BELLS CONTROLS LTD. Vs. COMMISSIONER OF CUSTOMS, BANGALORE

JUDGEMENT

(1.) THE appellants imported goods on free of Customs duty under the Advance Licensing Scheme in terms of Notification No. 30/1997 -Cus., dated 1 -4 -1997. The duty foregone by the Revenue is Rs. 61,84,758/ -. An export obligation is cast on the appellants in terms of the Advance Licence obtained from DGFT and also Notification No. 30/97. The validity period of the licence was 20 -10 -2000 after first extension by the licensing authority. By that time, the appellants could not fulfil the export obligation amounting to Rs. 5,21,33,991/ -. The DRI found duty free imported goods in the Calcutta plant of the appellants. Since the above goods had not been utilized within the validity period of the license, the DRI seized them. Proceedings were initiated against the appellants by issuing show cause notice dated 1 -5 -2002. The adjudicating authority held that the imported goods are not entitled for the benefit of exemption in terms of Notification No. 30/97 -Cus. and also the Advance Licence dated 20 -10 -98. The goods under detention valued at 6,11,767.55 were confiscated under Section 111(o) of the Customs Act, 1962 with an option to redeem the same on payment of fine of Rs. 60,000/ -. The duty foregone on the imported goods amounting to Rs. 61,84,758/ - was demanded under Section 28(1) of the Customs Act, 1962. Interest under Section 28AB of the Customs Act, 1962 was imposed. Penalty equal to the duty demanded was imposed under Section 112(a) read with Section 114 A of the Customs Act, 1962. A penalty of Rs. 1,00,000/ - was imposed on Shri S.D. Mookerjee, Chief Finance Executive of M/s. Bells Control Ltd., Kolkata under Section 122(a) of the Customs Act, 1962. The appellants strongly challenged the findings of the Adjudicating authority.

(2.) SHRI P. Sarkar, learned Chartered Accountant appeared for the appellants and Shri K.S. Bhat, learned SDR for the Revenue.

(3.) THE learned Chartered Accountant narrated the circumstances under which the appellants could not fulfil the export obligation within the validity period of license i.e. 30 -4 -2000. Till the validity period of the license, the appellants had exported goods valued at Rs. 41,87,346/ -. The JDFT granted first extension for fulfilling the export obligation up to 20 -4 -2000. Within that period the appellants additionally exported goods valued at Rs. 22,98,713/ -. Thus the total obligation fulfilled is only Rs. 64,86,059/ -. In view of the recession in the industry and due to labour trouble, the appellants could not fulfil the export obligation within the first extension period. They applied for the second extension up to 20 -10 -2000. It appears that the second extension was not granted due to non -payment of composition fee of 5%. However within that period, the goods valued at Rs. 65,29,691/ - were exported. In the meantime, the Government of India issued Public Notice No. 48 (RE -2001)/1997 -2002, dated 7 -11 -2000 on the subject of extension with respect to Advance License for physical export. In the said Public Notice certain guidelines were given by DGFT authorities for extension of the export obligation period. In terms of Para 1 of the Public Notice, In respect of Advance License issued on or after 1 -4 -97, where the stipulated time period of 30 months for fulfilment of export obligation is over, where the licence holder has failed to complete his export obligation within the stipulated time period, he can apply for extension of export obligation period for six months from the date of the Public Notice..... The appellants states that within six months period mentioned in the Public Notice, they exported additionally goods valued at Rs. 25,31,947/ -. It is stated that the total value of the goods exported comes to Rs. 1,55,47,697/ - only, but the export obligation is only Rs. 1,54,58,138/ -. In other words, the appellant actually exported goods value is excess of the obligation to the extent of Rs. 89,559/ -. The learned Advocate urged the point that the simple procedural infirmity by itself cannot be a ground to ignore the export made according to the procedure and to deny the benefit of Notification No. 30/97 in the light of the several decisions of judicial fora. The imposition of penalty for procedural lapse is not justifiable especially when there is no misuse of the scheme.