Duty-free procurement for 100% EOU upheld where prior approval supported exemption and pre-deposit waiver

A 100% Export Oriented Unit seeking duty-free procurement of goods for clean-room conditions and temperature control established a strong prima facie case for exemption because prior approval had been obtained from the competent authority. The notification permitted procurement of capital goods and other items required for production of export goods with prior approval of the Board of Approval, so the objection that such approval was irrelevant was not accepted. On that basis, waiver of the whole pre-deposit of duty and penalty was granted and the stay petition was allowed.

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Issues: Whether waiver of pre-deposit of duty and penalty was justified where a 100% Export Oriented Unit had sought and obtained approval for procurement of duty-free goods under the relevant exemption notification.

Analysis: The application was supported by the unit's prior request to procure the goods duty-free for creating clean-room conditions and maintaining temperature for production, and the approval was granted by the competent authority. The notification expressly permitted a 100% EOU to procure capital goods and other items required in relation to production of export goods with prior approval of the Board of Approval. On that basis, the denial of exemption on the ground that Board approval had no relevance was not accepted, and the applicant was found to have a strong prima facie case.

Conclusion: Waiver of the whole of the duty and penalty was granted and the stay petition was allowed.

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