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2022 (1) TMI 723 - AT - Customs100% EOU - demand of duty on wastage/ breakage over and above the permissible limit of raw materials imported duty free during the course of manufacture of final products by the EOU - whether the appellants would be eligible for the higher norms fixed by Ministry in respect of wastage/ loss/ breakage of raw materials? - whether the demand is premature? - HELD THAT - The appellants have represented to the Ministry to revise the SION norms in blanks imported by them. Ministry after considering the request of the appellants have communicated to the development commissioner that a wastage of 15 percent has been fixed and the development commissioner may take necessary action under para 6.7(e) of Hand Book of Procedures Volume-I. Thus in view of the decisions dated 23/9/2008 and 26/11/2008 of the Commerce Ministry in the appellant s case the wastage norms were fixed at 15 percent as against the earlier norms of 9.09 percent. The Revenue is bound by the norms fixed by SION norms fixed by the Ministry of Commerce and therefore the benefit of the same has to accrue to the appellants. Bombay High Court in the case of SARLA PERFORMANCE FIBRES LTD. VERSUS UNION OF INDIA 2008 (2) TMI 68 - HIGH COURT BOMBAY held that there is always an inherent power in the Tribunal to do justice; in these circumstances technicalities by themselves should not stand in the way if otherwise there is merit in the contention of the petitioners. Appeal allowed - decided in favor of appellant.
Issues:
1. Whether duty is recoverable due to excess wastage of raw materials by the Appellant. 2. Whether the demand for duty is premature. Analysis: Issue 1: Duty on Excess Wastage The Appellants, a recognized 100% Export Oriented Unit, imported rough ophthalmic lenses blanks duty-free for manufacturing ophthalmic lenses. The Revenue alleged that the breakage, wastage, and scrap generated exceeded the permissible 9.09% as per the Input-Output norms. The Tribunal initially confirmed the duty recovery for impermissible wastage but set aside the penalty. The High Court remanded the matter back to the Tribunal to consider the Ministry's decision fixing the wastage norm at 15% retrospectively. The Appellants argued that the Ministry's decision should apply, and no demand is sustainable. The Tribunal, considering the Ministry's norms, held that the Revenue must adhere to the fixed norms, benefiting the Appellants. The impugned orders were found unsustainable, and the Tribunal amended its previous order accordingly. Issue 2: Premature Demand for Duty The Appellants contended that duty demand can only be made upon closure of the bonding period or debonding, citing legal precedents. The Tribunal acknowledged the legal correctness of this submission, noting that it was not considered in the previous order. Therefore, the Tribunal held that the demand for duty was premature. Referring to the Bombay High Court's decision, the Tribunal emphasized the inherent power to do justice, setting aside technicalities in favor of merit. In line with the High Court's direction, the Tribunal allowed the appeals filed by the Appellants, granting consequential relief. In conclusion, the Tribunal allowed the appeals, modifying the previous order to reflect the Ministry's fixed wastage norms and determining that the demand for duty was premature. The decision was made in the interest of justice, aligning with the High Court's directives.
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