2010 (6) TMI 539 - AT - Central Excise

Waiver of pre-deposit - EOU - The demands stand confirmed against the assessees who are a 100% EOU on the ground that they have not fulfilled the export obligation in entirety - only 50% of the export obligation stands fulfilled - he submission of the assessees that, prima facie, demand cannot be sustained to the extent as confirmed for the reason that the unit has fulfilled export obligation partially. Prima facie, the demand therefore would get reduced by 50%. -The argument that the demand should be further reduced on the ground that depreciation has to be taken into account is prima facie not tenable for the reason that the question of depreciation arises only on wear and tear of the capital goods and in case where capital goods have not been used for export obligation fulfillment, no depreciation can be granted - The unit has been declared as BIFR unit which by itself is not sufficient for grant of 100% waiver of pre-deposit in the light of the Apex Court s decision. Hence, direct the appellants to deposit an amount of Rs. 75,00,000/- towards duty and on such deposit the pre-deposit of the balance duty and penalties shall stand waived and recovery thereof staye.

Summary

Issues: Application for waiver of pre-deposit of customs duty, excise duty, and penalties due to non-fulfillment of export obligation by a 100% EOU.

The judgment by the Appellate Tribunal CESTAT, CHENNAI, involved a case where demands for customs duty, excise duty, and penalties were confirmed against the assessee, a 100% Export Oriented Unit (EOU), due to partial fulfillment of export obligations. The tribunal acknowledged that only approximately 50% of the export obligation had been met as per the order by the Development Commissioner. While recognizing the partial fulfillment, the tribunal held that the demand should be reduced by 50% prima facie. The argument for further reduction based on depreciation of capital goods was deemed not tenable since depreciation applies only when capital goods are used for export obligation fulfillment. The tribunal also dismissed the plea to consider amounts paid for debonding as duty payment. Additionally, the declaration of the unit as a BIFR unit was not considered sufficient for a 100% waiver of pre-deposit. Consequently, the tribunal directed the appellants to deposit Rs. 75,00,000 towards duty within eight weeks, with the balance duty and penalties waived upon such deposit, and recovery stayed pending the appeal. Non-compliance would lead to vacation of stay and dismissal of the appeal without prior notice.

The tribunal set a compliance reporting date of 6-9-2010, emphasizing the importance of adhering to the directed deposit timeline. The judgment, delivered by Vice-President Jyoti Balasundaram, highlighted the significance of fulfilling export obligations for EOU units and the legal principles governing duty demands and pre-deposit waivers in such cases. The decision aimed to strike a balance between acknowledging partial compliance and upholding duty payment obligations, emphasizing the need for timely and appropriate financial commitments to maintain the appeal's validity and stay on recovery proceedings.