New Poly Tech Engineers Vs Commissioner of Customs (CESTAT Mumbai)
The CESTAT Mumbai addressed an appeal by New Poly Tech Engineers, concerning penalties and fines imposed for failing to meet export obligations under the Export Promotion Capital Goods (EPCG) scheme. The appellant had imported a Coordinate Measuring Machine in 2004-2005 without import duty, under the condition they would export goods manufactured using it. Due to market challenges, they failed to meet these obligations, resulting in a duty demand, confiscation of goods, redemption fine, and penalty. Subsequently, the appellant availed the Amnesty Scheme launched by the Department of Commerce in 2023, and received a regularization letter from the Director General of Foreign Trade (DGFT) after paying the due customs duty with interest. The appeal was then restricted to the legality of the penalty and redemption fine.
The appellant’s counsel argued that the Amnesty Scheme, particularly clause (ix), did not specify any penalties or redemption fines. They cited a precedent from the CESTAT Chennai, which held that once duty and interest are paid under the scheme, penalties for non-fulfillment of export obligations should be waived. The tribunal agreed that the amnesty scheme covered appeals pending before them, and that the scheme did not intend to view non-fulfilment of export obligation as an irregularity meriting penalty, given the scheme’s silence on the matter. Therefore, the CESTAT Mumbai allowed the appeal, setting aside the order of the Commissioner of Customs (Appeals) that had confirmed the penalties and fines. The tribunal concluded that once the duty and interest were paid under the amnesty scheme, the penalties and fines were no longer enforceable.
FULL TEXT OF THE CESTAT MUMBAI ORDER
