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Issues: (i) Whether advance DTA clearances made by a 100% EOU were eligible for the benefit of Notification No. 2/95-CE where the Development Commissioner had later held that the unit failed to fulfil its export obligation and future entitlement conditions. (ii) Whether the assessee was entitled to the alternative benefit of Notification No. 83/90-Cus. and whether the redemption fine and penalty could be sustained.
Issue (i): Whether advance DTA clearances made by a 100% EOU were eligible for the benefit of Notification No. 2/95-CE where the Development Commissioner had later held that the unit failed to fulfil its export obligation and future entitlement conditions.
Analysis: The advance DTA permission was granted subject to adjustment against future entitlements and was linked to fulfilment of export performance and value addition. The Development Commissioner, being the authority competent to decide such entitlement, recorded a final finding that the unit had not made any physical exports and had failed to fulfil the export obligation. Once that finding attained finality, the permission for DTA clearance could not support exemption under Notification No. 2/95-CE. The bond executed by the unit contemplated payment of duty and related dues on breach, and the demand followed from that contractual and regulatory framework.
Conclusion: The assessee was not entitled to the benefit of Notification No. 2/95-CE and the duty demand was sustainable.
Issue (ii): Whether the assessee was entitled to the alternative benefit of Notification No. 83/90-Cus. and whether the redemption fine and penalty could be sustained.
Analysis: Notification No. 83/90-Cus. was a conditional exemption requiring compliance at the time of import and proof of use of the imported melting scrap in the specified furnace. The claim was not made at the relevant stage. Since the DTA clearances were found to be contrary to the conditions governing advance permission and the bond, the confiscation of goods and imposition of penalty were not found unsustainable on the facts.
Conclusion: The alternative exemption was not available and the redemption fine and penalty were upheld.
Final Conclusion: The appeal failed on the core exemption dispute, and the adjudication sustaining duty, fine and penalty remained undisturbed.
Ratio Decidendi: Where advance DTA clearance by a 100% EOU is granted subject to future export entitlement and the competent Development Commissioner finally determines that the export obligation has not been fulfilled, customs exemption under the relevant notification cannot be claimed contrary to that determination, and the bond conditions become enforceable.
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