2011 (11) TMI 140 - AT - Customs

Export Oriented Unit (E.O.U.) under STPI scheme - Customs Private Bonded Warehouse Licence obtained on 22.01.1999 for 5 years on investigation in 2006 it is found that goods had been removed from the bonded premises - recovery of duty foregone on the goods - Held that - The circumstances in which the goods were removed from the bonded premises were not properly considered by the lower authorities. It is not in dispute that warehouse licence expired on 21.1.2004. The unit can, therefore, be deemed to be de-bonded with effect from that date particularly, as there was no objection from the STPI authorities. Therefore, the assessee is liable to pay dues of Customs and Central Excise on the imported and indigenous capital goods respectively under Section 28 of the Customs Act and Section 11A of the Central Excise Act respectively with applicable interest on it. However, the quanta of these dues required to be re-worked out by the original authority after granting depreciation of value in accordance with law. Quantum of fine & penalty is reduced.

Summary

Issues: Waiver of pre-deposit and stay sought by appellants, duty demands on imported capital goods and indigenous goods, penalties imposed, appeal against order-in-original and Commissioner (Appeals) decision, consideration of circumstances of goods removal, depreciation of goods value, reduction of fine and penalties.

Analysis:
The appellants sought waiver of pre-deposit and stay regarding duty demands and penalties imposed. The main appellant, an Export Oriented Unit under the STPI scheme, faced demands on imported capital goods and indigenous goods, along with penalties. The Customs duty demand on imported goods and Central Excise duty demand on indigenous goods were contested after goods were found removed from bonded premises. The original authority's order included cancellation of license, confiscation of goods, duty demands, interest, penalties, and invoking a bond for recovery. The Commissioner (Appeals) upheld the order with a reduced penalty. The appellants argued that due to the Managing Director's illness and financial crisis, they shifted premises and stopped production, fulfilling export obligations. They claimed that all capital goods were intact, and duty demands should consider depreciation. The appellants sought reduction of fine and penalties, which the respondent opposed.

Upon careful consideration, the Tribunal noted the circumstances of goods removal were not properly considered. The Managing Director's illness, age, and expired warehouse license indicated de-bonding, supported by STPI authorities. The duty demands were upheld, but the amounts needed re-calculation with depreciation. Interest on duties had to be paid at applicable rates. The confiscation of goods was upheld, but the fine was reduced to Rs. 50,000, and the penalty on the appellant was also reduced to Rs. 50,000, with the penalty on the Managing Director vacated.

In conclusion, one appeal was allowed, and the other was disposed of with reduced fines and penalties, directing the original authority to re-calculate duty amounts and interest. The stay petitions were also disposed of accordingly.