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TMI Blog2007 (10) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... types of Capital Goods and executed the necessary bonds with the Customs. The appellants made use of the Capital Goods in order to carry out their activity and fulfill the export obligations. However, after a certain time, the imported goods became obsolete and, therefore, they addressed, a letter to the Customs authorities for extending the bonding period and also give authorisation to destroy the capital Goods. But a Show Cause Notice was issued to the appellants demanding duty on the Capital Goods. The Adjudicating Authority held that once the warehousing period expired, the goods will be deemed to have been improperly removed from the warehouse. Applying the ratio of the Hon'ble Apex Court judgment in the case of Kesoram Rayon v. CC, Calcutta - 1996 (86) E.L.T 464 (S.C.), he held that the impugned goods, which are lying in the warehouse beyond the warehousing period are deemed to have been removed without payment of duty and, therefore, he demanded duty on these goods under Section 72 of the Customs Act. Along with the duty, he demanded interest also. Further, penal action had been taken against the appellants in respect of the goods. In fact, even before the issue of the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "6.31 Destruction of goods. No duty shall be payable in case capital goods, raw material, Consumables, spares, goods manufactured, processed or packaged, and scrap/waste/remnants/rejects are destroyed within the Unit after intimation to the Custom authorities or destroyed outside the Unit with the permission of Customs authorities. Destruction as stated above shall not apply to gold, silver, platinum, diamond, precious and semi precious stones" He said that this point has not been appreciated by the learned Commissioner. The learned Advocate brought to our notice that in the present case, the only fault of the appellant is that immediately after the expiry of the warehousing period, they did not apply for extension of the warehousing period to the Competent Authority. However, when they came to know about it, they applied for the extension and also requested the Competent Authorities to permit them for destruction of the goods. But, to their surprise, their request was not acceded to and Revenue proceeded against them. In this connection, the learned Advocate drew our attention to the Board's Circular No. 7/2005-Cus. dated 14-2-2005 wherein a very ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... U and the above goods, which are imported and kept in either private or public bonded warehouse. In the case of the 100% EOUs, the Capital Goods are meant for using them in the manufacture of goods which are ultimately to be exported. Alternatively, in 100% EOUs, the bonded premises is a factory which is not the case in other private or public bonded warehouse. The initial warehousing period in the case of goods deposited in the 100% EOU is 5 years and after the elapse of 5 years, the manufacturers are expected to apply for extension of the warehousing period, and this is routinely given. However, the Kerosam Rayon case refers to the goods, which are imported and warehoused either in a private bonded warehouse or a public bonded warehouse under Section 68 of the Customs Act. The only reason for the Commissioner to have confirmed the demand is that in terms of the Kesoram Rayon case, the goods are to be considered as improperly removed on the expiry of the warehousing period. 5.1 The learned advocate stated that the Commissioner disregarded the decisions of the Hon'ble Tribunal in the case of Modern Suiting v. CC, Jaipur - 2004 (164) E.L.T. 328 (Tri.-Del.) and CC, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellants had not requested extension of warehousing period in time. The Commissioner has demanded duty holding that on expiry of the warehousing period, the goods are deemed to have been improperly re moved. He has applied the ratio of the Kesoram Rayon case (cited supra). The learned Advocate had already brought to our notice the decisions of the Tribunall which hold that the Kesoram Rayon case cannot be applied to goods deposited in 100% EOU. This point has not been properly appreciated by the learned Commissioner. On going through the above noted Circulars issued by the CBEC, we find that the CBEC has adopted always a liberal approach towards the procedures in respect of 100% EOU. The Capital Goods imported in 100% EOU are meant for production of goods, which are ultimately to be exported. All the 100% EOU have got warehousing licences and their validity period is periodically extended. When the Capital Goods are imported, the initial bonding period is 5 years and later, the period can be further extended. In these extensions also, a very liberal approaches adopted by the Board and there are very many instructions to that effect. In the Circular of 2005, it is stated th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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