2017 (10) TMI 795 - AT - Central Excise

Clandestine removal - re-warehousing of indigenously procured goods - N/N. 22/2003-CE dated 31.03.2003 - Revenue took a view that the benefit of N/N. 22/2003-CE was only available to the appellant as 100% EOU. However, since the appellant was converted from 100% EOU to an EPCG unit, the conditions of said notification were not fulfilled and the exemption contained therein was not admissible to the appellants - whether the 5% custom duty on the capital goods is applicable to the indigenous capital goods or the appellants are required to pay the duty which was forgone when the appellants availed N/N. 22/2003-CE? Held that - The duty involved on such clandestinely removed machinery was 13,22,559/-, which was paid by the appellants along with interest at full rate. The Customs Bonded Warehousing License of the appellant was thereafter suspended vide order-in-original dated 8.8.2005 issued by the Assistant Commissioner. The appellants were, therefore, required to pay duty of Customs and Central Excise on the remaining capital goods which were brought under the bond - the effective rate of customs duty on the capital goods imported under EPCG Scheme is prescribed under Notification 97/2004 @ 5% whereas no such Notification has been issued under Section 5A of Central Excise Act prescribing a similar concessional rate of duty in respect of indigenous capital goods supplied under EPCG Scheme. The deemed equivalence given by the DGFT to the imported and indigenous capital goods for the purpose of calculating export obligation can not be transported to another act, namely, Central Excise Act under which the obligations for procurement of indigenous goods under N/N. 22/2003-CE were made by the appellant and B-16 bond was also signed by appellant. The conditions in N/N 22/2003-CE are binding on the appellant in terms of the bond executed by them and the concessional duty under Central Excise is not covered under the Scheme of EPCG. Appeal dismissed - decided against appellant.

Summary

Issues:
- Conversion from 100% EOU to EPCG Scheme and applicability of duty rates.
- Benefit of Notification No.22/2003-CE for indigenously procured goods.
- Discharge of obligations under EOU and conversion to EPCG Scheme.
- Interpretation of EPCG Scheme provisions for imported vs. domestically procured capital goods.
- Equivalence of imported and indigenous goods for export obligation calculation.

Analysis:
- The appellant, a 100% EOU, faced issues regarding duty liability after converting to the EPCG Scheme. The case involved clandestine removal of machinery, suspension of Customs Bonded Warehouse License, and duty payment requirements.
- The appellant argued that duty liability changed to 5% under EPCG Scheme, including duty foregone under Notification 22/2003-CE. They cited relevant cases to support their stance.
- The respondent contended that EPCG Scheme only covers imported capital goods, not indigenously procured ones. They emphasized the obligation under Notification 22/2003-CE for duty payment on domestically procured goods.
- The Tribunal noted the conversion approval by the Development Commissioner and the duty payment by the appellant on all capital goods, including indigenously procured ones under Notification 22/2003-CE.
- The Tribunal analyzed the provisions of EPCG Scheme and Notification 22/2003-CE, concluding that duty on domestically procured goods was not covered under EPCG Scheme.
- Upholding the Commissioner (Appeals) findings, the Tribunal highlighted the obligations under Notification 22/2003-CE and the distinction between imported and indigenous goods for duty purposes.
- The Tribunal dismissed the appeal, noting that the deemed equivalence by DGFT for export obligation calculation did not extend to Central Excise Act obligations under Notification 22/2003-CE.
- The Tribunal differentiated the present case from previous judgments, emphasizing the unique circumstances of the conversion from 100% EOU to EPCG Scheme.

This detailed analysis of the judgment addresses the issues raised in the case comprehensively, covering the conversion process, duty liability, scheme provisions, and legal interpretations applied by the Tribunal to reach a decision.