2006 (1) TMI 338 - AT - Central Excise

Demand - Warehoused capital goods - Import by 100% EOU - Penalty - Non-fulfilment of export obligation

Summary

Issues:
1. Duty liability on goods imported by 100% EOU for non-fulfillment of export obligations.
2. Demand of Customs Duty and Central Excise duty along with interest and penalties.
3. Interpretation of Notification 53/97 regarding duty payment on goods not utilized in export.

Analysis:
1. The case involved a 100% EOU facing penal action for not meeting export obligations. The Development Commissioner imposed a penalty, and the Dy. Commissioner of Customs demanded Customs Duty and Central Excise duty for non-fulfillment. The appellants challenged the Order-in-Appeal.

2. The appellants argued that duty should only be levied upon goods cleared from the bonded warehouse for home consumption, citing relevant legal precedents. They contended that the demand for duty on capital goods was premature as the goods were in a bonded warehouse. The Tribunal agreed, emphasizing duty payment at the time of clearance and remanded the case for quantification of duty on unutilized goods.

3. The Tribunal analyzed Notification 53/97, noting the obligation to pay duty on goods not used in export. As the appellants achieved 64% of NFEP, demanding duty on all imported goods was deemed incorrect. The Tribunal found the lower authority's view unjust and unfair, emphasizing the need for duty only on unutilized goods for export. Penalties were deemed unjustifiable due to circumstances beyond the appellants' control, following a precedent where penalties were not upheld under similar conditions.

In conclusion, the duty demand on capital goods was set aside, and the appeal was allowed based on the Tribunal's detailed analysis of duty liability, penalties, and the interpretation of relevant notifications.