2011 (1) TMI 134 - AT - Customs

100% EOU - shortage of imported material - it was admitted by the Director that the fabrics have been sold in the domestic market and had not been used for the manufacture of export goods - no evidence to show that said goods have been used in the manufacture of export goods and therefore he cannot contest the charge of illicit removal of the fabrics - submission that duty calculation on the imported fabrics should have been based on the value at the time of import and not on the basis of selling price, has not been considered by learned Commissioner (Appeals) - order set aside and allow the appeal by way of remand

Summary

Issues:
1. Shortage of imported Polyester Dyed fabrics found during visit
2. Admission of selling fabrics in domestic market
3. Duty calculation based on selling price vs. value at time of import
4. Time bar for issuing show cause notice
5. Applicability of High Court decision on time bar

Analysis:
1. The appellant, a 100% EOU engaged in manufacturing man-made fabrics, was found with a shortage of 11,888 L.Mtrs of imported Polyester Dyed fabrics during an officer's visit. The Director admitted selling these fabrics in the domestic market instead of using them for manufacturing export goods.

2. The advocate for the Assessee admitted the inability to provide evidence of using the goods for export manufacturing, leading to the acknowledgment of illicit removal of the fabrics. The advocate argued that duty calculation should have been based on the value at the time of import, not the selling price. The submission was not made before the original adjudicating authority, and the delay in issuing the show cause notice was raised as a defense, citing a Tribunal decision.

3. The Selling price of fabrics in the domestic market for duty liability calculation was not considered by the Commissioner (Appeals). The advocate for the Assessee relied on a Tribunal decision regarding the time bar issue, while the SDR argued against it, referencing a High Court decision. The applicability of the High Court decision to a 100% EOU was disputed.

4. The Tribunal found it necessary to remand the matter to the Commissioner (Appeals) to consider the selling price issue for duty liability calculation and the penalty amount. The Commissioner was instructed to review the decisions cited by both parties before passing a final order.

5. The impugned order was set aside, and the appeal was allowed by remand, emphasizing that the Commissioner (Appeals) must provide a reasonable opportunity for the appellant to present their case before issuing a final order.