Export-Oriented Units Face Customs Duty Dispute Over Exceeded Input-Output Norms

The applicants, 100% export-oriented units, exceeded prescribed Input-Output norms for manufacturing ophthalmic lenses, leading to demands for customs duty foregone. The duty exemption was subject to following these norms as per the EXIM Policy conditions. The impugned demands were raised after discussions with the Joint Development Commissioner, SEEPZ, SEZ, regarding excess wastage norms, and a decision was made to charge duty on the excess wastage shown. The applicants' contention that duty is recoverable only at the time of clearances was not accepted, and they were directed to pre-deposit 30% of the duty demanded in each case within eight weeks.

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Issues involved: Stay petitions filed against Orders-in-Appeal upholding Orders-in-Original regarding duty and penalty amounts for exceeding prescribed Input-Output norms under the Duty Exemption Scheme for manufacturing and exporting ophthalmic lenses.

Summary:

1. The applicants, 100% export-oriented units, imported rough ophthalmic blanks duty-free for manufacturing ophthalmic lenses. Exceeded prescribed limits for breakages, wastages, and rejects during manufacturing, leading to demands for customs duty foregone. Duty exemption subject to following Input-Output norms as per EXIM Policy conditions.

2. Impugned demands raised after discussions with Joint Development Commissioner, SEEPZ, SEZ, regarding excess wastage norms. Decision made to charge duty on excess wastage shown. Liability to pay duty on generated wastages beyond prescribed norms.

3. Applicants' contention that duty is recoverable only at the time of clearances not accepted as duty demanded is for customs duty foregone on excess quantities of inputs. Time-bar defense under Section 28 of Customs Act not sustainable as issuing authority competent to issue demands.

4. Applicants directed to pre-deposit 30% of duty demanded in each case within eight weeks. Compliance to be reported by 29-12-2008. Pre-deposit of balance amount waived on timely compliance, with recovery stayed pending appeal disposal. Non-compliance will result in dismissal of appeals without further notice.

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