2009 (4) TMI 292 - AT - Customs

Appellants100% EOU, imported 199 machineries as capital goods free of duty in terms of Notification No. 52/2003-Cus., dated 31-3-2003 shifting of 21 machineries to another bonded approved premises - demand raised alleging violation of notification ibid inasmuch as capital goods imported not used assessee states that even before the machines were shifted, they were put to use in the first premises for a period of nearly four years. When the Superintendent visited new premises, it was clarified that the machineries were under repair and maintenance - we find that the goods which were imported and shifted to the new premises were already in use by the appellants for a period of four years. Therefore, it cannot be alleged that the goods were never put to use. The contention of the appellant that the goods were not in working condition has to be appreciated. In any case, there is no removal of the goods from the bonded premises to any other place. It should also be appreciated that the appellants had achieved fairly good level of export performance. held that duty is payable only at the time of de-bonding. There is no merit in the impugned order demanding duty

Summary

Issues:
- Allegation of non-fulfillment of export obligations under 100% EOU scheme due to shifting of machineries.
- Dispute regarding the usage and condition of the shifted machineries.
- Legal validity of demanding duty on capital goods within bonded premises.
- Consideration of export performance in relation to duty demand.

Analysis:
1. Allegation of Non-Fulfillment of Export Obligations: The appeal was filed against an Order-in-Original passed by the Commissioner of Customs, Bangalore, alleging non-fulfillment of export obligations under the 100% EOU scheme due to the shifting of 21 machineries from the regular premises to additional premises. The Customs Officers initiated proceedings based on the allegation that the machines were not being put to use, leading to the issue of a show cause notice.

2. Dispute over Usage and Condition of Machineries: The consultant representing the appellants argued that the machineries were shifted to the additional premises with the necessary approvals and were under repair and maintenance. The consultant contended that the demand for duty on these machines, still in the bonded premises, was premature. They highlighted that the goods had not been removed to any premises other than the approved bonded premises, and the demand for duty at this stage was unwarranted.

3. Legal Validity of Demanding Duty on Capital Goods: The departmental representative argued that despite the shifting of goods to the new premises, they were not put to use, suggesting that the repair plea was an afterthought. However, the Tribunal found that the goods had been in use at the original premises for four years, and the contention that they were not in working condition was valid. The Tribunal referred to previous decisions and a Board's circular emphasizing that demanding duty on capital goods within bonded premises is not legally justified.

4. Consideration of Export Performance: The Tribunal considered the appellants' export performance, noting a significant level of export achievements compared to the value of imports. Given the export performance and the fact that duty is payable only at the time of de-bonding as per the Notification, the Tribunal concluded that the demand for duty on the 21 capital goods was premature. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.

This comprehensive analysis of the judgment from the Appellate Tribunal CESTAT, Bangalore, highlights the key issues, arguments presented by both parties, legal considerations, and the Tribunal's decision based on the facts and legal principles involved in the case.