2001 (3) TMI 599 - AT - Customs

Summary

Issues:
1. Allegations of clandestine production and clearance of PET bottles without duty payment.
2. Duty demand on machinery imported under EOU scheme.
3. Valuation method for duty calculation on PET bottles.
4. Legal position regarding EOU scheme and duty obligations.
5. Re-computation of duty demand and readjudication of the case.

Analysis:
1. The judgment addresses the allegations of clandestine production and clearance of PET bottles without duty payment. The Commissioner alleged that over 13 lakhs PET bottles were clandestinely produced in the EOU and cleared without payment of duty to the DTA. The order confiscated machinery and imposed penalties. The appellant contested these findings, arguing they were contrary to facts and the EOU scheme.

2. Regarding duty demand on imported machinery under the EOU scheme, the appellant argued that demanding duty on machinery imported for export production during the bond period was beyond the Commissioner's authority. The appellant highlighted that the EOU scheme aims to promote export production, and duty is only payable upon closing and de-bonding of the machinery. They cited legal precedents and circulars supporting their position.

3. The judgment discussed the valuation method for duty calculation on PET bottles. The appellants contended that the Commissioner incorrectly treated the entire price of the bottles as assessable value, contrary to established legal principles. They argued that duty should be deducted from the gross realisation for arriving at the assessable value, as per previous tribunal decisions.

4. The legal position regarding the EOU scheme and duty obligations was a crucial aspect of the case. The judgment emphasized that any decision to wind up an EOU should be made by the Development Commissioner, and demanding duty prematurely could create unintended difficulties. The actions of seizing goods and confiscating machinery were deemed premature and against the EOU scheme, leading to the set aside of confiscation and duty demand.

5. The judgment concluded by ordering a re-computation of duty demand and a fresh adjudication of the case by the jurisdictional Commissioner. The appellants were allowed to resume production activity immediately, with their plant and machinery released. A deposit made by the appellant was to remain with the Revenue during adjudication proceedings, to be adjusted towards duty at the final adjudication stage.