2015 (10) TMI 199 - AT - Customs

Goods diverted to local market Imposition of Custom Duty Appellants being 100% EOU attempted to divert goods to quantity of 16,420.600 kgs in local market By Impugned Order, Commissioner confirmed demand of Excise duty and customs duty on indigenous and imported raw materials Admittedly Assesse paid excise duty as was applicable, however commissioner levied additional excise duty upon assesse - It also confiscated seized goods and imposed redemption fine Whether imposing custom duty, on indigenous and imported raw material and additional excise duty was justified Held that - It was not in dispute that duty free import and indigenous raw materials were used in manufacture of finished products Appellants being 100% EOU discharged Central excise duty on goods, cleared to local market, amount equal to customs duty and therefore, separate demand of custom duty on raw materials would not sustain It was evident from record that Excise Officers detained seized goods, which was attempted to divert in local market So, confiscation of goods was justified and accordingly imposition of redemption fine was warranted Impugned order modified Demand of Central Excise duty and customs duties on raw materials hereby set aside Decided partially in favour of Assesse.

Summary

Issues:
- Demand of Central Excise Duty on finished goods diverted to the local market
- Demand of Customs duty on raw materials used in manufacturing
- Imposition of redemption fine on exported goods

Analysis:
1. Demand of Central Excise Duty on Finished Goods:
The appellants did not dispute the demand of Central Excise Duty on the finished goods diverted to the local market. The Tribunal upheld this demand, and the appellants had already paid the amount.

2. Demand of Customs Duty on Raw Materials:
The main issue revolved around the demand of Customs duty on the raw materials used in manufacturing the finished products. The appellants, a 100% EOU, contended that since they had already discharged Central Excise duty on the goods cleared to the local market, equivalent to the customs duty, a separate demand for customs duty on raw materials was not justified. The Tribunal, supported by various precedents, held that for 100% EOUs, the demand of customs duty on raw materials and penalties under the Customs Act could not be sustained.

3. Imposition of Redemption Fine on Exported Goods:
The appellants argued against the imposition of redemption fine on the exported goods, stating that they were not responsible for the diversion of the goods. However, the Revenue contended that the goods were seized by Central Excise Officers while being diverted to the local market, justifying the confiscation and imposition of the redemption fine. The Tribunal agreed with the Revenue's stance, leading to the imposition of the redemption fine.

4. Judgment Outcome:
After considering the arguments from both sides and reviewing the records, the Tribunal modified the impugned order by setting aside the demand of Central Excise duty and customs duties on the raw materials. The appeals were disposed of accordingly, with the demand of Central Excise duty on finished goods being upheld, and the imposition of redemption fine on exported goods being deemed warranted.

In conclusion, the judgment addressed the issues of Central Excise Duty on finished goods, Customs duty on raw materials, and the imposition of redemption fine on exported goods. The Tribunal's decision was based on legal provisions, precedents, and the specific circumstances of the case, resulting in a balanced resolution of the disputes raised by the parties involved.