CESTAT Ahmedabad confirmed export obligation dues under EPCG scheme but quashed confiscation and penalties for procedural fairness.
CESTAT Ahmedabad upheld the recovery of customs duty and interest arising from unmet export obligations under the Export Promotion Capital Goods (EPCG) scheme. However, the tribunal set aside orders of confiscation, redemption fine, and penalty under Section 112(a) of the Customs Act, 1962, citing disproportionate response and lack of culpable intent.
The tribunal emphasized that failure to meet export obligations, while triggering fiscal liability, does not per se justify punitive measures unless deliberate fraud or wilful default is established. The confiscation of capital goods was deemed excessive given the nature of the default.
This decision reinforces the principle of proportionality in customs enforcement. Legal practitioners should assess whether penalties are commensurate with the severity of default, especially in EPCG cases involving genuine business disruptions.
Citations
- Section 112(a), Customs Act, 1962