2012 (4) TMI 43 - HC - Customs

Demand - Notification Nos.13/81-Cus dated 9/2/1981 and 53/97-Cus dated 3/6/1997 - Assessee, a 100% Export Oriented Unit (EOU) failed to fulfill the export obligation even after importing duty free import of raw materials to the tune of Rs.3.94 crores - The Tribunal held that the extension of the Bonding period could be granted even after the expiry of the bond period in appropriate cases and accordingly, granted extension of the bond period to the assessee. It is not in dispute that in the present case, the respondent-assessee had neither sought re-warehousing of the goods nor sought extension of the bond period. - matter remanded back to tribunal for fresh decision.

Summary

Issues:
1. Interpretation of legal provisions regarding customs duty and interest on raw material procurement.
2. Demand for central excise duty on indigenous raw material procurement.
3. Imposition of penalties under the Customs Act and Central Excise Rules.
4. Failure of a 100% Export Oriented Unit (EOU) to fulfill export obligations.

Analysis:
1. The appeal raised questions regarding the correctness of the CESTAT's decisions on customs duty and interest on raw material procurement without payment of duty. The appellant contended that the duty and interest were demanded due to contravention of bond conditions under specific notifications. The court examined the legal provisions and found discrepancies in the CESTAT's reasoning, leading to a decision to quash and set aside the impugned order for de novo consideration.

2. The issue of demanding central excise duty on indigenous raw material procurement without payment was also contested. The court noted the invocation of specific rules and notifications, emphasizing the applicability of certain provisions to 100% EOU. The court highlighted the discrepancies in the CESTAT's decision and directed the matter to be restored for fresh consideration in accordance with the law.

3. Regarding penalties under the Customs Act and Central Excise Rules, the court addressed the imposition of penalties for non-compliance with provisions and fraudulent intentions. The court analyzed the legal framework and found errors in the CESTAT's conclusions, leading to the decision to quash the impugned order and remand the matter for reconsideration.

4. The case involved a 100% EOU failing to fulfill export obligations despite duty-free import of raw materials. The court observed the procedural lapses in granting options for re-warehousing or re-exporting unutilized raw materials. The court acknowledged the parties' agreement to quash the CESTAT's order and restore the matter for fresh consideration, emphasizing the importance of compliance with bond conditions and export obligations for EOUs.

In conclusion, the High Court of Bombay quashed the impugned order, set aside the decision, and restored the matter for de novo consideration by the Tribunal, highlighting the necessity for adherence to legal provisions and procedural requirements in matters concerning customs duty, central excise duty, penalties, and export obligations for EOUs.