Judgment:
1. The appellants are an 100% EOU who had applied for de-bonding.
Permission for such debonding was granted during December 1998. Present proceedings relate to duty liabilities on destruction of certain rejected rubber gaskets. There is no dispute about the quantities and or the factum of the rubber gaskets being got damaged/deteriorated in quality during the manufacture process or otherwise while in the bonded premises of the EOU. It is also not in dispute that the appellants had applied to the Development Commissioner for destruction of the total quality to such damaged waste gaskets and permission dated 18.2.99 and 18.3.99 was granted subject to supervision by the bond officers. In fact vide letter dated 6.8.99 the Development Commissioner informed the EOU by referring to para 9.20 of Handbook of Procedures/ Import Export Policy and stated that no permission was required for such destruction.
The appellants in this background applied for permission to destroy the above gasket. The Assistant Commissioner of Central Excise granted as sought for by the appellants vide letter dated 11.10.99 and Preventive Officers of Coimbatore Central Excise Cornmissionerate visited the factory and sought list of gaskets rejected and sought details of imports of numbers of such gaskets which were awaited destruction. .
Such details were submitted. The officers recorded statements and passed on the same day a show cause notice dated 20.1.2000 was issued requiring the appellants to show-cause as to why (a) permission granted by Assistant Commissioner for destruction vide letter dated 11.10.99 should not be denied/ withdrawn (ii) total duty of Rs. 25,88,889/- on such gaskets imported under Notification 13/81 and which were not used for the purpose for which they were warehoused should not be demanded and the bond executed be enforced; (iii) interest at 20% p.a. on the duty payable should not be demanded. A corrigendum was issued to this notice directing the appellants to show cause to Commissioner of Central Excise, Coimbatore. The Commissioner passed the above order confirming the demand of duty of Rs. 25.88.889/- due on these gaskets sought to be rejected which have been imported under Notification No.13/81-Cus. which had not been used for the manufacture of the declared find product, meant for export in terms of the conditions of the bond executed. He also confirmed demand of interest on the duty payable by the importers at applicable rates in terms of Section 65 (2) of Customs Act, 1962 inasmuch as that the appellant had warehoused the above said gasket imported by them for a period of more than one yer without getting the extension of warehousing period. He further directed the withdrawal of permission granted by the Assistant Commissioner for destruction. Hence this appeal.
2. After hearing both sides and considering the issue it is found (a) These facts are not controverted and the quantum of the gaskets which were imported and for which destruction is sought, found as a small percentage of rejects which has been reported to the Development Commissioner and the Assistant Commissioner of Central Excise. Customs Notification No. 13/81 and 53/97 provides for such destruction. Hence no duty can be demanded. Since it is nobody's case that the gaskets were not damaged/reject/emerged in the waste due to the manufacture process/used in the warehouse of the EOU. (b) The Commissioner has not imposed penalty as agreed with the appellant that there is no dis-information, mis-information or wrong information provided to the Assistant Commissioner and other officers. Therefore he should have appreciated the permission for destruction was granted by the proper officers vide his order dated 11.10.99 under provisio of Section 65(2)(a). The import duty was required to be limited, on the quanta of warehoused goods as damaged & in such waste or refuse after it was destroyed or duty was paid on such waste/refuse as if the same had been imported into India in that form i.e., as waste and reject rubber. The provisions of the Customs Notification are applicable in this case is also incorporate the very said provisions of Section 65(2 )(a). The duty demands therefore ordered and the permission to destruction withdrawn cannot be upheld. The order as regards the duty demand and consequent interest and withdrawal of the order of destruction is therefore required to be set aside. Board's order provides for no penalty and interest to be recovered if goods are exported even after the expiry of bond period option being granted to the appellants. The same should be offered to the appellant who may opt for destruction and thereafter pay duty at the rates as applicable to waste/scrap/reject rubber or they can even opt to re-export the gaskets,as in the condition they are, or after they are destroyed, without any duty or interest and or objection by the Customs department. In any case there can be no charge of levy of duty. The reliance by the appellants on the Tribunal's decision vide Order No. 4801-4802/2004/C-III dated 30.7.2004 covers the present case.
3. In view of the findings herein above the order is set aside and the appeal allowed with directions that options are available to the appellants as under the law and the Board's circular should be granted and they should exercise the same as per their free choice. Appeal allowed in the above terms.