EOU exempt from customs duty on HSD imports within factory premises

The Tribunal held that the 100% Export-Oriented Unit (EOU) was exempt from paying additional customs duty on imported High-Speed Diesel (HSD) used within its factory premises. The Tribunal set aside the order demanding the duty, citing precedents and legal provisions supporting the exemption for goods moved into a 100% EOU. The appeal was allowed in favor of the EOU.

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Issues:
- Applicability of additional duty of customs on imported High Speed Diesel (HSD) by a 100% EOU
- Validity of the show cause notice issued for recovery of additional duty of customs
- Imposition of penalties under Section 114A and Section 117 of the Customs Act, 1962
- Interpretation of exemption from payment of customs duty for goods moved into a 100% EOU

Analysis:

The appeal in question was filed against the order in appeal No. OIA No. Commr(A)/152/VDR-II/2006 dated 08.09.2006. The appellant, a 100% EOU engaged in the manufacture of cotton yarn, had procured imported High Speed Diesel (HSD) under certain notifications exempting basic duty of customs and additional duty of customs. However, a show cause notice was issued for the recovery of additional duty of customs on the imported HSD, alleging non-payment of the duty as per the provisions of the Finance Act, 1999 and Finance Bill 2003. The adjudicating authority confirmed the demand under Section 28 of the Customs Act, imposed interest, and penalties under Section 114A of the Customs Act, 1962. The first appellate authority upheld this decision.

Upon hearing both sides and examining the record, the Tribunal found that the appellant had transferred the HSD for use within the factory premises of the 100% EOU, which is exempt from payment of customs duty. The Tribunal referenced previous decisions to support this view, including the case of Commissioner of Customs, Jamnagar vs. Reliance Industries Limited and a decision by the Larger Bench of the Tribunal in the case of Paras Fab International vs. CCE, Kandla - 2010 (256) ELT 556. Based on this analysis, the Tribunal concluded that the additional duty of customs cannot be levied on goods moved into a 100% EOU, and therefore, set aside the impugned order, allowing the appeal.

In summary, the Tribunal held that the appellant, being a 100% EOU, was exempt from the payment of additional duty of customs on the imported HSD used within its factory premises. The impugned order was set aside, and the appeal was allowed, citing precedents and legal provisions supporting the exemption from such duties for goods moved into a 100% EOU.

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