In Customs Appeal No. 75151 of 2018 -CESTAT- CESTAT (Kolkata) holds that M/s. B R Marbles Pvt. Ltd. was unable to fulfil export obligation due to circumstances beyond its control; Rejects revenue's argument of deliberate fraud
Members P.K. Choudhary Member (Judicial) & Rajeev Tandon Member (Technical) [11-09-2023]

Read Order: Commissioner of Customs (Port), Kolkata v. M/s. B R Marbles Pvt. Ltd.

Chahat Varma

New Delhi, October 5, 2023: The Kolkata bench of the Customs, Excise & Service Tax Appellate Tribunal has upheld the order of the Commissioner (Appeals), setting aside the order for imposition of penalty and demand of interest on M/s. B R Marbles Pvt. Ltd. (respondent).

In the present case, the respondent had obtained an EPCG Authorization to import capital goods duty-free for marble mining and exporting. The duty foregone under this authorization amounted to Rs. 18,09,396. However, before the mining activities could commence, the Apex Court issued an order on 21.09.2005, following a PIL by local residents in Katni District, Madhya Pradesh, which halted the mining. The jurisdictional Collector also issued orders to stop mining within the jurisdiction. After the export obligation period expired on 22.03.2012, a demand notice was issued to the respondents to recover the duty foregone. In the adjudication proceedings, the demand was confirmed, including interest and penalties. In the appeal proceedings, the Commissioner (Appeals) upheld only the demand for the duty foregone, amounting to Rs. 18,09,396.

The Revenue argued that the respondents did not request an extension for fulfilling the export obligation. They claimed that despite being aware of the mining restrictions imposed by the Supreme Court's order, the respondents continued importing goods. The Revenue asserted that this demonstrated a deliberate intention to defraud the revenue by suppressing facts and making deliberate misrepresentations.

The two-member bench of P.K. Choudhary Member (Judicial) and Rajeev Tandon Member (Technical) noted that there was no dispute that the respondents were unable to engage in any mining activity due to the restrictions imposed by the Supreme Court. Therefore, attributing motives to the respondents under these circumstances was unwarranted. The bench further stated that it couldn't be argued that the respondents continued importing capital goods with the intention of defrauding the revenue and denying the department its legitimate claim.

The bench also pointed out that the authorities had acknowledged the compelling circumstances beyond the control of the respondents. Therefore, it was unwarranted to accuse the respondents of having a malicious intent to defraud the revenue. The argument made by the revenue in this regard was summarily rejected by the bench.

The bench referred to the case of Taurus Novelties Ltd. Vs. C.C. Bangalore [LQ/CESTAT/2004/2275], where the importers were unable to fulfil their export obligation due to the collapse of the Korean economy, which prevented them from obtaining the necessary orders and exporting ceramic goods they had manufactured. In that case, the Tribunal had granted a waiver of the redemption fine, penalty, and interest.

The bench additionally observed that the revenue had completely failed to establish any element of mens rea on the part of the respondent.

Thus, the Tribunal did not find any infirmity in the orders of the Commissioner (Appeals) and rejected the appeal filed by the revenue.