Tribunal allows appeal for duty on imported goods in 100% EOU after warehousing period, citing liberal approach.

The Tribunal overturned the Commissioner's order demanding duty on imported goods in a 100% EOU after the warehousing period expired. The Tribunal emphasized the liberal approach towards procedures for 100% EOUs, considering Circulars allowing extension of warehousing periods and destruction of obsolete goods. It noted the unique nature of goods in a 100% EOU and found no justification for demanding duty, especially when provisions existed for destruction of obsolete goods and relinquishment of title. Consequently, the appeal was allowed, setting aside the order demanding duty, interest, and penalties, providing consequential relief to the appellants.

---

---

Issues:
- Demand of duty on imported goods in a 100% EOU without extension of warehousing period
- Application of the Kesoram Rayon case by the Commissioner
- Disregard of Circulars by the Commissioner
- Relinquishment of title of goods by the appellants

Analysis:

The appeal was filed against an Order-in-Original passed by the Commissioner of Customs, Bangalore, demanding duty on imported goods in a 100% EOU after the warehousing period expired. The Commissioner relied on the Kesoram Rayon case to hold that the goods were improperly removed. The appellants challenged this order, stating they had fulfilled export obligations and sought to destroy obsolete goods. The learned Advocates highlighted Circulars allowing extension of warehousing period and destruction of goods. They argued that the Kesoram Rayon case should not apply to 100% EOUs. The appellants also informed of their intention to relinquish the title of the goods before the order was issued.

The Tribunal noted that the Commissioner's demand of duty was based on the expiry of the warehousing period, applying the Kesoram Rayon case. However, the Tribunal found that Circulars issued by the CBEC reflected a liberal approach towards procedures for 100% EOUs. The Capital Goods imported by EOUs are intended for export production, with warehousing licenses periodically extended. The Tribunal emphasized the liberal approach taken by the Board in extending warehousing periods, even without separate applications. It also considered the rapid obsolescence of IT goods and the Import Policy permitting destruction of obsolete goods.

The Tribunal observed that the Commissioner had not properly appreciated the Circulars and the unique nature of goods in a 100% EOU. It found no justification for demanding duty, especially when provisions existed for destruction of obsolete goods and relinquishment of title. Consequently, the impugned order demanding duty, interest, and penalties was set aside, and the appeal was allowed with consequential relief.

This detailed analysis highlights the key arguments, legal principles, and considerations made by the Tribunal in reaching its decision to overturn the Commissioner's order.

---