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Issues:
1. Duty liability on imported consumables not utilized for exports by a 100% E.O.U. 2. Imposition of penalty under Section 112(a) of the Customs Act, 1962. 3. Challenge to Commissioner's findings regarding utilization of imported consumables for local sales. 4. Dispute over exports made under the 100% E.O.U. scheme during specific years. Analysis: 1. The case involved a dispute over duty liability on consumables valued at Rs. 7,56,461 imported by a 100% E.O.U. during 1985-86 and 1986-87. The Commissioner held that the consumables were not utilized for exports, demanding duty, interest, and imposing a penalty. The appellants contested this, arguing that local sales related to pre-conversion stock and that the unit had a long-standing history before being granted 100% E.O.U. status in 1984. 2. The imposition of a penalty under Section 112(a) of the Customs Act, 1962 was also challenged. The appellants argued that the Commissioner's conclusion regarding non-utilization of imported consumables for exports was unfounded, emphasizing the installation of machinery under Notification No. 13/87 and the production records verified by Central Excise Officers. They further contended that the Commissioner's rejection of certain evidence was unjustified as the Tribunal had allowed the submission of additional evidence. 3. A key point of contention was the Commissioner's finding that there were no exports during 1985-86 and 1986-87, leading to the conclusion that the imported consumables were used for other purposes. The appellants presented evidence of exports from 1987 onwards and highlighted the absence of a requirement for yearly exports under the 100% E.O.U. scheme, unlike the EPCG scheme. The Tribunal found the Commissioner's reasoning flawed and set aside the Order-in-Original, ruling in favor of the appellants. 4. Ultimately, the Tribunal concluded that without strong evidence of misutilization of imported materials during the relevant years, demanding duty and imposing penalties was unwarranted. The appellants' fulfillment of export obligations and the absence of specific yearly export requirements under the 100% E.O.U. scheme were crucial factors in the Tribunal's decision to allow the appeal and provide consequential relief to the appellants.
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