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Issues:
1. Alleged violation of DEEC Scheme provisions and licensing conditions for duty-free import of raw silk yarn. 2. Denial of benefit under Notification No. 204/92-Cus. 3. Demand for duty amount and interest on duty-free import of mulberry raw silk. 4. Adjustment of paid amounts towards duty liability. 5. Imposition of penalty on the proprietors. Issue 1: Alleged Violation of DEEC Scheme Provisions: The appellant, proprietor of M/s. Vinayaka Industries, faced allegations of importing and disposing of raw silk yarn in violation of DEEC Scheme provisions. The show cause notice highlighted the duty-free import under advance licenses and the subsequent duty payment of Rs. 13,59,472. The appellant's statement indicated willingness to pay part of the amount and enforce a Bank Guarantee. The Commissioner found that the party failed to fulfill export commitments under the advance licenses, leading to diversion for home consumption. Issue 2: Denial of Benefit under Notification No. 204/92-Cus: The Commissioner concluded that the benefit under Notification No. 204/92-Cus was rightfully denied due to the party's failure to fulfill export obligations against the advanced licenses. The duty amount of Rs. 13,59,472 was confirmed, and adjustments were allowed for paid amounts and bank guarantees. Issue 3: Demand for Duty Amount and Interest on Duty-Free Import: The Commissioner held that the charges against the appellants were proven regarding the duty-free import of mulberry raw silk. The duty amount was confirmed, and adjustments were permitted for paid amounts and bank guarantees. A penalty of Rs. 50,000 each was imposed on the proprietors under Section 112(a)(ii) of the Customs Act, 1962. Issue 4: Adjustment of Paid Amounts towards Duty Liability: The appellant contested the recovery of interest under para 128A(iii) of the Exim Policy, arguing it should not be recovered under the Customs Act. The Tribunal found that interest recovery required a specific notice under the Customs Act, and the provisions cited did not apply to the case. Therefore, the recovery of interest was set aside. Issue 5: Imposition of Penalty on the Proprietors: The penalty imposed under Section 112(a)(ii) of the Customs Act was challenged as no goods were proposed for confiscation under Section 111. The Tribunal agreed that the penalty was not justified in the absence of goods liable for confiscation. Additionally, the recovery of interest was deemed inapplicable under the Customs Act provisions, leading to the setting aside of the penalty and interest recovery orders. In conclusion, the Tribunal allowed the appeal, setting aside the penalty and interest recovery orders while providing consequential relief.
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