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Issues:
1. Whether capital goods imported by a company and procured indigenously without payment of duty are liable to duty on account of disuse. Analysis: The appeals revolve around the issue of whether the capital goods imported by M/s. Perfect Latex Pvt. Ltd. and procured indigenously without payment of duty are subject to duty due to disuse. The company, a 100% Export Oriented Undertaking (EOU), faced financial difficulties after encountering losses and external challenges. The Commissioner, in the impugned Order, confirmed the duty demand on capital goods after allowing 90% depreciation. However, the Development Commissioner, in a separate order, found that the company had fulfilled export obligations and achieved the requisite value addition, leading to the dismissal of adjudication proceedings against them. The Revenue argued that the capital goods, unused since 1996-97, violated exemption conditions, making them liable for confiscation and duty under relevant provisions. The Tribunal noted that the capital goods were utilized for manufacturing and export purposes, with no violation of exemption conditions, ultimately rejecting the Revenue's appeals. The Commissioner's decision to demand duty on the depreciated value of capital goods due to their deemed removal from the Zone with the lapse of the Letter of Approval was challenged. The Tribunal observed discrepancies in the Revenue's arguments, noting that the goods were intended for export and not temporary storage. The Revenue's own statements indicated that the Adjudicating Authority had exceeded jurisdiction by considering removal of goods without proper permission. The Tribunal clarified that the Larger Bench decision cited by the Revenue applied to goods cleared to the Domestic Tariff Area, not to capital goods imported/procured without duty payment. As the Revenue did not assert that the capital goods were removed from the zone, the Tribunal allowed the appeals filed by M/s. Perfect Latex Pvt. Ltd., emphasizing that no duty demand on the capital goods was justified. In conclusion, the Tribunal upheld that the capital goods were not liable to duty due to disuse, as the company had complied with export obligations and exemption conditions. The Tribunal rejected the Revenue's appeals, emphasizing that the capital goods were used for manufacturing and export purposes, thus not subject to duty demands based on the lapse of the Letter of Approval.
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