COMMISSIONER OF CUSTOMS Vs. PERFECT LATEX PVT. LTD.

JUDGEMENT

(1.) THE issue involved in these appeals arising out of common Order -in -Original No. 94/2001, dated 18 -10 -2001 is whether the capital goods imported by M/s. Perfect Latex Pvt. Ltd. and procured indigenously without payment of duty are liable to duty on account of disuse.

(2.) SHRI Manoj Arora, learned Advocate, submitted that M/s. Perfect Latex Pvt. Ltd., a 100% Export Oriented Undertaking (EOU), imported plant and machinery for production of surgical/examination gloves and started production in 1989 -90; that as they incurred losses due to break down of the USSR and buyer in USA defaulted in its commitment, they became a sick industrial company; that the Board for Industrial and Financial Reconstruction (BIFR) recommended winding up of the assessee company; that a show cause notice dated 2 -6 -2000 was issued to them for demanding Customs duty and Central Excise duty on capital goods for violating the provisions of Notification No. 5/86 -C.E., dated 20 -1 -86 and Notification No. 339/95 -Cus., dated 21 -11 -95 and 33/94 -Cus., dated 22 -6 -1994; that the Commissioner, under the impugned Order, has come to the finding that the conditions of the Notifications that the 100% EOU ought to be authorized by the Development Commissioner for purposes of manufacturing of the export goods has been fulfilled; that the Commissioner has also found that the condition that the capital goods imported or procured locally ought to be installed and used within the zone for manufacture of export of goods has been complied with by the 100% EOU; that the Commissioner, however, has held that Para 4 of Notification No. 339/85 -Cus. provides that they can be allowed to clear capital goods on payment of duty on depreciated value out of NEPZ subject to the permission of the Development Commissioner and that even though they had not made any request to shift the goods out of the Zone, the goods may be treated as goods improperly removed on the date of their deemed removal from the warehouse; that the Commissioner has, therefore, confirmed the demand of duty on capital goods after allowing 90% depreciation.

(3.) THE learned Advocate, further, submitted that the Development Commissioner, who had initiated proceedings under the Foreign Trade (Development and Regulation) Act, 1992 has himself in regard to same issue by his Order dated 24 -11 -2001, observed that since they had exported goods worth Rs. 833.65 lakhs, they had achieved the requisite value addition and had complied with the Letter of Approval and thus the charges against them do not hold any ground; that the authority under the Foreign Trade Act, being the authority supervising their operations, having come to a finding that the conditions of Letter of Approval had been complied with it is not open to the Commissioner of Customs to hold that there was deemed non -compliance of the Letter of Approval. He relied upon the decision in Teg's Masrado Ltd. v. CCE, Chandigarh - 2002 (139) E.L.T. 117 (T) wherein it has been held that the demand of duty on raw material and capital goods is premature when the application of the noticee for de -bonding of the unit is pending and the Development Commissioner has not arrived at definite conclusion about non -fulfilment of their export obligation. Reliance has also been placed on the decision in Vishal Footwear ltd, v. CCE, 1999 (114) E.L.T. 60 (T). He also contended that there is no allegation against the assessee company that they had mis -utilised the capital goods procured without payment of duty; that the impugned goods are still lying in the factory and as such no demand of duty can be made from them.