OSWAL PAPERE AND ALLIED Vs. C.C.

JUDGEMENT

(1.) THE first appellant M/s. Oswal Paper and Allied Indus, imported Second Hand Paper Machine in 1996 under EPCG Scheme. Importers of capital goods are under obligation to export finished products. However, the project failed and the appellant was neither able to set up the manufacturing plant fully, nor produce and export any goods.

(2.) IN the above said circumstances, Customs authorities proceeded to confiscate the imported machinery and impose penalty on the first appellant and second appellant (the Managing Director of the first appellant). The reason for confiscation is that goods did not meet the export condition and for that reason are liable to confiscation under Section 111(o) of the Customs Act. The present appeals are directed against that order.

(3.) THE submission of the Ld. Counsel for the appellants is that, in terms of exemption Notification No. 111/95 -Cus dt. 3.6.95, under which the import was earned out, he only requirement, in the event of failure to carry out export, is to pay the whole of the duty of Customs on the imported goods as well as payment of interest (Clause 5 and 6 of the notification). It is the contention of the Ld. Counsel that imposition of penalties is not contemplated in law and the penalties are required to be set aside.