ORDER
Jyoti Balasundaram, Member (J)
1. After hearing both sides for some time on the application for waiver of pre-deposit of duty of Rs. 31,54,177/- and penalty of equal amount imposed upon them, we find that it was possible to hear and decide the appeal itself at this stage. Hence after dispensing with the requirement of pre-deposit of duty and penalty we heard the appeal with the consent of both sides.
2. The facts of the case are that the appellants herein are manufacturers of hermetically sealed compressors. Prior to 5/11/1997 they were known as Shriram Refrigeration Industry Limited which entered into a joint venture agreement with M/s. Tecumseh Products Company, USA. M/s. Tecumseh Products India Limited (TPIL) had obtained a EPCG licence from the DGFT under which they were permitted to import specific capital goods and under an obligation to export refrigeration and air-conditioning appliances, and hermetically sealed compressors within a period of 5 years from the date of issue of licence. Intelligence revealed that they had imported capital goods against the said licence but had failed to fulfil the export obligation even after the expiry of the period within which the export obligation was to be fulfilled as envisaged under customs Notification 160/92 dated 20/04/1992 read with the Exim Policy 1992-97. On this basis a show cause notice was issued proposing denial of the concession in terms of Notification 160/92, recovery of differential customs duty, confiscation of detained capital goods, recovery of interest and imposition of penalty. The notice was adjudicated by the Commissioner of Customs vide the impugned order, vide which he confirmed the differential duty demand, confiscated the detained goods with option to redeem the same on payment of fine of Rs. 30 lakhs and also imposed penalty as above. Hence this appeal.
3. We have heard both sides.
4. We note that by Public Notice No. 3(RE-01)/1997-2002 dated 31/03/2001 issued by the Ministry of Commerce the Ministry extended the period for fulfilment of export obligation up to 31/03/2002. The appellants applied for extension of the period for fulfilment of export obligation and the request of the appellants was allowed by the DGFT vide its letter issued on 07/09/2001 extending the period up to 31/03/2002. In the meanwhile the Finance Act, 2001 was enacted on 11/05/2001 so as to amend the Notification No. 160/92 whereby condition No. (iv) was introduced retrospectively w.e.f. 20/04/1992. The condition reads as under:
“(iv) where the licensing authority grants an extension of the period for fulfilment of export obligation or regularisation of shortfall in export obligation not exceeding 5% of such export obligation, in terms of, and subject to satisfaction of such conditions as may be specified in a Public Notice of the Government of India in the Ministry of Commerce in this regard, but shall in no case be extended beyond the 31st March, 2002, and the said shortfall in export obligation condoned by the Assistant Commissioner of Customs or the Deputy Commissioner of Customs, as the case may be.”
5. The appellants wrote to the adjudicating authority regarding their request to the DGFT and also enclosed a letter dated 7th September, 2001 of the DGFT by which the period for completion of the export obligation had been extended up to 31/03/2002. On 4th July, 2002 the DGFT confirmed that the appellants had fulfilled the export obligation imposed under the EPCG licence issued to them hence they were free from bank guarantee executed by them and also the letter of undertaking executed with the DGFT. In spite of the fact that the period of export obligation had been extended and that the obligation had been fulfilled within the extended period and this fact has been brought to the notice of the Commissioner he held that the condition of the notification as set out had been violated. Although the appellants did not bring to his notice the amendment by the Finance Act, 2001 to Notification 160/92 which held that the extension of period of export obligation would operate retrospectively it is a fact that the law makes it clear that the extension of period for fulfilment of the export obligation was with retrospective effect and therefore the duty demand and the penalty are not sustainable and therefore we set aside the same. Confiscations also set aside.
6. In the result we set aside the impugned order and allow the appeal.