2010 (3) TMI 530 - HC - Customs

Remand - The respondent assessee is a 100% EOU. The assessee sold the roses in domestic tariff area. Thus a SCN issued for duty and penalty. The assesee contended that the rose flower which were not suitable for export quality were sold in domestic area under the bonafide belief that those roses can be sold instead of treating as waste. Held that - Tribunal in such case could have remanded matter for proper adjudication. Suppression of facts being mixed question of facts and law to be considered by adjudicating authority. Impugned order set aside. Matter remanded to adjudicating authority for fresh order.

Summary

Issues:
1. Whether the Tribunal was right in allowing the appeal despite the possibility of demanding duty from the Respondent on the inputs used for manufacture?
2. Whether the Tribunal was correct in stating that the orders of the Adjudicating and Appellate Authority did not clarify how the duty was calculated, even though a work sheet was provided with the show cause notice?

Analysis:
1. The case involves an appeal by the Revenue against the order of the CESTAT, challenging the duty demand on inputs used for manufacturing by the Respondent, a 100% export-oriented unit growing roses for export. The Respondent had imported goods duty-free under a specific notification but was found selling unsuitable roses domestically. A show cause notice was issued for confiscation and duty penalty, which the Adjudicating Authority upheld, leading to an unsuccessful appeal before the Appellate Authority. The CESTAT allowed the second appeal on grounds of improper consideration of the Respondent's reply, leading to the current appeal.

2. The Revenue contended that the Tribunal should have remanded the matter to the Adjudicating Authority for proper consideration of the inputs used by the Respondent. However, the Respondent argued against remand due to the Revenue's notice being beyond the limitation period. The High Court opined that the matter needed reconsideration by the Assessing Officer. The Tribunal's relief was based on the Adjudicating Authority's failure to assess the inputs used by the Respondent, necessitating a remand for proper adjudication. The issue of limitation was not conclusively addressed, requiring the Assessing Officer to determine if the duty demand fell within the statutory time limits. The High Court emphasized that questions of fact and law, such as suppression of facts, needed proper adjudication by the Adjudicating Authority.

3. Consequently, the High Court allowed the appeal, setting aside all previous orders and remanding the matter to the Adjudicating Authority. The Respondent was granted the opportunity to present all legal contentions. The Court highlighted the need for a comprehensive reconsideration of the case by the Assessing Officer, emphasizing the importance of addressing both factual and legal aspects for a fair decision.

4. In conclusion, the High Court's judgment focused on the necessity of proper consideration of inputs, adherence to statutory timelines, and the distinction between questions of fact and law in customs duty cases. The remand to the Adjudicating Authority aimed at ensuring a thorough examination of all relevant aspects, providing both parties with a fair opportunity to present their arguments under the law.