2010 (6) TMI 184 - AT - Customs

EOU premises equal warehouse for Customs Act, duty-free manufacturing.

PARAS FAB INTERNATIONAL Versus COMMISSIONER OF C. EX., KANDLA

The Tribunal ruled in favor of the appellants, holding that the entire premises of a 100% Export Oriented Unit (EOU) can be considered a warehouse under ... EOU- the Appellants are a 100% EOU in Alwar. They imported the impugned goods namely HSD oil through Kandla Port and filed ‘into Bond Bill of Entry’ for warehousing the imported goods. The impugned goods were warehoused in their 100% EOU in Alwar and subsequently used in the factory within the premises of the 100% EOU for manufacture of the finished goods. The Departmental Authorities at Kandla as well at Alwar have separately demanded Additional Customs duty imposed under Section 128 of the Finance Act, 2003 on the impugned goods holding that Notification No. 53/2003-Cus., dated 31-3-2003 does not exempt such duty. Held that:- The entire premises of a 100% EOU has to be treated as a warehouse if the licence granted under Section 58 to the unit is in respect of the en tire premises. - Imported goods warehoused in the premises of a 100% EOU (which is licensed as a Customs bonded warehouse) and used for the purpose of manufacturing in bond as authorized under Section 65 of the Customs Act, 1962, cannot be treated to have been removed for home consumption. - The decision of the Tribunal rendered in the case of STI India (supra) holding that imported goods were not cleared from the warehouse and hence there cannot be any demand of duty on the same is the correct view in law. Issues:1. Whether the entire premises of 100% EOU should be treated as a warehouseRs.2. Whether the imported goods warehoused in the premises of 100% EOU is to be held to have been removed from the warehouse before the same is issued for manufacture/production/processing by the 100% EOURs.3. Whether issue for use by 100% EOU would amount to clearance for home consumptionRs.4. Whether non-filing of ex-bond bill of entry before using the goods by the 100% EOU makes the goods as not cleared for home consumptionRs.5. Whether the decision of the Tribunal in the case of STI India Ltd. enunciates the correct position of lawRs.Analysis:Issue 1: The case involves a 100% EOU importing goods and using them within their premises for manufacturing finished goods. The contention is whether the entire EOU premises can be considered a warehouse. The Tribunal found support for the appellants' argument that the entire EOU premises is a bonded warehouse under the Customs Act and the EOU Scheme. The Customs Manual and provisions of the Customs Act require the premises to be licensed as a customs bonded warehouse, and imported goods are to be utilized within the bonded premises without any duty payment or filing of ex-bond bills of entry at that stage.Issue 2, 3, 4: The Tribunal held that imported goods warehoused in a 100% EOU and used for manufacturing in bond, as authorized under Section 65 of the Customs Act, cannot be considered as removed for home consumption. The Tribunal emphasized that the act of using imported warehoused material for manufacturing in bond within the same warehouse does not trigger duty payment requirements or clearance for home consumption obligations.Issue 5: The Tribunal referenced a previous decision in STI India Ltd. where it was held that imported goods not cleared from the warehouse do not attract duty demand. The Tribunal concluded that the decision in STI India Ltd. correctly interprets the law, supporting the appellants' arguments in the present case.The Tribunal's detailed analysis covered the relevant provisions of the Customs Act, the EOU Scheme, and the specific requirements for warehousing and manufacturing in bond. The judgment clarified the treatment of imported goods within a 100% EOU, affirming that duty demands do not apply when goods are utilized for manufacturing in bond within the licensed premises of the EOU.