TEG'S MASRADO PRIVATE LTD. Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioner Company is a Company duly incorporated under the Indian Companies Act. It was issued a letter of intent by the Ministry of Industries as a 100% export oriented Unit engaged in the business of canned mushrooms. As per the terms of the license the petitioner Company had undertaken to export 100% of its production for a period of 10 years. The petitioner Company was permitted to import capital goods and machinery worth Rs.284.94 lakhs for the project without payment of import duty. One of the conditions was that on de-bonding after the period of export obligation, the petitioner Company would be liable to pay customs duty on the capital goods on the depreciated value; customs duty on un-used imported raw materials on face value and excise duty on excisable goods on depreciated value. It was further provided that if the undertaking failed to fulfill its export and other obligations it would be liable to pay all penalties, customs and excise duties and such other amounts as may be decided by the Government.

(2.) THE petitioner Company imported duty free capital goods and raw material of the value of Rs.284.94 lakhs. Admittedly, the petitioner Company manufactured and exported canned mushrooms during 1993-94 to 1996-97. The total value of the goods exported by the petitioner was Rs.278.55 lacs. The Unit of the petitioner Company was closed on 25.5.1996.

(3.) THE petitioner Company replied to the show cause notice and the Commissioner confirmed the demand of Rs.2,76,20,813/- under Section 28 of the Customs Act and also directed that Company will pay penal interest at the appropriate rate and further ordered confiscation of the imported capital goods. The Commissioner also confirmed that Central Excise duty for Rs.3,72,715/- was leviable on the Company and a sum of Rs.1,01,398/- payable on the finished stock of Canned Mushrooms. The Company was also held liable to pay interest and penalty was imposed upon the Company. The Company challenged the order before the CEGAT. The Tribunal set-aside the order of the Commissioner as being pre-mature. The Tribunal relied upon a circular of the Government of India dated 10.3.1995 wherein it had been laid down that in the event of 100% EOU's failure to fulfill the export obligation the Development Commissioner's recommendation is essential before duty demand can be confirmed.