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Issues:
Demand of duty for cleared garments under the 100% Export Oriented Unit (EOU) scheme without payment of duty; Allegations of short levy of duty; Allegations of suppression of facts by the appellants; Jurisdictional authority for clearance of goods; Validity of demand beyond the prescribed period; Levy of penalty. Analysis: The appeal pertains to the demand of duty for 2,417 garments cleared without payment of duty under the 100% EOU scheme from the appellants' premises to the domestic tariff area. The appellants had sought permission from the Assistant Collector of Customs for clearance of defective garments, one lot with imported raw materials and the other with indigenous raw materials. The permission was granted, specifying duty payment for imported raw material content and duty-free clearance for garments manufactured from indigenous materials. Subsequently, a show cause notice was issued under the Customs Act, alleging short levy of duty, followed by another notice invoking the longer period of limitation under the Central Excise Act. The appellants contended that they had acted in accordance with the permission granted by the authorities and had no obligation to approach the Excise authorities separately for duty payment. They argued that the duty required for clearance to the Domestic Tariff Area was as per the proviso to Section 3, and they had complied with the directions given by the authorities. The Tribunal observed that there was no evidence of suppression of facts by the appellants, as they had followed the instructions of the jurisdictional authority in clearing the goods. The Tribunal noted that the appellants had acted in good faith and there was no indication that they had any mala fide intent to evade duty payment. It was highlighted that the appellants were not directed to approach any other authority for clearance, and they had acted as per the directions provided. Consequently, the Tribunal set aside the demand of duty related to the cleared garments, as the allegation of suppression was not proven. However, regarding the duty for wastes, the appellants agreed to pay the amount, and the Tribunal confirmed the demand for this item. The Tribunal also decided to set aside the levy of penalty in the given circumstances. In conclusion, the appeal was partially allowed, with the demand of duty for the cleared garments being set aside due to lack of evidence of suppression, while the demand for wastes was confirmed. The penalty was also set aside based on the facts and circumstances of the case.
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