2006 (3) TMI 603 - AT - Central Excise

Summary

Issues:
1. Permission to destroy imported capital goods without payment of duty.
2. Rejection of request to abandon warehoused goods.
3. Confiscation of goods, imposition of duty, penalty, and interest.
4. Interpretation of Section 68 of the Customs Act.
5. Dispute over penalties imposed on the appellants.

Analysis:
1. The appellant, M/s. Jindal Imaging Ltd., planned to establish an Export Oriented Unit for manufacturing coated paper and film but later decided against it due to industry changes. They requested permission to destroy imported machinery without duty payment. Customs rejected this, leading to a demand for Rs. 7 crores in duty and penalties. The Commissioner's order confirmed the duty, ordered confiscation of goods, and imposed penalties on the company and directors.

2. The appellant argued that Section 68 of the Customs Act allows relinquishment of goods without duty liability, emphasizing the unfettered nature of this option. They contended that the proviso applies to all goods, including capital goods under the Letter of Permission. The Customs authorities' rejection was challenged, citing relevant case law. The SDR argued for a distinction in imports under the EOU scheme, referencing a Supreme Court decision.

3. The Commissioner justified duty demand and penalties based on the Letter of Permission undertaking for export. Allegations of mala fide intent in abandoning goods were made, suggesting de-bonding instead. However, the Tribunal found no legal or factual basis for these findings. The appellant's decision was deemed reasonable due to industry changes, resulting in significant losses. The Tribunal upheld the right to relinquish goods under Section 68, disagreeing with the refusal to permit abandonment.

4. Penalties imposed on the appellants were set aside, and the appeals were allowed in this regard. Confiscation of goods was not contested, as the appellants relinquished any claim. Appeal No. C/444/04-Cus. was rendered infractuous due to the decisions in other appeals, leading to its rejection on that basis.

This detailed analysis covers the issues of permission for destroying goods, rejection of abandonment request, duty imposition, interpretation of the Customs Act, and dispute over penalties, providing a comprehensive overview of the judgment by the Appellate Tribunal CESTAT, New Delhi.