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Issues involved: Alleged discrepancies in stock of goods, confiscation of goods, duty recovery, penalty imposition, non-maintenance of proper records, procedural mistake, duty confirmation, intention to violate provisions, EOU regulations compliance.
The case involved a dispute where discrepancies were found in the stock of goods of a registered 100% EOU engaged in manufacturing polyester texturised dyed yarn. The issues included unaccounted goods, duty recovery, penalty imposition, and non-maintenance of proper records leading to confiscation of goods. During physical verification, various discrepancies were noted, such as unaccounted quantities of different types of yarn and raw materials. A show cause notice was issued for confiscation of goods, duty recovery, penalty imposition, and interest charges under relevant legal provisions. The Assistant Commissioner initially ordered confiscation of goods and demanded duty payment. However, on appeal, the Commissioner (Appeals) set aside the order citing non-maintenance of proper records as a procedural mistake, without evidence of clandestine clearance to confirm duty liability. The Commissioner (Appeals) observed that certain quantities of yarn were in the factory premises before the appellant became an EOU, while others were properly accounted for in job work registers. The Commissioner found no intention to violate provisions, especially regarding raw materials procured duty-free for export production. The Revenue contended that the EOU should have maintained records properly as per regulations. However, the Commissioner's detailed findings on each quantity and lack of evidence of mala fide intent to evade duty led to the rejection of the Revenue's appeal against the Commissioner (Appeals) order. In conclusion, the appeal by the Revenue was rejected, upholding the Commissioner (Appeals) order regarding the discrepancies in stock of goods and the duty recovery issue. *(Pronounced in Court on 16-4-2007)*
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