Export Oriented Unit concession denied for non-implementation of project; duty upheld and penalty reduced.

A 100% export oriented unit that failed to implement its project or satisfy the Letter of Permission conditions within the validity period was held ineligible for the benefit of Notification No. 136/94 and the associated EOU concession. On the admitted facts, the duty demand was sustained because the export and operational conditions were not fulfilled. The penalty, however, was considered excessive in the circumstances and was reduced.

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Issues: Whether the appellants, having failed to implement the project and fulfil the conditions of the Letter of Permission within its validity period, were entitled to the benefit of Notification No. 136/94 dated 10-11-1994 and the concession available to a 100% Export Oriented Unit, and whether the penalty required reduction.

Analysis: The appellants had obtained registration as a 100% EOU for manufacture and export of cut flowers, but the Letter of Permission had expired without the project being implemented or the export conditions being satisfied. On that admitted factual position, the benefit of the notification and the EOU concession was held to be unavailable, and the duty demand was sustained. However, considering the facts and circumstances, the penalty was found excessive and was reduced.

Conclusion: The duty demand was upheld, while the penalty was reduced to Rs. 5,000.

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