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of <h1>Tribunal rules in favor of appellant, overturns duty demand based on extended LOP period</h1> The Tribunal ruled in favor of the appellant, holding that the Adjudicating Authority erred in confirming the duty demand based on the Development ... Demand of Customs Duty foregone - failure to achieve positive NFE within the communicated period of 5 years from the date of commencement of production - appellant were 100% EOU which were converted into SEZ unit - Held that:- Hon’ble High Court of Bombay in the case of Mavi Industrial Ltd. vs. Commissioner of Cus. & C.Ex, Thane-II [2013 (5) TMI 576 - BOMBAY HIGH COURT] has held that Before expiry of the extended period of LOP it is neither open to the Development Commissioner nor to the customs authorities to treat that the assessee had ceased to be a 100% EOU after the expiry of the first block of five years and consequently the question of enforcing the penal liability before the expiry of the extended period does not arise at all - appeal allowed - decided in favor of appellant. Issues:1. Confirmation of demand against the appellant by the Adjudicating Authority.2. Scope of the show cause notice and extension of time by the Development Commissioner.3. Consideration of the Development Commissioner's order and the demand of customs duty foregone.4. Interpretation of the Development Commissioner's extension of LOP period.5. Comparison with the judgment of the Hon'ble High Court of Bombay regarding penal action and extension of LOP.Analysis:1. The appellant filed an appeal against the confirmation of demand by the Adjudicating Authority. The Hon'ble Tribunal had previously remanded the matter to verify the extension of the export obligation period and fulfillment of NFE. The Adjudicating Authority confirmed the demand based on a letter from the Development Commissioner extending the LOA period. The appellant argued that the Adjudicating Authority exceeded the show cause notice's scope and that the Development Commissioner's extension of LOP should prevent the recovery of customs duty.2. The appellant contended that the Development Commissioner extended the LOP period to allow time for meeting export obligations and achieving NFE. The show cause notice was for duty-free import violations, not for customs duty confirmation. The appellant relied on a previous judgment to support their argument that the Adjudicating Authority erred in confirming the duty demand.3. The Revenue argued that the Development Commissioner only extended the LOP period, not the export obligation period. They emphasized a clause in the Development Commissioner's order stating that actions could be taken under other laws. The Revenue asserted that the Adjudication Order did not provide for demanding duty for not realizing positive NFE.4. The Tribunal considered the judgment of the Hon'ble High Court of Bombay regarding the extension of LOP and penal actions. The Court's decision highlighted that penal liability cannot be imposed before the extended period expires. The Tribunal found that the appellant's case, involving the conversion from 100% EOU to SEZ unit, aligned with the Bombay High Court's ruling.5. Ultimately, the Tribunal accepted the High Court's judgment and ruled in favor of the appellant. The decision emphasized that penal liability cannot be enforced before the extended LOP period expires. The Tribunal found the appellant's situation consistent with the principles outlined in the Bombay High Court's judgment, leading to the allowance of the appeal.This detailed analysis covers the issues raised in the legal judgment, providing a comprehensive understanding of the case and the Tribunal's decision.
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