2005 (2) TMI 327 - AT - Customs

Summary

Issues:
1. Duty liability on goods cleared to Domestic Tariff Area (DTA) without payment of duty.
2. Confiscation and penalty imposition on capital goods.
3. Duty demand on goods cleared without permission from Development Commissioner.

Analysis:

Issue 1: Duty liability on goods cleared to DTA without payment of duty
The appellant, a 100% Export-Oriented Unit (E.O.U.), faced challenges in fulfilling export obligations after availing duty-free procurement of capital goods and raw materials. The Revenue demanded duty on goods cleared to the Domestic Tariff Area (DTA) under the proviso to Section 3(1) of the Central Excise Act, 1944. The appellant argued that duty should be calculated as per the main section of Section 3(1) rather than the proviso, emphasizing that only duty as per the Central Excise Tariff should be levied. Citing relevant case laws, the Tribunal held that duty on goods cleared to DTA without permission should be charged under Section 3(1) of the Act, not as an aggregate of customs duties.

Issue 2: Confiscation and penalty imposition on capital goods
The adjudicating authority imposed a penalty and ordered confiscation of capital goods procured under CT-3 for non-fulfillment of export obligations. The appellant challenged the penalty and confiscation, arguing that as the goods were within the E.O.U. premises and not removed, the actions were unwarranted. The Tribunal noted that the capital goods were available within the bonded premises, and since the export obligations could not be met, the confiscation and penalty were set aside. The appellant was directed to pay appropriate duty on de-bonding.

Issue 3: Duty demand on goods cleared without permission
The Tribunal addressed the duty demand on goods cleared without permission from the Development Commissioner. Relying on established case laws, it held that duty should be charged under Section 3(1) of the Central Excise Act, 1944, rather than as an aggregate of customs duties. The duty demand on consumables procured was upheld, while the confiscation and redemption fine on unaccounted goods within the factory premises were set aside.

In conclusion, the Tribunal partially allowed the appeal, setting aside the penalty and confiscation on capital goods, directing payment of appropriate duty on de-bonding, and clarifying the duty liability on goods cleared without permission from the Development Commissioner under Section 3(1) of the Central Excise Act, 1944.