IMPORTANT POINT
Section 28, Proviso; Customs Act, 1962.

JUDGMENT

D.K. Jain, J.

This appeal under Section 130-E of the Customs Act, 1962 (for short “the Act”) arises from the final Order No. 142/03-B dated 18.02.2003, passed by the Customs, Excise & Gold (Control) Appellate Tribunal, New Delhi (for short “the Tribunal”). By the impugned order, the Tribunal has upheld the levy of customs duty on the import of furnace oil as also the penalty under Section 112 of the Act, rejecting the plea of the appellant that demand of the duty along with the penalty was barred by limitation.

2. The appellant, an Export Oriented Unit (for short “EOU”), is engaged in the manufacture of all wool and poly-wool worsted grey fabrics. It was granted the status of EOU by the Government of India, Ministry of Industry, Department of Industrial Development by way of a Letter of Permission (for short “the LOP”) dated 31.08.1992 as amended by letter dated 4.5.1993. The appellant applied for a license for private bonded warehouse, which was granted to it under C. No. V (Ch.51) 13- 01/92/100%EOU dated 30.09.1992 by the Assistant Collector, Central Excise Division- Raipur for storing inputs, raw materials, etc. either imported duty-free by availing concessions available for 100% EOU or procured locally without payment of duty for use in manufacture of all wool, poly-wool and other fabrics.

3. For interaction with the appellant, its sister unit, Uniworth Ltd., another EOU, engaged in the generation of power from a captive power plant, obtained another LOP dated 1.11.1994. The said LOP, dated 1.11.1994, permitted usage of electricity generated by the captive power plant by both, Uniworth Ltd. and the appellant Uniworth Textiles Ltd. The appellant purchased electricity from Uniworth Ltd. under an agreement which continued till 1999.

4. Prior to January-February, 2000, the sister unit i.e. Uniworth Ltd. procured furnace oil required for running the captive power plant. This purchase of furnace oil was exempted from payment of customs duty under Notification No. 53/97-Cus., the relevant portion of which reads as follows: -

“Notification No. 53/97-Cus., dated 3-6-1997 Exemption to specified goods imported for production of goods for export or for use in 100% Export-Oriented Undertakings -- New Scheme -- Notification No. 13/81-Cus. rescinded In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government being satisfied that it is necessary in the public interest so to do, hereby exempts goods specified in the Table below (hereinafter referred to as the goods), when imported into India, for the purpose of manufacture of articles for export out of India, or for being used in connection with the production or packaging or job work for export of goods or services out of India by hundred per cent Export Oriented units approved by the Board of Approvals for hundred per cent Export Oriented Units appointed by the notification of Government of India in the Ministry of Industry, Department of Industrial Policy and Promotion for this purpose, (hereinafter referred to as the said Board), from the whole of duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and the additional duty, if any, leviable thereon under section 3 of the said Customs Tariff Act...”

Entry 11 of the said notification at the relevant time read as follows: -

“11. Captive power plants including captive generating sets and their spares for such plants and sets as recommended by the said Board of Approvals.”

5. In January-February, 2000, Uniworth Ltd. exhausted the limit of letter of credit opened by it for the duty-free import of furnace oil. It made an alternative arrangement of procuring duty free furnace oil under Notification No. 01/95 titled “Specified goods meant for manufacture and packaging of articles in 100% EOU or manufacture or development of electronic hardware and software in EHTP or STP” dated 04.01.1995. The said notification read