TAURUS NOVELTIES LTD. Vs. COMMISSIONER OF CUSTOMS, BANGALORE

JUDGEMENT

(1.) THE appellants are aggrieved insofar as the Order of confiscation of the imported machineries, which were not utilised for the manufacture of goods for export of the same in terms of EPCG licence. The Redemption Fine is Rs. 20,00,000/ -. However, before the issue of Show Cause Notice, the Bank Guarantees, which had been furnished to safeguard the duties, have been appropriated to an extent of Rs. 1,04,94,086/ - and deposited by TR -6 challan dated 30 -11 -2000. The Show Cause Notice dated 15 -1 -2001, was issued thereafter. It is the contention of the appellant that in a circumstance, where the appellants have not violated any of the terms of the licence and the industry could not be established due to loss of export orders and fall in the foreign market, they are not required to pay the redemption fine, penalties and interest. The penalties imposed on the Company and the Directors is being sought to be waived in the matter along with interest and redemption fine. In this regard, the learned Counsel relied on the following judgment wherein the Tribunal has set aside the Redemption Fine and Penalty on the ground that the violation of the licence was due to unavoidable and extenuating circumstances. The Tribunal set aside the redemption fine and penalty also on the ground that the Bank Guarantees had been encashed and duty had been released. The Larger Bench has also taken a view that when the duty has been paid even before the issue of Show Cause Notice, then the penalty and interest is not leviable as held in the case of CCE, Delhi -III v. Machino Montell (I) Ltd. [2004 (168) E.L.T. 466 (T -LB) = 2004 (62) RLT 709 (CESTAT -LB)]. The judgments relied by the Counsel for non -imposition of penalty and redemption fine and interest are as follows :

(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 Cause Notice alleging violation of the Notification under Section 124 of Customs Act was issued on 15 -1 -2001. In terms of the adjudication order, the machineries were confiscated and granted redemption under fine of Rs. 20,00,000/ - besides a penalty on the Company of Rs. 20,00,000/ - and penalty of Rs. 5,00,000/ - each on the Managing Director and the Executive Director. The question in this appeal is as to whether the goods can be confiscated and redemption fine imposed besides penalties and interest. In a like situation, the Tribunal, in the citations referred to by the Counsel, has held that confiscation cannot be ordered in a circumstance when the export obligation became an impossibility. Further it has been held that when the Bank Guarantee has been realized before the issue of Show Cause Notice, then in such a circumstance, the redemption fine, penalty and interest is not imposable. We have perused these judgments and find that the appellants prayer for setting aside the redemption fine, penalty and interest, in terms of these judgments, is justified. The ratio of the judgments clearly applies to the facts and circumstances of this case. Respectfully following the same, the impugned order, confiscating the machinery and imposing redemption fine and penalty on the Company and the Directors including the levy of interest, is set aside by allowing the appeal.