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Issues involved: Appeal against Order-in-Original demanding duty on imported machinery and confiscation u/s 111(o) of Customs Act, 1962, challenge to penalty u/s 112(a) imposed by Commissioner.
Summary: Issue 1: Duty demand and confiscation of imported machinery The appellant, a 100% EOU, imported capital goods without duty payment and installed them in a private bonded warehouse. Subsequently, a Show Cause Notice was issued demanding duty foregone on the machinery and confiscating them u/s 111(o) of Customs Act, alleging non-installation within stipulated time. The duty demanded was Rs. 8,79,40,937/- with an option to redeem on payment of fine. Penalty of Rs. 25,00,000/- imposed u/s 112(a). Appellants challenged the impugned order. Details: - Appellants argued that duty cannot be demanded if goods are in warehouse, citing precedent cases. - Claimed entitlement to exemption u/s 21/2002-Cus. for machinery certified by Ministry of Environment and Forest. - Disputed non-installation of machinery, presenting evidence of installation. - Contended penalty not sustainable if confiscation proposal is not upheld. Issue 2: Challenge to penalty imposed Appellants contested penalty imposed u/s 112(a) of Customs Act, arguing against sustainability due to lack of merit in duty demand and confiscation of goods. Details: - Appellants presented arguments supporting their compliance with exemption conditions and installation of machinery. - Highlighted denial of cross-examination of expert witness by department, alleging violation of natural justice. - Asserted that penalty is unwarranted given the lack of merit in duty demand and confiscation. Judgment: After careful review, the Tribunal found in favor of the appellants. Noting that some goods were exported and disputed items were installed, the Tribunal agreed with appellants' contentions regarding exemption entitlement and procedural nature of installation condition. The demand of duty was deemed unsustainable, and penalty unwarranted. The impugned order was set aside, and the appeal was allowed with consequential relief.
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