Tribunal upholds show cause notice, grants depreciation on capital goods, and remands for duty re-computation.

The Tribunal deemed the show cause notice valid despite lacking the Development Commissioner's approval. Duty demands based on notifications coming into force after import/procurement were deemed unsustainable and set aside. The appellant was granted depreciation on capital goods and instructed duty calculation based on the depreciated value. The penalty issue was not explicitly addressed, requiring reconsideration. The impugned order was set aside, and the matter remanded for re-computation of duty demands in accordance with relevant laws at the time of import/procurement. Appeals were allowed for remand.

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Issues Involved:
1. Legality of the show cause notice issued without Development Commissioner's approval.
2. Applicability of duty demands on imported and indigenously procured capital goods and raw materials.
3. Calculation and abatement of duty on depreciated capital goods.
4. Penalty imposition on the appellant.

Issue-wise Detailed Analysis:

1. Legality of the Show Cause Notice:
The appellant contended that the show cause notice dated 19-5-2008 was invalid as it lacked the approval of the Development Commissioner, as required by Circular No. 21/95 dated 10-3-1995. However, the Tribunal found this objection unsustainable, stating that the Customs/Excise authorities were competent to issue the notice and adjudicate the matter. The Development Commissioner's role was to determine whether the export obligations were met, which was confirmed in his order dated 11-12-2009. Thus, the impugned order issued on 3-3-2011 was deemed valid.

2. Applicability of Duty Demands:
The Tribunal noted that the capital goods were imported between June 1994 and December 1994, and raw materials between April 1995 and September 1997, under Notifications No. 13/81-Cus., 53/97-Cus., and 1/95-C.E. The duty demands were computed based on Notification No. 52/03-Cus. and 22/03-C.E., which came into force on 31-3-2003. The Tribunal held that these notifications could not be applied retrospectively to goods imported/procured earlier. Therefore, the demands based on these notifications were unsustainable and set aside.

3. Calculation and Abatement of Duty on Depreciated Capital Goods:
The Tribunal considered the appellant's argument for depreciation on used capital goods as per Notification No. 52/03-Cus., amended by Notification No. 60/08, and Board's Circular No. 43/98-Customs. The Tribunal agreed that the appellant was entitled to depreciation for the period of use (April 1996 to July 1999). The duty liability would arise when the goods were removed from the bonded premises or deemed removed when the warehousing period expired. The duty on capital goods would be calculated based on the depreciated value as of 20-9-2003, the date following the warehousing period's expiry.

4. Penalty Imposition:
The appellant argued against the penalty, citing non-fulfillment of export obligations due to uncontrollable factors, not mala fide intent. The Tribunal did not explicitly address the penalty in detail but indicated that the entire matter, including penalties, needed reconsideration by the adjudicating authority.

Conclusion:
The Tribunal set aside the impugned order and remanded the matter back to the adjudicating authority for re-computation and quantification of duty demands in accordance with the law as it stood at the relevant time of import/procurement. The adjudicating authority was instructed to pass a fresh order after providing the appellant a reasonable opportunity to present their case. The appeals were allowed by way of remand.

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