Tribunal upholds duty demand cancellation decision for Export Oriented Unit, stresses on regularizing actions.

The Tribunal upheld the Commissioner's decision to cancel the duty demand and maintain the penalty in a case involving a 100% Export Oriented Unit. The Tribunal emphasized the need to regularize actions between EOU units under the same management without imposing harsh measures. The judgment was pronounced by Tribunal members Dr. S.L. Peeran and Shri T.K. Jayaraman on 25-9-2008.

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Issues:
Revenue's appeal against Order-in-Appeal No. 6/2008-Cus. (B) | Cross objection filed by the party

Analysis:
The case involves a 100% Export Oriented Unit (EOU) with premises in Bangalore, operating under the STPI Scheme and licensed as a Private Bonded Warehouse. The Customs Special audit team found that certain bonded goods were shifted to the STPI unit without proper permission, leading to duty liability. The Original Authority confirmed the duty demand and imposed a penalty, which was challenged before the Commissioner (Appeals).

The Commissioner (Appeals) acknowledged a procedural lapse but set aside the duty demand, imposing a penalty of Rs. 10,000 under Section 117 of the Act. The Revenue appealed, arguing that the Commissioner exceeded the scope of the notification and requested restoration of the duty demand.

The Tribunal referred to a similar case involving Honeywell Technology Solutions Lab. Ltd., where it was concluded that transferring goods between EOU units under the same management should not lead to a duty demand. The Tribunal emphasized the need to optimize resources and regularize such actions ex post facto, without imposing harsh measures. Consequently, the Tribunal upheld the Commissioner's decision to set aside the duty demand, noting that the penalty was not contested by the respondent.

In conclusion, the Revenue's appeal and cross objection were disposed of by the Tribunal, affirming the Commissioner's decision to cancel the duty demand and maintain the penalty. The judgment was pronounced on 25-9-2008 by the Tribunal members Dr. S.L. Peeran and Shri T.K. Jayaraman.

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