2006 (3) TMI 668 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 123/81-C.E regarding duty exemption for 100% Export Oriented Units.
2. Confiscation of goods procured without payment of duty under the notification.
3. Appeal against the adjudication order passed by the Commissioner of Central Excise.

Analysis:
The judgment delivered by Appellate Tribunal CESTAT, New Delhi involved the interpretation of Notification No. 123/81-C.E concerning the duty exemption for 100% Export Oriented Units. The case revolved around goods procured without payment of duty under the said notification and their subsequent confiscation. The appellants, registered as 100% Export Oriented Unit, faced issues when certain goods received without duty payment were found shifted outside the premises of EOU during a Revenue visit. The adjudicating authority confiscated the goods, imposed a redemption fine of Rs.10 lakhs, and levied a personal penalty on the appellant.

The key contention raised by the appellant in the appeal was that the goods procured without duty payment were within the customs bonded area of EOU and, therefore, not liable for confiscation. The appellant argued that the goods were initially installed within the bonded area but were later shifted outside due to quality issues with other export products. The appellant asserted that the goods remained at the same location and were exclusively used for producing goods meant for export, thus claiming the benefit of the notification.

Notification No. 123/81 provides exemptions for capital goods, components, raw materials, consumables, spares, and packaging materials for 100% Export Oriented Undertakings. It stipulates that goods procured without duty payment are to be used solely for manufacturing goods meant for export within the factory premises. However, in this case, the appellants admitted that the goods in question, procured under the notification, were shifted outside the EOU premises and used for manufacturing goods outside the EOU, leading to the dismissal of the appeal by the Tribunal. The judgment highlighted the importance of adhering to the conditions specified in the notification for duty exemptions and the consequences of non-compliance.

In conclusion, the Tribunal upheld the adjudication order passed by the Commissioner of Central Excise, emphasizing the need for strict adherence to the provisions of notifications governing duty exemptions for 100% Export Oriented Units. The judgment serves as a reminder of the legal obligations and restrictions imposed on entities availing such benefits, emphasizing the importance of compliance with the specified conditions to avoid penalties and confiscation of goods.