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Appeal against Order-in-Original passed by Commissioner of Customs Exports Chennai under DEEC scheme for disposal of imported mulberry raw silk yarn in local market. Analysis: The case involved the appellants importing raw silk yarn under the DEEC scheme, which required the goods to be used for manufacturing goods meant for export. The main charge was that the appellants disposed of a portion of the imported yarn in the local market. The Commissioner confirmed duty demanded and imposed penalties on the directors of the importing company. The CESTAT remanded the case for reconsideration due to discrepancies in considering the stock position pledged with the bank. After de novo proceedings, the Commissioner upheld the charge of disposal and imposed penalties. The appellants raised various points challenging the Commissioner's decision. The learned advocate argued that documentary evidence of hypothecation to the bank was ignored, investigating officers did not verify stock in the bank's godown, and key documents were not considered. The appellants also claimed that statements were obtained under duress, lacked corroborative evidence, and the chain of events was not established by DRI. They cited legal precedents and highlighted DRI's actions causing financial hardship. The appellants contended that the goods were hypothecated, penalties were unjustified, and certain sections of the Customs Act were not applicable. The Tribunal carefully reviewed the case records and found discrepancies in the appellants' claims. Despite the appellants' assertion of hypothecation, no mention was made to investigating officers during the search. The Commissioner's detailed findings justified rejecting the appellants' contentions, as the imported stock was not available during investigation and not utilized for export obligation. The Tribunal agreed with the duty demand but set aside penalties under certain sections of the Customs Act. The duty amount, already paid, was upheld, penalties on directors were deemed reasonable, and interest was not levied. The appeal was partially allowed, upholding duty demand and penalties on directors. In conclusion, the Tribunal upheld the duty demand on the appellants for disposing of imported goods in the local market, despite their claims of hypothecation. The penalties on the directors were considered reasonable, and certain sections of the Customs Act were found inapplicable. The Tribunal's decision balanced legal interpretations, factual findings, and procedural considerations to partially allow the appeal while upholding the duty demand and penalties on the directors.
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