2007 (12) TMI 93 - AT - Customs

EOU - procured goods free of Customs & Excise duty - export obligation was fulfilled partially due to business exigencies - as the appellant had put to use the imported capital goods for fulfillment of export obligation, duty liability will be computed after giving the benefit of depreciation - Moreover, the domestic sale without taking the approval of the Development Comm. does not appear a very serious offence Penalty reduced & original authority is directed to recompute duty liability

Summary

Issues:
Appeal against duty demand, non-fulfillment of export obligation, violation of Customs and Central Excise Notification, penalty imposition, benefit of depreciation in duty computation.

Analysis:
The appeal was filed against an Order-in-Original by the Commissioner of Customs, Bangalore, regarding duty demands on imported capital goods and raw materials. The appellant, a 100% Export Oriented Unit, failed to meet export obligations and conducted domestic sales without permission. The Commissioner confirmed duty demands for Customs and Central Excise duty, along with interest and penalties. The appellant had paid a significant amount under protest, which was appropriated by the Commissioner. The impugned goods were deemed liable for confiscation, and a penalty was imposed on the appellant. The appellant challenged the order before the Tribunal.

The Tribunal noted that the appellant imported goods duty-free under the EOU scheme and procured indigenous goods without duty. While the appellant partially fulfilled export obligations, they also made unauthorized domestic sales. The Development Commissioner had penalized the appellant for these violations. The Tribunal observed that the duty computation did not consider depreciation or the actual usage of goods for export obligations. Therefore, the duty demand on consumed raw materials was deemed incorrect. The Tribunal decided to remand the matter to the original authority for re-computation of duty liability, considering depreciation and partial fulfillment of export obligations. No further penalty was warranted for the unauthorized domestic sales, as a penalty had already been imposed by the Development Commissioner.

In conclusion, the Tribunal remanded the case for re-computation of duty liability, directing the original authority to issue a new order within three months. The Tribunal emphasized the need to consider depreciation and partial fulfillment of export obligations in the revised duty calculation. The unauthorized domestic sales did not warrant an additional penalty, given the existing penalty imposed by the Development Commissioner. The decision was pronounced in open court on 10-12-2007.