2006 (5) TMI 40 - AT - Customs

EXIM Machinery procured duty free not installed within stipulated time Violation of conditions of under which goods have been procured duty free by EOU viewed sympathetically Details are not in record to the Development Commissioner Case remanded to original authority for de novo decision after complying with the provisions of circular

Summary

Issues:
1. Non-installation of capital goods within stipulated period under 100% E.O.U. scheme.
2. Allegation of failure to prove installation and utilization of duty-free indigenous capital goods.
3. Confiscation of goods, demand of Customs and Central Excise duty, imposition of fines and penalties.
4. Challenge against the impugned order based on legal formalities and commercial constraints.
5. Discrepancy regarding commencement of commercial production and compliance with regulatory requirements.
6. Interpretation and application of Circular No. 21/95-Cus., dated 10-3-95.

Analysis:
1. The appellants imported capital goods duty-free under the 100% E.O.U. scheme but failed to install them within the prescribed period, leading to an investigation by the Revenue. The Adjudicating authority held the imported goods liable for confiscation under Section 111(o) of the Customs Act, imposing fines and demanding Customs and Central Excise duties. The appellants challenged this order, citing commercial constraints and extensions granted by authorities. They argued that the impugned order did not consider the Circular No. 21/95, emphasizing the need for Development Commissioner's sanction before demanding duty.

2. The issue of failure to prove installation and utilization of duty-free indigenous capital goods also arose. The appellants contended that despite starting production and exporting samples, technical issues delayed full-scale operations. They highlighted permissions granted for broad banding of manufactured items and renewal requests, disputing the Revenue's claim of non-compliance. The appellants challenged penalties imposed on individuals, asserting no intent to mislead authorities and citing relevant legal precedents to support their case.

3. The impugned order involved confiscation of goods, duty demands, fines, and penalties on the appellants. The Revenue argued that the order was legal, citing non-compliance with installation timelines and export obligations. They referenced directives from central authorities and annual reports suggesting non-commencement of commercial production. The Tribunal noted discrepancies in the order's adherence to Circular No. 21/95 and remanded the case for a fresh decision considering the Circular's provisions and Development Commissioner's role in confirming duty demands.

4. The Tribunal's analysis focused on the strict enforcement of regulatory requirements for E.O.U.s, acknowledging challenges in operational commencement. While the impugned order followed legal provisions, the Tribunal emphasized the importance of Circular No. 21/95's guidelines in demanding duties. The decision to remand the case for a new assessment aimed to ensure compliance with the Circular's procedural safeguards before confirming duty liabilities, highlighting the significance of regulatory oversight in such cases.