2015 (4) TMI 769 - AT - Customs

Waiver of pre deposit - 100% EOU - Diversion of inputs to domestic market - Held that - EOP granted to the Appellant is extended upto 31/03/2009 which is further extended to another six months. In the meantime, the company became sick and got registered with BIFR and their application for further extension of EOP is pending before the DGFT. As these facts were not before the Ld. Commissioner and the plea of the applicant/appellant that the entire fact was in the knowledge of DGFT and it is not necessary to meet the export obligation out of the inputs procured against the license issued to them, require verification and further deliberation. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Confirmation of Customs duty and penalty against M/s. RSI Pvt. Ltd.
2. Consideration of waiver applications in light of the law laid down by the Hon'ble High Court.
3. Waiver of pre-deposit due to negative net worth and implications of diversion of imported materials.
4. Dispute regarding utilization of exempted materials and fulfillment of export obligations.
5. Remand of the case for fresh adjudication by the Ld. Adjudicating Commissioner.

Analysis:
1. The Ld. Commissioner confirmed Customs duty against M/s. RSI Pvt. Ltd. and imposed penalties on other applicants. The Tribunal directed M/s. RSI Pvt. Ltd. to deposit a specific amount and waived the remaining dues. The applicants challenged this in the High Court, which directed CESTAT to reconsider the waiver applications based on a specific legal case.

2. The applicants argued for the waiver of pre-deposit, citing the company's negative net worth and its registration with the BIFR. They claimed that the diversion of inputs was known to the DGFT, and extensions of export obligation periods were granted due to the company's financial challenges. They requested a remittance of the case for fresh adjudication, emphasizing that the facts were not presented before the adjudicating authority initially.

3. On the contrary, the Revenue's representative contended that the show cause notice was for violations of specific conditions of a Customs notification, not solely for non-fulfillment of export obligations. They argued that the imported materials were diverted for domestic use, leading to the demand for duty payment. The representative highlighted the conditions of the Notification and the necessity for compliance.

4. After hearing both sides, the Tribunal considered the waiver of pre-deposit based on the precedent set by a previous case. However, they decided to remand the case for fresh adjudication by the Ld. Adjudicating Commissioner. The Tribunal noted discrepancies in the information presented and the need for further verification and deliberation on various issues raised by the appellants.

5. The Tribunal set aside the Ld. Commissioner's order, allowing the appeals by way of remand. They emphasized the importance of granting the applicants an opportunity for a hearing before a fresh decision is made. The stay petitions and appeals were disposed of accordingly, with the operative part of the order already pronounced in court.