TaxTMI 
TaxTMI 
2026 (6) TMI 120
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....through 9 Bills of Entry from Inland Container Depot, PPG, New Delhi and goods imported through 13 Bills of Entry from Air Cargo, New Customs House, New Delhi have also been confiscated for violation of the conditions of the Notification. The order also the confirms the demand of customs duty foregone on the imported goods in terms of section 25 of the Customs Act, 1962 [the Customs Act] and the Bonds/Bank Guarantees executed by the appellant under the aforesaid 55 Bills of Entry with interest in terms of the Notification and penalty under section 112(a)(ii) of the Customs Act. 2. The appellant was engaged in the business of hotel and hospitality. It obtained 27 Export Promotion Capital Goods Scheme [EPCGS] authorizations between 2007 and 2009 from the Director General of Foreign Trade [DGPT] for the purpose of importing duty free capital goods to be used in the construction of a hotel in Sector-42, Gurugram, Haryana. The said capital goods were imported under the EPCG Scheme in terms of the Notification under 55 Bills of Entry. The appellant also submitted bonds with Bank Guarantees, as contemplated under the conditions stipulated in the Notification. 3. The appellant claims....
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....d the allegations made in the show cause notice. 8. However, the Additional Director General, by order dated 31.12.2020, not only confiscated the goods imported by the appellant but also confirmed the demand of duty with interest and penalty. 9. The Additional Director General framed the following five questions for determination: (a) Whether, in the facts and circumstance of the case, the proportionate customs duty amounting to Rs. 5,07,83,188/- foregone on import of capital goods under the Bills of Entry is demandable in terms of the Notification, as amended and the connected Bond executed, in pursuance of the said Notification is enforceable? (b) Whether, consequent to (a), interest is demandable under section 28AA of the Customs Act? (c) Whether, in the facts and circumstance of the case, the goods imported under the Notification covered under the Bills of Entry cumulatively valued at Rs.20,28,62,041/- are liable to be held liable to confiscation under section 111(o) of the Customs Act for non-fulfillment of conditions of the Notification and for contravention of provisions of the Customs Act? (d) Whether, in the facts and circumstance ....
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....needs of the-importers (here the Noticee-importer). Accordingly, the Department of Revenue, through CBIC (earlier CBEC) and its field formations is bound to raise demand on account of the non-fulfillment of the conditions of the exemption notification and furthermore there is no privity of contract between the Noticee-importer and the Department of Revenue, through CBIC (earlier CBEC) and its field formations. I further find that it was for the Noticee-importer to approach the DGFT to get the matter regularized or get an extension, as the case may be or alternatively preferred a Writ Petition before the Competent Court having jurisdiction to press the doctrine of frustration and hence I am of the considered opinion that the quasi-judicial authority is not the right forum to press the same into service and that would be going beyond the mandate of the functions of the undersigned as a quasi judicial authority. Hence, I am of the considered opinion this argument of the notice-importer is not only misdirected and misplaced but also does not aid and advance their case and is accordingly not legally sustainable. 5.4.2. In this regard, I hold that the issue before me is limited ....
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....t gets vitiated. Therefore, I hold that the Noticee is liable to pay the interest as demanded under the SCN." (emphasis supplied) 15. The Additional Director General also examined whether penalty could be imposed upon the appellant under section 112 of the Customs Act and the relevant finding is reproduced below: "5.7.7. I find that either the penalty under section 112(a) or penalty under section 112(b) is imposable because of the use of "or" i.e. the clauses (a) and (b) are disjointed by the use of preposition "or". Having come to this conclusion, the issue is whether the Noticee-importer is liable to penal action under section 112(a) of the Customs Act, 1962. I have already held in the preceding paras that the goods imported are liable for confiscation under section 111(o) of the Customs Act, 1962 and consequently penalty under section 112(a)(ii) flows automatically. Taking into the gravity of the situation and particularly taking into consideration that there is no mens rea, I hold that penalty is rightly imposable under section 112(a)(ii) of the Customs Act, 1962. Needless to record here that there is no requirement of mens rea for imposition of section 112(a)(ii....
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....Commissioner of Customs, Bangalore [2004 (173) E.L.T. 100 (Tri.-Bang.)] and Commissioner of Customs (Port), Kolkata vs. M/s. B R Marbles Pvt. Ltd. [Customs Appeal No. 75151 of 2018 decided on 11.09.2023]; (iv) The appellant had requested the DGFT for permission to fulfil 100% export obligation by export of other goods by group company, but this request was rejected. Even otherwise, exports amounting to USD 25,14,072 of other goods made through 7 export invoices by group companies were made, which account for authorisations permitted upto 50% under paragraph 5.4 of the EPCG Scheme; (v) The appellant acted in a bona fide manner and hence there is no mens rea. The imposition of penalty is, therefore, not justified; and (vi) The appellant had also applied under the Amnesty Scheme for closure of the 26 EPCG authorisations, but permission was not granted. 18. Shri Nikhil Mohan Goyal, learned authorised representative appearing for the department, however, supported the impugned order and made the following submissions: (i) As the appellant failed to fulfil the condition of the Notification, the demand of duty with interest and penalty is justified. ....
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....he jurisdiction to examine this issue. 25. The Additional Director General also rejected the contention advanced on behalf of the appellant in connection with section 56 of the Contract Act for the reason that the issue before him was limited to contravention of the provisions of the Customs Act and, therefore, he was not required to examine the provisions of the Contract Act. 26. Paragraph 4 that was inserted in the Notification after paragraph 3 of the Notification by Notification dated 21.05.2007 is reproduced below: "4. Waiver of Export Obligation may be considered where, because of force majeure of other unforeseen circumstances/reasons, exporter is unable to fulfil export obligation. Such requests shall be consideration by a Committee comprising representative(s) of Department of Commerce and Department of Revenue under Directorate General of Foreign trade. Decision of this Committee shall be notified by Department of Revenue for implementation." (emphasis supplied) 27. A perusal of the aforesaid clause shows that the export obligation may be waived because of force majeure or other unforeseen circumstances/reasons because of which the exporter is unable ....
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....al loss and this aspect had been taken into consideration by the Settlement Commission. The Bombay High Court proceeded to hold that even if the Settlement Commission had no power to waive interest, the High Court itself could examine the entire issue. The Bombay High Court then examined section 56 of the Contract Act which deals with doctrine of frustration of contract and the relevant observations of the High Court are as follows: "The law of frustration of contract is well settled. Section 56 of the Indian Contract deals with the Doctrine of frustration of contract. It lays-down that the contract becomes void upon the act being (i) unlawful or (ii) impossible, though there is no condition to that effect in the contract. A contract is discharged where its performance becomes impossible. The contract automatically stands determined and cannot be enforced through the legal process. A contract is also discharged if a specific thing which is essential to the performance of the contract is destroyed. For example, the destruction of Music hall, where the performance was to be given. In the case of Taylor Vs. Caldwell, (1863 3 B. & S. 826) th....
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....ct, nor could it have avoided or overcome it or its consequences. In other words due to act of god or act of nature, if the contract is frustrated party cannot be asked to perform the contract. The contract automatically stands determined and cannot be enforced through the legal process. Assuming Mr. Jetly is right in his submission that Settlement Commission has no power to grant immunity from the payment of interest but in the facts and circumstances of the case, the Settlement Commission has no power to enforce the contract which is already frustrated or which does not exist in the eye of law. Had there been a dispute on a factual aspect we would have remanded the matter for investigation of the fact. But on admitted facts, the frustration of contract stands proved and if that be so, no useful purpose will be served by setting aside the order and restoring the Petition to the file of the Settlement Commission for consideration of the case." (emphasis supplied) 33. This issue was also examined by this Tribunal in Taurus Novelties. The Tribunal held that when the bank guarantee had been realised before issuance of the show cause notice, then the prayer for setting a....
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....Mangalore v. Shree Krishna Pipe industries - 2004 (165) E.L.T. 508 (Kar.) = 2004 (61) RLT 17 (Karnataka) 2. The learned SDR reiterated the departmental view. 3. On a careful consideration of the submissions, we notice that the appellants had imported capital goods under concessional rate of duty under EPCG Notification No. 110/95, dated 5-6-1995. But, they could not set up the industry to fulfil the export obligation due to total collapse of Korean economy and hence could not procure the order for manufacture and export of ceramic goods. The value of Korean company fell drastically and affected the appellants' project. As they could not get the support from the Korean collaboration for buy back of production and due to stiff competition from Chinese competitors, the factory could not be established for commercial production and export of goods. The appellants, due to these factors, approached the Commissioner and requested him to permit them to encash the Bank Guarantee and deposit these amounts due to the department. The same was granted and the amounts were deposited by TR-6 Challan on 30-11-2000. The same has been appropriated in the impugned order. The Show Ca....
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.... respondent did approach the department to permit them to make the payment of duty foregone in terms of the EPCG Licence issued, in installments and waive the requirement/imposition of interest and penalty as was proposed in the show cause notice. It is on record that the respondent has paid the total duty due in terms of the EPCG in two installments Rs.18,00000/- (Rupees Eighteen lakh only) before filing of the appeal before the Commissioner (Appeals) and the balance amount of Rs. 9,396/- (Rupees Nine thousand three hundred ninety six only) on 2nd November 2017, pursuant to the order passed by learned Commissioner (Appeals). 6. The compelling circumstances beyond their control pointed out by the respondents, have been admitted by the authorities. Therefore, no blame or aspersions can be cast on the respondents that they had malicious intent to defraud the revenue. This argument of the revenue is rejected summarily. We also note that this is not the first time that any importer has not been able to fulfill the export obligation for reasons beyond his control. Thus in the wake of global economic crisis in Asia and particularly so in Southeast Asia, this Tribunal in the case....
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....e export obligation could not be met because the goods imported and the premises of the hotel were auctioned. The appellant, therefore, could not have fulfilled the export obligation within the period prescribed in the first block. The bona fides of the appellant are also clear as the appellant did carry out some exports through group companies to the extent of 50% which was permissible under the Notification. The appellant had requested for grant of 100% obligation, but this plea was rejected. 38. The decision of the Delhi High Court in DSJ Communications will not come to the aid of the department as this decision was rendered in respect of EPCG Licence that was issued in 1995 when there was no provision in the Notification for waiver of export obligation on account of force majeure or other unforeseen circumstances. A finding was also recorded that the capital goods were always in the possession of the assessee for more than 14 years and the assessee had not made efforts to export the goods even after obtaining extension of the export obligation. 39. In the present case, as noticed above, paragraph 4 that was inserted by Notification dated 21.05.2007 provides for waiver of ....