Tribunal sets aside order, finds premature adjudication, orders duty payment, dismisses penalties appeal.

The Tribunal set aside the impugned order, finding that the adjudication was premature and contrary to the binding CBEC circulars. The Tribunal ordered M/s. Mantra Broadband Pvt. Ltd. to pay duty as offered in accordance with the law and dismissed the Revenue's appeal seeking penalties under Section 114A of the Customs Act and Section 11AC of the Central Excise Act. All three appeals were disposed of in these terms.

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Issues Involved:

1. Transfer of bonded goods and premises without permission.
2. Non-fulfillment of export obligations.
3. Premature adjudication without Development Commissioner's concurrence.
4. Liability for customs and excise duties and penalties.
5. Jurisdiction of Customs authorities versus Development Commissioner.

Issue-wise Detailed Analysis:

1. Transfer of Bonded Goods and Premises without Permission:
The case involved M/s. Mantra Broadband Pvt. Ltd. (MBPL) and M/s. Sarayu Softech Pvt. Ltd. (SSPL). MBPL was registered as an STPI unit with a Private Bonded Warehouse Licence (PBWL) and In-Bond Manufacturing (IBM) sanction order. The Customs authorities found that MBPL had transferred the bonded premises and capital goods to SSPL without the requisite permission. The Commissioner concluded that MBPL allowed SSPL to use the bonded premises and duty-free procured goods, violating the terms of the PBWL and IBM sanction order. This transfer was corroborated by statements from key personnel and documentary evidence, including the Asset Purchase Agreement (APA) dated 31-12-2003.

2. Non-fulfillment of Export Obligations:
MBPL had not fulfilled its export obligations as required under the EOU scheme. The Commissioner found that MBPL had not exported any software despite being granted LOP for development and export. The export performance was minimal even after five years, and MBPL failed to show evidence of using the equipment for the intended purpose. The Commissioner held that MBPL contravened the conditions of the EOU notifications and the Customs Act provisions.

3. Premature Adjudication without Development Commissioner's Concurrence:
MBPL and SSPL argued that the proceedings were premature as the Development Commissioner's clearance was not obtained. They cited CBEC Circular No. 21/95-Cus., which mandates concurrence from the Development Commissioner before confirming duty demands in cases of non-fulfillment of export obligations. The Tribunal found merit in this argument, noting that the adjudication should have followed the procedure to obtain concurrence from the Development Commissioner. The Tribunal cited several case laws supporting the necessity of the Development Commissioner's recommendation before confirming duty demands.

4. Liability for Customs and Excise Duties and Penalties:
The Commissioner ordered the confiscation of capital goods and demanded customs and excise duties from MBPL. Penalties were imposed on MBPL and SSPL under various sections of the Customs Act and Central Excise Rules. MBPL contended that they were willing to pay duty on the depreciated value of the bonded goods and argued that the confiscation and penalties were premature. The Tribunal agreed, noting that duty could only be demanded on the removal of goods from the warehouse and that the period for fulfilling export obligations had not expired.

5. Jurisdiction of Customs Authorities versus Development Commissioner:
The Tribunal emphasized that the Customs authorities should act in consultation with the Development Commissioner in cases involving non-fulfillment of export obligations by EOUs. The Tribunal referenced the Supreme Court's decision in Ranadey Micronutrients, which held that departmental circulars are binding on officers. The Tribunal concluded that the proceedings initiated by the Customs authorities without the Development Commissioner's concurrence were not maintainable.

Conclusion:
The Tribunal set aside the impugned order, finding that the adjudication was premature and contrary to the binding CBEC circulars. The Tribunal ordered MBPL to pay duty as offered in accordance with the law and dismissed the Revenue's appeal seeking penalties under Section 114A of the Customs Act and Section 11AC of the Central Excise Act. All three appeals were disposed of in these terms.

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