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TMI Blog2008 (10) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... mited, along with penalty of Rs. 5 lakhs vide his impugned order. 2. The brief facts of the case are that the appellant is a 100% EOU and was granted approval by the Department of Industrial Development, Secretariat for Industrial Approvals vide their letter dated 9-6-1994 under which they were given a permission to import plant and machinery and equipment of CIF value of Rs. 5,35,27,000/- and for import of raw material, components and consumable of CIF value of Rs. 48,00,000/- free of import duty. They were also granted permission to purchase indigenous capital goods, components and raw material for a value of Rs. 1.50 crores without payment of duty. As per the conditions of the above licence, the applicants were required to earn minimum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manded/imposed. 4. Ld. advocate for the appellants submitted that this is a pure case of non-fulfilment of export obligation vis-a-vis net foreign exchange earning for reasons beyond their control but non-fulfilment of export obligation is not a violation of legislative provisions contained in the Customs Act and the Central Excise Act, but only of a Notification, for which demand cannot be made. The normal warehousing period of capital goods is five years which is extendable. They} were required to discharge export obligation in ten years, which was still not over and as such duty cannot be demanded till the export period is over. They referred to several Tribunal decisions and the Supreme Court decision in the case of SIV Industries, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal in the case of GTC Industries v. Collector of Central Excise, Baroda/Bombay, 1996 (84) E.L.T. 313 (Tribunal) and Supreme Court decision in the case of Mangalore Chemicals and Fertilizers Ltd., 1991 (55) E.L.T. 437 (S.C.), wherein it was held that mere fact that the statutory condition is not fulfilled is not enough. The condition should be substantive, mandatory and based on considerations of policies only. He, however, admitted that if the bank guarantees are not extended at all, it may amount to violation of substantive condition. 6. Ld. DR invited attention to the findings of the Commissioner, wherein the appellants in their reply to the show cause notice have admitted that they have closed down their unit in October 2001 and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act, that once the bonding period of ten years is over, the machinery should be allowed to be debonded, by which time its depreciated value will become almost zero, when no duty will be payable. They have taken no steps to extend the bank guarantees and the bonding, even though the show cause notice has been issued to them in the year 2004. Therefore, to suggest that this is a curable defect is unacceptable when the defect has neither been cured nor there is an effort to do so. The Tribunal s decisions in the case of GTC Industries (supra) referred to by them nowhere says that furnishing of bank guarantee is not a substantive condition and in fact Tribunal has refused to condone the delay. In fact, this condition was considered as very subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled nor is there any possibility of its fulfilment. The unit has pleaded some financial hardship as they are running in losses, after accounting for the depreciation. From balance sheet we find that there will be some profit, if allowance is not made for depreciation, which will come into place as and when the machinery is sold only. For a unit which is already lying closed for the last seven years, the meaning of making very meager profit is of no significance and the Government revenue has to be protected, when there is just no chance of unit reviving, and its machinery becoming obsolete by their negligence. Prima facie, duty cannot be demanded on depreciated value as per Tribunal decision in Krishna Filaments Ltd. case cited supra. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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