Customs liability under EOU warehousing scheme required fresh consideration after extension of the letter of intent was overlooked.

Customs liability under the warehousing regime was considered alongside the 100% Export Oriented Unit approval, and the later extension of the letter of intent was treated as a material development affecting the scheme's implementation. Because that extension was not examined in the original adjudication, the customs demand, confiscation and penalty could not be assessed in isolation from the EOU approval status. The matter was therefore sent back for fresh consideration by the adjudicating authority, with directions to take the extension of the letter of intent into account.

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Issues: Whether the demand of duty, confiscation and penalty could be sustained, or the matter required remand for fresh consideration in view of the subsequent extension of the letter of intent under the 100% Export Oriented Unit scheme.

Analysis: The dispute arose from the interaction between the customs warehousing regime and the 100% EOU scheme. The original adjudication proceeded on the footing that the warehousing licence and the EOU approval had not been extended, attracting liability under the customs provisions and the exemption notification. Before the Tribunal, however, the Ministry of Industries had extended the validity of the letter of intent for the EOU project up to September 2000, without gaps, and that development was material to the viability and implementation of the scheme. The Tribunal held that the customs consequences could not be examined in isolation from the EOU approval, and that the subsequent extension was a relevant circumstance which had to be considered by the adjudicating authority.

Conclusion: The impugned order was set aside and the matter was remanded to the Commissioner for de novo consideration after taking the extension of the letter of intent into account.

Ratio Decidendi: Where a subsequent extension of the governing EOU approval is material to customs liability under the warehousing scheme, and that extension was not available when the original order was passed, the matter must be reconsidered afresh by the adjudicating authority.

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