2018 (1) TMI 1224 - AT - Customs

Clandestine removal - clearance of Soda Ash - It was alleged that while clearing such duty-free soda ash to various parties, appellant had raised invoices showing that such clearances are made out of duty paid soda ash - Held that - there is merit in the appellants prayer that the quantity of duty-free imported soda ash that would require differential customs duty to be paid thereon on account of their having been removed from the factory, will then have to be calculated after taking into account all such receipts of soda ash from different sources and total removals to arrive at the net removal from the factory - it is proper to remand the matter back to the adjudicating authority for denovo consideration and to arrive at the net quantity of duty free imported soda ash that may have been removed outside the factory for the limited purpose of calculation of net duty and without liability. Penalty - Held that - while differential customs duty will definitely accrue in respect of the quantities of duty-free imported soda ash that may have been removed in violation of import conditions, nevertheless, no malafide can be attributed to such clearances - penalties imposed on the appellant under section 114A ibid will not sustain and is therefore set aside. Appeal allowed in part and part matter on remand.

Summary

Issues:
Alleged diversion of duty-free soda ash, calculation of duty liability, penalty imposition, completeness of stock statement, justification of penalty imposition.

Analysis:
The case involved M/s. Mohan Breweries and Distilleries Ltd., engaged in glass bottle manufacturing, importing duty-free soda ash under Advance License scheme. The Department alleged diversion of duty-free soda ash, leading to demand of customs duty, interest, and penalties. The Commissioner confirmed duty demand, ordered confiscation of soda ash, and imposed penalties on the company and its General Manager. The appellants contended that clearances were for returning borrowed soda ash and fulfilling import obligations. They argued the stock statement was incomplete, lacking details of imported duty-free soda ash and domestic purchases. They disputed the quantity alleged to be cleared outside the factory. The Department supported the adjudication, highlighting the admission by the General Manager regarding the quantity of duty-free soda ash cleared. The Tribunal noted the merging of soda ash from different sources, making it challenging to distinguish the source of removed soda ash. They remanded the matter for re-consideration to calculate the net quantity of duty-free soda ash removed. The Tribunal found no evidence of clandestine removal and set aside the penalties, considering the fulfillment of export obligations. The penalties on the company and the General Manager were deemed unjustified, and the appeals were disposed of accordingly.