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2018 (6) TMI 1221 - AT - Customs100% EOU - diversion of duty free goods - Formal SCN not issued - N/N. 15/2003-Cus. Dated 31.3.2003 and Central Excise N/N. 22/2003 dated 31.3.2003 - Condition of notification not complied with - Confiscation - Penalty - Principles of Natural Justice - Held that - In the instant case there was some correspondence between the department and the respondent and the respondent has duly paid up the duty along with interest in response to the query of the department - No formal show-cause notice was issued. It is very clear that the respondents have transferred the goods under IUT as permitted by the Foreign Trade Policy and by following due process of law. When the recovery of duty itself is questionable confiscation and imposition of penalty will not survive. Appeal dismissed - decided against Revenue.
Issues Involved:
Allegation of duty evasion and non-compliance with customs notifications by STPI unit under EOU scheme; Confirmation of duty and interest by Commissioner of Customs; Appeal against recovery of duty and interest; Transfer of goods to another entity under Inter Unit Transfer (IUT); Compliance with Foreign Trade Policy; Applicability of penalties and confiscation without formal show-cause notice. Analysis: 1. The case involved allegations by the Customs Department against a STPI unit under the EOU scheme for transferring duty-free imported goods to another entity without complying with customs notifications. The main issue was the alleged violation of Notification No. 15/2003-Cus. and Central Excise Notification No.22/2003. A show-cause notice was issued demanding payment of duty and interest amounting to a total of &8377; 30,91,710. 2. The Commissioner of Customs confirmed the recovery of duty and interest but refrained from confiscating the goods or imposing penalties considering that the duty and interest were paid upon detection of the mistake. The Department appealed against this decision, seeking confiscation and penalties. 3. The respondent argued that the omission was due to oversight and a genuine belief in entitlement to duty-free benefits. They contended that the transfer of goods under IUT was in compliance with the Foreign Trade Policy and cited precedents to support their position. They emphasized that no formal show-cause notice proposing confiscation and penalties was issued, and they had paid the duty and interest voluntarily. 4. The Appellate Tribunal found no merit in the Department's appeal, noting that no formal show-cause notice for confiscation and penalties was issued. The Tribunal observed that the transfer of goods under IUT was permitted by the Foreign Trade Policy, and since the recovery of duty itself was questionable, confiscation and penalties were unwarranted. As the respondent had not appealed against the confirmation of duty and interest, no orders were passed on that aspect. 5. The Tribunal dismissed the Department's appeal, emphasizing that the transfer of goods was conducted in accordance with the law and no formal notice for penalties or confiscation was issued. The judgment highlighted the importance of due process and compliance with trade policies in determining the applicability of penalties and confiscation in customs cases. This detailed analysis covers the key issues and the Tribunal's decision in the legal judgment.
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