ORDER
V.K. Agrawal, Member (T)
1. The issue involved in this appeal, filed by M/s. Pure Rice (I) Ltd. is whether they are eligible to relinquish the title on the capital goods imported by them from abroad.
2. Shri K Kumar, learned Advocate, submitted that the Appellants, a 100% Export Oriented Undertaking, entered into a contract with M/s. Gauthier S.A. of France for the supply of Rice Processing machinery; that however, the foreign supplier supplied only a colorimetric sorting machine, one electrical Control Panel and a set of spare parts which were cleared under Bill of entry dated 8.8.1997; that the foreign supplier could not supply the rest of the machinery as they went into liquidation; that Colorimetric sorting machine could not be used without rest of the components and other parts; that the machine remained lying ideal and unused ever since its import with the result that 100% E.O.U. could not be set up and commissioned; that the foreign supplier was persuaded to accept back the machinery shipped by them; that the Appellants also approached the Customs authorities and the Development Commissioner of Noida Export Processing Zone for granting necessary permission for re-export of the goods vide letters dated 23.12.98 and 30.04.2001 respectively; that since they could not obtain the requisite permission for re-export of the machinery the supplier backed out and they were left with no option but to abandon the goods; that under these compelling circumstances they surrendered the goods under letter dated 7.8.2001 so that the Department may dispose of the same in any manner they like; that they also approached the Development Commissioner for de-bonding of the unit and for discharging the bond executed with the Department; that the Development Commissioner under letter dated 12.2.2002 conveyed their consent for withdrawal of 100% E.O.U. and allowing in principle the de-bonding of the unit; that however, the Dy. Commissioner, under letter dated 25.10.2002, rejected their request for surrender of capital goods as they had failed to fulfill the requirement of condition Nos. 3,6 & 6(1) of Notification No.53/97-Cus Dated 3.6.97 which stipulated that an importer has to carry out the manufacture, production, packaging, job work or service in customs Bond and the Capital goods so imported are to be installed in the bonded premises within a period of one year from the date of importation; that the commissioner (Appeals) also under the impugned Order rejected their appeal on the ground that their case is neither a case of clearance of goods for home consumption nor a case of deposit of goods in the warehouse.
3. The learned Advocate further submitted that the goods imported by a 100% E.O.U. are treated as warehoused goods only and the procedure for warehousing the goods is followed after clearance of the goods from Customs; that, therefore, it cannot be said that the present case is not a case of goods in the warehouse; that the Board vide Circular No.60/99-Cus dated 10.9.99 has clarified that in respect of goods imported and found defective/damaged or otherwise unfit for use, the units may be allowed to receive free replacement of the goods prior to re-export of the same; that however, re-export of such defective/damaged or otherwise unfit for use goods may be subsequently made; that in case the supplier of such goods does not insist on re-export the same shall be either destroyed with the permission of Asst. Commissioner or cleared into D.T.A. on payment of full Customs duty. The learned Advocate contended that the goods “unfit for use” may be new or old goods and no distinction can be made between new and old once they are found to be unfit for use. He has also relied upon the decision in the case of Khub Engg. Industries P. Ltd. v. C.C., Kandla, 1999 (114) ELT 612 (Tribunal) wherein the Tribunal has held that as the Appellants had declared that they are not going to redeem the goods the imposition of redemption fine and demand of duty was not proper. Reliance has also been placed on the decision in the case of Indian Charge Chrome Ltd. v. C.C.E. and Cus, Bhubneswer – 2001 (132) ELT 300 (Tribunal), and C.C.E. and Cus., Surat v. Garden Silk Mills-2000 (118) ELT 369 (Tri.) wherein the Tribunal has allowed the relinquishment of the goods after the expiry of warehousing period.
4. Countering the arguments shri H.C. Verma, learned D.R., reiterated the findings as contained in the impugned Order and submitted that the provisions of Section 23 of the customs Act does not apply; that the Board’s Circular No.60/99 also does not apply as the same deals with the destruction of the imported goods found defective/damaged or otherwise found unfit for use; that in the present matter the Appellants are not requesting for destruction of the goods; that further para 12A of Notification No.53/97-Cus only permits for the destruction of the capital goods. He also mentioned that the decisions relied upon by the learned Advocate are not applicable as the issue in the case of Khub Engg. related to redemption fine on the goods confiscated and in the case of Indian Charge Chrome the goods imported by a 100% E.O.U. were found defective which is not so in the present matter.
5. We have considered the submissions of both the sides. The Central Board of Excise & Customs under Circular No.60/99-Cus dated 10.9.99 has considered the difficulties of E.O.U, etc. faced by them in regard to replacement of goods imported and found damaged or defective or otherwise unfit for use. The Board after examining the matter issued the instructions that has to be followed by field formations in regard to the goods imported and found damaged or defective or otherwise unit for use. The relevant portion of the instructions reads as under:-
(B) Goods imported nd found defective/damaged or otherwise unfit for use:
(i) The unit may be allowed to receive free replacement of the goods imported and found defective, damaged or otherwise unfit for use, prior to re-export of the same. However, re-export of such defective/damaged or otherwise unfit for use goods may be subsequently made later.
(ii) In case, the supplier of such defective, damaged or otherwise unfit for use goods does not insist on re-export of such goods, the same may not be re-exported subject to the condition that such goods shall be either destroyed with the permission of Assistant Commissioner of Customs/Central Excise in charge of unit or cleared into DTA on payment of full customs duty.”
6. A perusal of the Board’s Circular clearly reveals that these instructions apply to goods imported and found defective/damaged or otherwise unfit for use. as per the Circular first, the importer is to be allowed free replacement of the goods and subsequently re-export may be allowed. In case the supplier does not insist on re-export of the goods the same has to be destroyed or cleared into DTA on payment of customs duty. The Board’s Circular does not apply only to defective or damaged goods, it also applies to the goods which are “otherwise unfit for use”. It has been contended by the Appellants which has not been rebutted by the Revenue that colorimetric sorting machine imported by them was not fit for use for want of the entire machinery for which they had placed order with the foreign supplier. As the machinery in question was unfit for use and the foreign supplier is not insisting on re-export of the same the only option available to the Appellants was to abandon the goods for which permission is available to them under the Board’s circular dated 10.9.99. Accordingly we set aside the impugned Order and allow the appeal filed by the Appellants.