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TMI Blog2022 (11) TMI 1015X X X X Extracts X X X X X X X X Extracts X X X X ..... being fully aware of this position, has failed to consider the said letter while adjudicating the case and passing the impugned order. Section 111(m) deals with intentional misdeclaration and mis-match between what has been declared on the Bill of Entry and what has actually been imported by the importer - In the facts of the present case, there is absolutely no misdeclaration between the description and / or value declared in the Bill of Entry and the goods actually imported by petitioner, both being diamond studded gold and silver jewellery. Accordingly, question of invoking Section 111(m) of the Customs Act does not arise at all in the present case. It is also noteworthy that there is no such requirement under the SEZ Act. Alleged Violation of Rule 29(7) of the SEZ Rules - HELD THAT:- There is no allegation in the SCN and / or no finding in the impugned order with respect to any alleged violation of Rule 29(7) of SEZ Rules. This entire issue was raised for the first time in the affidavit dated 25th November 2009 filed by respondent no.2 before this Court. It is settled law that a show cause notice is sacrosanct and all allegations must find mention therein for an assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner of Customs, The Secretary, Ministry of Commerce Industry, The Development Commissioner SEEPZ Special Economic Zone M/s. Gold Star Jewellery Designs Pvt. Ltd. Versus Union of India, The Commissioner of Customs, The Assistant Commissioner of Customs, The Secretary, Ministry of Commerce Industry, The Development Commissioner SEEPZ Special Economic Zone M/s. Jewel Art Versus Union of India, The Commissioner of Customs, The Assistant Commissioner of Customs, The Secretary, Ministry of Commerce Industry, The Development Commissioner SEEPZ Special Economic Zone M/s. Jewelex India Pvt. Limited versus Union of India, The Commissioner of Customs , The Assistant Commissioner of Customs, The Secretary, Ministry of Commerce Industry, The Development Commissioner SEEPZ Special Economic Zone M/s. Bombay Jewellery Manufacturers, M/s. Bombay Jewellery Manufactures Pvt. Ltd. Versus Union of India , The Commissioner of Customs , The Assistant Commissioner of Customs , The Secretary, Ministry of Commerce Industry, The Development Commissioner SEEPZ Special Economic Zone M/s. M.K. Versus Union of India , The Commissioner of Customs, The Assistant Commissioner of Cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. If the answer is yet then what will be the further orders. Therefore, for convenience, we are taking up Writ Petition No.2003 of 2009 as lead petition. 3 Petitioner is engaged in the manufacture and export of gold, platinum and silver jewellery. Its unit is located within the Santacruz Electronic Export Processing Zone ( SEEPZ ). SEEPZ is a notified export processing zone and is covered by the Special Economic Zone Act, 2005 ( SEZ Act ). Petitioner was granted a Letter of Permission ( LOP ) dated 17th March 2000 by the Joint Development Commissioner, SEEPZ ( DC ) being a license to manufacture and export all kind of jewellery plain as well as studded. Upon coming into force of the SEZ Act, in terms of the proviso to Section 15(1) thereof, existing units did not require approval under the SEZ Act. 4 Prior to the amendment to the SEZ Act, imports into the SEZs were governed by the provisions of the Foreign Trade Policy, 2002 ( FTP ) issued under the Foreign Trade (Development Regulation) Act, 1992 ( FTDR Act ) and erstwhile Chapter XA of the Customs Act, 1962 ( Customs Act ). The SEZ Act came into force on 10th February 2006 to provide for the establishment, development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nments of finished unsold jewellery were imported by petitioner. Petitioner states that it manufactures branded jewellery for international buyers and exports its entire production. Petitioner states that when some of the jewellery which is exported remains unsold, for various reasons, the said foreign buyers resell the said jewellery back to petitioner based on oral / written agreements and petitioner reimports the said jewellery on an outright purchase basis. The jewellery so imported is melted and used for remaking of fresh jewellery with or without additions. 6 However, petitioner is not merely importing finished jewellery as its only raw material for the manufacturing process and the majority of its raw material, imports comprise of gold and other precious metals in its raw form. Petitioner states that only 16.70% of its total imports are reimported finished jewellery which are repurchased from overseas buyers and is the subject matter of the present dispute. 7 In the course of its business, petitioner imported a consignment of gold and silver jewellery for remaking vide Bill of Entry No.100856 dated 9th February 2009 ( Bill of Entry ) declaring the same as Gold and Sil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d questions such as whether the (SEZ) unit has the approval of the competent authority to import / re-melt and export the imported finished jewellery. The DC (incharge of the SEEPZ) by his letter dated 22nd May 2009 addressed to respondent no.2 inter alia clarified and confirmed that petitioners were eligible to import the goods forming a part of the Consignment. 11 Respondent no.3, thereafter issued a Show Cause Notice dated 14th July 2009 calling upon petitioner to show case as to why the consignment should not be confiscated under Section 111(d) and (m) and penalty under Section 112 and 114A of the Customs Act be not imposed. This was followed by an Addendum / Corrigendum dated 21st July 2009 to the show cause notice issued by Respondent No.3. Another Addendum / Corrigendum dated 18th August 2009 to the show cause notice was issued by Respondent No.3 whereby amendments to the show cause notice were effected and now sought to include Sections 28, 28AB of the Customs Act. 12 Petitioner filed this writ petition on 4th September 2009 inter alia seeking an order to set aside or quash the show cause notices. Affidavit/s in reply to the petition were filed by the Deputy DC on 10t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to even issue the show cause notice. 16 Respondent No.2 vide its order dated 19th August 2010 ( Impugned Order ) confirmed the allegations made against petitioner in the show cause notice thereby imposing: A. In respect of goods imported vide Bill of Entry No.100856 dated 09.02.2009 (i) A penalty of Rs. 50,000/- and (ii) Redemption fine of Rs.1,50,000/- and (iii) Duty of Rs. 61,200/-. B. In respect to goods imported in the past: (i) Confiscation of goods cleared in the past alongwith fine of Rs.80,00,00,000/- (ii) Recovery of duty of Rs.43,77,44,781/- alongwith applicable interest (iii) Penalty of Rs. 43,77,44,781/-. 17 The petition was subsequently amended by way of a chamber summons and the aforesaid reply to the show cause notice and impugned order was brought on record and the challenge in the petition was modified to include a challenge to the impugned order as well. 18 The short point involved is whether petitioner is permitted to import new/unused jewellery for remaking after melting the same. As aforesaid, Customs say no , while the DC says yes . 19 At the outset, Mr. Kantharia submitted that Rule has been iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al on record consisting of various documents and statements recorded under Section 108 of the Customs Act and the reply of petitioner to the show cause notice. Petitioner has not alleged violation of principle of natural justice. Petitioner has not alleged any breach of fundamental rights, there is no challenge to the virus of the statute. Thus, this Court may not exercise its extra-ordinary Writ Jurisdiction under Article 226 of the Constitution of India inter alia in view of the alternate and efficacious remedy of statutory appeal available to petitioner under the provisions of the Customs Act. Courts have consistently taken the view that when there is an alternate remedy available, judicial prudence demands that the Court refrains from exercising its jurisdiction under constitutional provisions. Mr. Kantharia concluded, on the issue of alternate remedy that in view of the settled position in law as laid down by the plethora of judgments of the Hon ble Supreme Court of India and other High Court on the issue of alternate and efficacious remedy of statutory appeal, the petition deserves to be disposed inter alia with directions to petitioner to pursue the alternate and efficaci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brought from a place outside India shall be liable to confiscation :- (d) any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force; (m) any goods which do not correspond in respect of value or in any other particular] with the entry made under this Act or in the case of baggage with the declaration made under section 77 2[in respect thereof or in the case of goods under transhipment, with the declaration for transhipment referred to in the proviso to sub-section (1) of section 54; SECTION 112. Penalty for improper importation of goods, etc. -Any person,- (a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act. SECTION 114. Penalty for attempt to export goods improperly, etc.-Any person who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 113, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reon under section 28AB and penalty equal to twenty-five per cent. of the duty specified in the notice or the duty so accepted by such person within thirty days of the receipt of the notice.] (2) The proper officer, after considering the representation, if any, made by the person on whom notice is served under subsection (1), shall determine the amount of duty or interest due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined: [Provided that if such person has paid the duty in full together with interest and penalty under sub-section (1A), the proceedings in respect of such person and other persons to whom notice is served under sub-section (1) shall, without prejudice to the provisions of sections 135, 135A and 140, be deemed to be conclusive as to the matters stated therein: Provided further that, if such person has paid duty in part, interest and penalty under sub-section (1A), the proper officer shall determine the amount of duty or interest not being in excess of the amount partly due from such person.] [(2A) Where any notice has been served on a person under sub-section (1), the prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he proper officer, but for this sub-section. (2C) The provisions of sub-section (2B) shall not apply to any case where the duty or the interest had become payable or ought to have been paid before the date on which the Finance Bill, 2001 receives the assent of the President*.] (3) For the purposes of sub-section (1), the expression relevant date means,- (a) in case where duty is not levied, or interest is not charged, the date on which the proper officer makes an order for the clearance of the goods; (b) in a case where duty is provisionally assessed under section 18, the date of adjustment of duty after the final assessment thereof; (c) in a case where duty or interest has been erroneously refunded, date of refund; (d) in any other case, the date of payment of duty or interest.] Mr. Nankani s submissions : 22 Under Section 111 of the Customs Act goods which are liable for confiscation are those which have been imported or attempted to be imported contrary to any prohibition under the Customs Act or any other law for the time being in force. In connection therewith it lists out various scenarios how the goods could be improperly impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Entry and what has actually been imported by the importer. In the present case, there is no mis-declaration whatsoever and, therefore, the question of Section 111(m) of the Customs Act being invoked does not arise. 22.5 Respondent no.2 has proceeded on an erroneous interpretation and construction of Section 111(m) of the Customs Act and has invoked the said sub-section on the ground that (a) petitioner has filed Bill of Entry and imported goods which does not find mention as raw materials in the LOP issued by the DC and (b) petitioner ought to have filed a declaration in terms of Rule 29(7) of the SEZ Rules for reimporting goods which were earlier exported by it. If petitioner had not complied with the requirements of the LOP issued by respondent no.5 DC, respondent no.5 would have taken action under the provisions of SEZ Act and SEZ Rules framed thereunder. Not even a notice has been issued to petitioner for alleged violation of LOP Rules and on the contrary, DC has filed an affidavit stating that petitioner did nothing wrong. 22.6 As regards the alleged violation of Rule 29(7) of the SEZ Rules, there is not even a reference thereto in the show cause notice. The show ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions to petitioner that they shall not dispute the identity of the seized jewellery and that the Department may continue with the adjudication of show cause notice, but shall not to give effect to the Adjudication Order during the pendency of the writ petition. (d) The Customs Department has correctly exercised jurisdiction and the powers under the provisions of the Customs Act, 1962. Petitioner has not submitted a full self-declaration, while filing Bills of Entry inter-alia whether the jewellery being imported is New or Old or out of fashion/trend or scrap jewellery or manufactured and exported by it or re-import of self-exported jewellery because of payment issues suffered by petitioner. The declaration in the import invoice and the bill of entry is silent on these aspects. Further, as brought out in the investigations, petitioner, by its admittance, resorted to route the goods through remaking with full awareness that the self-exported jewellery attracted the provisions of Rule 29(7) to hoodwink the Customs and committed gross willful violations of the SEZ provisions read with Section 46(4) of the Customs Act and Rule 11 of Foreign Trade (Regulation) Rules, 1993. (e) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Z Rules, is to the tune of Rs.43,77,44,781/-. Since petitioner was not entitled for any exemption from customs duties on these consignments under SEZ Rules, a duty amount of Rs.43,77,44,781/- alongwith an interest as applicable is recoverable from petitioner in terms of provisions of proviso to Section 28 and Section 28(A) (B) respectively, of the Customs Act, read with Rule 25 and Rule 34 of the SEZ Rules. That the 1160 consignments of finished jewellery, imported by petitioner during 1st April, 2005 to 6th March 2009, and the consignment under seizure, were/are imported in violation of the provisions of para 4A 21 of the Foreign Trade Policy in vogue at the relevant time. These goods, therefore, were liable to confiscation under the provisions of Section 111(d) and (m) of the Customs Act and for the acts of omission and commission, petitioner is also liable to penal action under Section 112(a) of Customs Act. (h) Petitioner has violated Section 28 of the Customs Act. Moreover, Instruction No.6 dated 3rd August 2006 issued by the Ministry of Commerce, categorically mentions that the provisions of Sections 20, 21, and 22 of the SEZ Act are not operationalized. Hence, so long as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Authority in terms of Section 14 of the SEZ Act read with Rule 19 of SEZ Rules in pursuance of petitioner s Application thereof, cannot be enlarged to include the process of operations and the list of goods and raw materials, which were not mentioned or intimated in their application. The goods in the instant case were brand new jewellery in show-room condition with respective bar codes and tags affixed on it. The assessment of import and domestic procurement was on the basis of self-declaration. (m) The Adjudicating Authority has given categorical findings of facts that the unit s declaration in the Bill of Entry was not true and lacked full particulars. The unit had also not declared the true nature of the goods in the Bill of Entry or the invoice as to whether, the jewellery being imported, was new or old or self-exported or scrap jewellery. This is also evident from the statement of the Manager EXIM, of the unit, who had deposed that the consignment imported vide Bill of Entry No.100856 dated 9th February 2009, was imported as scrap jewellery. However, no such particulars found mentioned in the Bill of Entry or the corresponding Invoice. On the contrary, on physical exam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e imposed on the importer irrespective of the fact whether mens rea or knowledge or malafide exists or not. In terms of Section 112 (a) of the Customs Act, the importer shall be liable to penal action for the acts of omission and commission which had rendered the goods liable to confiscation. Under the circumstances, the Adjudicating Authority has correctly held that the unit was liable to penal action under Section 112 (a) of the Customs Act. (q) The Adjudication authority has arrived at findings of facts from the records submitted by the unit during investigation, that they had imported 1160 consignments of finished jewellery during the period April, 2005 to March, 2009. The total assessable value of these consignments was Rs.276,43,07,644/- and the exemption from the Customs duty availed under the provisions of SEZ Rules, is to the tune of Rs.43,77,44,781/-. The unit claimed the subject goods to be scrap jewellery used as part of raw material for the manufacture of jewellery. That claim is devoid of merit. The unit by their own submissions and admittance has accepted that they never declared in any of the documents, including the import documents, filed for the clearance of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a without payment of duty, taxes or cess or procure from Domestic Tariff Area after availing export entitlements or procure from other Units in the same or other Special Economic Zone or from Export Oriented Unit or Software Technology. Park unit or Electronic Hardware Technology Park unit or Bioechnology Park unit, all types of goods, including capital goods (new or second hand), raw materials, semi-finished goods, (including semi-finished Jewellery) component, consumables, spares goods and materials for making capital goods required for authorized operations except prohibited items under the Import Trade Control (Harmonized System) Classifications of Export and Import Items : (2) In case of any doubt as to whether any goods or services are required by a Unit or Developer for authorized operations or not, it shall be decided by the Development Commissioner. xxxxxxxxxxxxxx (10) The assessment of imports and domestic procurement by a Developer or a Unit, shall be on the basis of self-declaration and shall not be subjected to routine examination except in case of procurement from the Domestic Tariff Area under the claim of export entitlements : Provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Bill of Entry, original Bill of Entry shall be retained by the authorized officer and the remaining copies shall be handed over to the authorized representative of the Unit for presenting at the airport detention counter where goods shall be allowed clearance after receiving the original detention receipt alongwith the authorization from the Unit, by making entries in the warehouse register and detention receipt register; (vi) after release, the goods shall either be moved to the Unit under the Customs escort or shall be delivered to the Custodian or authorized representative of the Unit after sealing; (vii) the goods shall be allowed to be taken to the Unit after verification of marks and number of packages by the Authorized Officer at the gate of entry of the Special Economic Zone. xxxxxxxxxxxxxx (7) A Unit may import the goods exported by it which are either found to be defective or damaged by the overseas buyer or have not been taken delivery of by the overseas buyer or when the payment is not forthcoming from the buyer as per agreed schedule after having taken delivery of goods or when buyers return goods due to change of fashion and other market ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r import for authorized activity of manufacture of jewellery under Rules 27 (1) of the SEZ Rules. 28 The definition of raw material under Rule 2 (u) of the SEZ Rules, also means any material or goods which are required for the manufacturing process (including catalysts for initial charge), packing material, whether they have actually been previously manufactured or are processed or are still in a raw or natural state. In view of Rule 2 (u) of the SEZ Rules, read with Rule 27 (1) of the SEZ Rules, there is no restriction on the import of jewellery for authorized operations as even previously manufactured items, viz., finished jewellery earlier exported in the present case, can be imported into a SEZ as raw material . The definition of raw material as per Rule 2 (u) of the SEZ Rules is reproduced hereunder: (a) basic materials which are needed for the manufacture of goods, but which are still in a raw, natural, unrefined or unmanufactured state, and (b) any materials or goods which are required for the manufacturing process (including catalysts for initial charge), packing material, whether they have actually been previously manufactured or are processed or are still ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or provide service activities as authorized operations by the SEZ unit. The LOA issued to the units, therefore, cannot be restricted to any one or more of the activities covered under the definition of manufacture as given in Section 2(r) of the SEZ Act, 2005, which reads as under : Manufacture means to make, produce, fabricate, assemble, process or bring into existence, by hand or by machine, a new product having a distinctive name, character or use and shall include processes such as refrigeration, cutting, polishing, blending, repair, remaking, re-engineering and includes agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture, viticulture and mining . I therefore say and submit that in terms of Sec.2 (r) of the SEZ Act, 2005, manufacture among other things, mean repair, remaking, re-engineering, etc. 9. I say that the definition of manufacture given in the SEZ Act, 2005 prevails over other definitions given in any other statue and the same shall have no relevance in interpreting the terms defined and the meaning given in the SEZ Act, 2005. The definition of manufacture given in the SEZ Act shall prevail over oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith Rule 27 (1) of the SEZ Rules, there is no restriction on the import of jewellery for authorized operations. 13. I further say and submit that in the clarification given by the Board for Approval in the case of M/s. Yash Jewellery Pvt. Ltd., the Board had clarified that repair can be considered as covered under manufacture in terms of Section 2(r) of the SEZ Act, 2005 and import for repair of finished products manufactured elsewhere is allowed in the SEZ Act, 2005 and Rules. Thus, it is evidence from the clarification given that repairs can be considered as covered under manufacture, irrespective of where the items have been manufactured and the second part of the clarification makes it very clear that repairs even for finished products manufactured elsewhere is permitted under SEZ Act, 2005 and Rules and thereby giving a wider connotation to the meaning of the Repair under definition of manufacture in the SEZ Act, 2005. xxxxxxxxxxxxxx 16. I further say and submit that Para 4(A.21) of the Foreign Trade Policy is not applicable to SEZ units, as Chapter VII of the Foreign Trade Policy very clearly states that the Policy relating to the Special Economic Zone is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of these petitions. II. Section 111(m) of the Customs Act : 33 Section 111 (m) of the Customs Act provides : SECTION 111. Confiscation of improperly imported goods, etc. - The following goods brought from a place outside India shall be liable to confiscation:- (m) [any goods which do not correspond in respect of value or in any other particular) with the entry made under this Act or in the case of baggage with the declaration made under section 77 [in respect thereof, or in the case of goods under transhipment, with the declaration for transhipment referred to in the proviso to sub-section (1) of section 54]; Respondent no.2 has completely failed to appreciate the true intent and purport of Section 111(m) of the Customs Act while invoking the same. For invoking Section 111(m) of the Customs Act, the declaration made in an entry under the Customs Act, which is the Bill of Entry filed under Section 46 of the Customs Act, must fail to correspond, in value or any other particular, to the goods actually imported by petitioner. Accordingly, in our view, Section 111(m) deals with intentional misdeclaration and mis-match between what has been declared on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i 2003 (151) E.L.T. 254 (S.C.) where paragraph 12 reads as under : 12. As regards the contention that the appellants were not entitled to the benefit of the exemption notification as they had misrepresented to the licensing authority, it was fairly admitted that there was no requirement, for issuance of a licence, that an applicant set out the quantity or value of the indigenous components which would be used in the manufacture. Undoubtedly, while applying for a licence, the appellants set out the components they would use and their value. However, the value was only an estimate. It is not the respondents' case that the components were not used. The only case is that the value which had been indicated in the application was very large whereas what was actually spent was a paltry amount. To be noted that the licensing Authority having taken no steps to cancel the licence. The licensing authority have not claimed that there was any misrepresentation. Once an advance licence was issued and not questioned by the licensing authority, the customs authorities cannot refuse exemption on an allegation that there was misrepresentation. If there was any misrepresentation, it was for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also in the course of arguments sought to be contended that petitioner would benefit from such acts. Apart from the fact that there is no embargo of any nature whatsoever on the import of the Consignment and that no benefit whatsoever has accrued to petitioner, petitioner submitted that it has exported 100% of its production and that was not contested. 35 In view of the above, respondent no.2 has completely erred in invoking Section 111(m) of the Customs Act. III. Section 28 of the Customs Act : 36 Apart from making sweeping and bald statements both in the show cause notice as well as in the impugned order, respondent no.2 has not dealt with the issue of demanding customs duty under Section 28 of the Customs Act at all. Respondent no.2 has arbitrarily invoked Section 28 that too by way of a Corrigendum to the show cause notice, without even dealing with as to how violations, if any, of provisions of SEZ Act or SEZ Rules, disturbs the blanket exemption available to petitioner in terms of Section 26 of the SEZ Act, the relevant extract of which is reproduced hereunder : (1) Subject to the provisions of sub-section (2), every Developer and the entrepreneur shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellation of letter of approval to entrepreneur. (1) The Approval Committee may, at any time, if it has any reason or cause to believe that the entrepreneur has persistently contravened any of the terms and conditions or its obligations subject to which the letter of approval was granted to the entrepreneur, cancel the letter of approval: Provided that no such letter of approval shall be cancelled unless the entrepreneur has been afforded a reasonable opportunity of being heard. (2) Where the letter of approval has been cancelled under subsection (1), the Unit shall not, from the date of such cancellation, be entitled to any exemption, concession, benefit or deduction available to it, being a Unit, under this Act. (3) Without prejudice to the provisions of this Act, the entrepreneur whose letter of approval has been cancelled under sub-section (1), shall remit, the exemption, concession, drawback and any other benefit availed by him in respect of the capital goods, finished goods lying in stock and unutilised raw materials relatable to his Unit, in such manner as may be prescribed. A proposed unit submits application for a SEZ LOP under Section 15(1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority of India (2008) 232 ELT 7 SC. Paragraphs 9 and 10 of the said judgment read as under : 9. If the case of the Department itself in the show-cause notice was that lean gas is a by-product, then we fail to understand as to the basis for denying the benefit of MODVAT credit to the assessee during the relevant period (October 1998 to January 1999) under Rule 57-D. As repeatedly held by this Court, show-cause notice is the foundation of the demand under the Central Excise Act and if the show-cause notice in the present case itself proceeds on the basis that the product in question is a by-product and not a final product, them, in that event, we need not answer the larger question of law framed hereinabove. 10. On this short point, we are in agreement with the view expressed by the Tribunal that nowhere in the show-cause notice it has been alleged by the Department that lean gas is a final product. Ultimately, an assessee is required to reply to the show-cause notice and if the allegation proceeds on the basis that lean gas is a by-product, then there is no question of the assessee disputing that statement made in the show-cause notice. (b) Commissioner of Customs V/s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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