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TMI Blog2023 (12) TMI 1169X X X X Extracts X X X X X X X X Extracts X X X X ..... (SION) , designed for another and later scheme in the Foreign Trade Policy (FTP), was grafted into the already existing export oriented unit (EOU) scheme in the same policy without any alterations in structuring. Again, the grafting narrowed down the existing latitude in empowering of customs authorities to track usage of duty exempt materials and even to the extent of prescribing tolerance for waste arising in the production process. Once again, as we have noticed supra, the distinction lay in employing of the norms to limit import of raw materials physically at the threshold for the purpose of export promotion scheme while employing it as a template for determining deviations when raw materials are not physically available any longer and, consequently, cannot be accorded the rigour, by subsequent adoption, for presumption of diversion with penal consequence in the case of export oriented units (EOU) in the Foreign Trade Policy (FTP). A case of diversion cannot be made out without reference to the movement of the goods alleged to have been diverted. Recovery, intended by the impugned notifications, of duty liability, for non-conformity with the standard inp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms , as adopted, for monitorial oversight of actual user access to duty exempt privilege. The pleas of appellant-Commissioner fail - appeal of M/s Responsive Industries Ltd is allowed. - MR C J MATHEW, MEMBER (TECHNICAL) AND MR AJAY SHARMA, MEMBER (JUDICIAL) For the Appellant : Shri Prakash Shah and Shri Mihir Mehta, Advocates For the Respondent : Shri S K Mathur, Special Counsel with Shri Bhilegaonkar Deepak, Commissioner (AR) ORDER If a tree falls in a forest and there is no one to hear it, did it make a sound when falling? is an ostensibly unattributed poser that has had many responses both philosophical and physiological but rarely, if at all, in a tax dispute; in the disposal of these appeals before us both in relation to events that prompted the investigation culminating in notice impugned here as well as the foundational logic of the charges urged for our approval of the demand proposed in the notice impugned here the mundane world of tax levy may no longer remain out of that. On behalf of the appellant-assessee, M/s Responsive Industries Ltd, it has been submitted that the case of diversion of polyvinyl chloride (PVC) resin , p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,85,68,924 and ₹ 12,58,94,577 under section 28 of Customs Act, 1962 had not been entirely confirmed in the impugned order, the jurisdictional Commissioner of Central Excise, too, is in appeal with the assessee as respondent as are others alleged to have been involved either in transportation or in arranging the diversion of the impugned goods. 2. We are unable to fathom the stimulus for such meandering investigations, elaborate notice and discursive findings in a dispute which, in effect, stands on allegation of non-conformity with norms that, indisputably, are to be adhered to. Owing to the incremental lightening of oversight on export oriented unit (EOU) under the eponymous scheme in the Foreign Trade Policy (FTP), statutorily acknowledged by the Central Excise Act, 1944 for levy of duties on manufactured goods should that contingency arise, the obligation for restitution of privileges availed by such units, through exemptions accorded under section 5A of Central Excise Act, 1944 and Customs Act, 1962 now rests upon presumption and not on subjective satisfaction as it did earlier. Such units undertake manufacture of goods and, though considered to be factory with du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the domestic market as such and which is of sufficient relevance for us to dwell on presently. The mantra for monetization of procurement in excess of quantity warranted for optimal deployment of inputs for manufacture is the standard input output norms (SION) appended to chapter 4 of Foreign Trade Policy (FTP) within which the products of the appellant are placed, and unquestionably so as is evident from recourse to such in fastening duty liability, enjoining us, at the outset, to visit the propriety of appropriation of the norms to such end in the notice in the light of recourse to presumption adverted supra; for there appears to be an irreconcilability in setting out facts and inferences intended to portray clandestine removal while yet unavoidably yoked to pre-determined formulation of norms for quantification of consequential liability. The fatal flaw, in such dovetailing, lies in the inherent design of the norms to serve both the justification for, and computation of, recovery. That the said absence of distinguishment in the norms between inefficiency and diversion suffices to characterize the formulation for all applications except where it is specifically pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest thereon, the notice also proposed confiscation of the impugned goods as well as 50 nos. trucks and trailers alleged to have been used for transportation. 6. It is surprising to note that, unlike the standard procedure of personal hearing in which only noticees are afforded opportunity of response, a special counsel was authorized to present the case of the show cause notice issuing authority and, notwithstanding which, the investigating agency insinuated itself into the adjudicatory proceedings to oppose cross examination of witnesses sought for by the assessee; that denial thereon was challenged before the Tribunal and, upon disclaiming of jurisdiction, was carried to Hon ble High Court of Bombay before being permitted to be withdrawn vide order dated 3rd June 2019. 7. The foundation of the demand supra has been elaborately set out in the adjudication order informing the issues for disposal that, according to the adjudicating authority, erected on the premise that export-oriented unit (EOU) are obliged to undertake manufacture of goods solely by using exempted material and stood on assumption of diversion inhering in every procurement of raw materials in excess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dropping of demands of ₹ 6,78,85,68,924 and ₹ 12,58,94,557 towards aggregate duties of customs foregone, and ₹55,75,39,599 and ₹ 4,08,13,609 towards duties of central excise , foregone on procurement of polyvinyl chloride (PVC) resin alleged to have been not used and, thereby, presumed to have been diverted into the market in contravention of conditions of exemption availed then, for insufficiency of evidence in the form of statements and documents relied upon and for inconclusiveness of inference from the norms relied upon. 11. Built into the last is the finding of misclassification of export goods, within the groupings of standard input output norms (SION) in Handbook of Procedure Vol II appended to Foreign Trade Policy (FTP), based on procurement and consumption of dolomite used as filler that were inferred from records seized from third parties as well as statements of transporters and employees. It is to be noted that, but for the finding on non-leviability of differential duty in the adjudication order, the allegation of misclassification may have had effect on the quantum of recovery ordered and is, therefore, relevant for scrutin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... daries of notice was, according to him, clearly enunciated by the Hon ble Supreme Court in Commissioner of Central Excise v. Gas Authority of India Ltd [2008(232) ELT 7 (SC)], in Commissioner of Central Excise, Nagpur v. Ballarpur Industries Ltd [2007 (215) ELT 489 (SC)] and in Commissioner of Central Excise, Bangalore v. Brindavan Beverages (P) Ltd [2007 (213) ELT 487 (SC)] as well as by the Tribunal in Hindalco Industries Ltd v. Commissioner of Central Excise, Allahabad [2009 (248) ELT 391 (Tri-Del)]. 14. Though the notice did venture to suggest that the goods cleared to their affiliate in the domestic tariff area (DTA) was not similar to that which had been exported, duty liability sought to be fastened was only to the extent of duty foregone on raw materials deployed for such manufacture and only for not having been put to use in manufacture of export goods. Indeed, the notice went a step further to propose recovery of such duty foregone as is attributable to such raw materials as were deployed even in manufacture that was not exported. Yet, the adjudicating authority preferred to use that signification to infer only ineligibility for concessional rate of duty on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n rule 2 of Customs Valuation (Determination of Value of Imported Goods) Rules, 1988 is apt for adaptation. It was, thus, that the show cause notice contended that the raw materials deployed therein had not been used for the purpose intended in the exemption notification to empower recovery of duty foregone on such procurement which, itself, was dilution of a preceding contention in the notice that the privilege of exemption could not be extended to raw materials used in any goods that were not exported that the adjudicating authority, rightly, discarded without any controverting thereto in proceedings now before us. Nonetheless, either by way of denial of concessional rate of excise duty for being not similar to export goods or by way of recovery of duty foregone on procurement of raw materials used for manufacture of goods that were not similar to export goods, we are required to resolve the dispute over the goods cleared to domestic tariff area (DTA) entity being similar , or otherwise, to exported goods to settle the controversy. 17. Learned Counsel submitted that the conclusion of lack of similarity of domestically cleared goods with exported goods had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty, by limiting the consequence, had, in effect, extended benefit unintended by the scheme in the Foreign Trade Policy (FTP). It was urged that the finding of the Tribunal in similar disputes of the past should also inform the outcome of the proceedings now before us. 19. Though the order of the reviewing authority directing the appellant-Commissioner to challenge confirmation of duty liability in the adjudication order signifies divergent opinion, at least as far as outcomes are concerned, within the tax administration, we, nonetheless, perceive convergence on this one facet of the dispute: that the vinyl flooring and polyvinyl chloride (PVC) leather cloth/textile fabric - plain - cleared to associate undertaking of appellant-assessee during the period of dispute were not similar to the vinyl flooring and polyvinyl chloride (PVC) leather cloth/textile fabric - embossed / printed exported by them. That is not in the least surprising for the adjudicating authority has merely adopted the narrative in the show cause notice which is all the analysis, too, that prompted this element of the challenge now mounted in appeal of jurisdictional Commissioner of Central Excise. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry 2006 of Central Board of Excise Customs (CBEC). We find it untenable, and, especially, where duty liability is contingent upon evaluation of facts in assessment process, that the Central Board of Excise Customs (CBEC) did, without authority of empowerment under Central Excise Act, 1944 or Customs Act, 1962, arrogate to itself enablement of such determination. Being tantamount to directing of assessment, or adjudication, by proper officer to a pre-determined conclusion, such exercise of jurisdiction is beyond the scope of the taxing laws. Even otherwise, the deployment of such an expression in the Rules notified under section 14 of Customs Act, 1962 intended to offer surrogate price for value as essential to assessment when transacted price, and first alternative of identical goods, fails is of such narrow applicability as to be unusable for any other determination including description of goods in any other context. 22. This conclusion funds resonance in the decision of the Tribunal in Meghamani Industries Ltd v. Commissioner of Central Excise, Ahmedabad I [2010 (261) ELT 411 (Tri-Ahmd)] holding that 4. We have considered the submissions made by both the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be used in respect of Notification issued under another enactment. In such cases common parlance or dictionary meaning has to be applied. Therefore, we find this issue has not been dealt with properly by the Commissioner. We could have considered this issue here in the Tribunal but for the fact that there is no examination of the goods in question which have been cleared in the DTA in terms of definition of similarity. In our opinion, in such cases, there has to be examination in respect of each product to show that this product is not similar to the one exported and why benefit of notification is not available to this particular product. In the absence of clear finding in respect of each product, we consider the order would be incomplete. As already observed by us in respect of dyes, there seems to be clarity in view of the fact that demand shown under the heading VAT dyes would give an impression that department has accepted that VAT dyes, OBA and solvent dyes form distinct categories. There is no finding as regards agro-chemicals which are similar and if they are not similar why they are not similar. Commissioner has to consider all these facts and give finding on the issues. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unable to ascertain the extent to which revenue has been purportedly prejudiced, if at all, by the order of the adjudicating authority fastening liability on manufactured goods. It appears to us that, by not having effected such segregation of recovery of duty foregone for each type of alleged misuse in the notice, the reviewing authority had no choice but to seek that liability be fastened on the raw materials irrespective of the detriment occasioned by breach of provisions. This lack of appreciation of cause and effect of the specific breaches also points to lack of application of mind with its consequence to the proposed demand. This is further exacerbated by charging that dissimilar goods are not entitled to absorb duty free raw materials while at the same time restricting the computation of duty foregone only to polyvinyl chloride (PVC) resin and not to other inputs obtained by availing the exemption notification. For those reasons, too, we are compelled to consider the aspect of dissimilar goods in appeal of jurisdictional Commissioner of Central Excise within the urging for recovery of duty foregone on the whole of raw materials that did not get deployed fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility on this score and it appears to us that unwillingness to take that path to its logical conclusion was prompted by unavailability of wherewithal to distinguish the raw materials used for manufacture from that which was diverted which would remain unanswered sufficiently enough to cast doubts on the proposition in the notice itself. 26. Though the appeal of Commissioner of Central Excise CGST, Palghar, on this aspect is stultified by our finding supra that the goods cleared to their group unit did conform to the requirement of similar for entitlement to concessional rate of duty permitted by notification no. 23/2003-CE dated 31st March 2003, the ground of appeal cannot be left unaddressed for its potential to disrupt operation of the scheme. We are at a loss to comprehend the conclusion in the ground of appeal that the consequence of dissimilar goods cleared on discharge of applicable duty, or even if subjected to post-clearance proceedings for being dissimilar, can ever be contemplated for restitution of duty foregone at the time of import by operation of intended use having been breached. Both the exemptions, viz., notification no. 52/2003-Cus dated and notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , undoubtedly, higher recovery realizable from fastening liability on finished goods to preserve the integrity such as it is - of the demand laid at the door of the assessee. 28. However, with the legality of transfer of finished goods to the domestic undertaking of the group on payment of concessional duty having been affirmed supra, the appeal of jurisdictional Commissioner of Central Excise may be allowed cavil only over the amount remaining out of the proposed recovery after exclusion of that attributable to raw materials used in manufacture of finished goods that had been transferred to associate company. The notice proposed recovery of duty foregone on raw materials enumerated in the standard input output norms (SION) , though entitled to be procured under the two notifications for specified purpose, to the extent of being in excess of requirements for manufacture of exported goods and of such raw materials that had availed duty exemption incorrectly owing to non-inclusion in standard input output norms (SION) of the Foreign Trade Policy (FTP). 29. The charge of liability to recovery of duty foregone by subsequent non-utilization for manufacture of eligib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elating to short receipt of a small quantity of raw materials at the premises of the assessee that was made good during investigation, rests on the pillars of procurement of polyvinyl chloride (PVC) resin in excess of that permitted by the norms for the quantity exported and procurement of raw materials not covered by the norms as required for manufacture of permitted goods, both inclusive of the misutilization implicit in having been deployed in goods transferred domestically, and manifest as duties of customs or duties of excise on such quantity that is in excess of plasticizers deployed for manufacture of goods that were exported. 32. For the sake of his convenience in decoding, and categorizing, of the several parallel, and some entangled, threads of evidences presented in support of the proposal in the notice, the adjudicating authority had posed questions and rendered answers to each which, however, does not detract from the simplicity word picture supra. That having been placed on record, may now address the principal cavil of the jurisdictional Commissioner of Central Excise about the impugned order. We make it abundantly clear that we are deciding only on the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recisely lays down what is permitted. Clearing non similar goods to DTA is therefore, clearly beyond the scope of the said scheme. It follows that if any such clearances of non similar goods to DTA has occurred, conditions of exemption notification have been clearly violated. besides ignoring 8. .. (e) The opening paragraph of Notification No. 23/2003 - CE reads as under: In exercise of the powers .. hereby exempts excisable goods produced or manufactured in an export oriented undertaking or .. (STP) Unit and brought to any other place in India in accordance with the provisions of Export and Import Policy (emphasis supplied) and subject to the relevant conditions specified Attention is invited to the words - in accordance with the provisions of Export and Import Policy [i.e. the FTP] . A con-joint reading of the EOU Scheme, the Notification No. 23/2003-CE and the FTP clearly brings to the fore that the said Notification is applicable only to those goods that are allowed to be brought into DTA in accordance with the FTP. This fact has remained unappreciated by the Adjudicating Authority. Para 6.08 (a) of the FTP requires the fulfillment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (f) From para 44c of the Show Cause Notice the quantum of PVC Resin and Plasticizers procured by the assessee is reproduced below - xxxxxx For example, if the assessee claims that during the year 2010-11 they had consumed entire quantity of 5922925 Kgs of duty-free Plasticizers for manufacture of PVC Leather Cloth for export and DTA, then as per SION, the maximum quantity of duty-free PVC Resin allowed to be consumed would be = [5922925 Kgs x 0.587/0.405 (refer SION for PVC Leather Cloth)] = 8584585 Kgs only. The procurement of PVC Resin in excess of the above quantity therefore becomes dutiable. (g) The use of Plasticizer has been confirmed by the following employees of the assessee - Shri Sharad Chandra vide his Statement dated 25-08-2015 [RUD-B48], Shri R. K. Parsania vide his Statements dated 23-11-2015 [RUD-B77] and 28-12-2015 [RUD-B81] and also by the assessee vide letter dated 31-07-2015. The Plasticizer is the chemical that gives flexibility to the finished product. Lesser the Plasticizer, more rigid the product. (h) The argument put forth by the assessee is that SION provides for maximum quantity of inputs that can be used but there was no re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal of jurisdictional Commissioner of Central Excise also contending that these evidence comprising statements and documents, incorporated in the notice for discrediting the records maintained by the importer and even if corroborative only, had been disdained rather casually by the adjudicating authority, it would be appropriate for us to subject that finding to the test of fact and law. 36. Before doing so, it behoves us to tarry awhile on the recurrent urging of Learned Special Counsel for the appellant-Commissioner and Learned Authorized Representative appearing for respondent-Commissioner to draw into this proceedings an incident of 21st August 2014 concerning the appellant-assessee which eventually was carried to the Customs Central Excise and Service Tax Settlement Commission under section 127B of Customs Act, 1962. Conscious of the finality of order issued by the Commission in terms of section 127J of Customs Act, 1962, we steer clear of any inferences, relating to alleged acts of omission and commissions, that the representatives of the Commissioner of Central Excise desired to impress upon us. We, however, are constrained to bear this in mind while evaluating the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... means, law will cease to be the armor of the agents of the Republic only to be distressed by no less brutality than by those alleged to have broken those very laws. We, therefore, discard the evidentiary weight of the statements relied upon in the notice, that the adjudicating authority held to be unreliable and which is cause of grievance in the appellant-Commissioner, for not being amenable to disentangling from the matter decided by Customs Central Excise and Service Tax Settlement Commission. 38. As far as the pen drives are concerned, it has been contended by Learned Counsel for appellant-importer that the pre-requisite of forensic authentication had not preceded the capture of information allegedly contained therein and, thereby, depriving resort thereto of any credibility whatsoever notwithstanding any statement of acceptance on the part of the persons from whom these were recovered and which has been the substance of contention by Learned Special Counsel for appellant-Commissioner. Our perusal of the notice leads to the inevitable conclusion that the information purportedly sourced from the pen drives has not been deployed for computation of differential duty liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nutiae of the scheme in the Foreign Trade Policy (FTP) along with the condition in the operationalizing exemption notifications and that the records claiming such utilization was a sleight intended to throw the jurisdictional authorities off the scent of this elaborately devised diversion effected by the respondent-assessee. He cited the admission by the key personnel of the assessee that norms had not been followed, that sales made to GEE TEE was typical of the commercial trade that the respondent- assessee was actually engaged in and that this was further amplified in the statements of the transporters. 41. Taking us through the grounds adduced by appellant-Commissioner, he argued that the adjudicating-Commissioner had failed to appreciate the intent of the scheme from a holistic perspective in ruling on the want of evidence to support the allegation of diversion. He echoed the criticism in the ground of appeal about the acceptance by the adjudicating-Commissioner of the contentions of the assessee without considering the proposition in the notice that, with non-conformity to the norms along with manipulation of records, onus of disproving diversion vested with the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... U who claims exemption under the said notifications to prove that the inputs procured by them duty-free were used for the intended purpose. (b) The noticee/assessee has executed a Bond undertaking to comply with the provisions of the Customs Act, 1962, the Central Excise Act, 1944, the conditions of the said notifications and the FTP and to pay the appropriate duty on their failure to do so. (c) Therefore, it is for the assessee to satisfy the proper authority that the duty-free inputs procured by them were used in a manner as provided under the said notification and the FTP. (d) In their reply to the Show Cause Notice, it has been contended by the assessee that the Revenue has failed to prove diversion of duty-free inputs. This contention has been accepted by the Adjudicating Authority without evaluating the evidences in the Show Cause Notice and without considering the Revenue's submission that the onus was on the assessee to prove otherwise. The Adjudicating Authority has completely failed to appreciate the crux of the case. It is logically evident that inputs procured way in excess of the finished goods have been obviously diverted. Furthermore, enough cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Leather Cloth was manufactured maximum by the assessee. As per SION, for the manufacture of 1.000 Kg of PVC Leather Cloth, the maximum quantity of duty-free inputs - PVC Resin and Plasticizers, allowed is 0.587 Kg and 0.405 Kg, respectively. (f) From para 44c of the Show Cause Notice the quantum of PVC Resin and Plasticizers procured by the assessee is reproduced below - xxxxxx For example, if the assessee claims that during the year 2010-11 they had consumed entire quantity of 5922925 Kgs of duty-free Plasticizers for manufacture of PVC Leather Cloth for export and DTA, then as per SION, the maximum quantity of duty-free PVC Resin allowed to be consumed would be = [5922925 Kgs x 0.587/0.405 (refer SION for PVC Leather Cloth)] = 8584585 Kgs only. The procurement of PVC Resin in excess of the above quantity therefore becomes dutiable. (g) The use of Plasticizer has been confirmed by the following employees of the assessee - Shri Sharad Chandra vide his Statement dated 25-08-2015 [RUD-B48], Shri R. K. Parsania vide his Statements dated 23-11-2015 [RUD-B77] and 28-12-2015 [RUD-B81] and also by the assessee vide letter dated 31-07-2015. The Plasticizer is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the market unauthorizedly. Indubitably, the mandate of the exemptions is actual use by the importer and, doubtlessly, the availment is predicated by adherence to norms as ceiling of entitlement to duty exemption. The former, connoting illegality of use by another entity in which the importer is complicit through deliberate transfer of possession, is distinguishable from the latter which may not exclude the possibility of sub-optimal manufacturing efficiency. In the notice which, in the urgings on behalf of appellant-Commissioner, is pressed for adoption, there is no evidence of usage by another entity; nor is there anything to suggest that such misuse by another can be gleaned from the circumstances. Even if the importer has been found wanting in adhering to the norms, a consequential presumption of misuse, in contradistinction with inefficiency, must necessarily rest upon unearthing of some destination for the goods impugned in the appeal. The lack thereof circumscribes the extent of detriment that could, possibly, be fastened on the importer. 45. The dichotomy supra is apparent in the evolution of the notification itself. In the original version of 2003, neither of the not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty afforded by, and evolution of, the exemption notifications issued by the Government of India in Department of Revenue to give effect to export oriented unit (EOU) scheme in chapter 6 of the Foreign Trade Policy (FTP) emanating from the Government of India in the Department of Commerce. 46. The two notifications are twinned, so to speak, in the privileges, conditions and prescriptions. We, therefore, restrict ourselves to notification no. 52/2003-Cus dated 31st March 2003 as representative of waiver of levy on procurement of goods capital equipment, consumables and raw materials required for manufacture of goods, enumerated in the letter of permission (LoP) issued by jurisdictional Development Commissioner, for export, and even clearance of like or similar goods into domestic tariff area (DTA) on payment of appropriate duties of central excise, in fulfillment of export obligation , i.e., being net foreign exchange (NFE) positive over five year period as prescription for renewal. While there is no ceiling, either under the policy or in terms of either notification, on the quantity or value of such procurement on duty foregone basis, deployment in manufacture of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ree months from the date of self-declared norms and the unit shall undertake to adjust the self-declared/ ad-hoc norms in accordance with norms as finally fixed by the Norms Committee further unit. The ad-hoc norms will continue till such time the final norms are fixed by the Norms Committee. . identically in condition 3(d)(I)(ii) of first paragraph in notification no. 52/2003-Cus dated 31st March 2003 and in condition 4 (a)(ii) of first paragraph in notification no. 22/2003-CE dated 31st March 2003 conceives of such deployment and resort to measure of efficiency in use of these. The purpose of these exemptions is to give effect to the scheme in the Foreign Trade Policy which has not envisaged restriction on deployment of raw materials and it is merely the unwieldiness in exhaustive enumeration of each and every conceivable article of manufacture that appears to have prompted prescription limited to that most commonly known without intruding upon management of manufacturing facility. The assumption of the tax authorities is not echoed in the notifications or the scheme and must be discarded without any let or hindrance. Thus, we find that, in the two-pronged approach to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed export obligation ; for chapter 6 of Foreign Trade Policy (FTP), those very norms were to assist officers of customs in post facto monitoring of efficiency of production. It does not bear repetition that the contents of an exemption notification does not have to be the authority for interdiction of smuggling by diversion of duty exempt material; the provisions of Central Excise Act, 1944 and Customs Act, 1962 did already afford jurisdiction for enforcement. 49. The question that begs answer is the extent to which these norms , borrowed for its empirical acceptability and contextual validity, can be stretched to presume inclination to misuse exemption intended for fulfillment of net foreign exchange (NFE) earning. As we have noticed supra, standard input output norms (SION) , designed for another and later scheme in the Foreign Trade Policy (FTP), was grafted into the already existing export oriented unit (EOU) scheme in the same policy without any alterations in structuring. Again, as we have noticed supra, the grafting narrowed down the existing latitude in empowering of customs authorities to track usage of duty exempt materials and even to the extent of pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that of ceiling or maximum requirement for each of the raw materials so enumerated as corresponding to a specific output. Therefore, recovery of duty in the event of excessive usage in comparison with actual production is also limited to each of the raw materials on the logical premise of non-optimal deployment which the exchequer is not obliged to subsidize. The ascertaining of compliance with the second limb, of condition 3(d) of first paragraph of notification no. 52/2003-Cus dated 31st March 2003, as well as in condition 4(a) of first paragraph in notification no. 22/2003-CE dated 31st March 2003 is limited to each of the raw materials in isolation from the rest of the mix. That, then, should be the test for allowing the relief sought by appellant-Commissioner. 51. The extent of exports is not in dispute. The entitlement in procurement of polyvinyl chloride (PVC) resin to the extent effected by the unit is not in dispute and it is not in dispute that the production was not proportional to such quantity. The contention of the appellant-Commissioner rests upon the procurement of plasticizer not being in proportion with procurement of polyvinyl chloride (PVC) resin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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