INDIAN FURNITURE WORKS Vs. CC

JUDGEMENT

(1.) THIS is an appeal against order -in -original No. Section 5/SIB/88/1670/89 dt. 26.6.1989 wherein the Ld. Collector has confirmed duty and interest on capital goods and consumables totalling Rs. 50,22,715/ - on the present appellants as also personal penalty of Rs. 10,00,000/ -under Section 112(a) of the Customs Act, 1962 for misuse of 100% EOU scheme. He has also ordered that in bond manufacturing licence issued under Section 58 and 65 of the Customs Act is cancelled. The capital goods imported duty free have been held liable to confiscation but have not been confiscated.

(2.) HEARD Shri G. Sampath, Ld. Advocate for appellants and Shri S. Kannan, Ld. DR.

(3.) LD . Advocate submits that appellants since during the last 12 years exported specified goods under the 100% EOU scheme totalling to Rs. 5,83,17,456.37 as per the year -wise statement submitted in this Tribunal today which has been taken on record. Therefore, he submits that it cannot be said that the export obligations have not been met. Secondly, Ld. Advocate submits that vide their order dt. 28.10.1996, the Govt. of India as the authority to empower to grant 100% EOU status under law were pleased extend the said 100% EOU status for a further period of 5 years w.e.f. 17.9.1996. Therefore, appellants still continue to enjoy the 100% EOU status under law. As against this, the order impugned denies the Customs bonded warehouse and manufacturing under customs bond which are the attendant pre -requisites necessary in law to operate as 100% EOU effectively. This part of the order impugned has been stayed by the Tribunal in its interim order dt. 26.12.1990 which stay has been extended by the Tribunal from time to time culminating in the Misc. Order No. 55/1992 dt. 28.1.1992 wherein the said interim stay granted earlier had been extended for the entire period pending disposal of the appeal. Ld. Advocate submits that but for this stay granted by this Tribunal, the unit would not have been able to operate under the 100% EOU scheme and the significant export performance shown in the subsequent years would not have been possible. Ld. Advocate further submits that in order to avoid such a hiatus between the two authorities under law namely the authority under Govt. of India which is empowered to consider applications for granting 100% EOU status and the Customs authorities, the department of Revenue in the Ministry of Finance vide their Circular No. 21/95 -Cus. dt. 10.3.1995 have streamlined the procedures in such matters to be followed by the Customs authorities. Therein, it has now been prescribed that if it comes to the notice of the Customs authorities that the conditions of the Customs duty exemption vide notifications relevant have been violated by a unit, particularly where a 100% EOU ceases the production prematurely or fails to commence production or export within the stipulated period, leading to non -fulfilment of export obligations etc., the Customs authorities should inform the Development Commissioner concerned all the facts of the case and though the Customs can issue show cause notice to safeguard the Revenue, the demand of duty should be confirmed only after a definite conclusion has been arrived at by the Development Commissioner. He submits that this procedure was unfortunately not invoked when the order -in -original impugned was passed, otherwise the hiatus created as noted above would have been avoided. He submits that therefore it is now for this Tribunal to prescribe measures to reconcile these conflicting decisions on record. Ld. Advocate also quickly took us through various grounds of appeal and submitted that one of the reasons why their licence under Customs Act for operation under customs bond in the premises to manufacture therein has been cancelled by the impugned order is that the premises was not fit as a customs bonded warehouse. He submits that there was no change in the premises from the date when the initial premises was given after inspection thereof by the Customs authorities and therefore it is not clear as to why the premises which was found fit initially has not been found fit subsequently. As far as the capacity of Gang -saw machines, the department has not been able to lead any evidence to show that the said capital goods were not capable producing goods which they had to export and that instead of independent technical advice, only a rival experts opinion was relied upon. Such allegation on uncorroborated evidence was legally not correct.