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2014 (4) TMI 55 - AT - Central Excise100% EOU - Recovery of the duty exemption - benefits of Customs Notification No.53/97-Cus dt. 03/06/1997 - Excise Notification No.1/95-CE dt. 04/01/1995 - Violation of provision of Chapter No.IX of EXIM Policy 1997-2002 - Failure to to comply with the condition No.2(i) (ii) and (vi) of the LOP and agreement dated 26/03/1998 - no discharge of export obligation - Held that - appellant did not produce DTA sales permission before learned adjudicating authority nor satisfied that authority about earning of foreign exchange making exports. Some of the figures of the foreign exchanged claimed to have been earned by the appellant could not be justified by it as to whether such earning was from export of shrimp feed or from any other source. Neither appellant showed export evidence except merely relying on state Bank Certificate nor learned adjudicating authority examined the source of foreign exchange if any earned as certified by State Bank of India. It should be ruled out that no hawla transaction had occurred. The appellant had already faced penalty for the patent violation of terms of LOP undertaking and agreement entered into with the Government but made sale of shrimp feeds without permission of Development Commissioner. There was no nexus of shrimp/prawn processing unit with shrimp feed unit which was expected to export entire product manufactured. The plea of broad banding of the activity of the appellant did not find support of Board of Approvals to treat the shrimp/prawn processed unit as EOU. Development Commissioner held that there was violation of conditions of EOU by the appellant. Keeping in view earnest prayer of the appellant to satisfy learned Adjudicating Authority on various allegations made against it and also noticing certain materials facts borne by record requiring fresh examination granting fair opportunity of hearing to the appellant matter is remanded to that authority to examine various issues. Appellant shall be required to furnish such evidence as may be required by learned adjudicating authority to satisfy him that appellant was not enriched at the cost of Revenue availing duty exemption under respective notification and complete the re-adjudication by 31/10/2014. Burden of proof lies on the appellant. - Matter remitted back - Decided in favour of assessee.
Issues Involved:
1. Non-fulfillment of export obligations. 2. Unauthorized Domestic Tariff Area (DTA) sales. 3. Misuse of duty exemptions under Customs Notification No. 53/97-Cus and Excise Notification No. 1/95-CE. 4. Failure to comply with conditions of Letter of Permission (LOP) and agreements. 5. Alleged fraud and misrepresentation to customs authorities. Issue-wise Detailed Analysis: 1. Non-fulfillment of Export Obligations: The appellant, M/s. Avanti Feeds Ltd., was required to export shrimp feed and processed shrimp/prawn to achieve a minimum export turnover as stipulated in the LOP. The adjudicating authority found that the appellant failed to achieve the required Net Foreign Exchange (NFE) and export performance. The appellant argued that it had earned foreign exchange through deemed exports and physical exports, but the adjudicating authority was not satisfied with the evidence provided, such as bank certificates and export documents. The tribunal remanded the matter for re-examination, directing the appellant to produce evidence of foreign exchange earnings and export details. 2. Unauthorized Domestic Tariff Area (DTA) Sales: The appellant sold shrimp feed in the DTA without obtaining the necessary permissions from the Development Commissioner. The adjudicating authority imposed penalties for these unauthorized sales. The appellant contended that it had obtained permissions for DTA sales, but failed to produce the original permission letters before the adjudicating authority. The tribunal instructed the appellant to provide all DTA sale permission letters and satisfy the authority on the quantity and sale value stipulated. 3. Misuse of Duty Exemptions: The appellant imported raw materials and spares duty-free under Customs Notification No. 53/97-Cus and procured indigenous goods duty-free under Excise Notification No. 1/95-CE. The adjudicating authority found that the appellant did not use these materials for the intended purpose of manufacturing shrimp feed for export, but instead cleared the products in the DTA. The appellant's plea to apply a different notification (No. 196/94) was raised for the first time before the tribunal, which was deemed inconceivable and malafide. The tribunal directed the appellant to clarify which notification applied to its imports and why the plea of a different notification was taken. 4. Failure to Comply with Conditions of LOP and Agreements: The appellant was required to comply with various conditions stipulated in the LOP and agreements, including maintaining a certain percentage of NFE and obtaining necessary clearances. The adjudicating authority found multiple violations, including failure to submit quarterly reports and non-fulfillment of export obligations. The tribunal remanded the matter for re-examination, directing the appellant to explain year-wise foreign exchange earnings and provide evidence of compliance with LOP conditions. 5. Alleged Fraud and Misrepresentation to Customs Authorities: The revenue argued that the appellant committed fraud by misrepresenting its eligibility for duty exemptions and failing to fulfill export obligations. The adjudicating authority found that the appellant's actions resulted in undue gains and imposed penalties accordingly. The tribunal emphasized the need for the appellant to establish the genuineness of exports and rule out any hawala transactions. The appellant was directed to produce bank realization certificates and other relevant evidence to substantiate its claims. Conclusion by Tribunal: The tribunal remanded the matter to the adjudicating authority for a comprehensive re-examination of the appellant's compliance with export obligations, DTA sales permissions, duty exemptions, and conditions of the LOP. The appellant was instructed to cooperate fully and provide all necessary evidence without seeking adjournments. The re-adjudication was to be completed by 31/10/2014, with day-to-day hearings beginning in April 2014. The burden of proof was placed on the appellant to demonstrate that it was not enriched at the cost of the revenue.
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