2017 (9) TMI 1978 - AT - Customs

100% EOU - non/short payment of Customs duty - appellant exported less quantity and for the remaining quantity the appellant has applied for the N/N. 52/2003-Cus dated 31.03.2003 read with Foreign Trade Policy 2009 to 2014 (FTP), to dispose of the raw material in DTA (Domestic Tariff Area) with approval of the Customs authorities - It is the allegation of the Department that on the quantity of the raw material which was cleared in the DTA, the assessee has not paid applicable customs / central excise duties - HELD THAT - It appears that the appellant has claimed that the maximum quantity or value of the raw material has not been mentioned in the permission letter. From enquiry, it appears it is not clear as to how much raw material was utilized for the export of goods and how much remained with the appellant. Further, it is also not clear as to for how much amount permission was granted by the appropriate authority for disposal of surplus raw material and whether duty was paid at the time of clearance of such raw material as claimed by appellant. During the course of the arguments, both the parties have agreed that it is not mentioned in the enquiry how much additional raw material, upon the permission, was sold by the appellant. When it is so, then the fresh adjudication is required by the adjudicating authority - matter remanded back to the adjudicating authority to decide the issue denovo and by providing reasonable opportunity to the appellant - appeal allowed by way of remand.

Summary

Issues:
- Duty payment on surplus raw material clearance in DTA by 100% EOU
- Applicability of excise duty on excess raw material clearance
- Interpretation of permission letters for disposal of surplus raw material
- Requirement of fresh adjudication by the adjudicating authority

Analysis:
The case involves an appeal by a 100% EOU against an order alleging non-payment of applicable customs/central excise duties on surplus raw material cleared in the DTA. The appellant manufactured electric conductors and stranded wire of copper using imported raw materials procured duty-free under a notification. The appellant exported less than the procured quantity, leading to the need to dispose of the surplus in the DTA with duty payment. The appellant claimed to have paid excise duty on the surplus raw material cleared in DTA with permission from customs authorities. The dispute arose regarding the quantity and value of raw material cleared in excess of the permitted amount.

During the hearing, the appellant's counsel argued that duty was paid on the excess quantity cleared and cited relevant case laws to support the submission. On the contrary, the respondent contended that no duty was paid on the surplus raw material, highlighting the absence of specific quantity or value limits in the permission letters issued by the JAC. The Tribunal observed discrepancies regarding the actual quantity utilized for exports, the surplus remaining with the appellant, and the clarity on duty payment for the excess raw material clearance.

After considering both parties' arguments and examining the record, the Tribunal found the need for fresh adjudication due to the lack of clarity on the quantity of surplus raw material sold by the appellant post-permission. Consequently, the impugned order was set aside, and the matter was remanded back to the adjudicating authority for a denovo decision, ensuring a reasonable opportunity for the appellant to present their case. The appeal was allowed by way of remand, emphasizing the requirement for a detailed examination of the issue for a just resolution.

In conclusion, the judgment underscores the importance of precise documentation, clarity on duty payment for surplus raw material clearance, and the necessity for thorough adjudication to address ambiguities in such cases. The decision reflects the judicial approach to ensure fairness and proper assessment in matters concerning duty payment by EOUs on excess raw material disposal in the DTA.