Revenue cannot initiate proceedings against 100% EOU after Development Commissioner issues de-bonding certificate

CESTAT Kolkata held that Revenue lacks jurisdiction to initiate proceedings against a 100% EOU after the Development Commissioner issued de-bonding certificate. The appellant achieved positive Net Foreign Exchange (NFE) within the block period and obtained de-bonding from Development Commissioner. Following precedents in Transworld Business Corporation and Universal Biofuels cases, the Tribunal ruled that once Development Commissioner grants final exit through de-bonding, Customs cannot re-open the matter regarding export obligation fulfillment. The proceedings were set aside and appeal allowed.

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Issues Involved:
1. Jurisdiction of the Respondent to question the fulfillment of Net Foreign Exchange (NFE).
2. Scope of the show-cause notice.
3. Computation of cumulative NFE.
4. Limitation period for issuing the show-cause notice.

Summary:

1. Jurisdiction of the Respondent to question the fulfillment of NFE:
The appellant contested the impugned order confirming the demand of excise duty for non-fulfillment of export obligation. The appellant argued that the respondents have no jurisdiction to question the fulfillment of NFE as this responsibility lies with the Development Commissioner. The Tribunal upheld this view, citing previous cases such as *Transworld Business Corporation*, *Universal Biofuels Private Limited*, and *Shree Bankey Behari Lal Board Mills*, which established that once the Development Commissioner issues a de-bonding order, the Customs authorities cannot re-open the matter.

2. Scope of the show-cause notice:
The appellant argued that the Commissioner (Appeals) traveled beyond the scope of the show-cause notice by raising issues not originally mentioned. The Tribunal agreed, noting that no objections regarding the quantity of Domestic Tariff Area (DTA) sales and their entitlement were raised in the show-cause notice. Thus, the Commissioner (Appeals) acted beyond his jurisdiction.

3. Computation of cumulative NFE:
The appellant maintained that cumulative NFE should be computed only with reference to the block period and that they had achieved positive NFE cumulatively from September 2011 to March 2015. The Tribunal found that the appellant had indeed achieved positive NFE within the block period and obtained de-bonding from the Development Commissioner. Therefore, the proceedings initiated by the respondents were not sustainable.

4. Limitation period for issuing the show-cause notice:
The appellant argued that the demand was barred by limitation since the audit took place in December 2015, but the show-cause notice was issued on 27.09.2016 for the period September 2011 to March 2013. The Tribunal did not specifically address this issue in the judgment but set aside the proceedings on other grounds.

Conclusion:
The Tribunal concluded that the respondents had no jurisdiction to initiate proceedings against the appellant as they had already achieved positive NFE in the block period. Consequently, the appeal was allowed with consequential relief, and the impugned order was set aside.

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