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of <h1>EOU wins appeal against customs demand for full import duty on obsolete raw materials before destruction</h1> <h3>M/s. Tyco Electronics Corporation India (P) Ltd. Versus Commissioner of Central Excise & Service Tax, Bangalore</h3> M/s. Tyco Electronics Corporation India (P) Ltd. Versus Commissioner of Central Excise & Service Tax, Bangalore - TMI Issues Involved:1. Whether the raw materials/components procured without payment of duty under Notification 52/2003-Cus dated 31.03.2003 can be destroyed without payment of duty when the goods become obsolete and unfit for manufacture.Summary:Issue 1: Destruction of Obsolete Goods Without Payment of DutyThe Appellant, an EOU manufacturing connectors, imported raw materials and components duty-free under Notifications No. 52/2003-Cus and 22/2003-CE. Upon becoming obsolete, the Appellant sought permission to destroy these goods and pay duty on the scrap value. The Adjudicating Authority, however, directed payment of duty on the assessable value at the time of import with interest. This decision was upheld by the Commissioner Appeals, prompting the present appeal.The Appellant argued that the impugned order ignored Para 6.15(b) of the Foreign Trade Policy and Notification No. 53/2003-Cus, which allows destruction of obsolete goods within the unit or outside with Customs' permission without paying duty, except for applicable GST and compensation cess. The Appellant also cited Board Circular No. 60/1999-Cus, which permits destruction or DTA clearance of defective goods without re-export, subject to Customs' approval.The Tribunal referenced previous judgments, including M/s. Saint Gobin Crystals and M/s. Indian Actuators Pvt Ltd., which supported the Appellant's stance that obsolete goods could be destroyed with Customs' permission without incurring duty on the original import value. The Tribunal also noted that Notification No. 34/2015-Cus amended Notification 52/2003-Cus to align with FTP provisions, reinforcing that no duty is payable when goods are destroyed.The Tribunal concluded that the Appellant's request for destruction of obsolete goods should have been granted without insisting on duty payment, especially since similar permissions were granted previously. The reliance on Santox Pvt Ltd by the Revenue was deemed inapplicable as it involved determining duty on deteriorated goods' value, not the original import value.In light of these findings and the Hon'ble High Court's decision in Commissioner of Central Excise Delhi vs. Pure Rice Ltd., the Tribunal allowed the appeal, permitting the destruction of obsolete goods without payment of duty on the original import value. The order was pronounced in open court on 20/11/2023.
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