2024 (2) TMI 318 - AT - Customs

100% EOU - mis-declaration of weight of imported rough A marble blocks - violation of policy circular No. 13(RE-08)/2004-2009 dated 30.06.2008 as excess quantity/weight is not covered by the procurement certificate issued in terms of Notification No. 52/2003-Cus. - demand of duty as excess quantity as per the record of CHA was found to have been sent to the EOU - imposition of penalty - HELD THAT - On detail examination of such record department found certain blocks of marble had weight in excess than the weight declared and case was made out on the basis of record of such CHA over the quantity shown in the Bill of Entries. The CHA had maintained the record on the basis of weighment slips issued and received from Mundra CFS. The CHA also informed the Bill of Entries were filed on the basis of bill of lading, invoice, packing list etc has received. Further, it is found that no check of weighment at the premises of appellants, EOU was done nor any excess was found, to have been cleared or even documented as excess production or clearance of wastage. Department has not even charged them with excess production of clearance in the EOU from clearance of excess marble as such nor has it brought any evidence on record to this effect. It is clear that the practice as pointed out by the appellant is well established and case of excess weight made out cannot be sustained, as the same was based on ignorance of such trade practice and department has failed to establish that any excess goods or weight was cleared and not used in manufacture - appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are mis-declaration of weight of imported rough marble blocks by the appellants, alleged violation of policy circular, confirmation of duties and penalties, applicability of Notification No. 52/2003-Cus, exemption from customs duty for EOUs, time-barred demand, imposition of penalty, and excess quantity of imported goods.

Mis-declaration of weight and policy circular violation:
The appellants, 100% EOU engaged in manufacturing and exporting marble slabs and tiles, were alleged to have mis-declared the weight of imported rough marble blocks and violated policy circular No. 13(RE-08)/2004-2009. The department contended that excess quantity/weight was not covered by the procurement certificate issued under Notification No. 52/2003-Cus.

Applicability of Notification No. 52/2003-Cus:
The appellants argued that Notification No. 52/2003-Cus grants exemption from customs duty to all goods imported by EOUs for manufacturing finished goods, regardless of the weight of imported goods. They emphasized that customs duty demand on warehoused goods used for manufacturing in bond for exports is not permissible.

Time-barred demand and duty imposition:
The appellants claimed that the demand for customs duty was time-barred as the period of import was from 13.04.2007 to 19.12.08, and the show cause notice was issued on 31.03.2012. They contended that in the absence of suppression or intent to evade customs duty, the demand was barred by limitation.

Imposition of penalty and excess quantity:
The lower authority justified the imposition of penalty and demand of duty based on the excess quantity found in the records of the Customs House Agent (CHA). However, the appellants argued that the difference in weight was due to trade practices and irregular shape of blocks, resulting in greater waste content. They highlighted that imported goods used in manufacturing in EOU are not subject to duty.

Judicial findings and conclusion:
Upon examination of the records and submissions, the Tribunal found that the department failed to prove that any excess goods or weight were cleared and not used in manufacturing. Citing relevant case laws and trade practices, the Tribunal held that the demand of duty and penalty was not sustainable. The appeal was allowed with consequential relief in relation to duty, penalty, and interest, ultimately ruling in favor of the appellants.