2011 (1) TMI 466 - AT - Customs

Waiver of pre-deposit - 100% EOU - The impugned order also confiscated the capital goods procured by the appellant indigenously as well as through import and offered to redeem the same on payment of a total fine of Rs. 1,50,00,000 - As per Section 129E of the Customs Act, no pre-deposit is required in respect of the goods which are under the control of the Department to hear and dispose appeal impugning such order - prima-facie, the appellant is liable to pay back the exemption availed by it in respect of the raw materials/consumables procured under the EOU scheme and were the subject of the said order - In the instant case, there is no dispute that the assessee undertook processes such as stirring, stabilizing, testing, labeling and packing of Hydrogen Peroxide received before it was exported - Moreover, for the period 1-4 2002 to 31-3-2005, the Development Commissioner had dropped proposal to penalize the EOU for failure to achieve positive NFE and to discharge export obligation - Decided in favour of the assessee

Issues:
1. Waiver of pre-deposit of duty and penalty confirmed against the appellant.
2. Confiscation of capital goods procured by the appellant.
3. Failure to fulfill export obligation and achieve required Net Foreign Exchange (NFE).
4. Demand of duty on raw materials/consumables.
5. Entitlement to exemption on goods procured under the EOU scheme.

Analysis:
1. The appellant, a 100% EOU engaged in manufacturing Sodium Perborate and Hydrogen Peroxide, sought waiver of pre-deposit of duty and penalty confirmed against it. The Commissioner of Customs demanded duty of Rs. 5,21,27,308/- and imposed a penalty of Rs. 2,40,10,000/-. The appellant had failed to achieve required NFE and export obligation, leading to the demand. However, the Tribunal found that the exemption availed on capital goods was not liable to be recovered if the goods were installed or put to use, as per relevant notifications. The appellant made a strong prima-facie case against the demand of entire exemption availed on the capital goods.

2. The capital goods procured by the appellant were confiscated, but the Tribunal noted that no pre-deposit is required for goods under the control of the Department for appeal disposal. The appellant argued that after allowing relevant depreciation, the duty due on the capital goods was significantly lower. Therefore, the Tribunal ordered a complete waiver of the dues adjudged against the appellant and stayed recovery pending appeal decision.

3. Regarding the export performance of the appellant, the Tribunal analyzed the export figures of Sodium Perborate and Hydrogen Peroxide over several years. The appellant's failure to fulfill export obligation and achieve NFE led to penalties imposed by the Development Commissioner. The Tribunal observed that the appellant may be liable to pay back the exemption availed on raw materials/consumables procured under the EOU scheme.

4. The Tribunal addressed the issue of entitlement to exemption on goods procured under the EOU scheme, specifically related to Hydrogen Peroxide exported by the appellant. The Tribunal found that the appellant had undertaken various manufacturing processes on the material before export, which aligned with the definition of "manufacture" as per the Exim Policy. The finding that the appellant did not discharge export obligation for Hydrogen Peroxide was deemed prima-facie unsustainable, especially considering the actions taken by the Development Commissioner in previous periods.

In conclusion, the Tribunal granted a complete waiver of the dues against the appellant and stayed recovery pending the appeal decision, considering the arguments presented and the legal provisions applicable to the case.

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