2006 (7) TMI 501 - AT - Customs

100% EOU - Import of Capital Goods free of duty - Non-fulfilment of export obligation - main grievance of the appellants is that the benefit of depreciation on capital goods has not been given while calculating the duty in terms of Board s instructions on the subject - HELD THAT - Matter remanded to the Original Authority for giving the benefit of depreciation on the Capital Goods in accordance with the relevant Boards Instructions and decide the matter. Thus the appeal is allowed by way of remand. 100% EOU - procured Capital Goods by import and also by local purchase free of Customs and Central Excise duty under the EOU Scheme - failure to fulfil the export obligation - HELD THAT - It is seen that in the present case, the appellants has discharged 76% of the export obligation. Therefore, it cannot be said that they had not put to use the Capital Goods procured free of duty. In any case, it is seen that no de-bonding order has been issued by the competent authorities. In that case, the Capital Goods are still deemed to be under bond. In these circumstances, the duty demand is premature. Therefore, the impugned order is set aside and matter remanded to the original authority to decide the matter after the issue of debonding order by the competent authority. While computing the duty liability, the benefit of depreciation should be given - The appeal is allowed by way of remand.

Summary

Issues:
1. Duty demand on imported and indigenous goods for non-fulfilment of export obligations.
2. Benefit of depreciation not given while calculating duty.
3. Confiscation of Capital Goods and duty demand due to failure to fulfil export obligations.
4. Premature duty demand without de-bonding order.
5. Benefit of depreciation not considered for Capital Goods used for a significant period.
6. Ignoring mitigating factors in penalty imposition.
7. Demand of duty on raw materials and consumables already used.
8. Applicability of Rule 209A in case of export obligation non-compliance.
9. Justification of redemption fine.
10. Comparison with precedent regarding premature duty demand.

Analysis:
1. The first issue involves duty demands on imported and indigenous goods due to non-fulfilment of export obligations by the appellants. The Commissioner confirmed the duty demand but set aside the penalty, citing the appellants' failure as unintentional. The main grievance was the denial of depreciation benefits while calculating duty. The Tribunal remanded the matter to the Original Authority to consider depreciation in accordance with relevant Circulars.

2. The second issue pertains to the confiscation of Capital Goods and duty demand for failing to meet export obligations. The Commissioner imposed penalties and demanded duties, leading to an appeal by the appellants. The Tribunal found the duty demand premature as no de-bonding order was issued, and the Capital Goods were still under bond. The matter was remanded for consideration after the issuance of a de-bonding order, with instructions to provide depreciation benefits as per Tribunal decisions.

3. The third issue raises concerns over the premature duty demand without a de-bonding order and the lack of depreciation benefits for Capital Goods used extensively. The Tribunal noted that 76% of the export obligation was fulfilled, indicating the use of Capital Goods. As no de-bonding order was issued, the duty demand was deemed premature. The impugned order was set aside, and the issue remanded for further consideration post-debonding, with instructions to allow depreciation benefits.

4. The fourth issue emphasizes the appellants' arguments regarding the premature duty demand, lack of depreciation benefits, and the substantial export obligation discharge. Mitigating factors were ignored in penalty imposition, and the demand included duty on raw materials and consumables already utilized. The Tribunal found the premature duty demand unjustified without a de-bonding order and remanded the issue for reevaluation post-debonding, emphasizing the need to consider depreciation benefits.

5. The fifth issue addresses the applicability of Rule 209A in cases of export obligation non-compliance and the justification of redemption fines. The Tribunal found the duty demand premature without a de-bonding order, set aside the impugned order, and directed a reevaluation post-debonding, emphasizing the need to consider depreciation benefits as per Tribunal decisions. The justification for redemption fines was not addressed explicitly in the summary.