2012 (11) TMI 516 - AT - Central Excise

Debonding of 100% EOU depreciation on capital goods - duty is to be paid on the capital goods on the depreciated value - whether the depreciation is to be calculated as per the provisions of Notification No. 52/2003-C.E., or as per the provisions of Notification No. 53/97-Cus. In this case, the Commissioner has calculated the quantum of depreciation as per the provisions of Notification No. 52/2003-Cus. holding that it is the provisions of this Notification, which would be applicable Held that - Since the goods had been imported during June 1997 - July 1998 period by availing exemption under Notification No. 53/97-Cus., dated 3-6-1997, it is the provisions of this Notification, which would be applicable for determining the quantum of depreciation available to the appellant - In terms of para 5(a) of this Notification, the duty on the used capital goods at the time of debonding is payable on the depreciated value at the rate in force on the date of payment of duty and in terms of explanation to para 5(a) of the Notification, the depreciation is to be allowed for the period from the date of commencement of commercial production upto the date of payment of duty - matter has to be remanded to the Commissioner for re-quantification of the duty demand Penalty under Section 117 of Customs Act and Rule 26 of the Central Excise Rules, 2001/2002 - DTA clearances were in excess of the prescribed limit of 5% of export turnover and that they did not give intimation to the Department regarding their export performance Held that - Penalty on the Managing Director and Director cannot be imposed under Section 117 of Customs Act, 1962 and Rule 26 of Central Excise Rules - matter is remanded to the Commissioner for de novo adjudication for the purpose of re-quantification of the duty demand

Issues:
1. Duty calculation on imported capital goods for a 100% Floriculture EOU.
2. Confiscation of goods, imposition of penalties, and debonding of the EOU.
3. Dispute over the calculation of depreciation on capital goods.
4. Imposition of penalties on the Managing Director and Director.
5. Appeal against the Commissioner's order and remand for de novo adjudication.

Issue 1: Duty calculation on imported capital goods for a 100% Floriculture EOU:
The appellant company, a 100% Floriculture EOU, imported capital goods under duty exemption but failed to meet export obligations. The Jurisdictional Central Excise Officers seized the goods and issued a show cause notice for duty recovery, confiscation, and penalties. The Commissioner's order confirmed duty demands, imposed penalties, and confiscated goods. The Tribunal remanded the matter for de novo adjudication twice, focusing on duty quantification and penalty imposition.

Issue 2: Confiscation of goods, imposition of penalties, and debonding of the EOU:
The Commissioner initially imposed penalties and confirmed duty demands, leading to appeals by the appellants. The Tribunal set aside the Commissioner's order and remanded the case for fresh adjudication. Later, the Commissioner reiterated the penalties and duty demands, allowing debonding of the EOU with duty payment. Penalties were imposed on the Managing Director and Director, leading to further appeals.

Issue 3: Dispute over the calculation of depreciation on capital goods:
The dispute centered on the calculation of depreciation on capital goods at the time of debonding. The Commissioner calculated depreciation per Notification No. 52/2003-C.E., while the appellants argued for Notification No. 53/97-Cus. The Tribunal held that the depreciation should align with the provisions of the Notification under which the goods were imported, necessitating a re-quantification of duty demands.

Issue 4: Imposition of penalties on the Managing Director and Director:
Penalties were imposed on the Managing Director and Director for alleged contraventions related to DTA clearances and export performance reporting. However, the Tribunal found a lack of specific findings on these points, necessitating a de novo examination to determine if penalties were warranted.

Issue 5: Appeal against the Commissioner's order and remand for de novo adjudication:
The Tribunal set aside the impugned order and remanded the matter to the Commissioner for re-quantification of duty demands and a fresh assessment of penalties on the Managing Director and Director. The appeals and stay applications were disposed of accordingly.

This detailed analysis outlines the complex legal proceedings concerning duty calculations, penalties, and debonding in the context of a 100% Floriculture EOU, emphasizing the need for adherence to specific notification provisions and proper penalty imposition based on clear contraventions.

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