1998 (2) TMI 230 - AT - Customs

Summary

Issues:
1. Confirmation of demand under Section 28(2) of Customs Act, 1962 on a 100% Export Oriented Unit (EOU) for failing to re-export goods within stipulated time.
2. Validity of bond executed by the appellant on re-import of goods.
3. Applicability of Notification No. 132/61-Cus. and Section 20 of Customs Act, 1962 to 100% EOUs for re-import of goods.
4. Interpretation of legal provisions governing 100% EOUs and Customs warehouse approvals.

Analysis:
The judgment deals with appeals challenging the confirmation of a demand under Section 28(2) of the Customs Act, 1962 on a 100% EOU for not re-exporting goods within the specified period. The appellant, engaged in manufacturing "Wire-Wheels" for Motor Vehicles, re-imported defective goods after exporting them, leading to the demand. The appellant argued that due to changes in car models, re-importing was necessary, and the goods had to remain under bond for extended periods. The appellant contended that the bond executed was unnecessary as they were under the 100% EOU scheme and had already executed a composite bond. However, the Tribunal found the demand valid, emphasizing the legal provisions governing re-import of goods by 100% EOUs.

The Tribunal considered the arguments regarding the applicability of Notification No. 132/61-Cus. and Section 20 of the Customs Act, 1962 to 100% EOUs for re-import of goods. The appellant claimed that the bond executed was illegal as they were under a special scheme and not subject to these provisions. However, the Tribunal held that until the introduction of Notification No. 190/94-Cus. in 1994, existing laws applied to re-imports by 100% EOUs. The Tribunal emphasized that the Customs Act provisions covered re-imports, and the bond executed by the appellant was valid under the law, dismissing the appeals challenging the demand under Section 28 of the Customs Act.

Furthermore, the judgment delves into the interpretation of legal provisions governing 100% EOUs and Customs warehouse approvals. It highlighted that 100% EOUs must be approved as Customs warehouses and are required to execute various bonds under the Customs Act and relevant notifications. The Tribunal clarified that the conditions governing 100% EOUs mandate manufacturing in Customs bond and specify the sale of rejects in the domestic tariff area upon payment of duties. The judgment underscores that the legal framework under the Customs Act governs the operations of 100% EOUs, including re-imports and bond obligations, ensuring compliance with customs regulations and export obligations.

In conclusion, the Tribunal upheld the demand under Section 28 of the Customs Act on the appellant, emphasizing the legal validity of the bond executed for re-import of goods by the 100% EOU. The judgment underscores the adherence to customs regulations and the application of relevant legal provisions to ensure compliance with export obligations and customs duties, ultimately dismissing the appeals challenging the demand confirmation.