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TMI Blog2009 (10) TMI 744X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of excise duty (total duty of Rs.12,15,243/-) under Notification No. 10/95-CE, dated 23-2-1995, as amended. 2. As the EOU had failed to fulfill export obligation prescribed, a show cause notice was issued proposing to confiscate the capital goods procured under EOU scheme under Section 111(o) of the Customs Act, to recover the exemption availed on them along with interest and to penalize the EOU under the various provisions. Allegations were adjudicated by the Commissioner ex-parte. Assessee approached the Hon ble High Court of Andhra Pradesh seeking relief against the liabilities confirmed against it in order-in-original 7/03 (Cus) dated 18-7-2003. The Hon ble High Court directed the assessee to file an appeal before the Tribunal. The Tribunal allowed the appeal filed by the assessee by way of remand to the adjudicating authority for taking a fresh decision. The impugned order has been passed in de novo proceedings so ordered. 3. While adjudicating the allegations, the Commissioner considered the following case laws cited by the appellants and observed as follows :- (i) Suvarna Aqua Farm Exports Ltd. v. Commissioner of Cus., Guntur - 2005 (190) E.L.T. 284 (Tri. - Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises. 5. The Commissioner found in the impugned order that the EOU was entitled for depreciation on capital goods in cases of partial fulfillment of export obligation in the light of the following case law. (i) Meirs Pharma (India) Pvt. Ltd. v. CC - 2004 (167) E.L.T. 53 (T) (ii) Fal Industries Ltd. v. CC - 2003 (159) E.L.T. 215 (T) (iii) Dyna Lamps and Glass Works Ltd. v. CC - 2003 (157) E.L.T. 73 (T) (iv) CC CCE, Vadodara v. Solitaire Machine Tools (P) Ltd. - 2003 (152) E.L.T. 384 (T) (v) Taurus Novelties Ltd. v. CCE - 2004 (173) E.L.T. 100 (T) The Commissioner rendered the following finding : The unit started commercial production from 27-5-1994. As the non-duty paid capital goods were procured subsequent to the date of commencement of production (from 07/94 to 04/96), I take the date of installation of the respective capital goods as the date from which depreciation is to be calculated. According to the Board s instructions and the governing Notifications themselves, depreciation is to be allowed till the payment of duty. These instructions apply to a unit which applies for debonding in the normal course of business. But this yardstick cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due on the capital goods on 31-10-2002, when Development Commissioner VEPZ ordered suo motu debonding of the EOU. Accordingly, the Commissioner passed the Order-in-Original No. 2/08-Cus. (de novo) (Commr.) dated 16-5-2008, inter alia, demanding Customs duty of Rs. 1.57,675/- and Excise duty of Rs. 1,33,456/-, on the capital goods; Customs Excise duties of Rs. 3,38,701/- on the raw materials not utilized; and imposed penalty of Rs. 6,00,000/-. She also demanded interest for the delay in payment of duties confirmed from 31-10-2002 till the date of payment. She ordered confiscation of capital goods of value of Rs. 13,17,546/-and offered redemption on payment of a fine of Rs. 3,00,000/-. Raw materials of value of Rs. 1,08,60,084/- were confiscated and allowed to be redeemed on payment of fine of Rs. 3,50,000/-. 8. Appeal filed by the assessee assails the impugned order on the following issues : 1. Non allowance of depreciation on capital goods upto the date of payment of duty or upto the date, on which capital goods were confiscated by the department. 2. Confirmation of duty without giving allowance for exports made. 3. Wrong demand of duty on raw materials (both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is lawful to do so. Where penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances . Following the ratio of the above decisions, we set aside the confiscation of the goods and imposition of penalty on the appellants. We also find that in the case of Taurus Novelties Ltd. v. CC, Bangalore (supra), where the appellant therein had failed to fulfill the export obligation, owing to collapse of Korean Economy, the Tribunal ordered as follows : ..........In a like situation, the Tribunal, in the citations referred to by the Counsel, has held that confiscation cannot be ordered in a circumstance when the export obligation became an impossibility. Further it has been held that when the Bank Guarantee has been realised before the issue of Show Cause Notice, then in such a circumstance, the redemption fine, penalty and interest is not imposable. We have perused these judgments and find that the appellants prayer for setting aside the redemption fine, penalty and interest, in terms of these judgments, is justified. The ratio of the judgments clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of payment of duty and not up to the date of de-bonding. The same finding was recorded also in Khabros Steel (I) Ltd. The learned JCDR relied on Kesoram Rayon case. The Kesoram Rayon case deals with the rate of duty to be fixed on the de-bonding and not on the aspect pertaining to depreciation. Hence, the reliance on the Kesoram Rayon s case by the JCDR is misplaced. 11. We find that in the instant case, the assessee had not paid the duty due on the capital goods. The capital goods were confiscated by the order of the Commissioner dated 18-7-2003. Therefore, the goods should be deemed to have been taken from the possession of the assessee on that date. Since the goods had been warehoused, this date has to be treated as date of clearance of the goods. As per the Board s Circular, such goods are entitled to clearance on payment of duty after following depreciation from the date they were installed in the appellant s unit till the date of clearance. The depreciation admissible shall be worked out in terms of the Circular No. 46/98 which was current during die material period. 12. The appellants have claimed depreciation in proportion to the percentage of export obligation fu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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