Premature customs demand under Exim Policy cannot be confirmed before Development Commissioner first decides the alleged violation.

Customs could not confirm a demand for alleged non-fulfilment of NFEP under a Letter of Permission and the Exim Policy before the Development Commissioner first determined the alleged policy violation. CBEC circulars dated 10.03.1995 and 28.11.1995 required such violations in a 100% EOU/EPZ case to be settled by the Development Commissioner before Customs could proceed to confirm demand. As no communication or finding from the Development Commissioner was produced, the demand was treated as premature and the order dropping it was upheld.

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Issues: Whether the customs demand was premature in the absence of a prior determination by the Development Commissioner regarding violation of the Exim Policy and fulfilment of the NFEP obligation.

Analysis: The appeal concerned a demand raised on alleged non-fulfilment of NFEP under the LOP and Exim Policy. The Adjudicating Authority had held that the show-cause notice was premature because the Development Commissioner, FSEZ had not first decided the alleged policy infraction. The Tribunal noted that the CBEC Circulars dated 10.03.1995 and 28.11.1995 clarified that cases involving violation of Exim Policy by a 100% EOU/EPZ must first be settled by the Development Commissioner and only thereafter can Customs confirm demand. No communication from the Development Commissioner raising any demand or recording such violation was produced.

Conclusion: The demand could not be confirmed by Customs before the Development Commissioner's decision, and the impugned order dropping the demand was upheld. The appeal was dismissed.

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