2018 (6) TMI 140 - AT - Customs

100% EOU - debonding of unit - Duty on depreciated value of capital goods at applicable rates at the time of debonding - Import of goods without payment of duty - imported goods not used in manufacture - case of the Revenue against the appellant is that they have never started any manufacturing activity and being 100% EOU, imported capital goods as well as inputs without payment of duty - Held that - The Revenue cannot claim that the appellants have never used the imported goods for discharging their export obligation. Admittedly, the appellant could not fulfil export obligation and therefore, they applied for de-bonding with the Development Commissioner and the same has been allowed to them. The appellant was required to pay duty on capital goods at applicable rates at the time of payment of duty - appellant has rightly paid duty on depreciated value of capital goods at applicable rates at the time of debonding. Penalties u/s 112 of CA - Held that - No penalties are imposable on the appellants as proceedings against the appellants has already been closed by the Development Commissioner and no specific provision has been provided for imposing penalties under Section 112 of the Customs Act. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against duty demand on imported goods under LoP without payment of duty and non-usage for manufacture.

Analysis:
The appellant, a 100% EOU, imported goods duty-free under LoP but failed to fulfill export obligations. The Development Commissioner allowed de-bonding, requiring duty payment on goods in stock or export. The appellant paid duty on depreciated value of capital goods, admitted by the Commissioner. Customs issued show cause notice demanding total duty saved, alleging non-usage for manufacture. Appellant argued factory visit confirmed manufacturing activity. Revenue claimed duty recovery due to unmet export obligations.

Analysis (contd.):
The Tribunal found evidence of manufacturing activity and upheld appellant's duty payment on depreciated value at debonding rates. Precedents supported this approach, emphasizing duty payment during de-bonding. No penalties were imposed as proceedings were closed by the Development Commissioner, lacking specific provisions under the Customs Act. The impugned order was set aside, and appeals allowed with consequential relief.