2015 (9) TMI 931 - HC - Central Excise

100% EOU - Clandestine removal of goods - DTA clearances - Held that - Where it becomes necessary to shift the imported goods from one customs godown to another, it can be done only on the strength of a specific order passed by the competent authority in this behalf. In case, the appellant had permission from any superior authority for removal of the goods from a godown, without payment of customs duty, the same ought to have been presented before the incharge officer of the godown. It is only when such incharge officer is satisfied about the genuinity of the order, that he can be expected to release the goods without payment of the customs duty. The record discloses that the appellant did not produce the so-called order of the Development Commissioner, at any point of time nor it was shown to the incharge officer of the godown. The respondent as well as the Tribunal recorded specific findings to this effect. - Once there is an absolute prohibition against the sale of goods manufactured by the appellant in the DTA, the question of making any classification or distinction of the goods or purchases in the DTA, does not arise. - Decided against assessee.

Summary

Issues: Violation of customs duty payment and sale of goods in the Domestic Tariff Area (DTA).

Violation of Customs Duty Payment:
The appellant, a 100% export-oriented unit, was found to have removed imported goods from a notified customs godown without paying customs duty. The appellant argued that the removal was for preservation in another godown, but failed to produce any authorization for such removal. The Tribunal upheld that the removal was unauthorized as no permission was obtained from the incharge officer of the godown or any superior authority. The appellant's plea that permission from the Development Commissioner was obtained was not substantiated. The Tribunal's findings were based on the lack of evidence supporting the appellant's claims, leading to the dismissal of the appeal.

Sale of Goods in DTA:
The appellant was also accused of selling goods within the Domestic Tariff Area (DTA), which is prohibited for export-oriented units. The appellant contended that the distribution of seed to farmers for prawn cultivation and subsequent export was not a sale in the DTA. However, the respondent argued that the absolute prohibition against selling goods in the DTA applies regardless of the intended use of the goods. The Tribunal found no legal basis for the appellant's distinction between different instances of sales in the DTA. The judgment emphasized that export-oriented units are restricted from selling goods domestically and must export their entire production.

Conclusion:
The High Court dismissed the appeal, ruling against the appellant on both issues. The judgment highlighted the strict regulations governing export-oriented units, emphasizing the requirement to pay customs duty on imported goods and the prohibition against selling goods in the DTA. The lack of proper authorization for the removal of goods and the absolute prohibition on domestic sales were key factors in the court's decision. The appellant's arguments were deemed unsubstantiated, leading to the dismissal of the appeal without costs.