Duty-free EOU transfers require customs permission; transfer without it breaches exemption conditions and sustains duty and confiscation.

Transfer of duty-free computers and UPSs from one 100% EOU to another required prior permission from the Assistant/Deputy Commissioner under Notification No. 140/91-Cus., and compliance with STP permission alone was insufficient. Because the goods were moved without that specific approval, the exemption conditions were breached. Duty demand, confiscation and penalty were therefore sustained, while the redemption fine and penalties were reduced.

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Issues: Whether transfer of computers and UPSs by one 100% EOU to another STP/EOU without the specific permission of the Assistant/Deputy Commissioner, despite permission from the STP authorities, complied with the exemption conditions so as to avoid demand of duty, confiscation, redemption fine and penalty.

Analysis: The goods were imported or procured duty-free under Notification No. 140/91-Cus. and Notification No. 1/95-C.E. for specified use in the unit concerned. Paragraph 13 of Notification No. 140/91-Cus. required transfer of such goods to another 100% EOU only with the permission of the Assistant/Deputy Commissioner and in the manner prescribed by him. The record showed that the goods were moved to the premises of the other unit without that specific approval. Permission granted by the Chief Executive of the Software Technology Park did not satisfy the statutory condition. The Board circular relied upon by the appellants was held inapplicable to the notification under which the goods had been cleared.

Conclusion: The transfer violated the notification conditions. Duty demand, confiscation and penalty were upheld, and the only modification was reduction of the redemption fine and penalties.

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