2016 (9) TMI 1163 - AT - Customs

100% EOU - DTA sale of prawn seed - production and export of shrimp and processed shrimp - Notification 13/81-Customs - Notification 123/81-central Excise dated 02-06-1981 - whether the impugned prawn seed have been removed from the EOU into the DTA or whether they emanate from the Hatchery of M/s Magunta Exports which is not part of EOU and which has been taken on lease by the Assessee and if it falls within the former, what would be the manner and method of calculation of duty liability? Held that - the decision in the case of WATERBASE LTD. Versus COMMISSIONER OF CUS. & C. EX., GUNTUR 2005 (12) TMI 429 - CESTAT, BANGALORE followed. The allegations in the show cause show cause notice and the conclusions in the impugned order are without solid foundation, without evidence and premised on presumptions and assumptions. Deand of duty, confiscation of consignments and imposition of penalties set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Demand of duty on prawn seed clearance into DTA.
2. Confiscation and redemption of imported and indigenous capital goods.
3. Appeal against the impugned order by Assessee.
4. Appeal against the impugned order by Department.

Issue 1: Demand of duty on prawn seed clearance into DTA
The case involved a dispute regarding the demand of duty on prawn seed clearance into DTA by the Assessee. The department issued a show cause notice demanding a substantial amount from the Assessee. The adjudicating authority dropped some proposals but confirmed a demand for a proportionate duty on raw material consumed in prawn seed production. The Assessee contended that the duty demand was outside the scope of the show cause notice, as it was based on subsequent amendments not applicable to the period in question. The Assessee also argued against the confiscation and redemption fines imposed by the department, claiming compliance with EOU scheme provisions and no violation committed. The department, however, argued that the duty demand and confiscation proposals were justified due to lack of evidence provided by the Assessee regarding the origin and clearance of prawn seed into DTA.

Issue 2: Confiscation and redemption of imported and indigenous capital goods
Although the department dropped the proposal for duty demand on imported and indigenous capital goods, they confiscated the goods and imposed redemption fines. The Assessee challenged this action, stating that compliance with EOU scheme provisions and net foreign exchange earnings were achieved, hence no violation occurred. The department argued that the duty liability should be collected based on executed bonds and customs duties leviable, emphasizing that the impugned order lacked clarity and basis for determining duty liability. The dispute revolved around the confiscation, redemption fines, and duty liability on capital goods used in production.

Issue 3: Appeal by Assessee against the impugned order
The Assessee filed an appeal against the impugned order, presenting various submissions to challenge the duty demand, confiscation, and redemption fines imposed by the department. The Assessee argued that the duty demand was unjustified, as it was based on subsequent amendments not applicable to the relevant period. They also contended that the confiscation and fines were unwarranted due to compliance with EOU scheme provisions and absence of any violation. The Assessee consistently maintained that the prawn seed clearance into DTA was from a non-EOU hatchery, supported by evidence disregarded by the adjudicating authority.

Issue 4: Appeal by Department against the impugned order
The department also filed an appeal against the impugned order, asserting that the duty demand and confiscation proposals were valid, as the Assessee failed to provide sufficient evidence regarding the origin and clearance of prawn seed into DTA. The department argued for the collection of duty based on executed bonds and customs duties leviable, highlighting the lack of clarity and basis in the impugned order for determining duty liability. The department sought a remand for redetermination of the correct duty liability by the Commissioner.

In the final judgment, the Tribunal found that the duty demand, confiscation, and redemption fines imposed by the department lacked a solid foundation, evidence, and were based on presumptions and assumptions. Relying on a similar case law precedent, the Tribunal set aside the impugned order, allowing the Assessee's appeal and dismissing the department's appeal. The Tribunal concluded that the duty demand and other actions taken by the department were unsustainable and without merit, providing consequential reliefs to the Assessee.