“Indirect Tax I Indirect Tax Litigation I Customs & FTP I Central Licensing I Arbitration I Advisory”
Dated: 26.03.2025
CESTAT Mumbai overturns confiscation & Penalty under EPCG Amnesty Scheme
In a recent judgment, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai, provided significant relief to M/s New Poly Tech Engineers by setting aside a penalty and redemption fine originally imposed for non-fulfillment of export obligations under the Export Promotion Capital Goods (EPCG) Scheme.
Background:
M/s New Poly Tech Engineers had imported machinery under the EPCG Scheme without payment of duty in 2004-2005. Due to challenging market conditions and competitive pressures, the company failed to meet its stipulated export obligations. Consequently, customs authorities demanded recovery of duties, interest, imposed penalties, and a redemption fine, which the Commissioner (Appeals) confirmed in 2019.
Amnesty Scheme Utilization:
Subsequently, the appellant availed the benefit of an Amnesty Scheme launched by the Department of Commerce, Government of India, on April 1, 2023. By March 2024, the appellant paid the pending customs duty with interest and obtained a regularization letter from the Director General of Foreign Trade (DGFT).
Tribunal’s Decision:
The appellant appealed to CESTAT challenging only the penalty and redemption fine. Considering the Amnesty Scheme provisions, which aim to regularize defaults without imposing additional fines or penalties, the Tribunal ruled in favor of the appellant. It held that penalties and redemption fines were no longer applicable once the principal duty obligations were settled under the scheme.
Key Takeaways:
- Amnesty Scheme provides immunity from penalties and fines upon fulfillment of primary obligations.
- Appeals pending at higher authorities, including tribunals, are covered under this Amnesty Scheme.
- This ruling reinforces the protective intent of amnesty initiatives, promoting compliance without undue punitive measures.
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Source: CESTAT Mumbai
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