2006 (11) TMI 52 - AT - Customs

Demand 100% EOU Appellant imported capital goods and other raw materials but could not fulfill the export obligation Revenue demand duty along with interest and penalty Matter remanded to original authority for recomputing the duty liability

Summary

Issues:
1. Duty demand on imported goods due to non-fulfillment of export obligations by a 100% EOU.
2. Applicability of Notification No. 13/81-Cus. and Notification 123/81-C.E.
3. Imposition of penalties under Section 112 of the Customs Act and Rule 173Q of the Central Excise Rules, 1944.
4. Benefit of partial fulfillment of export obligations and depreciation on capital goods.
5. Retroactive application of Circulars and Notifications.

Issue 1: Duty demand on imported goods due to non-fulfillment of export obligations by a 100% EOU:
The appeal was filed by a 100% EOU against the demand for Customs duty and Central Excise duty due to their failure to meet export obligations. The Adjudicating Authority confirmed a substantial duty demand along with interest and penalties. The matter was remanded by CEGAT, Chennai to re-consider upon de-bonding. The Development Commissioner de-bonded the unit, leading to the confirmation of the duty demand and penalties by the Adjudicating Authority in compliance with the Tribunal's directions.

Issue 2: Applicability of Notification No. 13/81-Cus. and Notification 123/81-C.E.:
The Adjudicating Authority confirmed the Customs duty under Notification No. 13/81-Cus. and Central Excise duty under Notification 123/81-C.E. The duty amounts were demanded along with interest, penalties, and enforcement of bonds. The appellants challenged this order before the Tribunal, disputing the duty demands and penalties imposed.

Issue 3: Imposition of penalties under Section 112 of the Customs Act and Rule 173Q of the Central Excise Rules, 1944:
Penalties were imposed on the appellants under Section 112 of the Customs Act and Rule 173Q of the Central Excise Rules, 1944. The appellants contested the imposition of penalties, arguing that the non-fulfillment of export obligations was due to business conditions and not intentional wrongdoing. The Tribunal considered the circumstances and set aside the penalties imposed.

Issue 4: Benefit of partial fulfillment of export obligations and depreciation on capital goods:
The appellants claimed the benefit of partial fulfillment of export obligations and depreciation on capital goods imported duty-free. The Tribunal acknowledged the appellants' partial export fulfillment and usage of imported goods, ruling that duty should be demanded only on the depreciated value at the time of de-bonding. The Tribunal emphasized the entitlement to benefits based on partial fulfillment and depreciation, directing the original authority to re-calculate the duty liability accordingly.

Issue 5: Retroactive application of Circulars and Notifications:
The appellants relied on Circulars and Notifications to support their claim for benefits based on partial fulfillment of export obligations and depreciation. The Revenue argued against retroactive application of the Circulars and Notifications, asserting that the benefits were prospective. The Tribunal disagreed with the Revenue's stance, holding that the appellants were entitled to the benefits based on judicial decisions and remanded the matter for re-computation considering the Circulars and Notifications.

This detailed analysis of the judgment addresses the duty demands, penalties, benefits of partial fulfillment and depreciation, and the application of Circulars and Notifications in the context of the case before the Appellate Tribunal CESTAT, Bangalore.