Dispute over customs duty exemption for EPABX equipment imported by 100% EOU

The case involved a dispute over customs duty exemption for EPABX equipment imported by a company under Notification 140/90. The company, a 100% EOU, filed a bill of entry on 5-6-96 and was cleared on 14-6-96. The show cause notice for differential duty was issued beyond the 6-month limit from clearance. The Commissioner allowed the appeal based on the time bar issue alone, granting customs duty exemption. The Revenue's appeal was dismissed as the duty could only be charged upon debonding, not at clearance into a bonded warehouse, following Supreme Court precedent.

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Issues involved:
The issues involved in the judgment are the eligibility for customs duty exemption under Notification 140/90, dated 22-10-90, and the operation of time bar regarding the clearance of EPABX equipment imported by M/s. Infosys Technologies Ltd.

Eligibility for Customs Duty Exemption:
M/s. Infosys Technologies Ltd., a 100% EOU, had been granted a Private Bonded Warehousing license under the Customs Act for the development of exports of computers and software. They claimed the benefit of Notification 140/90 for EPABX system imported on 5-6-96. The Commissioner (Appeals) found that the bill of entry was filed on 5-6-96, and the clearance was given on 14-6-96. The show cause notice demanding differential duty was issued on 8-9-97, which was beyond the 6-month time limit from the date of clearance. The Commissioner set aside the order based on the time bar issue alone, allowing the appeal for customs duty exemption.

Operation of Time Bar:
The Revenue filed an appeal arguing that the assessment on the bond Bill of Entry was not final under Sections 15 & 28 of the Customs Act, and the demand confirmed by the Original Authority should stand. They cited a Tribunal decision in M/s. J.K. Synthetics Ltd. v. CC, Jaipur. However, the Tribunal found that goods cleared into a bonded warehouse cannot be charged duty until the bond period expires. The duty and penalties, if any, should be considered at the time of debonding, as per the Supreme Court ruling in Siv Industries Ltd. The demands issued were deemed premature, and the appeal was dismissed for lack of material to uphold it.

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