EOU Importer Wins Appeal: Duty Demand Set Aside Due to Warehouse Clearance Process

The Tribunal allowed the appeal by M/s. STI India Ltd., an EOU importing High Speed Diesel Oil (HSD) under Notification No. 53/97-Cus. The demand of Rs. 54,72,063 under Section 28 of the Customs Act, 1962, with interest and penalty imposed by the Commissioner of Customs, Indore, was set aside. The Tribunal held that as the goods were assessed on into bond Bills of Entry and not cleared from the warehouse, there was no duty collection, making the demand non-sustainable. The absence of a revised notification covering additional customs duty meant the EOU was not liable for the duty, leading to the appeal's success.

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Issues:
Import of High Speed Diesel Oil (HSD) by an EOU under Notification No. 53/97-Cus., imposition of additional duty of customs, assessment of goods against warehousing Bills of Entry, recovery of exemption allowed, limitation on demand, interest on duty demanded, penalty imposed under Customs Act, 1962.

Analysis:
The case involved M/s. STI India Ltd., an EOU importing HSD under Notification No. 53/97-Cus. The issue arose when an additional duty of customs was imposed on HSD, but there was no amendment to the notification exempting EOUs from such duty. The assessing officers extended the benefit of the notification to STI, leading to a Show Cause Notice by the ADG, Office of the DGCEI, Ahmedabad for recovery of the exemption on warehousing Bills of Entry. The Commissioner of Customs, Indore, accepted the plea of the appellant regarding limitation and confirmed a demand of Rs. 54,72,063 under Section 28 of the Customs Act, 1962, with interest and a penalty of Rs. 5 lakhs. STI appealed this order.

The appellant argued that as per the exim policy, an EOU could import goods without paying any duty, and it was a government oversight not to revise the notification to cover the additional duty of customs. The Tribunal found that the impugned goods were assessed on into bond Bills of Entry, and as they were not cleared from the warehouse, there was no duty collection, leading to a non-sustainable demand under Section 28 of the Act. No penalty was imposable as there was no act rendering the goods liable for confiscation under Section 111.

Referring to the case of Priya Blue Industries Ltd. v. CC (Preventive), the Tribunal emphasized that duty payable is as per the assessment order unless reviewed or modified. Since there was no review/appeal of the assessment, the order stood. The EOU had executed a bond for discharging liabilities related to warehoused goods before the Commissioner, Indore, who was competent to adjudicate recovery notices. The absence of a Notification under Section 25 of the Customs Act meant the impugned goods had to pay additional customs duty when cleared for home consumption, despite the exim policy allowing duty-free imports for EOUs.

The appeal was allowed, and the judgment was pronounced on 14-11-2007 by the Tribunal.

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