2017 (6) TMI 196 - AT - Customs

100% EOU - procurement of ascorbic acid without payment of duties (including anti-dumping duty) - permission granted by Development Commissioner for addition to the list of goods to be manufactured and exported by M/s Suprapti Plastics Ltd - Held that - It is abundantly clear that the goods cleared into the domestic tariff area were not such as were entitled to be cleared at the concessional rate of duty available to Export Oriented Units. Therefore the clearance has been of goods that were not in conformity with the permission granted under the Foreign Trade Policy. Consequently the goods are liable for confiscation - there is no flaw in the demand for duty and in imposition of penalty. M/s Vishal Export Overseas Ltd was the beneficiary of the availment of concessional rate of duty as well as the escapement of anti-dumping duty. In the absence of any evidence to show that the transaction was a bona fide one the imposition of penalty on them is not invalid. The roles of S/Shri Prashant Tanna Ajay Tanna and Pradeep Mehta have been elaborated in the impugned order and no evidence has been led to controvert these findings. M/s Pet Plastics was also able to clear goods into the Domestic Tariff Area (DTA) without payment of full duties that were otherwise applicable. No evidence is brought on record to show that this was a bona fide transaction. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Challenge to order-in-original dated 29th July 2005 of Commissioner of Central Excise.
2. Allegations of conspiracy to obtain inclusion of a new product in Letter of Permission.
3. Allegations of clearance of goods without manufacturing.
4. Confiscation of imported goods and imposition of fines and penalties.
5. Interpretation of Letter of Permission and compliance with Foreign Trade Policy.

Analysis:

1. The appeals were filed against the order-in-original dated 29th July 2005 of the Commissioner of Central Excise, Thane-II. The core issue revolved around the imports by an Export Oriented Unit (EOU) and the subsequent challenges faced by the appellants regarding the said order.

2. Allegations were made that the EOU conspired to include a new product in the Letter of Permission (LoP) to evade duties and provide goods at concessional rates. The unit was accused of procuring goods without payment of duties and clearing them without actual manufacturing, contrary to EOU obligations.

3. Concerns were raised about the lack of manufacturing activity at the unit, supported by evidence of unused machinery and utilities. The clearance of goods without proper manufacturing processes raised questions about compliance with EOU regulations and duty liabilities.

4. The judgment confirmed the confiscation of imported goods, imposition of fines, and penalties on various parties involved in the alleged scheme. The penalties were justified based on the findings of the original authority and the roles played by different entities in the transactions.

5. The interpretation of the Letter of Permission and compliance with the Foreign Trade Policy were crucial aspects of the case. The discrepancy between the permitted products and the goods cleared, along with the absence of necessary permissions, led to the rejection of appeals and the upholding of the impugned order.

This detailed analysis of the judgment highlights the key issues, allegations, findings, and legal interpretations involved in the case, providing a comprehensive understanding of the legal proceedings and outcomes.