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2016 (12) TMI 658 - AT - Central Excise100% EOU - clearance of 2 obsolete auto coner machines from one M/s. Kumar Cotex Ltd.(KCL). Permission had been taken from the Development Commissioner by KCL for clearance to DTA. These goods were purchased by the appellants. Department has taken the view that the goods have been so cleared only by payment of Central Excise duty whereas they should have suffered Customs duty along with CVD Held that - A reading of the impugned order will indicate that culpability for non-discharge of duty liability has been imposed on KCL only. No allegation has been put against the appellant to the effect that they have in any manner colluded with KCL in the clearance of the said goods to DTA without discharging of appropriate duty thereon. This being so, the appellants cannot be faulted for having availed of the CENVAT credit of the goods purchased and received by them. Imposition of redemption fine on them only for the reason that the goods are already purchased and received by them is also not sustainable. In the circumstances, their appeal succeeds and is allowed - decided in favor of appellant.
Issues: Clearance of obsolete auto coner machines, liability for Customs duty, redemption fine, penalty under Section 112 of the Customs Act.
Analysis: 1. Clearance of Obsolete Machines: The issue in question pertains to the clearance of 2 obsolete auto coner machines from M/s. Kumar Cotex Ltd. to the appellants. Permission was obtained from the Development Commissioner by Kumar Cotex Ltd. for clearance to Domestic Tariff Area (DTA). The Department alleged that the goods were cleared by payment of Central Excise duty only, whereas they should have also incurred Customs duty along with CVD. 2. Legal Standpoints: During the hearing, the appellant's counsel highlighted that a previous Tribunal order had settled the issue in favor of Kumar Cotex Ltd. The appellant argued that they purchased the goods in good faith from Kumar Cotex Ltd., availed CENVAT credit, and did not collude with Kumar Cotex Ltd. The Department, represented by the Assistant Commissioner, stood by the impugned order demanding Customs duty from Kumar Cotex Ltd., imposing a redemption fine on the appellant, and penalty under Section 112 of the Customs Act. 3. Judgment Analysis: After hearing both sides and examining the facts, the Tribunal observed that the culpability for non-discharge of duty liability was solely on Kumar Cotex Ltd. No allegations were made against the appellants regarding collusion in the clearance of goods without paying appropriate duty. Consequently, the Tribunal ruled that the appellants could not be faulted for availing CENVAT credit on the purchased goods. The imposition of a redemption fine on the appellants merely for receiving the goods was deemed unsustainable. Therefore, the Tribunal allowed the appeal, stating that the appellants succeeded in their case. 4. Conclusion: The judgment by the Appellate Tribunal CESTAT Hyderabad, delivered by Member (Judicial) and Member (Technical), resolved the issue of liability for Customs duty, redemption fine, and penalty under Section 112 of the Customs Act in favor of the appellants. The decision was based on the lack of evidence implicating the appellants in any collusion with Kumar Cotex Ltd. in the clearance of goods, leading to the allowance of the appeal and the relief of the redemption fine and penalty imposed on the appellants.
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