2009 (6) TMI 374 - AT - Customs

100% EOU Non-fulfilment of export obligation - Notification No. 53/97-Cus. which governs the appellant - EOU, providing for destruction of obsolete capital goods, raw materials and finished goods, that are unfit for manufacture and become obsolete in market for actuators - We find force in the submission of the appellants that since the relevant Exim policy had already been amended prior to the issue of show cause notice, and it provides for destruction of obsolete capital goods, raw materials and finished goods and the request for destruction was made after the issue of the show cause notice, and the impugned order was passed well after the Notification itself had been amended to provide for destruction with the permission of the Assistant Commissioner, and since there is no dispute that the capital goods and raw materials had become unfit for manufacture and become obsolete in the market for actuators, the permission sought for destruction of the capital goods, raw materials and finished goods etc. by the appellants can be accepted. -, we direct that the application for permission to destroy the obsolete goods be allowed by the appropriate authority in terms of Notification No. 71/2000-Cus., dated 22-5-2000. Demand not sustainable

Summary

Issues:
Confirmation of demand of Customs duty on imported capital goods and raw materials, rejection of plea for destruction of obsolete goods, interpretation of relevant Exim policy and Circular No. 18/98-Cus.

Analysis:
The case involved the confirmation of a demand for Customs duty on capital goods and raw materials imported by the appellants, who were a 100% EOU that became defunct due to outdated products. The Commissioner rejected the plea to destroy the obsolete goods as per Notification No. 53/97-Cus., stating no provision for destruction existed until 22-5-2000, while the show cause notice was issued earlier. The appellants argued that the Exim policy had been amended to allow destruction of obsolete goods before the notice was issued. The Tribunal found merit in the appellants' submission, noting that the Exim policy now permitted destruction of obsolete goods with the Assistant Commissioner's permission. The Circular No. 18/98-Cus. clarified that destruction of waste/scrap could be allowed under the current notification even if not provided for in the earlier notification.

The Tribunal emphasized that the Circular allowed destruction of goods imported under an earlier notification under the current one, and goods unfit for manufacture could be destroyed with the Assistant Commissioner's permission. The Circular also permitted destruction of waste obtained in the process of manufacture, even outside the Export Processing Zone, under certain conditions. In light of this, the Tribunal directed the appropriate authority to allow the destruction of obsolete goods in accordance with Notification No. 71/2000-Cus., dated 22-5-2000.

Ultimately, the Tribunal disposed of the appeal by allowing the application for destruction of obsolete goods, highlighting the importance of interpreting the Exim policy and Circulars in line with the current regulations to facilitate the disposal of outdated and unusable goods in compliance with the law.