2003 (1) TMI 193 - AT - Central Excise

Summary

Issues:
- Duty liability on damaged goods not exported by a 100% EOU under B1 Bond
- Imposition of penalty under Rule 173Q

Analysis:

1. Duty liability on damaged goods not exported by a 100% EOU under B1 Bond:
The Commissioner (Appeals) found that a 100% EOU, engaged in manufacturing Polished Granite Slabs and tiles, failed to export damaged goods cleared under B1 Bond, leading to a duty liability of Rs. 6,66,057. The appellants claimed the goods were damaged in accidents, not exported, and brought back to the factory. The Commissioner upheld the duty demand but set aside the penalty of Rs. 60,000. However, the Appellate Tribunal found that the demand for duty under Rule 9(2) of the Central Excise Rules, 1944 was incorrect. The goods were validly taken out for export and brought back due to accidents with proper procedures followed. The Tribunal emphasized that a demand under Rule 9(2) can only be made if there is a violation of Rule 9(1, which was not the case here. The damaged goods were still in the factory premises, and all formalities were duly completed, including informing the Central Excise Authorities and lodging a police complaint. The Tribunal referenced legal precedents and circulars to establish that premature demands of duty cannot be sustained, and the duty liability will be determined only at the time of removal of goods from the EOU.

2. Imposition of penalty under Rule 173Q:
The Appellate Tribunal further ruled that imposing a penalty under Rule 173Q was not warranted in this case, as Rule 173Q is excluded and not applicable to clearances made by the EOU under Rule 173A(2). Therefore, the duty and penalty imposed were set aside, and the appeal was allowed. The Tribunal's decision was based on a thorough analysis of the legal provisions, procedural compliance, and precedents, ensuring a fair and just outcome for the appellants in this case.