2007 (11) TMI 166 - AT - Customs

As per not. 53/97 & 1/95, EOU procured imported and indigenous goods with out payment of duty under CT-3 certificate - Appellants, EOU do not have any case on merits as they have not utilized the imported goods in the mfg. of the final products in terms of the Not. 53/97 & 1/95 - time provided for completing the export obligation expired in 2005 and the same has not been extended - so, the order passed by both the authorities of imposing demand & penalty is justified

Summary

Issues:
1. Duty demand on imported and indigenous goods in a 100% EOU under specific notifications.
2. Imposition of interest and penalty for violation of conditions of the notifications.

Analysis:
1. The judgment dealt with the duty demand on imported and indigenous goods in a 100% Export Oriented Unit (EOU) under particular notifications. The Commissioner's findings emphasized the conditions under Notification No. 53/97-Cus and 1/95-C.E. regarding duty exemption for goods procured for manufacturing export products. The appellants failed to utilize the goods for export production, leading to penalty imposition by the Deputy Commissioner of VEPZ. The appellants argued against duty demand without express permission, but the Commissioner ruled in favor of the duty demand, interest, and penalty due to non-compliance with notification conditions. The judgment highlighted the necessity of legal permission for warehousing extensions beyond five years and rejected the appellants' contentions, affirming the duty demand against procured goods.

2. Regarding the imposition of interest and penalty for violating notification conditions, the judgment outlined the appellants' failure to fulfill export obligations despite the lapse of seven years. The Commissioner justified the interest demand from the finalization of assessment and upheld the penalty due to deliberate default by the appellants. The judgment emphasized that the Department cannot indefinitely postpone duty demands for non-performance, supporting the imposition of interest and penalty under statute and bond conditions. The appellants' plea for extension based on BIFR registration and lack of marketing opportunities for manufactured goods was considered but ultimately dismissed, confirming the imposition of interest and penalty as per the Order-in-Original.

Conclusion:
The Appellate Tribunal dismissed the appeal and stay application, upholding the Order-in-Original's duty demand, interest, and penalty due to the appellants' non-compliance with export obligations and notification conditions. The judgment emphasized the legal requirements for warehousing extensions and rejected the appellants' arguments against duty demand, interest, and penalty, concluding that no grounds existed to challenge the impugned order's legality.