2014 (8) TMI 281 - AT - Customs

Tribunal remands case for fresh adjudication, emphasizing Letter of Permission importance.

The Tribunal set aside the impugned order and remanded the matter to the Commissioner for fresh adjudication, considering new developments and the ... 100% EOU - subsequent development after the passage of order in original - LOP was extended and permission for Customs Private bonded warehouse was extended - capital goods obtained duty free - Clandestine clearance of goods into the DTA and failure to intimate commencement of manufacturing goods - Violation of the conditions of Notifications No. 13/81-cus and 123/81-CE - Held that:- there is a new development in the sense that the LOP has been extended up to 06.04.2014. If the Tribunal was convinced that the entire order was a result of cancellation of LOP, the moment the LOP was extended, normal course would have been to set aside the order and direct the department to take up the issue as and when LOP expires. If an order is passed on only cancellation of LOP, the moment the cancelled LOP gets reviewed and extended, naturally the obvious step when an appeal is filed is to set aside the order which is passed purely on the ground that LOP has been cancelled. - matter remanded back for fresh decision. Issues Involved:1. Violation of conditions of Notifications No. 13/81-cus and 123/81-CE.2. Demand for Customs and Central Excise duties.3. Imposition of penalties and interest.4. Validity and extension of Letter of Permission (LOP).5. De-bonding of the unit and subsequent developments.6. Determination of duty liability and applicability of depreciation.Issue-wise Detailed Analysis:1. Violation of conditions of Notifications No. 13/81-cus and 123/81-CE:The Revenue's case was based on the alleged violation of conditions of Notifications No. 13/81-cus and 123/81-CE by M/s. Ready Foods Ltd. (RFL). The allegations included clandestine clearances of finished goods into the Domestic Tariff Area (DTA) and renting out of capital goods without proper permissions. RFL did not deny these allegations.2. Demand for Customs and Central Excise duties:The show-cause notice issued to RFL demanded duties foregone on imported and indigenous capital goods. Initially, the duty demands amounted to Rs. 25.80 crores for capital goods and Rs. 6.71 lacs for clandestine clearances. The adjudicating authority confirmed these demands, but upon appeal, the matter was remanded for fresh consideration due to pending decisions on the extension of the export period by the Development Commissioner (DC).3. Imposition of penalties and interest:Penalties were initially imposed on RFL and concerned individuals. However, in subsequent orders, the adjudicating authority dropped the demands and penalties related to capital goods but confirmed the duty demand for clandestine clearances. The Revenue contested this, arguing that the adjudicating authority erred in dropping the demands and penalties.4. Validity and extension of Letter of Permission (LOP):The validity of the LOP was a crucial factor in the case. Initially, the DC canceled the LOP, leading to the confirmation of duty demands. However, the Appellate Committee annulled the DC's order, and the LOP was later extended. The Tribunal remanded the matter for fresh adjudication, considering the extended LOP.5. De-bonding of the unit and subsequent developments:The unit was purchased by M/s. Global Nutri Foods Pvt. Ltd. (GNFPL) and permitted to function as a DTA unit. GNFPL undertook to pay any determined duty, interest, fines, and penalties. The Tribunal noted that formal de-bonding was yet to be done, emphasizing the need for an early decision.6. Determination of duty liability and applicability of depreciation:The Tribunal highlighted several unresolved issues, including whether the duty should be determined based on the show-cause notice or after allowing depreciation, and whether the duty liability could be passed on to the purchaser of the assets. The Tribunal directed the Commissioner to adjudicate the matter afresh, considering new developments and the validity of the LOP.Conclusion:The Tribunal set aside the impugned order and remanded the matter to the Commissioner for fresh adjudication, taking into account new developments and the validity of the LOP. The Commissioner was instructed to provide a reasonable opportunity for the respondents to present their case and to determine the duty liability in accordance with the law. The Tribunal emphasized the relevance of the LOP and directed that the new developments be considered in the fresh order.