TaxTMI 
TaxTMI 
2018 (1) TMI 1212
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....iat of Industrial Assistance (SIA) vide letter No.EO.95/1992 dated 25.03.1997. The first condition for permitting de-bonding, by the Secretariat of Industrial Assistance is that they should pay "applicable Customs and Excise duties on the imported and indigenous capital goods, raw materials, components, consumables spares and finished goods in stock". 2.2 Note to the Appendix 16C of the Hand Book of Procedures (Vol.I) of the EXIM POLICY reads as follows: "The unit would fulfill the above mentioned standard conditions in a period of 6 months from the date of issue of 'in principle' de-bonding letter and obtain final de-bonding permission from the Development Commissioner/SIA as the case may be, failing which the approval granted would lapse automatically". The EOU did not pay the applicable Customs and Excise duties on the capital goods/raw materials thereby, not fulfilling the first condition of the "standard condition for de-bonding" and so the permission given by SIA lapsed automatically. DGFT also initiated action against the EOU by issuing a show cause notice vide F.No.9/7/98-99/ECA II/218 dated 29.05.1998, proposing to impose penalty under Foreign Trade (De....
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....tively? II) Whether the Tribunal is right in according permission to destroy indigenously procured raw materials covered under Notification No.1/95-Cus by Notification No.71/2000-Cus dated 22.05.2000 which is not at all related to Notification No.1/95-Cus? III) Whether the Tribunal was right in relying on Customs Notification No.133/94-Cus dated 22.06.1994 and Circular No.18/98-Cus dated 16.03.1998 applicable for the units within an export processing zone or a free trade zone specified in Annexure-II and applying the same to an 100% EOU falling outside the said export processing zone or a free trade zone?" 5. Supporting the abovesaid substantial questions of law, Mr.A.P.Srinivas, learned counsel for the appellant, submitted that the decision of CESTAT, Madras, is based on the customs Notification No.133/94-Cus, dated 22.06.1994 and Circular No.18/98-Cus, dated 16.03.1998. The said notification is applicable to the units, within the export processing zone or a free trade zone specified, in Annexure-II to the notification, whereas, the instant case, relates to an 100% EOU unit, not covered, under the above zones specified under the said notification. Hence, the n....
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....d 22.05.2000. 10. Learned counsel for the appellant further submitted that the obsolete goods, as per the assessee, is the Actuators, i.e. goods intended to be manufactured by importing/purchasing Capital goods/Raw materials. Just because the prospect of marketing of Actuators was unviable/outdated, captial goods/raw materials cannot be termed, as obsolete goods. This was also observed by the adjudicating authority, vide para 33 of the Order-in-Original. 11. Learned counsel for the appellant further submitted that in, para 13 of the Order-in-Original, the adjudicating authority has clearly observed that the second hand capital goods, imported by the assessee were restricted items, as per para 5.3 of the policy and a specific licence from DGFT is required to release the same. CESTAT, Madras, made no reference on this aspect. By according permission for destruction of the alleged obsolete goods, by the appropriate authority, in terms of Notification No.71/2000-Cus dated 22.05.2000, CESTAT, Madras, has prompted the above question of law, for consideration by this Court. 12. Heard Mr.A.P.Srinivas, learned counsel for the appellant and perused the materials available on record.....
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.... of this letter may kindly be acknowledged." 14. Circular No.49/2000-Cus, dated 22.05.2000, in respect of EOU/EPZ/STP/EHTP Scheme - Amendments in Exim Policy and Handbook of Procedures, 1997-2002, is extracted hereunder: "Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject : Amendments in Exim Policy and Handbook of Procedures, 1997-2002 - relating to EOU/EPZ/STP/EHTP Scheme - Issuance of Customs/Central Excise Notifications - reg. I am directed to refer to Chapter 9 of the revised Exim Policy 1997-2002 and Handbook of Procedures, Vol. 1. The changes made therein have necessitated amendments in notifications governing duty free import/procurement of goods by EOU/EPZ/STP/EHTP units. These amendments have been made vide notification Nos. 71/2000-Cus., and 40/2000-C.E., both dated 22-5-2000. A copy each of the notifications is enclosed for reference. The revision of Exim Policy and HOP has also necessitated amendments in existing Circulars/instructions, and the same has been made wherever necessary. The salient features of the changes are given below : Inc....
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....y all types of goods for creating a central facility for use by software development units in STP/EHTP/EPZ. An amendment has been made in this paragraph to the effect that the central facility for software development could also be accessed by units in the DTA for export of software. Necessary arrangements may be made to implement this Policy provision. It may be noted that the software exported by DTA units by availing of such central facility of EPZ/STP/EHTP will be considered as export made by DTA unit only. DTA sale of rejects : 6. Paragraph 9.9(a) of the Policy provides for DTA sale of rejects. Prior to the revision of the Policy, rejects above 5% of the FOB value of exports were counted against DTA sale entitlements, which was allowed upto 50% of the FOB value of export. An amendment has been made in this paragraph to stipulate that all sales of rejects in DTA shall be counted in the overall limit of 50%. As hitherto, the DTA sale entitlement shall be worked out on the basis of physical exports only. DTA sale by software units : 7. Prior to revision, under para 9.9(g) of the Policy, the software units were allowed DTA sale in any mode inclu....
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....been provided that DTA units shall be entitled to brand rate of duty draw back. 11. The EOU/EPZ units in textiles, ready made garments and granite sectors were allowed to undertake job work on behalf of DTA units by Board s Circular 69/98-Cus., dated 14th September 1998. This facility was subsequently extended to the EOU/EPZ units in aquaculture, animal husbandry, hardware, software sector vide Boards <<15183$Circular No. 74/99-Cus., dated 5th Nov., 1999. >> Now, it has been decided to extend this facility to EOU/EPZ units in all sectors. Further, it has been decided that the DTA units shall be entitled to avail of the brand rate of duty drawback for such jobwork undertaken by EOUs/EPZ units concerned. Board s <<15083$Circulars 67/98-Cus., dated 14-9-1998 >> and <<15183$74/99-Cus., dated 5-11-1999 >> stand modified to the above extent. Disposal of Capital goods 12. Para 9.19 of the Exim Policy has been amended to allow destruction of obsolete capital goods and spares without payment of duty with prior permission of Customs. To align with the revised provision of the Policy, all notifications governing duty free import/procurement by EOU/EPZ/STP/EHTP units....
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.... to transfer/supply capital goods and inputs to the quarries with prior intimation to the jurisdictional Assistant/ Deputy Commissioner of Customs. To effect the above changes, two separate notifications (Nos. 58/2000-Cus., dated 8-5-2000 and 38/2000-C.E., dated 8-5-2000) have been issued (copies enclosed) to allow granite sector units in EOU/EPZ Scheme to import/procure specified capital goods, equipment and inputs etc., duty free and to use them in their own quarries. The granites so quarried would be brought back to the EOU/EPZ units for further manufacturing/processing and export thereof. This facility of duty free import/ procurement of equipment for quarrying of granite shall be available only to the units which have a manufacturing/processing unit operating under EPZ or EOU Scheme. The granite so quarried shall not be allowed to be exported as such and shall be transferred to the processing unit of the importer/user industry (in case of procurement) operating under EOU/EPZ Scheme. However, the granite so quarried may be supplied to other granite processing EOU/EPZ units without payment of duty. The granites quarried shall not be allowed to be sold in DTA. The granite manufac....
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....imum of 90% <<15043$Circular Nos. 27/98, dated 21-4-1998 >> and <<15059$43/98-Cus., dated 26-6-1998 >> stand modified to the above extent. Powers of approval of Development Commissioner : 18. At present, under Paragraphs 9.37 of the HOP, DG sets up to capacity of 1000 KVA is approved by Development Commissioner (DC) and of capacity beyond 1000 KVA is approved by Board of Approvals. This Paragraph has been amended so as to allow the DC to permit import/procurement of DG sets without any limit in regard to the capacity of such sets. All notifications governing EOU/EPZ/EHTP/STP Schemes have been amended suitably to reflect the above change. Allowing Export of Call Centre Services under STP scheme : 19. The notification Nos. 138/91-Cus. and 140/91-Cus., both dated 22-10-1991, governing STP scheme presently allow duty-free imports for certain purposes viz. development of software, data entry or data conversion, data analysis and control or data management for export out of India. Call Centre Services are not listed in the notification as one of the specific purposes. In recent past, a number of proposals has been received regarding setting up....
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....r Boilers : 23. Notification Nos. 133/94-Cus., dated 22-6-1994, 53/97-Cus., dated 3-6-1997 and 1/95-C.E., dated 4-1-1995, provide for duty-free import/procurement of furnace oil for boiler in textile units only. The Ministry of Commerce has requested that the boiler is required for units other than textiles also. It has also been pointed out that Notification No. 126/94-C.E., dated 2-9-1994, does not allow duty-free procurement of furnace oil even for the textile units. The matter has been considered, and Notification Nos. 133/94-Cus., dated 22-6-1994, 53/97-Cus., dated 3-6-1997, 1/95-C.E., dated 4-1-1995 and 126/94-C.E., dated 2-9-1994 have been amended to allow duty-free import/procurement of furnace oil for boilers in all EOU/EPZ units. Import/ Procurement of HSD for Aquaculture and Agriculture Sector : 24. Aquaculture and agriculture sector EOUs operate under notification Nos. 196/94-Cus., dated 8-12-1994 & 10/95-C.E., dated 23-2-1995 and 126/94-Cus., dated 3-6-1994 & 136/94-C.E., dated 10-12-1994 respectively. These units are not amenable to physical bonding. Therefore, the units are allowed to import/procure duty free only some specified goods HSD i....
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....Difficulties, if any, faced in understanding or in implementation of the above changes, may be brought to the notice of the Board at an early date. Kindly acknowledge receipt of this Circular." 15. Let us now consider, as to how the Commissioner of Central Excise, Coimbatore, original authority, has considered the issue. Paragraphs Nos.23 to 31, are extracted hereunder:- "23. He brought to my notice that MEPZ had already given NOC for destruction of obsolete capital goods imported by them. He further stated that the Ministry had also issued a clarification vide Notification No.49/2000 dated 22.05.2000 wherein it has been clarified that in accordance with the amendment made in the EXIM Policy 2000, disposal of obsolete capital goods have been permitted without payment of duty (Vide para 12). In view of the above he finally requested for permission for destruction of all the obsolete capital goods lying in their factory which were imported in the year 1993 except one number of Butler Hi-Tect 10/60 Injection Moulding Machine, one set category 1 spares 1 and 500 kgs of alluminium alloy as discussed above. 24. Commissioner of Central Excise, Coimbatore, gon....
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.... Notification No. 53/97 Cus as amended by Notification No. 65/99 Cus dated 19.5.99. As per the amendment, if the AC is satisfied that the capital goods are not used (for the purpose for which they are imported) within the warehouse, interest at the rate of 20% has to be charged on the duty. On the same analogy, it is also proposed to demand duty and interest on the imported and indigenous raw materials. 29. It was emphasized by the EOU that the Obsolete capital goods are eligible for destruction in terms of Customs Circular No. 49/2000-Cus dated 22.5.2000 and as recommended by the Development Commissioner, MEPZ, Chennai. But the Development Commissioner has recommended the destruction of obsolete capital goods subject to the observance of Customs and excise formalities. The EOUs are governed by the provisions of Notification No. 53/97- Cus as amended, which did not have any provision for destruction of capital goods till 22.5.2000, when para 12A was inserted vide Notification NO.71/2000- Cus dated 22.5.2000 allowing the destruction of capital goods subject to the satisfaction of the Asst. Commissioner. The show cause notice had been issued on 11.4.2000 demanding duty when ....
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....e, interest at the rate of 20% has to be charged on the duty from the date of import till the date of payment of duty. The amended provisions of Notification No. 53/97 Cus can be invoked only for the imports made after 19.5.99, the date of amendment, and it cannot have a retrospect effect. Hence interest as per Notification No.53/97 Cus cannot be charged on the duty payable by the 100% EOU on the goods covered by show cause notice. 31. In view of the above, Commissioner of Central Excise, Coimbatore, pass the following order:- a) To Restrict the demand of customs duty to Rs. 26,82,677/-(as per Annexure I) on the imported Capital goods from M/s.India Actuators Pvt Ltd., Coimbatore in terms of the conditions of the Bond executed by them. b) To Restrict the demand of customs duty to Rs. 5,46,607/-(As per Annexure II) on the imported Raw Materials and Central Excise duty of Rs. 13,541/- (As per Annexure III) on the duty free raw materials procured indigenously within India in terms of the above Bond. c) To order that the said second hand machineries should be released on payment of above duty only after fulfillment of the conditions prescribed in the....
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....ctive or sub-standard computers and its parts which are not required (useful) for current production and have also not been used can be destroyed out side the zone i.e. whether the goods which were imported under an earlier notification could be allowed destruction under the present Notification No.133/94-Cus. (iii) Whether the goods which are permitted for destruction within the zones can be taken for destruction outside the zones, as the notification only provides for destruction within the zone? (2) The issue has been examined by the Board. It is clarified that action taken under the rejoinded seven notifications will be deemed to have done or taken under the corresponding provisions of the current Notification No.133/94 and the goods which were imported under any one of the earlier notification could be allowed destruction under present notification. Under para 7 (ii) of Notification No.133/94-Cus, the imported goods as such may be allowed destruction and para 7(iii), the scrap/waste obtained in the process of manufacture may also be allowed destruction. In the cases where goods cannot be destroyed within the Zone because of the safety reasons or Municipal Cor....