2014 (1) TMI 1393 - AT - Customs

Duty demand - Depreciation on goods - Valuation of goods - Assessee does not dispute liability of duty - Commissioner (Appeals) held that the warehousing sanction had not expired when the demand was raised and in fact it was extended upto 8.9.2005 and therefore the demands originally issued is not sustainable and set aside the demand - Held that - original demand is not legally sustainable because it was made even when the warehousing permission was valid and further the question whether they are eligible for depreciation was not looked into. We find that in fact the demand was confirmed without hearing the respondent. Therefore, we do not find any fault with the direction of the Commissioner (Appeals) re-storing status quo ante and directing that the matter be decided afresh keeping all the relevant facts and law in mind. While coming to this conclusion we take note of the submission of the respondent that they are not disowning their duty liability. They only want a fair and correct determination of the duty liability after allowing depreciation as per law and taking date of de-bonding into account while arriving at interest liability - Decided against Revenue.

Summary

Issues involved:
1. Early hearing application for de-bonding of a 100% EOU.
2. Validity of demand notice for duty payment on capital goods.
3. Appeal against Commissioner (Appeals) decision on demand validity and finality.
4. Export obligation fulfillment and duty liability.
5. Dispute on quantification of duty and depreciation for machinery.
6. Legality of demand issuance before expiry of warehousing permission.
7. Recovery action timing and ten-year period for demand.

Analysis:

1. The respondent filed a miscellaneous application for early hearing due to the pending de-bonding issue of a 100% EOU since 2005, affecting asset disposal and creditor settlements. The Tribunal allowed early hearing due to the significant demand amount exceeding Rs. 1 crore and the age of the matter. Both parties were heard for merit disposal.

2. The respondent, granted a green card for a 100% EOU, failed to fulfill the total export obligation, leading to duty recovery action on imported capital goods. The demand notice issued in 2003 was confirmed, but the respondent challenged it before the Commissioner (Appeals), who set it aside based on the non-renewal of warehousing period and lack of finality in the demand.

3. The Revenue contended that the original demand had finality and the export obligation non-fulfillment justified duty payment, citing a notification. However, the Tribunal found the original demand legally unsustainable as it was issued during a valid warehousing period and without proper quantification, supporting the Commissioner (Appeals) decision.

4. The respondent argued willingness to pay duty liability but disputed the demand quantification and validity based on warehousing permission expiry. They emphasized the need for fair quantification considering depreciation and de-bonding date for interest liability calculation, pointing out the premature recovery action by the Department.

5. The Tribunal upheld the Commissioner (Appeals) decision, noting the unsustainable original demand, lack of proper hearing, and the need for a correct determination of duty liability. The respondent's acknowledgment of duty liability and request for fair quantification were considered valid, leading to the rejection of the Revenue's appeal.

6. The Tribunal concluded by rejecting the Revenue's appeal and disposing of the miscellaneous application, emphasizing the importance of fair determination and proper consideration of all relevant factors in deciding duty liability disputes.