2009 (1) TMI 235 - AT - Central Excise

100% EOU Export Obligation non fulfillment of - Held that - appellant had tried to fulfill the export obligation during the periods 1995-96 to 2000-01 but fell short - Development Commissioner had held against the appellant that they are guilt for non-fulfilment of minimum export obligation and hence, imposed a penalty of Rs. 10,000/-, which was paid by the appellants. - the Development Commissioner had suo motu cancelled the approval of EOU to the appellants Demand of duty works out by the adjudicating authority confirmed Inputs in factory premises and inputs contained in finished goods allowed to be destroyed without payment of duty redemption fine in lieu of confiscation reduced penalty imposed u/s 112 upheld

Summary

Issues:
Non-fulfilment of minimum export obligation by the appellant leading to penalty, confiscation of capital goods and raw materials, imposition of interest, and penalty under the Customs Act, 1962.

Analysis:

The case involved an appeal against an Order-in-Original due to the non-fulfilment of minimum export obligation by the appellant, a manufacturer and exporter of optical lenses. The appellant was issued a Letter of Permission by the Ministry of Industry for the manufacture of ophthalmic lenses and had a Customs Bonded Warehouse Licence. The appellant failed to meet the minimum export obligation set by the authorities, leading to a penalty imposed by the Development Commissioner. The appellant argued that fulfilling the export obligation became impossible due to competition and market changes, citing various judicial precedents to support their case.

The Adjudicating Authority, after considering the submissions, ordered the payment of total customs duty on imported goods, confiscation of capital goods and raw materials, imposition of a penalty, and interest on duty payable. The appellant challenged the order, arguing that the duty liability on capital goods should be nil after depreciation and that the redemption fine imposed was unjustifiable. They also contended that destruction of obsolete raw materials should exempt them from duty payment as per the Export-Import Policy.

Upon review, the Tribunal found that the appellant had indeed failed to fulfill the export obligation, leading to penalty and cancellation of approval. The Tribunal upheld the confiscation of capital goods and raw materials but reduced the redemption fine. The Tribunal also agreed with the appellant's argument regarding the destruction of raw materials and remanded the matter to the Adjudicating Authority for further consideration. The penalty imposed by the Adjudicating Authority was upheld, and the case was disposed of accordingly.

In conclusion, the Tribunal acknowledged the challenges faced by the appellant in meeting the export obligation but upheld the penalties and confiscation while providing some relief by reducing the redemption fine. The case highlighted the importance of fulfilling export obligations under the Customs Act, 1962, and the need for a balanced approach in enforcing penalties and duties based on the circumstances of each case.