2007 (10) TMI 207 - AT - Customs

Tribunal Upholds Depreciation Benefits for Aqua Culture Industry; Rejects Revenue's Appeal

The Tribunal rejected the Revenue's appeal against the Order-in-Appeal, which challenged the denial of depreciation benefits on imported goods to a 100% ... EOU - imported raw materials and CG u/not. 196/94-Cus. without payment of duty - Aqua Culture Industry - There was a viral disease and order of SC was also not in favour of the continuance of the Aqua Culture units, so export obligation could not be fulfilled – however, appellants actually commenced commercial production and they supplied the goods to the other exporters in India – hence, payment of duty at depreciated value is available from the date of commencement of commercial production Issues:1. Revenue's appeal against the Order-in-Appeal No. 16/2004 (G) Cus. dated 12-10-2004.2. Entitlement to depreciation on imported goods due to failure to fulfil export obligations under the 100% E.O.U. Scheme.Analysis:1. The Revenue challenged the Order-in-Appeal issued by the Commissioner of Central Excise (Appeals) against M/s. Aravic Aqua Farms (P) Ltd., a 100% E.O.U., for not fulfilling export obligations after importing goods duty-free. The Revenue sought recovery of Customs duties amounting to Rs. 4,00,158/-, along with confiscation of goods, a redemption fine of Rs. 50,000/-, and a penalty of Rs. 10,000/-. The Commissioner (Appeals) set aside the Order-in-Original, leading to the Revenue's appeal. The Revenue argued that the Respondents did not commence commercial production or meet export obligations, thus disqualifying them from depreciation benefits on imported goods.2. The Departmental Representative contended that under the 100% E.O.U. Scheme, duty-free import and excise duty exemption are contingent upon production and export fulfillment. As no exports occurred, the Revenue argued that there was no commercial production, and thus, depreciation should not be granted. The Respondents, through their Advocate, explained their inability to fulfill export obligations due to external factors like regulatory restrictions and crop failures. They emphasized that commercial production began in 1995, with goods sold to other exporters. Citing relevant case laws, they argued against duty imposition when E.O.U. operations become unviable.3. The Tribunal, after careful consideration, acknowledged the Respondents' challenges in the Aqua Culture Industry, including disease outbreaks and regulatory hurdles. Despite export difficulties, the Respondents engaged in commercial production and supplied goods to other exporters. The Tribunal disagreed with the Revenue's stance, noting the Respondents' willingness to pay duty on depreciated goods value. Given the circumstances and the Notification's provisions, which allow depreciation from the start of commercial production, the Tribunal rejected the Revenue's appeal. The cross-objections were also disposed of in favor of the Respondents.