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TMI Blog2009 (1) TMI 235X X X X Extracts X X X X X X X X Extracts X X X X ..... against Order-in-Original No. 2/2008 dated 14-3-2008. 2. The relevant facts that arise for consideration are the appellant M/s. Lens Master International, 100% EOU, Shed No. 100, Craftsman Guild, Mallepally, Hyderabad are manufacturers and exporters of optical lenses. They are holders of Customs Bonded Warehouse Licence No. 8/97. The Appellants were issued a Letter of Permission (LOP) vide No. PER/225 (1994) /EOU/184/(94), dated 12-7-1994 for the manufacture of ophthalmic lenses by the Ministry of Industry, Government of India, New Delhi. Appellants commenced commercial production from 1-10-1995. During the period from 1994 to 1997, capital goods valued at Rs. 25,94,491/and inputs/consumables valued at Rs. 16,03,745/- were imported by the appellants for the manufacture and export of ophthalmic lenses. The minimum export obligation of Rs. 1,470/- lakhs was fixed and was to be achieved during the five years period commencing from October 1995 onwards. As against this the appellants were able to export goods as indicated below: Year Physical exports (Value in Rs.) 1995-96 1,00,662 1996-97 3,13,786 1997-98 6,70,347 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompetition from Chinese origin goods and change in technology. The Adjudicating Authority after considering the oral and written submissions made before him by the appellants, vide his Order-in-Original No. 2/2008-Adjn.-Cus., dated 14-3-2008 passed the following order. ORDER (i) In terms of Notification No. 13/81-Customs dt. 9-2-1981, I demand total customs duty of Rs. 33,679/- on the imported goods. The amounts of duty already deposited by the licensees vide TR6 Challan No. Nil dated 9-8-2007 shall be appropriated and adjusted towards the duty liability. (ii) I confiscate the capital goods valued at Rs. 25,94,491 /- and Raw materials/Consumables valued at Rs. 1,06,284/- (Valued at the time of Import) under Section 111(o) of the Customs Act, 1962. However, I give an option to redeem the goods on payment of redemption fine of Rs. 5,00,000/- (Rupees Five Lakhs only) under Section 125 of the Customs Act, 1962. (iii) I impose a penalty of Rs. 5,000/- (Rupees five thousand only) on M/s. Lens Master International, in terms of the provision of Section 112(ii) of the Customs Act, 1962. (iv) I demand interest on the duty amount confirmed as above at the appropriate applicable ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted capital goods works out to Nil. Thus, the duty liability on such goods is also Nil. The redemption fine is imposed to eliminate the margin of profit. In the instant case, as per the guidelines given in Notification No. 52/2003-Cus., dated 31-3-2003, the depreciated value of the capital goods is Nil. As such to impose a redemption fine of Rs. 5,00,000/- is not justifiable in law. 3.5 Learned counsel would further submit that in terms of Para 6.16(b) of the EXIM Policy 2002-2007 - "No duty shall be payable in case capital goods, raw material, consumable, spares, goods manufactured, processed or packaged, and scrap/ waste/remnants/rejects are destroyed within the unit after intimation to the Customs Authorities or destroyed outside the unit with the permission of the Customs Authorities". It was submitted that demand for Customs duty on the raw materials imported, is not sustainable in law, inasmuch as, the said raw materials have become obsolete and not fit for being utilized in the manufacture of Ophthalmic Lenses and is therefore required to be destroyed before the Customs Authorities, as provided in Para 6.16(b) the EXIM Policy 2002-2007. 3.6 It was submitted that fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mises and the inputs contained in the finished goods, can be destroyed by them in the presence of Customs Authorities if such permission is granted, they need not pay any customs duty on the imported goods. We find merits in the contentions raised by the appellant. As such, the contention of the appellant that they should be permitted to destroy the goods in accordance with the provisions of Export Import Policy needs consideration by the Adjudicating Authority. 5.2 As regards the confiscation of capital goods and the imported goods, we find that it is attracted. Section 111(o) of the Customs Act, 1962 specifically contemplates that the goods which are imported are in violating the conditions of the Notification, which has granted the exemption, are liable for confiscation. We find that in this case, it is an admitted fact that the appellant has not complied with the export obligation and as such, the capital goods/raw materials which were imported by them have violated the conditions of the Notification. Since, there is violation of the conditions of the Notification, the provisions of Section 111(o) of the Customs Act, 1962 are attracted and we hold that the goods are liable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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