TaxTMI 
TaxTMI 
2025 (12) TMI 1206
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....ty under section 112 of the Customs Act, 1962 and also under Rule 26 of the Central Excise Rules, 2002, arising out of same proceedings. 2. Based on certain observations, the department felt that the appellant has failed to fulfil export obligation and has not achieved the positive NFE (Net Foreign Exchange) during the period 2009-10 to 2011-12 and therefore, they have contravened the provision under Notification No.52/2003-Cus dt.31.03.2003 and Notification No.22/2003-CE dt.31.03.2003 as well as various terms and conditions of B-17 bond executed by them and therefore, both customs duty and Central Excise duty in respect of imports and domestic procurement, without payment of duty, was demanded. 3. The appellants are a 100% EOU, who were issued Letter of Permission (LOP) dt.29.05.2008 by the competent authority, which, inter alia, provided for meeting certain conditions relating to achievement of positive NFE. In pursuance thereto, the appellants imported certain goods duty free in terms of Notification No.52/2003-Cus as well as procured certain indigenous goods without payment of excise duty in terms of Notification No.22/2003-CE. The appellants were registered under Central....
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....cordance with provisions in the notifications, supra, while computing the duty demand and similarly, the depreciation on capital goods, while demanding duty has to be reworked out as per the provisions in the notifications itself. He has also additionally submitted that there is no scope for confiscating the capital goods, as there is no allegation that the said capital goods were not installed or for that matter, not used in manufacture of goods, which were either exported or cleared in DTA, with valid permission from the DC till the time permission to exit was finally accorded by the DC. 6. Learned AR has reiterated the findings of the adjudicating authority and has also submitted that the judgment relied upon by the appellant is not applicable in the facts of the case. 7. Heard both sides and perused the records. 8. We find that in this case, there is no dispute that certain customs duty along with interest would become payable in respect of goods imported duty free as well as procured indigenously without payment of excise duty, due to non-fulfilment of stipulated positive NFE condition. We also find that it is not in dispute that they had valid registration and LOP fr....
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....on merely because some show cause notice or confirmed dues is pending against them. Therefore, what we find that in this case there has been 'in-principle' approval for debonding but it was not issued any final exit order and only in the year 2016, a letter dt.21.03.2016 was issued for final exit from the EOU scheme making the same effective retrospectively from 01.11.2014. Therefore, we find that till 01.11.2014, they continued to be an EOU unit in terms of order passed by the DC, who is the competent authority to regulate the operations of EOU within his jurisdiction in terms of FTDR Act and Rules. It is also noted that whatever domestic clearances have taken place, has taken place in accordance with either original permission of DC or has been subsequently regularized by the DC in case where excess clearances have taken place to DTA. It is also not in dispute that during the intervening period from 2010-11 to 2014-15, they were making three types of clearances viz. DTA, deemed export and physical export. It is also not in dispute that they had paid customs duty on the import of the goods including capital goods and consumables as well as Central Excise duty on domestic procureme....
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.... from EOU scheme up to 12.08.2013 was indicated and was also directed that NFE obligation will still be binding on the appellant till they get final exit from EOU scheme and would be treated as EOU until final order from the office. We have also perused the letter dt.21.03.2016 concerning cancellation of LOP by the DC, which was deemed to have been cancelled, as also, final exit from EOU scheme w.e.f. 01.11.2014 (FN). Therefore, they were having a valid status as EOU till 01.11.2014 when the final exit order was issued and the LOP was cancelled by the competent authority. 12. Therefore, as far as first issue is concerned, it is obvious that the unit will be considered to have been debonded only on 01.11.2014 in terms of retrospective permission for final exit and the duty has to be computed based on various parameters like export, deemed export, permissible DTA sales, etc., as also the depreciated value of capital goods in terms of para 4(a) of Notification No.52/2003-Cus and para 8(i) of Notification No.22/2003-CE and condition 3(d) of Notification No.52/2003-Cus and Condition 4(b) of Notification No.22/2003-CE. Apparently, this has not been done by the adjudicating authority a....
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....her they were liable to penalty. 15. In view of the above, we find that the matter needs to be remanded back to the adjudicating authority, who shall now compute the duty demand for raw materials/ consumables in accordance with provisions under Notification No.52/2003-Cus dt.31.03.2003 and Notification No.22/2003-CE dt.31.03.2003 and as discussed, in foregoing paras. The duty demand in respect of capital goods will also have to be recomputed after allowing depreciation as provided in the notifications, supra. 16. Insofar as adjustment of duty already paid by them, even during the period when they were otherwise having the status of EOU, the same also needs to be examined by the adjudicating authority in the light of the judgment in the case of Nikhil Industries Pvt Ltd (supra) and Moonlight EXIM P Ltd (supra) and the duty liability to that extent recomputed, would have to be adjusted against payment of Customs duty while effecting domestic clearances of raw materials, as such, or finished goods made out of such raw materials. 17. Moreover, as we do not find any merit in upholding the confiscation of imported and indigenously procured capital goods and raw materials, since ....