was not invokable for the reason recorded to the contrary that they violated the notification and that they did not account for the discharge of the EO nor informed the authorities, which are contrary to the express mandate contained in Sec. 112 of the Act especially when this Tribunal ....
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....in the case of Rajalakshmi Labs was not applicable as in the cited case there was bonafide utilization of goods during the prescribed period whereas, in the present case, there was no intention to fulfil the export obligation. Moreover, the said order was distinguished by Tribunal, Mumbai in the case of Prakash Roadlines Corporation Pvt. Ltd. Vs CC(EP), Mumbai [2019 (369) ELT 663 (Tri.-Mumbai)] and hence, not applicable to facts of this case. 4.4 It was submitted that even after availing huge bank loans from banks and financial institutions, the Appellant had not commenced production of silicon cells over a period of years resulting in non-fulfillment of export obligation even after a period of 8 years under EPCG scheme, thereby violating the conditions of the said Customs Notification which proves their mens rea and hence, the imported goods were liable for confiscation, as held in the decision in the case of Weston Components Limited Vs. Commissioner of Customs, New Delhi [2000 (115) ELT 278 (Tri.-New Delhi)] which ratio was also followed by the CESTAT, Chennai in Farida Prime Tannery Vs. Commissioner of Customs, Chennai [2006 (198) ELT 158 (Tri.-Chennai)] distinguishing the Raj....
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....impugned duty demand quantified and confirmed against the appellants. Had the appellants been present at the time of personal hearing, the computation of the duty amount could have been arrived at with their participation. Since, the appellants have not availed such opportunity, we are of the view that they should be given a second chance to go before the original authority for re-quantification of the correct amount of duty liability. We are also of the view that in a case such as this, where the non-fulfillment of export obligation is not deliberate but on account of the recession in the international market and other economic factors, a lenient view requires to be taken in regard to the amounts of fine and penalty. The ratio of the cited decision in the case of Rajayalakshmi Labs. Ltd (supra) is also required to be taken into account by the adjudicating Commissioner." 8. The Tribunal Chennai has clearly ordered that the duty amount payable by the Appellant (A1) to be the amount leviable on the imported goods at the time of import but for exemption availed under Notification No. 111/95-Customs dated 05.06.1995. In Paragraph 14 of the impugned order dated 30.06.2014, the duty amo....
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....ns of this Tribunal in Paragraph 7 and reduced the penalties imposed on A1, A2 and A3, considering the recession and prevailing economic conditions at that time. Further, in the present appeal, the Appellant is not only disputing the duty amount but also has contended that the demand of duty and confiscation was not to be confirmed in terms of Section 28/ 125 of the ACT. 10. The Larger Bench of the Tribunal in the case of Bombay Hospital Trust Vs. Commissioner of Customs, Mumbai [2005 (188) ELT 374] has held that when post importation conditions in an exemption notification are not fulfilled, the Department has the power to recover the escaped duty in terms of Section 12 of the Customs Act, 1962. The relevant portion of the said order has been extracted below: - "10. We have carefully considered all the arguments advanced from both sides as well as the case records, written submissions and the cited case laws. We briefly consider the legal provisions first in relation to the main argument by the appellants that duty cannot be demanded in the present case in the absence of any specific provision of law. We find that in Virgo Steel (supra), a Bench of three Judges of the Apex Cour....
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.....K. Bhardwaj, A.C.C.E. - 1987 (32) E.LT. 534 (Bombay) (ii) Commissioner v. Raghuvar (India) Ltd. - 2000 (118) E.L.T. 311 (S.C.) 13. We find that while Section 12 gives the power to levy customs duty, Section 25 gives the power to grant exemption of duty in the public interest either absolutely or subject to conditions. In the case of Notification No. 64/88, the exemption granted is conditional. The conditions relating to (i) free treatment of 40% outdoor patients and (ii) reservation of 10% of beds for free treatment of patients with family income less than Rs. 500 p.m. make it manifestly clear what the public interest behind the said exemption is. If these conditions are not fulfilled after importation and the public interest is not served, the exemption becomes unavailable and full duty as leviable under Section 12 becomes payable. 14. We note that the impugned notification has not provided for obtaining any bond or bank guarantee for recovery of duty in the event of failure to fulfil the conditions of free treatment. However, it is the prerogative of the Government to grant exemption, as has been held in Sri Sathya Sai Inst. (supra), and it is for the Government to incorpo....
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.... 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 Apex Court has thus clearly held that the said Notification No. 65/88 casts a continuing obligation and that in the event of failure to discharge that obligation, duty is demandable. ..... ..... 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 12 of the Apex Court decision in Mediwell (supra) also provides an authority for such recovery. (ii) Such dem....