2018 (8) TMI 1242 - AT - Customs

100% EOU - customs private bonded warehouse - whether the appellant has violated the Provisions of Section 58 of the Customs Act, 1962 read with Notification No. 52/2003 -CUS in relation to capital goods which were imported without payment of duty? Held that - There is no dispute that the capital goods which were imported without payment of duty claiming the benefit of Notification No. 52/2003 were transferred out of the EOU after their importation and bonding in the EOU. Though, there is a claim of the appellant the machinery was not installed in DTA unit, it is a finding of the Adjudicating Authority that the machinery was installed and used for the manufacture of the goods in DTA unit - Both the Lower Authorities have recorded a concurrent finding and the machinery which were imported by claiming the exemption for installation in EOU, were not installed, were found in DTA. Appellant was not able to produce any documents to show that they done so by seeking the permission of the Revenue Authorities. In the absence of any such evidence, the action of the appellant to remove the machinery from EOU to DTA without any permission from the authorities, is incorrect and the findings reached by the lower authorities is correct - also, penalties imposed by First Appellate Authority are appropriate. Appeal dismissed - decided against appellant.

Summary

Issues:
Violation of Provisions of Section 58 of the Customs Act, 1962 read with Notification No. 52/2003 -CUS in relation to imported capital goods.

Detailed Analysis:

1. Background:
The appellant, a 100% EOU engaged in manufacturing ophthalmic lenses, imported machinery without duty payment under Notification No. 52/2003. The machinery was diverted to a sister unit in DTA without paying appropriate duties, leading to a show cause notice for confiscation and duty demand.

2. Confiscation and Penalties:
The original authority confiscated the goods under Section 111(o) but allowed redemption on payment of a specified amount. Penalties were imposed on the appellant and its officials under Sections 112 and 117 of the Customs Act, 1962.

3. First Appellate Authority:
An appeal was filed challenging the penalties and duty demands. The First Appellate Authority reduced the penalties but upheld the duty confirmation, leading to appeals by both the Revenue and the importer appellant.

4. Appellant's Argument:
The appellant argued that the machinery was moved out of the EOU for testing purposes only, with no intention of permanent shifting. They contended that since the goods were not used for production in the DTA unit, duty demand and penalties were unjustified.

5. Departmental Representative's Stand:
The Departmental Representative supported the findings of the First Appellate Authority.

6. Key Issue:
The central issue in the appeal was whether the appellant violated the Customs Act and Notification No. 52/2003 by transferring imported capital goods without duty payment.

7. Adjudication and Findings:
Both lower authorities found that the machinery, imported duty-free for installation in the EOU, was instead installed and used in the DTA unit without permission. The appellant failed to provide evidence of seeking authorization for this transfer.

8. Decision and Rationale:
The appellate tribunal upheld the lower authorities' findings, stating that the appellant's unauthorized transfer of machinery from EOU to DTA without permission was incorrect. Consequently, the penalties imposed by the First Appellate Authority were deemed appropriate.

9. Final Verdict:
The tribunal concluded that the impugned order was legally sound and warranted no interference, leading to the rejection of the appeals from both parties.

This comprehensive analysis highlights the key legal issues, arguments presented, findings of the authorities, and the tribunal's decision, providing a detailed overview of the judgment.