2023 (6) TMI 1062 - AT - Customs

100% EOU - Permission for import and acquisition of the raw materials duty free, for use of the same in the manufacture of export products - mis-declaration - failure to declare whether the job worker declared by them for manufacture of intermediate product exist at the time declared manufacturing unit or not - N/N. 52/2003-Cus dated 31st March 2003 - HELD THAT - With an objective to encourage exports, the Government of India has imposed lot of faith and has allowed import and acquisition of the raw materials duty free for use of the same in the manufacture of export products - The relevant notification No. 52/2003-Cus dated 31st March 2003 allowed import and acquisition of raw material without payment of any duty subject to certain undertakings and paper formalities. In this case, the appellant has violate the faith imposed in them in as much as they did not even bother to check whether the job worker declared by them for manufacture of intermediate product exist at the time declared manufacturing unit or not. It also shows the carelessness on the part of the manufacturer in failing to ensure as that the duty free import or acquired are being sent to the right place which have been declared by them for manufacture of the intermediate products. The declared job worker M/s. Heartwell Life Sciences was fully aware that the duty free raw materials sent by the appellant M/s. Sun Pharmaceuticals Industries Ltd. to them were not being put to the process at the declared address. If there was any difficulty in getting the duty free imported raw materials processed for the purpose of manufacture of intermediate products at the given address at plot no. A/1, 7304, GIDC Estate, Ankleshwar. They had enough time to come clean and inform the authorities that goods are being taken to M/s. Hemdeep Organics Pvt. Ltd. explaining the difficulties being faced by them to process the same on the declared address. There have been some procedural lapses in this matter however, the impugned order-in-original has confirmed duty and imposed redemption fine as well as penalties under various sections of Customs and Central Excise Acts. From the findings given in the impugned order, no discussion has been made as to the effect whether the duty free imported raw materials which were supplied to the job worker who did not exist at the given address, were received back after the processing or not - duty, redemption fine and penal action can be confirmed only if it is established that duty paid on raw material which was sent to the job workers have not been received by the 100% EOU of the appellant. Since the impugned orders are silent on this aspect, the matter need to be re-adjudicated - appeal disposed by way of remand.

Summary

Issues involved:
The issues involved in the judgment are violation of conditions of permission granted for job work, diversion of duty-free imported goods, imposition of penalties under Customs Act and Central Excise Act, and challenge to the Order-in-Original before the Commissioner (Appeals).

Violation of Conditions of Permission for Job Work:
The appellant, a 100% Export Oriented Unit, sought permission for job work to manufacture 'Theobromine' from another manufacturer. However, investigations revealed that the declared job worker did not exist at the given address, leading to allegations of violation of conditions of the permission granted. The Order-in-Original imposed penalties and duties on the appellant, job worker, and individuals involved.

Challenge before Commissioner (Appeals):
The appellants challenged the Order-in-Original before the Commissioner (Appeals), contending that the order did not address their submissions and emphasizing that any lapses were on the part of the job worker, not the appellant. They argued that there was no intention to divert duty-free raw materials for evasion and cited a relevant case law.

Judgment and Observations:
The Tribunal noted the objective of encouraging exports by allowing duty-free import of raw materials. However, it found that the appellant failed to verify the existence of the job worker at the declared address, indicating carelessness. The job worker was aware that the raw materials were not being processed at the declared address. The Tribunal observed procedural lapses and the need for re-adjudication to determine if the duty paid on raw materials sent for job work was received back by the appellant.

Decision and Remand:
The Tribunal allowed the appeals by way of remand to the Adjudicating Authority for re-adjudication based on the observations made. The matter was directed to be re-examined considering the lack of discussion on whether duty paid on raw materials sent for job work was received back by the appellant.