2014 (12) TMI 274 - AT - Central Excise

100% EOU - fulfilling the export obligation - Discharge of duty liability - Non consumption of goods imported - Held that - there is no evidence to show that this achievement was made without using the goods imported/sourced indigenously. Secondly the observation of the learned original adjudicating authority that the consumables were not consumed also was without basis. In the absence of any evidence to show that the consumables were not used for production of export goods which were apparently produced in view of the fact that 5.31% of export obligation has been fulfilled, the observation of learned Commissioner(Appeals) that consumables were consumed has to be accepted - Decided against Revenue.

Summary

Issues:
1. Duty liability on goods not utilized for production of export goods by a 100% EOU.
2. Discharge of duty liability based on export obligation fulfillment.
3. Admissibility of depreciation only when goods are put to use.
4. Consumption of consumables sourced without payment of duty for production of export goods.
5. Allowance of depreciation when capital goods have not been used.

Analysis:
1. The judgment addresses the duty liability issue concerning a 100% EOU that did not utilize goods imported/sourced indigenously for producing export goods. Proceedings were initiated based on non-fulfillment of export obligation, leading to a penalty imposed by the Development Commissioner. The original adjudicating authority highlighted the non-commencement of commercial production and lack of evidence of goods utilization. However, the learned Commissioner(Appeals) noted an export obligation fulfillment of 5.31%, suggesting goods utilization without evidence to the contrary. The Tribunal agreed with this observation, dismissing the duty liability claim due to insufficient evidence of goods non-utilization.

2. Regarding the discharge of duty liability based on export obligation fulfillment, the Tribunal emphasized the lack of evidence supporting the claim that consumables sourced without duty payment were not consumed for export goods production. Despite conflicting observations by the original adjudicating authority and the Commissioner(Appeals), the Tribunal accepted the latter's conclusion that consumables were indeed consumed for production, given the fulfillment of export obligations. This decision nullified the duty demand argument raised by the Revenue.

3. The issue of admissibility of depreciation only when goods are put to use was raised by the Revenue, contesting the allowance of depreciation due to alleged non-use of capital goods. The Tribunal dismissed this claim, noting the absence of evidence supporting the assertion that capital goods were not utilized. Without further evidence from the Revenue, the Tribunal deemed this ground baseless, ultimately rejecting the Revenue's appeal.

4. In summary, the Tribunal's judgment upheld the Commissioner(Appeals)'s findings regarding the utilization of goods and consumables for export goods production, thereby dismissing the duty liability claim. Additionally, the Tribunal rejected the Revenue's appeal concerning the allowance of depreciation, emphasizing the necessity of evidence to support such claims. The decision highlights the importance of substantiating claims with concrete evidence in duty liability cases involving EOUs and the utilization of imported goods for production.