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Issues:
1. Importer's claim for duty-free clearance under DEEC scheme. 2. Department's appeal against redemption fine and penalty. 3. Interpretation of the term "replenishment" in the notification. 4. Requirement for imported goods to be used in the export product. 5. Determination of value and underdeclaration of goods. Analysis: 1. The case involved an importer, M/s. Garment Craft, who imported flocked velvet fabric under the DEEC scheme and claimed duty-free clearance. The department alleged that the imported goods were not identical to those used in the exported garments, leading to underdeclaration of value and denial of benefits under Notification No. 117/88. The Collector increased the value of goods, ordered confiscation with an option to redeem, and imposed a penalty, prompting the importer to appeal. 2. The department appealed against the Collector's order, arguing that the redemption fine and penalty were disproportionately low. Both sides were heard, and the Tribunal considered the arguments presented. 3. The Tribunal addressed the contention that the term "replenishment" in the notification did not necessarily require the imported goods to be used in the export product. The importer argued that the term should be interpreted broadly to include import against goods already exported, while the department emphasized the need for the goods to be used in the manufacture of the export product. 4. The Tribunal examined whether the imported goods were actually used in the export product, emphasizing the importer's responsibility to demonstrate entitlement to the notification's benefits. The lack of evidence linking the imported fabric to the exported garments weakened the importer's case, leading to the rejection of this contention. 5. Regarding the determination of value and underdeclaration of goods, the Tribunal found that the goods imported by Garment Craft were not identical to those covered by higher-value invoices, and thus, the charge of undervaluation failed. Consequently, the confiscation of goods and imposition of penalties were deemed unsustainable. 6. In conclusion, the Tribunal partially allowed the importer's appeal by setting aside the confiscation of goods and the penalty imposed on Garment Craft. However, the department's appeal seeking enhancement of redemption fine and penalty was dismissed.
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