2018 (7) TMI 1297 - AT - Customs

Fulfillment of NFEP in terms of LOP issued by Development Commissioner vide F.No.FSEZ/LIC/T-10/99/307 dated 13.04.2004 - Held that - In Circular No.21/95-Cus dated 10.03.1995 and Circular No.122/95-Cus dated 28.11.1995, it has been clarified that the case of violation of the Exim Policy by the 100% EOU/EPZ be fresh settled by the Development Commissioner and only thereafter Customs should confirm the demand. On this account, that would avoid the situation wherein the allegation in the notice might be found unsustainable in terms of Exim Policy/Customs law and may have to be dropped by the Department itself. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Fulfillment of NFEP in terms of LOP issued by Development Commissioner.
2. Validity of the impugned order dropping the demand of ?1,81,11,759.
3. Prematurity of the show-cause notice issued by the Revenue.
4. Compliance with Circulars issued by CBEC regarding violation of Exim Policy by 100% EOU/EPZ.

Analysis:
1. The primary issue in this case revolves around the fulfillment of Net Foreign Exchange Earnings (NFEP) as per the Letter of Permission (LOP) issued by the Development Commissioner. The LOP was revised to include additional items for export, namely garments and jewelry. The dispute arose when the dis-similar items were deleted from the LOP, and the NFE achievement was to be calculated till the date of cancellation. The appellant argued that NFE was achieved through both exports and domestic clearances, complying with the Export & Import Policy.

2. The impugned order dropped the demand of ?1,81,11,759 based on the grounds mentioned in the Memorandum of Appeal. The Adjudicating Authority found that the show-cause notice was premature as the Development Commissioner had not made any adverse findings against the appellant. The Authority relied on Circulars issued by the CBEC, emphasizing that violations should be settled by the Development Commissioner before Customs confirms any demand to prevent unsustainable allegations.

3. The Revenue, represented by the ld.D.R., contended that the impugned order was issued to address CERA Audit Objections and protect revenue. However, upon inquiry, it was revealed that the D.R. was not informed of the status of the CERA Audit Objection by the Customs House. The Tribunal found that no show-cause notice was issued by the Development Commissioner, and thus, there was no contravention of the Policy.

4. The Tribunal upheld the impugned order, citing the Circulars issued by the CBEC, which outline the procedure for settling violations of the Exim Policy by 100% EOU/EPZ. The Tribunal emphasized the importance of awaiting a decision from the Development Commissioner before confirming any demand to avoid baseless allegations. As no communication was received from the Development Commissioner regarding any demand against the appellant, the appeal filed by the Revenue was dismissed.

This detailed analysis of the judgment highlights the key issues surrounding the fulfillment of NFEP, the validity of the impugned order, the prematurity of the show-cause notice, and the compliance with Circulars issued by the CBEC, providing a comprehensive overview of the case.