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2019 (6) TMI 1538 - AT - Customs100% EOU - import of capital goods without payment of duty - non-fulfilment of export obligation due to recession in the international market - demand on the ground that the appellant had failed to achieve positive NFE and duty forgone proportionate to the ratio of unachieved NFE is required to be paid along with interest and penalty - paragraph (3) (d) (ii) of notification dated 31.03.2003 - HELD THAT - Paragraph 4 in the said notification provides that removal of the capital goods from the place of installation in the EOU can be done subject to fulfilment of the conditions/limitations imposed in the Export and Import Policy. It has also been provided that capital goods can be taken to any other unit in a Special Economic Zone or to other Export Oriented Undertaking etc., without payment of duty for the purpose of manufacture and export of the final product. It is not the case of Revenue that the appellant had not complied with the above provisions laid down in the FTP and the HBP. Since, the capital goods were supplied by the appellant to the SEZ unit, duly approved by the Development Commissioner; the requirements of the Export and Import Policy have been duly complied with. Thus, the adjudged demands cannot be fastened on the appellant. Appeal allowed - decided in favor of appellant.
Issues:
- Duty liability of an EOU for unachieved positive NFE and duty forgone proportionate to unachieved NFE. Analysis: The case involved an EOU unit engaged in manufacturing plastic disposable items under the 100% EOU Scheme. The appellant had imported capital goods without duty payment for manufacturing and exporting finished goods. Due to a recession, the appellant failed to achieve the export obligation and applied for de-bonding from the EOU Scheme. Subsequently, the appellant sought to transfer capital goods to an SEZ unit, which was approved by the Development Commissioner. The Central Excise Department initiated proceedings against the appellant for unachieved positive NFE, leading to a duty demand of ?5.44 Lacs. The adjudication order confirmed the duty demand, interest, and penalty. On appeal, the Commissioner upheld the demands, citing the failure to achieve positive NFE. However, the Tribunal analyzed the relevant provisions of the Export and Import Policy, Foreign Trade Policy, and Handbook of Procedure. It noted that the appellant had complied with the conditions for transferring capital goods to the SEZ unit, as approved by the Development Commissioner. As the appellant had met the requirements, the Tribunal held that the duty liability could not be imposed on the appellant. Consequently, the Tribunal set aside the Commissioner's order and allowed the appeal in favor of the appellant. This judgment primarily addressed the duty liability of an EOU concerning unachieved positive NFE and duty forgone proportionate to unachieved NFE. The Tribunal emphasized the importance of complying with the provisions of the Export and Import Policy, Foreign Trade Policy, and Handbook of Procedure when transferring capital goods to another unit. By analyzing the appellant's adherence to the regulations and approval from the Development Commissioner for the transfer of capital goods to the SEZ unit, the Tribunal concluded that the duty demands could not be imposed. The decision highlights the significance of fulfilling policy requirements in determining duty liabilities for EOUs and underscores the need for proper documentation and approvals when dealing with such transactions.
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