2006 (10) TMI 329 - AT - Customs

Summary

Issues involved:
The issues involved in this case are the import of machinery under Notification No. 13/81-Cus., non-installation of the machinery, demand of duty, penalty under Section 112(a) of the Customs Act, 1962, and permission for re-export granted by the Development Commissioner.

Import of Machinery and Non-Installation:
The appellants imported machinery duty-free under Notification No. 13/81-Cus. for their 100% E.O.U. setup. While most machines were used for production, one machine, the Fluid Bed Granulator, was not installed due to unforeseen circumstances. The Revenue issued a Show Cause Notice proposing confiscation of the machinery under Section 111(o) of the Customs Act, 1962, and demanded duty, penalty, and interest. The appellants argued that the Notification did not specify a time limit for installation and that the machinery was not diverted for other purposes. They also highlighted extensions granted by the Development Commissioner for their E.O.U. status and the permission to re-export the machinery.

Permission for Re-Export and Violation of Conditions:
The appellants sought permission for re-export of the machinery due to market conditions and the inability to install it. The Development Commissioner granted this permission considering the circumstances. The appellants contended that the permission for re-export should absolve them from duty liability, as confirmed by the Board's Circular. They emphasized that the Revenue's demand of duty contradicted the Development Commissioner's decision and the purpose of re-export provisions.

Decision and Ruling:
The Tribunal found that the non-installation of the machinery was due to unforeseen circumstances and not a deliberate violation of the Notification conditions. They criticized the Revenue for proceeding against the appellants despite the Development Commissioner's permission for re-export. The Tribunal emphasized the need for government departments to work in harmony and set aside the impugned order, directing the Commissioner to consider the request for re-export in line with the Development Commissioner's decision.