The jurisdiction over 100% EOU is of territorial officers and not of custom officer where the goods are imported. Secondly, for allowing an appeal, the principle of natural justice should be followed.

PJ/Case Laws/2010-11/1020

Case: Noel Agritech Ltd v/s Commissioner of Customs, Bangalore

Citation: 2001 (128) ELT 0227 (Tri. - Chennai)

Issue:- The jurisdiction over 100% EOU is of territorial officers and not of custom officer where the goods are imported. Secondly, for allowing an appeal, the principle of natural justice should be followed.

Brief Facts:- Appellants are 100% EOU and were engaged in the export of cut fresh flowers to various destinations abroad. They sought permission to make clearances to Domestic Tariff Area (DTA) from the concerned Jurisdictional Development Commissioner, which was granted.

It was alleged that the appellant had made such clearances without following the prescribed procedure.

Appellants contended that they approached the Customs Authorities at Mangalore port where the capital goods viz. machinery was imported for installation in their 100% EOU premises at Mangalore which is away from the Mangalore port town area. Since the Customs House did not indicate to them as to what procedure and documentation was required, clearances were effected and in any case cut fresh flowers were not chargeable to any duty in the Central Excise Law and therefore there was no question of a levy of customs duty under Section 3A for the cut fresh flowers removed into the DTA.

The Original Authority confirmed the demand. In appeal, the Commissioner (Appeals) dismissed the stay applications & appeals. Later on in two cases without hearing and in the third case hearing was granted and appeal was dismissed for non-compliance of the pre-deposit amount. Hence, appellants are before the Tribunal. Stay applications are also filed.

Appellant’s Contentions:- Appellants relied on the judgment of Larger Bench in the case of Ferrous Alloys Corporation Ltd [1995 (077) ELT 31] and submitted that the jurisdiction over an Export Oriented Unit was the jurisdiction of the territorial officers where the unit was situated and not the Customs House from where the capital goods were imported and final goods were exported.

Respondent’s Contention:- Revenue submitted that there is a Special Officer appointed as Asst. Commissioner of Customs in charge of EOU in that area who is the competent officer having jurisdiction in this case and therefore the orders have been decided and determined by the jurisdictional officer. The Commissioner (Appeals) has the designation of Commissioner of Central Excise & Customs (Appeals), Bangalore who has jurisdiction over the entire State of Karnataka where the appellants unit fall and therefore there is no apparent conflict of jurisdiction. Respondent submitted that there was no ground for staying the pre-deposit.

Reasoning of Judgment:- The Tribunal held that there is no duty on removals to DTA under the Central Excise & Salt Act, 1944 which is applicable only to such goods which are permitted to be sold in the DTA. Reliance was placed on the case of Siv Industries Ltd [2000 (017) ELT 0281 (S.C.)] wherein it was held that Central Excise levy is only on goods permitted to be sold; for contravention of the procedural irregularities. Chapter VA of the Central Excise Rules prescribes the procedure to be followed and consequential action under the rules could be invoked.

It was held that in the present case duty, penalties & Cess have been invoked under the provisions of Customs Act under Section 28 for duty, Section 112 for penalty. Since flowers have been grown in India and removed from the premises within India to a premises in India, it is not clear as to how customs duty would be applicable.

Further, it was held that since principles of natural justice have been grossly violated in the decision of the Commissioner (Appeals), inasmuch as they have not determined the amounts of pre-deposit and the matter on merits in two cases and in the third case they have summarily rejected the material and the grounds on pre-deposit of duty, it is fit case for de novo consideration by the lower authorities.

Impugned order set aside. Matter remanded for re-determination of duty, if any, as per law.

Decision:- Appeal disposed off.

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PJ/Case Laws/2010-11/1020

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