2018 (1) TMI 1212 - HC - Central Excise

100% EOU - Debonding of unit - Whether the Tribunal is right in according permission for destruction of obsolete goods under Notification No.71/2000-Cus which became effective only from 22.05.2000, to the goods that became obsolete in the past, well before the Notification No.71/2000-Cus came into effect and for which show cause notice was issued on 11.04.2000 for the goods imported and purchased during 1993 and 1995 respectively? - Held that - In the cases where goods cannot be destroyed within the Zone because of the safety reasons or Municipal Corporation s regulations, the Commissioner may permit destruction outside the zone subject such conditions as may be prescribed by the Commissioner since this is only a procedural requirement and non-substantive in nature. Show cause notice dated 11.04.2000, has resulted in order in original dated 28.12.2001. Having regard to the intention, in issuing the above circulars, and considering the reasons assigned by CESTAT, Madras, in granting permission to destroy the absolete goods, we are of the view that the order impugned before us cannot said to be erroneous. Question whether, it is within the export processing zone or free trade zone, does not arise, for consideration - appeal dismissed.

Summary

Issues Involved:
1. Permission for destruction of obsolete goods under Notification No.71/2000-Cus.
2. Applicability of Notification No.71/2000-Cus to indigenously procured raw materials.
3. Application of Customs Notification No.133/94-Cus and Circular No.18/98-Cus to 100% EOU units outside export processing zones or free trade zones.

Issue-wise Detailed Analysis:

1. Permission for destruction of obsolete goods under Notification No.71/2000-Cus:
The appellant challenged the CESTAT's decision to allow the destruction of obsolete goods under Notification No.71/2000-Cus, which became effective from 22.05.2000. The appellant argued that the goods became obsolete before the notification came into effect and the show cause notice was issued on 11.04.2000. The court noted that the relevant EXIM policy had already been amended before the show cause notice was issued, allowing for the destruction of obsolete goods with the permission of the Assistant Commissioner. The CESTAT had found that the capital goods and raw materials had become unfit for manufacture and obsolete in the market for actuators, thus justifying the permission for destruction. The court upheld CESTAT's decision, stating that the destruction of obsolete goods was permissible under the amended notification and circulars.

2. Applicability of Notification No.71/2000-Cus to indigenously procured raw materials:
The appellant contended that Notification No.71/2000-Cus, which amended Notification No.53/97-Cus, did not apply to raw materials procured indigenously under Notification No.1/95-Cus. The court observed that the CESTAT had directed the application for permission to destroy obsolete goods to be allowed under Notification No.71/2000-Cus. The court noted that the circulars and notifications provided for the destruction of capital goods and raw materials, whether imported or procured indigenously, with the permission of the customs authorities. Thus, the court found that the CESTAT's direction was in line with the applicable notifications and policies.

3. Application of Customs Notification No.133/94-Cus and Circular No.18/98-Cus to 100% EOU units outside export processing zones or free trade zones:
The appellant argued that the CESTAT's decision was based on Customs Notification No.133/94-Cus and Circular No.18/98-Cus, which were applicable to units within export processing zones or free trade zones, and not to 100% EOU units outside these zones. The court referred to Circular No.18/98-Cus, which clarified that actions taken under earlier notifications would be deemed to have been done under the corresponding provisions of the current notification. The court also noted that Circular No.49/2000-Cus allowed for the destruction of obsolete capital goods and spares without payment of duty, with prior permission from customs authorities. The court concluded that the CESTAT's reliance on these notifications and circulars was justified and applicable to the case at hand.

Conclusion:
The court dismissed the appeal, upholding the CESTAT's decision to allow the destruction of obsolete goods under the relevant notifications and circulars. The court found that the CESTAT's decision was consistent with the amended EXIM policy and the applicable notifications, and there was no error in granting permission for the destruction of obsolete goods. The substantial questions of law raised by the appellant were answered against the revenue.