2019 (11) TMI 389 - AT - Customs

100% EOU - Concessional rate of duty - removal of goods in contravention of Section 72(1)(a) and Section 72(1) (d) of the Customs Act, 1962 and without the permission of the Development Commissioner SEEPZ, Mumbai and without execution of the Bond - benefit of N/N. 52/2003-Customs dated 31.03.2003 - whether the appellants were right in clearing the lathes imported vide Notification No.53/97-Cus. Dated 03.06.97 to the domestic tariff area without permission of the Development Commissioner on the grounds that they were surplus in terms of Para 6.16 of the Import Export Policy? - rate of depreciation to be applied in terms of the Notification No.57/2003-Cus dated 31.03.2003 or in terms of the Exim Policy? HELD THAT - The Appellants have cleared the goods to DTA or EPCG holders during the period August to September 2003. During this period notification No.53/97 was not in currency. Notification No.52/2003 was only operational. Therefore the same requires to be considered. This notification does not contain any condition 5 or 5a as in the case of notification 53/97 as per which the unit required to take permission from the Development Commissioner and the Assistant Commissioner as the case may be. It is not the case of the department that the Appellant has not fulfilled the export obligation in terms of the Exim Policy. This claim of the Appellant is not controverted by the department. Therefore, the Appellants are entitled to clear the used capital goods in terms of the policy as well as the customs notification. In terms of Notification 52/2003, there is no provision for obtaining permission. Even if such a provision exist in the policy or custom notifications , it would not be the intent of the same to deny a substantial right of the appellants citing procedural infractions like non obtaining a permission or non filing of a Bill of Entry - thus, the Appellants submission that non obtaining of the permission does not take away the applicability of notification allowing a concessional rate of duty, is acceptable. Rate of depreciation - HELD THAT - The Appellants need to apply the depreciation in terms of notification No.52/2003 which was in force at the time of clearances - For this reason, the matter requires to go back to the original authority for computing the applicable duty after allowing the applicable rate of depreciation in terms of notification No.52/2003. The appeals are partly allowed by way of remand to the original authority to arrive at duty payable by the appellants after extending the benefit of concessional rate of duty under notification 52/2003 and the rates of depreciation contained therein - penalties set aside.

Summary

Issues Involved:
1. Proper procedure under Customs Act not followed for removal of capital goods.
2. Allegation of duty evasion and short levy by the Revenue.
3. Requirement of permission from Development Commissioner for clearance of capital goods.
4. Applicability of depreciation rates as per Customs Notifications and Exim Policy.
5. Dispute over the necessity of permission for clearance of goods to Domestic Tariff Area.
6. Determination of duty payable by the Appellants and setting aside of penalties.

Analysis:

1. The case involves the Appellants, a 100% EOU engaged in manufacturing, who imported capital goods under the EOU scheme and later removed them to DTA and EPCG license holders. The Revenue alleged that proper procedures were not followed, leading to contravention of Customs Act sections and duty evasion. Short levy of duty was claimed, resulting in the issuance of SCNs confirmed by the authorities, leading to the appeals.

2. The Appellants argued that permission from the Development Commissioner was not required for clearance as they paid appropriate duty. They cited relevant notifications and legal precedents to support their position, emphasizing that no permission was needed when duty was paid and goods were cleared.

3. The department contended that permission from the Development Commissioner was necessary for clearance under specific notifications and policies. They highlighted the failure of the Appellants to seek permission, leading to allegations of suppression of facts and non-compliance with required procedures.

4. The dispute also centered around the applicability of depreciation rates as per Customs Notifications and Exim Policy. The Appellants argued for the application of rates based on the Exim Policy, while the department insisted on adherence to Customs Notification provisions.

5. The Appellants claimed that clearance to DTA did not necessitate permission from the Development Commissioner, especially when duty was paid. They referenced circulars and rules supporting their stance, asserting that procedural requirements did not hinder their right to avail of concessional duty rates.

6. The Tribunal, after considering the arguments and precedents, concluded that the Appellants were entitled to clear the goods based on the applicable notification in force at the time. The necessity of permission was deemed procedural, not affecting the concessional duty eligibility. The matter was remanded to the original authority for computing the duty payable based on the correct depreciation rates as per the relevant notification.

This detailed analysis of the judgment covers the issues of procedural compliance, duty evasion allegations, permission requirements, depreciation rate applicability, and the final determination of duty payable, providing a comprehensive understanding of the legal complexities involved in the case.