TMI Blog2023 (5) TMI 651X X X X Extracts X X X X X X X X Extracts X X X X ..... ges had been made to the scheme. Concurrently, the perception on liabilities arising from non-fulfilment of export obligation had also undergone transformation in terms of judicial determination. In SHRIRAM GRAPE GROWERS CO-OPERATIVE SOCIETY LTD VERSUS COMMISSIONER OF CENTRAL EXCISE CUSTOMS [ 2018 (3) TMI 205 - CESTAT MUMBAI] , it was held that It is, therefore, adequately certain that the duty liability on imported, or indigenously procured, capital goods is erased by sheer efflux of time. The appellant has been functioning exportoriented unit since 1992 and capital goods procured in that year should be eligible for depreciation over the period that the unit has been in existence. As on the date of the impugned order, the appellant has been in existence for over a decade and, by application of the straight-line depreciation approved by the Central Board of Excise Customs, the value of capital goods would be nil. Consequently, no duty liability would arise. In BAGLAN TALUKA GRAPE GROWERS CO-OPERATIVE SOCIETY LTD VERSUS COMMISSIONER OF CENTRAL EXCISE NASHIK [ 2019 (1) TMI 1188 - CESTAT MUMBAI] it was held that With a lapse of time since the commencement of commercial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,23,04,089 under section 111(o) of Customs Act, 1962 and of goods valued at ₹ 61,353 under rule 25 of Central Excise Rules, 2002 but permitted to be redeemed on payment of fine of ₹ 1,00,00,000 and ₹ 2,00,000 respectively, and imposition of penalties under section 112 of Customs Act, 1962 as well as under section 11AC of Central Excise Act, 1944 and rule 25 of Central Excise Rules, 2002 in order [order-in-original no. 23/CEX/COMMR/KOP/2012 dated 22nd August 2012] of Commissioner of Central Excise, Kolhapur is impugned before us in this appeal of M/s Jadhav Exports Pvt Ltd. Two separate appeals have been filed in relation to the duties under the two statutes and both are taken for disposal in this common order. 2. The appellant operates 100% export oriented unit (EOU) , issued with letter of permission (LoP) dated 7th August 2000 by the Secretariat for Industrial Approvals (SIA) entitled them to procure capital goods, inputs and consumables from abroad and from domestic sources for the manufacture and export of footwear for a period of 10 years and, in accordance with the extant procedure, had secured private bonded warehouse (PBWH) license for their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )], in Suvarna Aqua Farm Exports Ltd v. Commissioner of Customs, Guntur [2005 (190) ELT 284 (Tri-Bang)] and in Profitex Pvt Ltd v. Commissioner of Customs Central Excise, Raigad [2008 (226) ELT 711 (Tri-Mumbai)]. 5. Further reliance is placed by him on circular no. 14/2004 dated 13th February 2004 of Central Board of Excise Customs (CBEC) on grant of depreciation with effect from commencement of commercial production. It was also contended that duty liability on raw materials procure domestically will continue to subsist only to the extent of stock in hand on date of the bonding. It is contended that the unit having been lying idle since 2006, the value of the raw materials is nil and, hence, not liable to duty. 6. Learned Authorised Representative relies upon notification no. 6/98-CE (NT) dated 2nd March 1998 on the correctness of recourse to the general bond for recovery of duties forgone in the event of nonfulfilment of obligation/conditions in notification. He also placed reliance on the decision of the Hon ble High Court of Bombay in Commissioner of Central Excise, Thane-II v. Bee International [2013 (298) ELT 193 (Bom)]. He pointed out to the contents of Notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Development Commissioner, the consequence of duty liability specified in the said Letter of Permission would arise. 5. It must be noted here that the operationalising of the scheme, insofar as exemption from duties are concerned, depended on Customs Act, 1962 and Central Excise Act, 1944. A proceeding for recovery of duties cannot be based on authority other than these notifications. A cursory perusal of the impugned order would indicate that violation of the conditions of the notifications are not the basis of the confirmation of demand and the detriments enumerated therein. This alone should be sufficient aside the impugned order. 6. The mandate of export obligation under this scheme has altered substantially over the time that this dispute has persisted. The computation thereof, either applicable at the time of issue of Letter of Permission or applicable at the time of issuing of the show cause notice, vary substantially. It would appear that the impugned order has not distinguish between the two. It is further contended that the action to recover duties premature since the unit does not cease to operate till debonding and that eligibility for depreciation, as pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Excise Act, 1944 which are attached conditions that are to be fulfilled. The scheme envisages procurement of capital goods, consumables and from materials without payment of duty and, since 2003, the consequent export obligations prescribed with reference to foreign exchange outflow though, in the period preceding, the prescription not only obliged the unit to neutralise the outflow but also to add prescribed value in the manufacturing process. Now, units that are in that foreign exchange positive on annual, as well as cumulative, performance is to be considered to be compliant with the export obligation prescription. Noncompliant units would be subject to proceedings for recovery of duty foregone on the procurement of raw materials in excess of that utilized for manufacture of export goods and on consumables as well as the amortised value of capital goods proportion to the ascertained efficiency. Thus, the export-oriented unit scheme has undergone changes over a period of time and, more significantly, during the tenor of the letter of permission of the appellant. The amending notifications issued under Customs Act, 1962 and Central Excise Act, 1944 superseded, and substitut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciation over the entire tenor result in nil value for the purpose of assessment . 10. It would appear that these decisions of the Tribunal, and several others thereafter establishing the consistent view of judicial determination on duty liability of such units unable to continue exportation, was not available to the original authority which precluded a judicious disposal of the issue as proposed in the show cause notice. We are conscious that the decision supra is on the value to be adopted for assessment at the time of closure/exit from the scheme. As the substantial part of the amount in dispute pertains to capital goods and the adjudicating authority would need to reappraise the demand in accordance thereof requiring the matter to be remanded, it would also be in consonance thereof for the dispute relating to raw materials also to be reconsidered at the same time. 11. To enable such re-determination, we set aside the impugned order and remand the matter back to the original authority for a fresh decision in accordance with the law as enacted and as judicially determined. ( Order pronounced in the open court on 01/05/2023 ) - - TaxTMI - TMITax - Central Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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