2006 (2) TMI 404 - AT - Customs

Demand - EOU, 100% EOU - Warehoused goods - Imports - Rate of duty - Capital goods - Depreciation

Summary

Issues:
- Extension of warehousing period for imported goods under Notification No. 140/91-Cus.
- Demand of duty on warehoused goods under Section 72 of the Customs Act, 1962.
- Imposition of interest and penalty under Sections 72 and 117 of the Customs Act, 1962.
- Applicability of case law on extension of warehousing period.
- Consideration of extension application by the Chief Commissioner/Commissioner.
- Premature confirmation of duty demand without waiting for extension application decision.
- Rate of duty applicable on removal of warehoused goods after the expiry of warehousing period.

Extension of Warehousing Period:
The appellant, a 100% EOU, imported goods for developing computer software under Notification No. 140/91-Cus. They sought an extension of the initial 5-year warehousing period from the Chief Commissioner, but no response was received. The jurisdictional officer demanded duty on the warehoused goods under Section 72 of the Customs Act, 1962, and imposed interest and a penalty. The Commissioner (Appeals) held that the goods, unused beyond the warehousing period, ceased to be warehoused goods, rejecting the applicability of a cited case law due to the timing of the extension application. The Tribunal disagreed, citing precedents that the extension application should be considered even if belatedly made, and the demand was premature pending a decision on the application.

Demand of Duty and Imposition of Interest/Penalty:
The appellants challenged the duty demand, interest, and penalty imposed by the jurisdictional officer under Sections 72 and 117 of the Customs Act, 1962. The Tribunal noted that no action was taken on the extension application by the Chief Commissioner/Commissioner. It held that the demand was premature, following precedents that duty confirmation without awaiting a decision on the extension application was improper. The matter was remanded for a fresh decision in consideration of the extension application, with instructions to provide depreciation benefits on the value of the goods at clearance.

Applicability of Case Law and Commissioner's Decision:
The case involved conflicting interpretations of case law regarding the extension of warehousing periods and the status of goods beyond the initial period. The Tribunal emphasized the obligation of the Commissioner to consider extension applications, even if delayed, and criticized the premature confirmation of duty demand without awaiting a decision on the extension application. The Tribunal's decision highlighted the need for proper consideration of extension requests and the application of relevant guidelines on depreciation benefits during clearance.

Rate of Duty on Removal of Warehoused Goods:
In discussing the rate of duty applicable on the removal of warehoused goods after the expiry of the warehousing period, the Tribunal referred to precedents emphasizing the duty rate applicable at the time of goods removal. It noted that the Chief Commissioner/Commissioner's lack of response to the extension application rendered the demand premature, warranting a remand for a fresh decision considering the pending extension request and providing depreciation benefits on clearance value.