2018 (2) TMI 493 - AT - Customs

Tribunal overturns customs duty, penalties on 100% EOU for importing goods, upholds exemption claim

The Tribunal allowed the appeal, setting aside the order confirming customs duty liability and penalties against a 100% EOU for importing goods without ... 100% EOU - benefit of N/N. 52/2003-Cus - case of Revenue is that some of the items imported by the appellants may not qualify as capital goods and the exemption already allowed is not sustainable - Held that: - the goods were duly assessed as capital goods by the competent officer at the port of entry. The same has not been varied by that officer. The goods were in warehouse. In the case of Greenspan Agritech Pvt. Ltd. Vs. CCE, Pune [2013 (5) TMI 823 - CESTAT MUMBAI], again the Tribunal examined the same notification. It has held that when the appellant is a 100% EOU and the goods imported are used for the intended purpose, no demand will arise. The denial of exemption under N/N. 52/2003-Cus is not sustainable - appeal allowed. Issues:1. Jurisdictional Central Excise Officer's authorization for import of goods without payment of customs duty.2. Interpretation of nature of goods for exemption eligibility.3. Premature proceedings when goods are in warehouse.4. Applicability of case laws on similar notifications for 100% EOU.Analysis:1. The appeal challenged an order confirming customs duty liability and penalties imposed by the Commissioner (Appeals) against a 100% EOU for importing goods for industrial purposes without paying customs duty, based on the contention that some items may not qualify as capital goods. The appellant argued that the goods were imported with due authorization and were assessed by Customs authorities during import.2. The appellant contended that the impugned order wrongly interpreted the nature of the goods for exemption eligibility, stating that the goods were duly authorized and assessed as capital goods by the competent officer at the port of entry. The Tribunal found that the terms of the bond were invoked and held that the denial of exemption under the relevant notification was not sustainable based on case laws like Verifone India Pvt. Ltd. Vs. CC, Bangalore and Greenspan Agritech Pvt. Ltd. Vs. CCE, Pune.3. The appellant argued that the proceedings were premature as the goods were still in the warehouse under the custody and supervision of the jurisdictional Central Excise Officer, thus no demand should be made on goods in such a situation. The Tribunal referred to case law stating that proceedings cannot be held against goods in the warehouse without invoking relevant provisions of the Customs Act.4. The Tribunal examined the scope of similar notifications for 100% EOU based on case laws like Verifone India Pvt. Ltd. Vs. CC, Bangalore and Greenspan Agritech Pvt. Ltd. Vs. CCE, Pune, where it was held that if the goods imported are used for the intended purpose by the EOU, no demand would arise. The Tribunal set aside the impugned order and allowed the appeal, finding the denial of exemption under the notification unsustainable.