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Issues involved:
The case involves the unauthorized removal of duty-free gold from a Special Export Oriented Complex, leading to penalties imposed under Section 112 of the Customs Act, 1962. Summary: Issue 1: Customs Duty Exemption for Export-Oriented Units (EOUs) The appellant, an EOU manufacturing studded jewelry in a Special Export Oriented Complex, imported gold bars duty-free for export purposes under Customs Notification No. 3/88-Cus. MMTC, the nominated agency, supplied gold to the appellant for manufacturing jewelry for export. The appellant exported jewelry without duty payment as per the agreement. Issue 2: Penalties Imposed under Section 112 of the Customs Act A show cause notice accused the appellants of unauthorized removal of 12 Kgs. of duty-free gold, leading to penalties under Section 112. The appellants contested the allegations, citing lack of specific clauses mentioned in the notice or order. The appellants argued lack of evidence, procedural irregularities, and failure to establish unauthorized gold removal. Judgment: Upon review, the Tribunal found no evidence supporting the charge of unauthorized gold removal. The burden of proof lay with the Department, which failed to establish the allegation. The order lacked a finding that the gold was liable for confiscation under Section 111, a prerequisite for penalty under Section 112. Citing a Madras High Court decision, the Tribunal emphasized the need for specific findings under the relevant clauses of Section 112. Notably, penalties were imposed without findings against all appellants and lacked specificity in the show cause notice. The Tribunal noted the ongoing dispute between MMTC and the Department regarding duty liability, but upheld that the appellant had no duty liability on the imported gold. Consequently, the Tribunal allowed the appeals, setting aside the Commissioner's order imposing penalties under Section 112 of the Customs Act.
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