2017 (5) TMI 40 - AT - Central Excise

100% EOU - shortage of goods - It is the case of Revenue that such shortage in the containers received by an American client would tantamount to non-export of goods hence duty liability arise as per B-17 Bond excluded by appellant in respect of the goods cleared for export - Held that - Revenue authorities have never disputed the fact that appellant had produced the proof of export to the authorities who had accepted the same. It is also not disputed that the ARE-1 forms were attested by customs authorities for the export of the goods. Just because appellant has lodged F.I.R for the short receipt of the goods by their clients in USA, would not mean that the goods were diverted to DTA and duty can be demanded - the factual matrix the containers have been cleared for export and the proof of export has been accepted and admitted by the jurisdictional Asst. / Deputy Commissioner is not disputed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Duty liability on stolen goods not physically exported
2. Proof of export and customs clearance
3. Interpretation of relevant case laws

Analysis:

Issue 1: Duty liability on stolen goods not physically exported
The appeal was against a demand for duty on stolen goods that were not physically exported, despite being supervised by Central Excise officials during stuffing. The appellant's customer in the USA reported a shortage, leading to a FIR and insurance claim. The adjudicating authority confirmed the duty demand, interest, and penalties based on a B-17 Bond undertaking. The first appellate authority upheld this decision. The key contention was whether the goods being stolen before export absolved the appellant of duty liability.

Issue 2: Proof of export and customs clearance
The appellant argued that the goods were cleared for export, supported by proof of export accepted by the authorities. The containers were sealed by Central Excise officials, transported to the port, and examined by customs before export. The appellant's filing of a FIR for the shortage in the USA did not negate the export status. Citing relevant case law, the appellant emphasized that once goods are cleared for export and proof of export is submitted, duty cannot be demanded based on non-export grounds.

Issue 3: Interpretation of relevant case laws
The Departmental Representative contended that the theft of goods before export meant they were not physically exported, justifying duty liability. Referring to precedents where diverted goods led to duty demands, the Department argued for duty, interest, and penalties. However, the Tribunal found that the factual matrix supported the appellant's claim of export, as acknowledged by customs and excise authorities. The Tribunal upheld the appellant's position based on binding decisions and distinguished the cited case laws where diversion to the local market was admitted.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal with consequential relief. The judgment emphasized the importance of proof of export and customs clearance in determining duty liability, rejecting the Department's argument of non-export due to theft. The decision underscored the significance of factual evidence and legal precedents in resolving duty disputes related to exported goods.