The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the non-imposition of redemption fine and penalty as there was compliance of the customs notification.
The revenue is in appeal against the impugned order wherein the adjudicating authority did not impose any redemption fine and penalty on the respondent.
As the respondent could not fulfil their export obligation in terms of the condition No.6 of the Notification, therefore, DRI investigated the case and on pointing out by the DRI the respondent paid the duty payable along with interest. But, the proceedings were initiated against the respondent by issuance of the show cause notice to impose redemption fine and penalty along with demand of duty and interest. The matter was adjudicated.
The adjudicating authority after recording the fact that on pointing out, the respondent paid duty and interest and refrained from imposing redemption fine and penalty on the respondent. Against the said order, revenue is before the Tribunal.
The AR who appeared on behalf of the revenue submitted that as the appellant violated the condition of the Notification, therefore, redemption fine and penalty were required to be imposed on the respondent, in those circumstances, the impugned order qua not imposing redemption fine and penalty is to be modified.
The Consultant who appeared on behalf of the respondent submitted that as per the Handbook Procedure of Foreign Trade Policy Volume-I of Foreign Trade Policy for 2009-2014, the respondent is required to fulfil export obligation within 6-8 years and they were under premise within 6 years they have to fulfil the export obligation, therefore, they did not pay duty after 4 years on account of non-fulfilling the export obligation. But on pointing out, they paid duty along with interest. Therefore, the redemption fine is not imposable on the respondent.
A Two-Member Bench comprising Ashok Jindal, Judicial Member and Rajeev Tandon, Technical Member observed that “We find that in this case no doubt the respondent in terms of Notification, has failed to fulfil the export obligation within a block of 4 years, the respondent is required to pay 50% of duty along with interest @ 15% within 30 days from the expiry of each block, but the respondent was not aware of this condition as they were under an impression that they were required to fulfil the export obligation within a period of 6 years.”
“But, as and when investigation started the respondent immediately paid duty and interest. Further, as per the condition of the Notification, the appellant is required to pay duty along with interest. In that circumstances, the adjudicating authority has rightly refrained from imposing redemption fine and penalty on the respondent. As the respondent has complied with the condition of the Notification, therefore, we do not find any infirmity in the impugned order” the Tribunal noted.
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