Appeal Allowed, Matter Remanded for Redetermination

The appeal was allowed, and the matter was remanded to the Commissioner for deciding the liability of the assessee on the capital goods after redetermining the assessable value. The assessee shall be heard before a fresh decision is taken.

---

---

Issues Involved:
1. Non-allowance of depreciation on capital goods up to the date of payment of duty or confiscation.
2. Confirmation of duty without allowance for exports made.
3. Wrong demand of duty on raw materials.
4. Illegal confiscation of capital goods and raw materials.
5. Wrong imposition of penalty and redemption fine.

Summary:

1. Non-allowance of depreciation on capital goods:
The Commissioner found that the EOU was entitled to depreciation on capital goods in cases of partial fulfillment of export obligation. The depreciation was calculated from the date of installation of the respective capital goods to the date of the 'Suo Motu Debonding Letter' (31-10-2002). The depreciated value of the imported capital goods for charging customs duty was Rs. 4,67,447, and that of indigenous capital goods for charging excise duty was Rs. 9,08,099. The total duties payable were Rs. 2,91,131/-.

2. Confirmation of duty without allowance for exports made:
The Commissioner observed that the appellant had fulfilled export obligation to the extent of about 60%. Therefore, 40% of the raw material procured was not entitled to exemption, and accordingly, customs and excise duties of Rs. 3,38,701/- were demanded on 40% of the value of the raw materials procured by the appellants.

3. Wrong demand of duty on raw materials:
The Commissioner inferred that the unit could not operate from 1997-98 onwards due to the Supreme Court's directions banning aquaculture. The unit claimed that most of the capital goods were washed away during the cyclone followed by heavy floods in 1997, but this was not substantiated.

4. Illegal confiscation of capital goods and raw materials:
The Tribunal found that the appellants were compelled to close down the EOU owing to the Supreme Court's direction banning aquaculture. The order of confiscation of the capital goods and raw materials procured by the appellant was not justified, nor was the penalty imposed on the appellants. The Tribunal set aside the confiscation of the goods and imposition of penalty, following the ratio of decisions in similar cases.

5. Wrong imposition of penalty and redemption fine:
The Tribunal found that the appellants had not tried to evade duty or avail undue exemption. The penalty and redemption fine imposed on the appellants were set aside. The Tribunal ordered that the admissible depreciation shall be computed in the light of the ratio of decisions in similar cases. The demand of customs and excise duties on the 40% of the value of the raw materials procured by the assessee was set aside.

Conclusion:
The appeal was allowed, and the matter was remanded to the Commissioner for deciding the liability of the assessee on the capital goods after redetermining the assessable value. The assessee shall be heard before a fresh decision is taken.

---