2006 (5) TMI 369 - AT - Customs

Summary

Issues:
1. Application for waiver of pre-deposit of duty and penalty by a 100% Export Oriented Unit.
2. Interpretation of Notification No. 53/97-Cus and Notification No. 52/2003 regarding procurement of goods without duty payment.
3. Denial of benefit of notification on the grounds of goods not being capital goods and used for aesthetic purposes.
4. Jurisdiction of Board of Approval in granting approval for procurement of duty-free goods and its relation to exemption notifications.

Analysis:
The case involved an application for the waiver of pre-deposit of duty and penalty by a 100% Export Oriented Unit (EOU) that imported goods under Notification No. 53/97-Cus and obtained certain goods without payment of Central Excise duty with the approval of the Board of Approval. The Revenue contested the application, citing a previous Tribunal decision denying the benefit of the notification as the goods were deemed not to be capital goods but used for aesthetic purposes.

The applicant argued that the goods were procured with the prior approval of the Board of Approval under Notification No. 52/2003, which allowed a 100% EOU to procure goods without duty payment for production of export goods. They highlighted the difference in approval conditions between the present case and the previous case, emphasizing that the goods were used for the specified purpose as approved by the Board of Approval.

The Tribunal examined the conditions of the notification and noted that a 100% EOU could procure capital goods or items required for export production with Board of Approval approval. The applicant had sought approval for duty-free goods to create specific production conditions, which was granted by the Ministry of Commerce and Industry. The Tribunal disagreed with the adjudicating authority's view that Board of Approval's permission did not impact duty exemption, stating that the exemption was indeed tied to Board of Approval approval as per the Ministry of Finance's notification.

Consequently, the Tribunal found merit in the applicant's case and waived the pre-deposit of duty and penalty, allowing the stay petition. The judgment clarified the importance of Board of Approval approval in relation to duty exemptions for 100% EOUs, emphasizing the specific conditions and approvals required for duty-free procurement of goods for export production.