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Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 2012 (11) TMI AT This

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2012 (11) TMI 768 - AT - Central Excise


Issues:
1. Export obligation fulfillment by 100% EOU.
2. Demand for non-fulfillment of export obligation.
3. Barred demand by limitation.
4. Consultation with Development Commissioner.
5. Depreciation calculation for demand.
6. Imposition of penalty.
7. Premature demands due to pending de-bonding.
8. Waiver of pre-deposit of dues.

Analysis:

1. The case involves the export obligation fulfillment by the 100% Export Oriented Unit (EOU) holding a license as a Private Bonded Warehouse. The applicants imported duty-free capital goods under specific notifications and procured indigenous capital goods against CT-3 certificates. However, they failed to meet the export obligations leading to a significant shortfall and a penalty imposed by the Development Commissioner.

2. The demand for non-fulfillment of export obligation was contested by the applicants citing the absence of provisions in relevant notifications to raise such demands. They argued that the demand was time-barred and required consultation with the Development Commissioner, which was not done in this case. Additionally, they claimed that the depreciation of capital goods should have been considered to avoid the duty demand.

3. The contention regarding the barred demand by limitation was based on the issuance of the show-cause notice beyond the prescribed period of five years. The applicants emphasized that there was no suppression on their part and highlighted the requirement for consultation with the Development Commissioner before issuing demand notices against EOUs.

4. The consultation with the Development Commissioner was a crucial aspect raised by the applicants, emphasizing the necessity of such consultation before confirming demands against EOUs. They argued that the failure to involve the Development Commissioner rendered the demands invalid.

5. Regarding the calculation of duty demand, the applicants proposed considering the depreciation of capital goods as per the EXIM Policy to potentially eliminate the duty demand. They asserted that without mens rea, the imposition of penalties would not be justified.

6. The issue of premature demands due to the pending de-bonding of the unit was a significant argument put forth by the applicants. They referred to specific instructions and circulars indicating that demands should not be enforced until the de-bonding process is completed, and the unit transitions to a normal Domestic Tariff Area (DTA) unit.

7. The judgment highlighted the importance of awaiting the final de-bonding order from the Development Commissioner before enforcing duty demands. The Tribunal referred to a previous case where duty demands were considered premature due to the absence of a de-bonding order, leading to the waiver of pre-deposit of dues adjudged in the present case.

8. Ultimately, the Tribunal granted the waiver of pre-deposit of dues adjudged and stayed the recovery thereof during the pendency of the appeals, considering the premature nature of the demands in light of the pending de-bonding process.

 

 

 

 

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