TMI Blog2009 (12) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... Guntur (hereinafter referred to also as 'the assessee' or 'EOU') are a 100% Exported Oriented Undertaking, engaged in the manufacture and export of Mono/Dual fluted double wall fibre board containers falling under Chapter Sub-heading No. 4819.12 of the Central Excise Tariff Act, 1985. The assessee had procured imported capital goods valued at Rs. 4,93,33,838/- involving Customs duty of Rs. 1,91,71,995/- and raw materials valued at Rs. 94,27,384 involving Customs duty of Rs. 63,19,241/- . The total Customs duty foregone under Notification No. 13/81-Cus., dt. 9-2-1981 as amended read with Notification No. 53/97-Cus, dated 3-6-1997 was therefore Rs. 2,54,91,236/-. The assessee had also procured various indigenous capital goods valued at Rs. 55,57,936/-involving excise duty of Rs. 5,23,309/- and indigenous raw materials valued at Rs. 5,19,088/- involving excise duty of Rs. 93,436/- with out payment of excise duty to the tune of Rs. 6,16,745/- availing conditional ex emption under Notification No. 1/95-CE, dated 4-1-1995 as amended. 2. The EOU commenced commercial production from 19-11-1995 but failed to fulfill the export obligation during the period from 1995-96 to 2000-2001. As su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such, it could not fulfill the stipulated/minimum export obligation during the review period from 19-11-1995 to 31-3-2001. She had also observed that there were no exports since April, 1999. However, in view of the packaging industry under 100% EOU Scheme facing problems viz., lack of orders, internal competition, low prices, working capital etc, the Development Commissioner had taken a lenient view and imposed a fiscal penalty of Rs. 50,000/- on the packaging unit. Later on, the unit became sick-and finally the capital goods were disposed off by the Debt Recovery Tribunal (DRT) in June, 2004 for recovery of debts due to Banks/Financial Institutions. 5. In the impugned order, the Commissioner considered the pleas made by the appellant in response to the show cause notice supported by case law. She made the following observations on the case laws cited by the appellants: (i) Suvarna Aqua Farm Exports Ltd. v. Commissioner of Cus., Guntur 2005 (190) E.L.T. 284 (Tri. - Bang.) In this case, the Hon'ble Tribunal held that on debonding, depreciation is to be given up to the date of duty payment and not till the date of debonding and set aside the penalty, fine and confiscation fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailed in respect of these raw materials and con firmed demand of an amount of Rs. 25,65,070/-. As regards the liability to confiscation of the capital goods and raw materials she observed as follows: "However, the unit could not fulfill the export obligation due to reasons beyond its control. The packaging unit was established primarily to cater to the needs of Aqua Unit, which was closed down due to the Orders of the Hon'ble Supreme Court. The DC, VEPZ, Visakhapatriam too took a lenient view imposed a fiscal penalty of Rs. 50,000/- only on the unit as it faced problems like lack of orders, internal competition, low prices, working capital, etc. But these claims have not been sustained by the unit. 8. She found that the appellants had ceased its operations on 31-3-1999 and held that the assessee was liable to pay interest on the duty due on capital goods and raw materials from 1-4-1999 till the date of payment of duty. She rejected the assessee's claim for allowing relief in the demand on account of the fact that the. assessee had fulfilled the export obligation to the extent of 5% and had to close the unit for reasons beyond its control. She found that there was no provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es was not sustainable as the non-fulfillment of export obligation was on account of business conditions that prevailed at the relevant time and not on account of any mala fide act. 12. We have heard both sides and carefully considered the case records and submissions made by both sides. In the instant case, the appellants had submitted that they were forced to close down the business owing to problems such as lack of orders, internal competition, low prices and working capital. They had also submitted that considering these difficulties faced by the EOU, the Development Commissioner had taken a lenient view and imposed a light penalty of Rs 50,000/- on them. The Commissioner rejected this claim of the appellant as not substantiated. We find that it is reasonable to conclude that the EOU had wound up its business for want of business and funds. In this connection-we find that the appellants have rightly relied on the decision of this Tribunal in Pal Industries Ltd. (supra) wherein the Tribunal has observed as follows: "B. Confiscation of the goods imposition of penalty. We observe that in this case the appellants have come clean before the authorities that it was beyond t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest, in terms of these judgments, is justified. The ratio of the judgments clearly applies to the facts and circumstances of this case. Respectfully following the same, the impugned order, confiscating the machinery and imposing redemption fine and penalty on the Company and the Directors including the levy of interest, is set aside by allowing the appeal. 10. The ratio of the decisions clearly applies to the facts and circum stances of this case as regards the liability of the impugned goods to confiscation and the assessee's liability to penalty. Respectfully following the same, we set aside the impugned order confiscating the capital goods and raw materials and imposing redemption fine and penalty on the EOU. 10.1 As regards the depreciation admissible on the value of capital goods for assessment to duty, the appellants rely on Board' Circular No. 27/98- Cus., dated 21-4-1998 which prescribed admissible depreciation and the period of computation. The period of depreciation as per the circular would be counted from the date the capital goods have been put into the manufacturing process in the EOU up to the date they are sought to be cleared to DTA. We find that in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed depreciation in proportion to the percentage of export obligation fulfilled by it relying on' a decision of this Tribunal in the case of Premier Granites Ltd. (supra) wherein the Tribunal had held that as the appellants had put the goods imported to use and had partially fulfilled the ex port obligation, denial of benefit of exemption notifications and demanding en tire duty was not proper. Such a view was also taken by the Tribunal in the case of Natural Stone Exports Ltd. v. Commissioner [2006 (198) E.L.T. 440 (Tri.)]. Revenue has no case that the decisions of the Tribunal in Premier Granites case and Natural Stone Export case have been challenged before a competent Court. In the circumstances, we order that the admissible depreciation shall be computed in the light of the ratio of these decisions. As regards duty due on the raw materials, the Commissioner has presumed that the raw materials procured had been consumed only to the extent of 60%, as the EOU had fulfilled its export obligation to that extent. The impugned order does not record any evidence to counter the argument of the assessee that the entire raw materials had been consumed in the production of goods already ..... X X X X Extracts X X X X X X X X Extracts X X X X
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