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TMI Blog2023 (4) TMI 1070X X X X Extracts X X X X X X X X Extracts X X X X ..... e seen from the Appendix-1 for the exim policy 2002-2007 that electronic hardware does not have any minimum value addition norms, it need to be only a positive value addition. Since it is an admitted fact that the respondent assessee had achieved value addition norms of about 25% and if we go by the minimum percentage of value addition prescribed in the exim policy, it is found that there has not been any substantial violation of value addition norms by the respondent s 100% EOU. Thus there are no violation of the conditions of the exemption notification. To decide whether there has been any violation of relevant exim policy by any Export Oriented Unit, the most appropriate authority to decide the violation of the policy are the officers of the Ministry of Commerce and Industry and as can be seen from the above orders, they have categorically found that there has been no violation on the part of the respondent assessee of any provisions of the import-export policy and it has very categorically been provided that no statutory requirement of achieving any minimum value addition and therefore as a corollary no violation of any provisions of the exim policy. For demanding the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... materials, packing materials, etc. under the aforesaid notifications was subject to certain conditions which included that the respondent assessee was required to achieve a value addition of 70% however against the prescribed value addition norms of 70%, the respondent unit achieved an average value addition of just 25% and thus resulting in short fall in the value addition by 45% during the period covering financial years 1994-95 to 1998-99. Being more specific, the respondent assessee was required to fulfill export obligation to the tune of Rs.1540 lacs as per their legal undertaking against which they could only export goods valued at Rs. 647.44 lacs and thus resulting into export short fall of Rs. 892.56 lacs. 3.1 On the basis of the above premises, the department has issued a show cause notice F.No.GNR/SCN/LC/EOU/2000 dated 9.5.2000 in which it proposed to recover customs duty amounting to Rs. 2,26,51,803/- for violation to the condition no. 6(iv) of Notification No. 53/92-Cus dated 04.06.1997 and central excise duty amounting to Rs. 4,01,324/- for violation of condition no. (c)(d) of notification no. 1/95-CE dated 04.01.1995. Initially the show cause notice was adjudicated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . No. KASEZ/100%EOU/III/138/93-94 dated 07.02.2013. 10.7 I find it very explicit from the above appellate Order that there was no statutory requirement of achieving any minimum value addition and also considering a period of 1 year and 8 months in calculating NFE is too short. 10.8 In light of the hon'ble CESTAT's order and the Appellate Order in the matter, I find and hold that once there is no statutory requirement of achieving any minimum value addition as per EXIM policy as held by the Appellate Committee, the allegations made in the subject show cause notice that the non achievement of export obligation as well as value addition in respect of the noticee do not hold any merit and get defeated and as such the show cause notice deserves to be dropped. 3.3 The department feeling aggrieved by the above mentioned order-in-original has filed this appeal before us. The main contentions of the department for not agreeing with the Order-In-Original are as follows:- (i) Letter of permission (LOP) No. PER 244 (1993) EOU/301/93 dated 21.06.1993 was issued by the respondent assessee to setup a 100% EOU by manufacture of Ultrafine Magnet Wire. (ii) The above ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt assessee has violated the condition of notification no. 53/97-Cus dated 03.06.1997 and notification no. 1/95-CE dated 04.01.1995. The notification no. 53/97-Cus dated 03.06.1997 provides exemption to the capital goods imported for the purpose of manufacture of articles for export by 100% exported oriented unit. The condition stipulated under the notification reads as under :- (6) The importer executes a bond in such form and for such sum and with such security or surety as may be prescribed by the Assistant Commissioner of Customs, binding himself to fulfil the export obligations and conditions stipulated in this notification and in or under said Export and Import Policy and to pay on demand an amount equal to the duty leviable on the goods as are not proved to the satisfaction of the Assistant Commissioner of Customs to have been used in the manufacture of articles or in connection with the production or packaging or job work for export of goods or services out of India. Thus, it can be seen that the 100% EOU has to fulfill the export obligation and conditions as mentioned in the export-import policy for the relevant period. 4.4 The export-import policy for the per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the above facts and circumstances, I find no reason to penalize them for the shortfall in the export obligation / export performance, specially in view of the fact that the actual export obligation as per the show cause notice was to the tune of Rs. 1132.24 lakhs Whereas they have actually achieved export of Rs. 1055.24 lakhs which is short to the extent of 6.76% of stipulated export obligation. This is reasonable taking into account that the price available for their final products has been reduced by more than 62 % due to the competition in the International Market, mainly by China which was a factor beyond their control. In any case the cumulative NFEP has been maintained above the normal minimum prescribed NFEP of 20% since inception till 30.09.2002 also. On total imports of 460.06 lakhs they have achieved export of 1344.28 lakhs which is value addition of 192%. I find that since the unit has achieved on cumulatively basis the minimum stipulated Net Foreign Exchange Earnings as a Percentage of exports (NFEP) and Export Performance (EP) as prescribed in the Appendix-I of the Export and Import Policy, 1997-2002, in force as also there is no non achievement of Export ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of achieving any minimum value addition and therefore as a corollary no violation of any provisions of the exim policy. 4.9 In our view, for demanding the forgone customs duty under the notification no. 53/97-Cus dated 03.06.1997 there need to be violation of the conditions of the import-export policy of the relevant period. Since the relevant authorities implementing the import export policy provisions have categorically found that there has not been any violation of the conditions therefore, we hold that no conditions of the exemption notification no. 53/97-Cus dated 03.06.1997 and notification no. 1/95-CE dated 04.01.1995 has been violated by the respondent assessee. We also take note of the fact that relevant period taken for judging export performance was very short i.e. 18 months only which they were to achieve the entire export obligation in 5 years. We also take note of the fact that the Export Oriented Unit was continuously engaged in the export of their final product hence, we find that no conditions of the exemption notification as well as exim policy has been violated by them and therefore, we find no short coming in the impugned order-in-original under challenge. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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