2018 (10) TMI 1331 - AT - Customs

EOU wins case on duty-free goods transfer: Tribunal permits transfers between EOUs under Notification No. 52/2003-Cus.

The Tribunal ruled in favor of the appellant, an EOU, in a case concerning the transfer of duty-free imported goods between EOUs under Notification No. ... EOU - Clearance of goods from one EOU to another EOU - the goods were procured at nil rate of duty under N/N. 52/2003-Cus dated 31.03.2003 - Whether under the law, the appellant is entitled to clear duty free imported goods under N/N. 52/03-Cus? - Held that:- Para 4 of the notification states that the removal of the duty free goods is clearly permissible under the said notification in accordance with the provision of foreign trade policy - From the plain reading of para 6.15 of the foreign trade policy, it is clear that duty free imported goods are allowed to be transferred to another EOU. Since the goods were transferred from appellant’s one EOU to another EOU unit under CT-3 procedure. No duty is required to be paid. The lower authority have confirmed the demand mainly on the ground that in terms of N/N. 52/2003-Cus, the appellant are entitle for removal duty free imported goods from their EOU this contention of the department does not hold good. This issue were considered by this Tribunal in case of Vijaya shrimp Farms Ltd [2014 (5) TMI 331 - CESTAT BANGALORE] wherein the Tribunal has held that the transfer of goods imported to another EOU for use is permitted. The appellant are permitted to clear imported goods to their other EOU unit - appeal allowed - decided in favor of appellant. Issues:Violation of conditions of Notification No. 52/2003-Cus regarding duty-free imported goods transfer between EOUs.Analysis:The case involved the appellant, an EOU, clearing imported raw material to another EOU under a CT-3 Certificate, procured at nil duty under Notification No. 52/2003-Cus. The department alleged a violation of conditions as the goods were transferred to another EOU, demanding customs duty, interest, and penalty. The appellant argued that such transfers are akin to moving goods between warehouses under the Customs Act, supported by relevant judgments.The appellant contended that the transfer of duty-free goods between EOUs is permissible under Notification No. 52/2003-Cus and the foreign trade policy, specifically para 6.15. The Tribunal analyzed the notification's provisions, allowing the transfer of goods to another EOU without duty payment. Citing judgments like Vijaya Shrimp Farms Ltd and Shrivatsa International Ltd, the Tribunal emphasized the legality of such transfers under the EOU scheme, dismissing the department's demand based on the clear provisions of the law and policy.In conclusion, the Tribunal found that the appellant was within their rights to transfer duty-free imported goods between EOUs under the relevant notifications and foreign trade policy. Relying on legal precedents and the explicit provisions of the law, the Tribunal set aside the impugned order, allowing the appeal and rejecting the demand for customs duty, interest, and penalty.