2017 (11) TMI 1185 - AT - Customs

100% EOU - N/N. 53/97-Customs and 1/95-CE. - Since the appellants did not fulfill the conditions of export for duty free procurement of capital goods and other items, the jurisdictional Commissioner initiated proceedings against them to demand and recover the customs duty/excise duty forgone in terms of the above notifications - Held that - The prime condition is that they have to manufacture and export the products from their units. They have not exported any product. After repeated extension of LOP, the same was terminated w.e.f. 1.4.2013. In fact the licensing authority, the Development Commissioner, Noida, categorically recorded the developments from the date of issue of LOP in 1995 and concluded that the appellants failed to fulfill the terms of the LOP and there is a violation of the FTDR read with FTP 2009-2014. As such, the violation of EXIM Policy and non-fulfilment of export conditions is clearly an admitted fact. Appellant was specifically asked as to the process of fresh adjudication based on all facts now in the knowledge of the appellant than can be completed by the Original Authority - Matter remanded for fresh consideration - appeal allowed by way of remand.

Summary

Issues:
Proceedings against appellant for non-fulfillment of export conditions and duty foregone, validity of Letter of Permission (LOP), termination of LOP, legality of impugned order, Customs Authorities' actions, violation of EXIM Policy, technical objection to proceedings.

Analysis:
The appeal challenged an order demanding customs and excise duty, confiscating goods, and imposing penalties on the appellant for not meeting export conditions as an Export Oriented Unit (EOU). The appellant had a valid Letter of Permission (LOP) until 31.03.2013, but Customs Authorities initiated proceedings for duty recovery due to non-compliance. The Development Commissioner terminated the LOP on 1.4.2013, citing violations of export obligations. The appellant contended that Customs proceedings were premature, as the LOP was valid until 31.03.2013. The Tribunal acknowledged the technical validity of the objection but remanded the case for fresh adjudication, considering all facts, including the LOP termination, to be analyzed by the Original Authority.

The appellant, permitted to operate as an EOU in 1995, failed to export any products despite repeated extensions of the LOP, which was ultimately terminated in 2013. The Development Commissioner confirmed the violation of export conditions and EXIM Policy. The appellant argued that Customs proceedings were premature, given the valid LOP until 31.03.2013. While acknowledging the technical objection's validity, the Tribunal remanded the case for a fresh decision, emphasizing the need for the Original Authority to consider all facts, including the LOP termination, and allow the appellant to present a defense with supporting documents.

The Original Authority's order demanding duty, confiscating goods, and imposing penalties on the appellant for non-fulfillment of export obligations as an EOU was challenged in the appeal. The appellant had a valid LOP until 31.03.2013, but Customs Authorities initiated proceedings for duty recovery due to non-compliance. The Development Commissioner terminated the LOP in 2013, citing violations of export conditions. The Tribunal recognized the technical objection but remanded the case for fresh adjudication, instructing the Original Authority to consider all relevant facts, including the LOP termination, and provide the appellant with an opportunity to present a defense with supporting documents.