2013 (6) TMI 39 - HC - Customs

100% EOU - net foreign exchange earnings - NFE - CESTAT observed that assessee is liable to pay Customs duty only in respect of the goods imported but not exported - Circular No. 12/2008, dated 24-7-2008 - held that - the finding recorded by the Tribunal is in consonance with the aforesaid circular and in accordance with law and that cannot be found fault with. Since the adjudicating order has treated both the capital goods and other goods on the same putting, the Tribunal was justified in remanding the case to the Original Authority for quantification of duty on the goods other than capital goods which are imported/indigenously procured duty free but not utilized in the manufacture of articles for export. - decided against the revenue.

Summary

Issues:
1. Challenge to Tribunal's order regarding liability to pay Customs duty on imported goods not utilized in export.
2. Quantification of duty on goods other than capital goods not utilized in export.
3. Challenge to penalty imposition.

Analysis:
1. The High Court addressed the challenge raised by the revenue against the Tribunal's order regarding the liability to pay Customs duty on goods imported but not exported. The Court noted that the assessee, a 100% EOU, had achieved 64% of non-fulfillment of export obligations on goods other than capital goods. The Court emphasized that duty is leviable only on goods not utilized in export, as clarified in Circular No. 12/2008 issued by the Central Board of Excise and Customs, New Delhi. The Court found the Tribunal's decision in line with the circular and the law, highlighting that duty should be paid in proportion to the non-achieved portion of NFE. Therefore, the High Court upheld the Tribunal's decision on this issue.

2. The Court further delved into the quantification of duty on goods other than capital goods, which were imported or indigenously procured duty-free but not utilized in export. The Court observed that the Assessing Authority had wrongly levied duty on 100% of the imported goods, disregarding the non-utilization in export. Given the incorrect treatment of both capital and other goods in the adjudicating order, the Tribunal rightly remanded the case to the Original Authority for the proper quantification of duty on such goods. The High Court concurred with the Tribunal's decision on this aspect as well, emphasizing the need for accurate duty calculation based on the non-fulfillment of export obligations.

3. Lastly, the High Court addressed the challenge to the penalty imposition. Considering the circumstances and the Tribunal's decisions on the duty liability issues, the Court found no merit in imposing the penalty. The Tribunal's decision to set aside the penalty was deemed justified by the High Court. Consequently, the Court dismissed the appeal, affirming the Tribunal's orders on the duty liability and penalty imposition issues.