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2024 Supreme(Online)(CESTAT) 340
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
P. A. AUGUSTIAN, J, R. BHAGYA DEVI, T
M/s. Tyco Electronics Systems India (P) Ltd. – Appellant
Versus
The Commissioner of Central Excise Bangalore-II Commissionerate – Respondent
Customs Appeal No.28563 of 2013|Customs Appeal No.2708 of 2011|Customs Appeal No.1116 of 2011
For the Appellants/Petitioners: Mr. N. Anand, Mr. Rajiv Kumar Agrawal
For the Respondents: Commissioner (AR)
The court affirmed that goods declared obsolete under Customs Act may be destroyed without duty if permissible under relevant notifications.
Headnote:(A) Customs Act, 1962 - Notifications No.53/2003-Cus dated 31.03.2003 and No.34/2015-Cus dated 25.05.2015 - Appeals against orders for destruction of obsolete goods - The appellant sought permission for destruction of goods deemed unfit for manufacture. The matters discussed the provisions for such destruction including payments of duties on scrap value, following General Exemption No.66 Paragraph 3(c). (Paras 2-7)
(B) Law of Precedents - Decisions made in prior cases established that customs duties could be waived under certain conditions if goods were deemed obsolete - Cited Tribunal decision related to similar circumstances confirming the destruction of capital goods to be allowed under proper notification approvals. (Paras 8-11)
Facts of the case:
The appellant's goods became obsolete and the request for destruction was supported by relevant notifications and guidelines. The Commissioner initially denied this, leading to these appeals.
Findings of Court:
The appeals were based on proper precedent and relevant notifications allowing for the destruction of obsolete goods confirming the duty on scrap value.
Issues: The core issue was whether the destruction of unutilized components without duty payment was permissible under the law, given past approvals.
Ratio Decidendi: The court reaffirmed the importance of proper procedures under the Customs Act and highlighted that prior permissions provided by the Department were consistently followed without significant alteration in law.
Result: Customs Appeal No.28563 of 2013 and Customs Appeal No. 2708 of 2011 are allowed; Customs Appeal No.1116 of 2011 is allowed by way of remand.
| Table of Content |
|---|
| 1. introduction and background of appeals (Para 1 , 2 , 15) |
| 2. court's analysis of precedents and legal procedures (Para 3 , 7 , 9) |
| 3. legislative framework and notifications for destruction of goods (Para 4 , 5 , 6) |
| 4. ruling on customs duties and exemptions (Para 10 , 12 , 13) |
| 5. final decision and directions for remand (Para 17 , 18) |
These appeals are filed against Order-in-Appeal No.478/2013-C.E. dated 12.09.2013 passed by the Commissioner of Central Excise (Appeals-I), Bangalore and Order-in-Appeal No. JMJ/25/2011 dated 7.7.2011 passed by the Commissioner of Central Excise and Service Tax, Large Taxpayer Unit, Bangalore, respectively.
2. When the matter came up for hearing, the learned Counsel for the appellant submitted that due to rapid technological development/advancement, the imported raw material/components become obsolete and unfit for manufacture and therefore they sought permission from the jurisdictional authority from time to time to destroy the goods on payment of duty on the scrap value of the destroyed goods. The Learned Counsel also submitted that the impugned order is issued without considering the provisions of Para 6.15(b) of the Foreign Trade Policy r/w Notification No.53/2003-Cus dated 31.03.2003 which reads as:-
“Capital goods and spares that have become obsolete/ surplus, may be exported or transferred to SEZ unit, transferred to another EOU/EHTP/STP/BTP/on payment of applicable GST and compensation cess or disposed of in DTA on payment of applicable GST and compensation cess and duties of Customs leviable under First Schedule of the Customs Tariff Act, 1975. Benefit of depreciation will be available in case of disposal in DTA only when the unit has achieved positive NFE taking into consideration the depreciation allowed. No duty shall be payable other than the applicable taxes under GST laws incase capital goods, raw material consumables, spares, goods manufactured, processed or packaged, and scrap/ waste/remnants /rejects are destroyed within unit after intimation to Customs authorities or destroyed outside unit with permission of Customs authorities. Destruction as stated above shall not apply to gold, silver, platinum, diamond, precious and semi- precious stones”.
3. The Learned Counsel further submits that as per Board Circular No. 60/1999-Cus dated 10.09.1999, in case of 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 AC in-charge of the unit or cleared into DTA on payment of full customs duty. They have further submitted that the impugned order is issued without considering/following the provisions of Foreign Trade Policy. It is stated that as per the General exemption No.66 Paragraph 3(c)
“3. …..
(c) To dispose of the goods or services, the articles produced, manufactured, processed and packaged in the unit, or the waste, scrap and remnants arising out of such production, manufacture, processing or packaging in the manner as provided in the [Foreign Trade Policy]and in this notification; “ And also, to dispose of the goods, the said condition was further relaxed by Condition 8
8. Subject to the satisfaction of the said officer, duty shall not be leviable in respect of (i) the capital goods, if such capital goods are destroyed within the unit or outside the unit, when it is not possible or permissible to destroy the same within the unit, in the presence of Customs or Central Excise Officer;
(ii) the scrap or waste material or remnants arising in the course of production, manufacture, processing or packaging, if such scrap or waste material or remnants are destroyed within the unit or destroyed outside the unit when it is not possible to destroy the same within the unit:
Provided that this condition shall not apply in the case of unit engaged in manufacture and export of gem and jewellery.
4. Ld. Counsel further submitte
