2019 (6) TMI 646 - AT - Customs

Demand of Customs Duty - illicit removal - shortage of stock - N/N. 177/94-Cus dated 21st October 1994 - Gold jewellery - HELD THAT - While proper account of import, consumption and utilisation are to be maintained for periodic submission to the Assistant Commissioner of Customs, it is the satisfaction of the Development Commissioner on the usage of the goods for the purpose specified in the notification or any other purpose permitted in the Export Import Policy that must be complied with. In the present instance, there is no record of the satisfaction of the Development Commissioner having been ascertained. The shortage of 8971.11 gms at the premises of assessee does not, by itself, indicate that condition no.8 of the notification has not been complied with as has been held by the Tribunal in RB. JEWELLERY CORPORATION VERSUS COMMR. OF CUS., AIRPORT, MUMBAI 2006 (8) TMI 405 - CESTAT, MUMBAI . The notification does not place a premium on the efficient utilisation of imported inputs of operation and it would not be proper for the customs authorities to read such as an object of the notification. In the absence of any evidence of removal from the export processing zone without following proper procedure or of having failed to satisfy the Development Commissioner of proper utilisation, the provisions of levy of duty and imposition of penalty would not sustain - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of notification no. 177/94-Cus dated 21st October 1994 regarding import of gold and silver without payment of duty.
2. Determination of shortage of stock and liability for customs duty.
3. Compliance with conditions of the notification for units in SEEPZ.
4. Application of previous tribunal decisions and Supreme Court judgments.

Analysis:

1. The appeal challenged an order-in-original regarding a shortage of stock leading to a demand for customs duty based on a verification conducted in 1998. The appellant argued that the shortage was a normal processing loss and wastage allowance should be considered to avoid liability. Reference was made to Tribunal decisions and the notification governing gold import.

2. The adjudicating authority detailed the findings related to the shortage of stock, considering the export quantities, wastage allowance, and gold recovered from dust. The calculation sheets certified by the company director showed the weight loss as wastage, which was factored into the shortage calculation. The judgment emphasized the importance of considering all factors before determining the shortage.

3. The notification specified conditions for units in SEEPZ, including the disposal of processing loss and restrictions on bringing manufactured goods to other parts of India. The satisfaction of the Development Commissioner regarding the usage of goods was highlighted as a crucial aspect of compliance. The judgment noted the absence of evidence regarding the Development Commissioner's satisfaction in the present case.

4. Previous tribunal decisions and Supreme Court judgments were cited to support the arguments made by both parties. The Tribunal differentiated the present case from the precedent based on the interpretation of the notification and the absence of evidence indicating non-compliance with the conditions. Ultimately, the impugned order was set aside, and the appeal was allowed due to the lack of evidence supporting the levy of duty and imposition of penalties.

This comprehensive analysis of the judgment highlights the key issues addressed, the arguments presented by the parties, the legal interpretations made by the Tribunal, and the ultimate decision reached based on the evidence and legal principles involved.