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2023 (4) TMI 930 - AT - Customs100% EOU - diversion of imported/indigenous goods procured duty free - entire edifice built upon wrong calculation on an approximate ratio based on wrong facts - burden to prove the entitlement to an exemption notification - shortage of raw material - Penalties - HELD THAT - M/s Kansal Texo Tubes (P) Ltd was not a 100% EOU on the basis of the invoices issued under Rule 52(A) and 173(G); we find that learned adjudicating authority has totally ignored the assertion in the show cause notice that M/s Kansal Texo Tubes (P) Ltd was a 100% EOU; learned adjudicating authority has not carried out or got conducted any enquiry to come up such a conclusion - When the very basis of the calculation is wrong, we find that there is no way, such figures and calculation can be upheld. On this point alone, we find that the calculations arrived at by the adjudicating authority are not based on any factual matrix and therefore, are incorrect. To this extent, we are inclined to accept the contention of the Revenue and the submissions of learned Authorised Representative. The learned adjudicating authority has not examined the fact whether the respondent have achieved a positive NFEE and whether the realization for deemed export was in convertible currency in EEFC; we also find that the learned Commissioner has not bothered to verify whether the respondent had any permission granted by the competent authority i.e. Development Commissioner to sell the goods manufactured by the EOU in domestic market - learned adjudicating authority was not correct in extending the benefit of Notification No. 2/95-CE dated 04.01.1995 to the respondents without verifying the relevant facts. In respect of shortage of raw material received during the period from 19.08.2001 to 25.03.2002, learned adjudicating authority appears to have accepted the contention of wrong recording of 4000 kgs in the Form IV Register on the basis of submissions of the respondents. However, it is quite clear in para I(2) on page 5 of show cause notice that such adjustment of 4000 kgs has been resorted to by the respondents twice and therefore, the balance was shown as 22650 kgs instead of 26650 kgs; thus it is found that on this account also, learned adjudicating authority is incorrect in calculation. Penalties - HELD THAT - The learned Commissioner has imposed penalty only on Shri Vinod Kumar Garg, proprietor of M/s Annchal Export, Ludhiana and dropped penalties on other noticees; it is found that the reason given by the adjudicating authority for not imposing penalties on Shri Harbhajan Singh Sandhu, Shri Sushil Kumar Sharma, Shri Ramesh Kumar Jain etc are also applicable to Shri Vinod Kumar Garg. It was incorrect on the part of the adjudicating authority to hold that Shri Vinod Kumar Garg was hand in glove with Shri Harbhajan Singh Sandhu in the evasion of customs duty by indulging in paper transactions only, while letting of Shri Harbhajan Singh Sandhu himself. Though there is no appeal filed by Shri Vinod Kumar Garg. On looking into the facts and circumstances of the case, imposition of penalty on Shri Vinod Kumar Garg is also not justified. It is reported that Shri Harbhajan Singh Sandhu is no more and therefore, it would not be proper to impose any penalty on Shri Harbhajan Singh Sandhu at this juncture. Regarding penalties not imposed on other noticees, we are in agreement with conclusion of learned adjudicating authority, therefore, while accepting the contention of the department, in so far as duty evasion by M/s Punjab Exports is concerned, we are not inclined to impose any penalties on any other persons. We set aside the penalty imposed on Shri Vinod Kumar Garg also. The appeal is partly allowed confirming the duty of Rs. 5,62,20,888/- against M/s Punjab Exports along with interest and equal penalty; maintaining the redemption fine of Rs. 25 lakhs imposed on M/s Punjab Exports and by setting aside the penalty on Shri Vinod Kumar Garg. Rest of the order of dropping penalties by the adjudicating authority are being left untouched.
Issues Involved:
1. Calculation of duty liability based on imported/indigenous goods ratio without verification. 2. Determination of DTA entitlement under Notification No. 02/95-CE. 3. Calculation of duty recoverable on an individual. Summary: The case involved M/s Punjab Exports, a 100% EOU, importing raw materials and availing exemptions. An investigation alleged diversion of duty-free goods, leading to a show cause notice and subsequent adjudication. The Tribunal remanded the matter for further examination. The Revenue appealed against the Order-in-Original dated 19.06.2009, citing errors in duty calculation, DTA entitlement determination, and duty recoverable on an individual. Regarding the first issue, the Revenue contended that the adjudicating authority erred in determining the imported/indigenous goods ratio without proper verification. The authority's decision was based on incorrect information about a supplier not being a 100% EOU, leading to flawed calculations. On the second issue, the Revenue argued that the DTA entitlement should be assessed based on the FT policy and permissions granted by the Development Commissioner, not just Notification No. 02/95-CE. Lastly, the Revenue challenged the calculation of duty recoverable on an individual, asserting that the amount was wrongly determined. Upon review, the Tribunal found discrepancies in the adjudicating authority's approach. It noted that crucial facts were overlooked, such as the status of the supplier as a 100% EOU and verification of NFEE fulfillment. The Tribunal highlighted the necessity of verifying permissions and compliance with relevant provisions before extending benefits under Notification No. 02/95-CE. Regarding penalties, the Tribunal upheld penalties on M/s Punjab Exports but set aside the penalty on the individual in question, considering the circumstances of the case. The penalties on other noticees were also dropped based on the findings. Ultimately, the appeal was partly allowed, confirming duty against M/s Punjab Exports, maintaining the redemption fine, and setting aside the penalty on the individual. Other penalties imposed were left untouched.
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