Judgment:
2. In all these appeals, the appellants have raised a common question about imposition of penalty for not fulfilling the export obligation.
3. M/s. Pharmed Chemicals Limited, having their factory at Sipcot Industrial Area, Hosur, Tamilnadu and their office at Pharmed Gardens, White-field Road, Bangalore have imported several consignments of chemicals have imported 1050 kgs of Pivaloyl Chloride vide Bill of Entry No. 006662-IMP-B, dated 18-9-1995 a Mumbai against Advance License No. 1533488, dated 2-8-1995. They have failed to fulfil export obligation in respect of Advance License and instead diverted the duty free imported material into local market and also to their own sister concerns M/s. Medicare Pvt. Ltd. and M/s. Pharmed Limited. A case was made out by DRI, Zonal Office Bangalore against the importers. A show cause notice was issued under Section 124 and Section 24 of Customs Act, 1962 by the Joint Director of DRI on 30-9-1999 to all concerned including two Directors of M/s. Pharmed Chemicals Limited proposing to deny the benefit of Notification No. 80/95, dated 31-3-1995 against the imports which have taken place duty free under Advance License, demand of customs duty foregone for imports made under DEEC amounting to Rs. 48,716/- and imposition of penalty on all of them.
4. On adjudication of the matter, the benefit of duty free clearance of 1050 kgs. of pivaloyl chloride imported against advance license was denied, customs duty of Rs. 48,716/- along with interest @ 24% under Section 28AB was confirmed, the penalties were imposed on the two Directors namely, Shri Sandeep Aurora and Shri K.K. Arora to the tune of Rs. 50,000/- each of them and a penalty of Rs. 25,000/- each on two firms. The facts reveal that the imports have taken place from different Ports i.e. Chennai and Mumbai on the same advance license.
Therefore, proceedings have been initiated separately at both the places. The South Zonal Bench at Bangalore heard the appeals filed by both the Directors, namely, Shri Sundeep Aurora and Shri K.K. Arora aggrieved by the Order-in-Original No. 3133/2004, dated 30-9-2004 and set aside the penalties imposed on them vide its Final Order Nos.
1176-1177/2005 and the same has been reported at 2005 (190) E.L.T. 53 (T-Bang.). It is observed in the aforesaid decision that there were several extenuating circumstances which prevented the appellants from fulfilling the export obligation. As chemical was likely to lose shelf-life, therefore in view of the same they were left with no alternative but to sell the same in the local market. The orders itself clearly brings out that appellants had no mens rea in not fulfilling export obligations. The penalty is not imposable on the appellants consequently set aside the same.
5. The above said decision is also supported by the other decisions in the case of Aviauipo of India Ltd. v. Commissioner of Customs (Exports), New Delhi and in the case of Dencap Electronics (P) Ltd. v. Additional Director General of Foreign Trade 2006 (194) E.L.T. 389 (Delhi High Court).
6. The proposition laid down in the aforesaid decisions squarely covers the issue on hand in favour of the appellants. Applying the same, the impugned order is set aside. Accordingly the appeals are allowed.