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2024 (1) TMI 466 - AT - CustomsDemand of duty foregone - SEZ unit - destruction of waste scrap or remnant arising in the course of manufacture - destruction of obsolete goods - HELD THAT - As regard to the judgment of Hon ble Supreme Court in the mater of COMMISSIONER OF CUSTOMS, HYDERABAD VERSUS M/S. PENNAR INDUSTRIES LTD. ANOTHER 2015 (8) TMI 56 - SUPREME COURT , the importer has claimed Exemption Entitlement Certificate under DEEC Scheme and imported the goods on actual use of condition but unable to export goods produced by them using imported material. Thereafter DGFT allowed them to meet the export obligation through 3rd party with a finding that they were neither mis utilization of raw material nor violation of any other conditions of license to the cost of exchequer - Apex Court held that DGFT order was not binding on Customs authorities for taking action under Customs Act, 1962. In the present case, there is no allegation that appellant had not fulfilled the export obligation. Appeal allowed.
Issues Involved:
1. Destruction of obsolete goods and payment of duty. 2. Compliance with Foreign Trade Policy and relevant notifications. 3. Past permissions and precedents regarding destruction of goods. 4. Premature appeal based on jurisdictional Range Officer's letter. Summary of Judgment: Issue 1: Destruction of Obsolete Goods and Payment of Duty The appellant argued that due to rapid technological advancements, the imported raw material/components became obsolete and unfit for manufacture. They sought permission from the jurisdictional authority to destroy these goods on payment of duty on the scrap value. The Tribunal noted that the impugned order did not consider the provisions of Para 6.15(b) of the Foreign Trade Policy read with Notification No. 53/2003-Cus dated 31.03.2003, which allows for the destruction of obsolete goods without the payment of duty other than applicable taxes under GST laws. Issue 2: Compliance with Foreign Trade Policy and Relevant Notifications The appellant highlighted that as per Board Circular No. 60/1999-Cus dated 10.09.1999, defective or unfit goods may not be re-exported and can be destroyed with the permission of the AC in charge. The Tribunal also referred to Notification No. 34/2015-Cus dated 25.05.2015, which specifies that duty shall not be leviable on destroyed goods, and Circular No. 18/1998-Cus dated 16.03.1998, which allows for the destruction of scrap/waste in Export Processing Zones. Issue 3: Past Permissions and Precedents Regarding Destruction of Goods The appellant cited previous permissions granted by the Department for the destruction of obsolete goods and payment of duty on the scrap value. The Tribunal acknowledged that the Department had previously allowed such actions and could not contradict its earlier decisions. The Tribunal also referred to similar cases where the adjudicating authority had permitted the destruction of obsolete goods without the payment of duty. Issue 4: Premature Appeal Based on Jurisdictional Range Officer's Letter The Tribunal found that the appeal filed against the jurisdictional Range Officer's letter was premature. The Commissioner (A) had correctly disposed of the appeal, noting that a show-cause notice needs to be issued to vacate the protest payment of duty. The Tribunal remanded the matter to the Adjudication authority to decide the issue afresh based on the findings and discussions in the related appeals. Conclusion: 1. Customs Appeal Nos. 28563 of 2013 and 2708 of 2011 are allowed. 2. Customs Appeal No. 1116 of 2011 is allowed by way of remand. (Order pronounced in open court on 04.01.2024.)
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