EOU destruction exemption permits duty-free disposal of obsolete raw materials after Customs intimation under the governing policy scheme.

A customs exemption notification governing EOU destruction provisions must be read harmoniously with the Foreign Trade Policy, and obsolete imported raw materials destroyed after the requisite intimation to Customs authorities or permission are not liable to duty where the statutory scheme supports such destruction. The later amendment expressly including raw materials reinforced the view that the earlier scheme already contemplated destruction of obsolete materials in appropriate cases. On the facts, the materials had become obsolete and prior relief had been granted on the same issue, so the duty demand was held unsustainable and the matter was decided in favour of the assessee.

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Issues: Whether duty was payable on obsolete raw materials imported by an EOU and destroyed after intimation to Customs authorities, in the light of Notification No. 52/2003-Cus, the Foreign Trade Policy and the subsequent amending notification.

Analysis: The relevant notification, read with paragraph 6.15(b) of the Foreign Trade Policy, recognised destruction of capital goods, raw materials, consumables, spares and scrap after intimation to Customs authorities or with permission where destruction was outside the unit. The amendment made by Notification No. 34/2015-Cus later brought raw materials expressly within the exemption language, supporting the view that the pre-amendment scheme was intended to permit destruction of obsolete materials in appropriate cases. On the facts, the materials had become obsolete, similar relief had been granted earlier, and the Tribunal found no persuasive basis to depart from its own prior decisions on the same issue.

Conclusion: The demand was unsustainable and the issue was decided in favour of the assessee.

Final Conclusion: The appeals succeeded, and the denial of permission and consequential duty demand were set aside with relief in accordance with law.

Ratio Decidendi: A customs exemption notification governing EOU destruction provisions must be read harmoniously with the Foreign Trade Policy, and obsolete imported raw materials destroyed after the requisite intimation or permission are not liable to duty where the statutory scheme supports such destruction.

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