9911796707
TMI Blog2006 (5) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... e Commissioner of Customs, Bangalore. 2. The appellants imported capital goods free of duty under 100% E.O.U. scheme. They completed the legal formalities. Under 100% E.O.U. scheme, the appellants were under an obligation to produce the goods and export them for realisation of foreign exchange. The Revenue conducted investigation and it was found that the capital goods imported duty free have not been installed within the stipulated period and utilised for the production of specified goods within the period stipulated by the Board of Approval. Certain goods were procured indigenously duty free under CT3 procedure. It was alleged that the appellants failed to prove that the indigenous capital goods procured duty free had been install ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned order. 3. Shri H.S. Ananda Padmanabha, the learned Advocate appeared for the appellants and Shri K. S. Reddy, the learned JDR for the Revenue. 4. The learned Advocate urged the following points :- (i) Due to various commercial constraints, the appellants could not commence commercial production within the period mentioned in the Letter of Permission. The Jurisdictional CSEZ office granted extension from time to time. The Ministry of Commerce and Industries, E.O.U. section, vide their letter dated 23-2-2002 extended the permission up to 30-4-2002. The appellants started production on 26-4-2002. This fact was communicated to the Development Commissioner and Jurisdictional Assistant Commissioner on 27-4-2002. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice was issued for not commencing the production within the stipulated time. The show cause notice was adjudicated and the impugned order has been passed. (vi) The Commissioner has ignored the preliminary objection raised by the Company that no show cause notice could be issued to an E.O.U. for demanding duty or imposition of penalty without prior sanction of the Development Commissioner In-charge of the unit. The Board Circular No. 21/95, dated 10-3-95 was relied on. The above Circular is binding on the Department officers. In view of these reasons, the impugned order for demand of duty, confiscation of the impugned goods, imposition of penalty and interest is not sustainable. (vii) The Commissioner has erred in holding that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms vide their letter dated 15-4-2002. Besides the Board, vide Circular No. 122/95, dated 28-11-95, instructed that prompt action should be taken against gross violation of law while passing the Order-in-Original. Moreover, the Ministry of Commerce and Industry, in its letter dated 20-3-2002 has communicated that the Board of Approval has extended the LOP up to 30-4-2002 only and no further extension would be granted. It is also proved beyond doubt that the appellant's unit has not been able to achieve the minimum value addition and fulfil export obligation. (iii) It has been rightly held vide Paras 55 to 67 of the impugned order that what was started on 26-4-2002 is only trial run and no commercial production. The export of 26 consignmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduction. That is why, the Circular 21/95 has been issued. According to the above mentioned Circular, when an E.O.U. fails to commence production, the Development Commissioner should be informed. It has been emphasised that the demand of duty should be confirmed only after a definite conclusion has been arrived at by the Development Commissioner. The Circular No. 21/95-Cus., dated 10-3-95 is reproduced below :- "Demand - Show cause notice for recovery of customs duty on goods imported by 100% EOU - Clarification Circular No. 21/95-Cus., dated 10-3-1995 [ From F. No. 307-2-91-FTT] Government of India Ministry of Finance (Department of Revenue) New Delhi . Subject: Issue of show cause notice for recovery of Cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen in such case it may be held that the conditions of the exemption notification has been violated. As this stage, it will be open for this Department to issue a show cause notice to the Unit for demanding the due duty on the imported goods. 3. Normally the Customs authorities should immediately inform the Development Commissioner in case a 100% EOU ceases production prematurely or fails to commence production or export within the stipulated period. In case the Development Commissioner initiates action against the unit for non-fulfillment of export obligation etc. simultaneously the Customs authorities should issue show cause notice for failure to comply which conditions of Notification 13/81-Cus., dated 9-2-1981 - The demand of d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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