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TMI Blog2003 (6) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... et in it. 2. The appellants claimed exemption under Notifications 177/94-Cus. and 196/87-Cus. 3. The Notification 177/94 provided inter alia in Clauses 8 and 10 thereof as follows :- "(8) Gem and jewellery, including the rejects, manufactured in the said Zone, shall not be brought to any other place in India (that is to say the Domestic Tariff Area) for whatever purpose : Provided that scrap, dust or sweepings of gold arising in the manufacturing process may be forwarded to the Government Mint by the importer for conversion into standard gold bars and return to the said Zone in accordance with the procedure specified by the Collector of Customs in this regard; (10) The Assistant Collector of Customs may allow, subject to the fulfilment of conditions specified in this notification, the loss of percentage of gold specified in column (2) of the Table given below during the manufacture of jewellery of the description specified in the corresponding entry in column (1) of the said Table. TABLE Description of jewellery Percentage of gold wastages (1) (2) A. Plain gold jewellery articles un-studded with minimum valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it to put all the dust/slurry shown as on the date of stock taking, to refining process to recover the entire amount of gold which was supposed to be recovered, latest by 29-2-96. As soon as the recovery of pure gold taken place, the same may be informed to the Bond Preventive Officer of your Unit and got quantity of gold verified and certified, by him. If your Unit is unable to comply with the recovery action within the above stipulated time, it will be presumed that no gold is recoverable from the dust/slurry available with you, and action to recover duty on the shortage of gold will be taken against your Unit. Yours faithfully, Sd/- (M.M. DUBEY) ASSTT. COMMISSIONER OF CUSTOMS SEEPZ 2-2-96" 5. The department i.e. R I Division of the Bombay Custom House, issued a show cause-cum-demand notice under Section 28 of the Customs Act alleging inter alia that the appellants have failed to maintain wastage accounts register and claimed duty. In fact in Paragraphs 5(i)(ii)(iii) and (iv) of the said notice, the department specifically claimed that there was a failure to keep proper accountal of the said rejects etc. as referred to in Clauses 8 and 10 of the above said notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt of Bombay in the writ petition initiated by some of the appellants, had directed the CEGAT to dispose of the appeal within four months. Hence we have taken up these appeals. 10. Learned JDR, Shri A. Awasthi, appeared for the department. 11. Shri V. Sridharan arguing for the appellants contended that when the inspection of the appellants' premises having been undertaken on 11-11-1995 and a further letter having been issued on 2-2-1996 for non-accountal of the imported gold, there could not have been invocation of the larger period of limitation by the show cause notice dated 13-11-1997. The counsel argued stated that the ingredients of Section 28 of the Customs Act, viz. collusion, misstatement or fraud are absent in the show cause notice. The learned Counsel also argued that Clause (8) of the notification (which has been extracted above) provides for rejects, scrap, dust or sweepings of gold which is retrievable whereas the term loss contained in Clause (10) of the notification means that which is not retrievable i.e. invisible loss. To say that even the irretrievable loss should be accounted for is not warranted. His contention is that when the manufacture of the final pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erified by the Customs. He also invited our attention to Public Notice dated 28-7-1988 which mentioned inter alia about maintenance of accounts. Notification 196/87, when we go through it in Clause (5) thereof, mentions maintenance of proper accounts in respect of consumption and utilisation of the imported goods and exports made by the importer and submission of the same to the Assistant Collector of Customs. 13. Learned departmental representative adopted the reasoning of the adjudicating authority. 14. We have considered the rival submissions. At the outset, we have to state that the show cause notice dated 13-11-1997 provides for notice being issued under Section 28 of the Customs Act. However, in Paragraph 6, there is a reference not only to Section 28 of the Act but also to a bond given by the appellants. But when we go through the impugned order, there is no discussion of demand being made under bond. This lacuna in the order has not been challenged by the department in terms of Rule 15A of the CEGAT (Procedure) Rules within a month of receipt of the Appeal. The department did not file any memorandum of cross-objection. 15. As far as invocation of Section 28 of the Cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been brought out in the show cause notice so as to invoke the provisions of Section 114A of the Customs Act, 1962." It is not possible that the adjudicating authority could have found existence of three circumstances for demanding duty invoking larger period of limitation, but found none for not imposing penalty under Section 114A of the Act. In our view, therefore, the adjudicating authority has failed miserably in applying his mind properly to what is contained in paragraph 5(ii) of the show cause notice and again failed miserably to apply his mind whether even a bare reading of the same would enable the adjudicating authority to confirm the demand invoking the proviso to Section 28. As we have said earlier, the words contained in Section 28 of the Act provide mandatorily that the importer must be put on notice as to what the case was against him for demand of duty short paid so that he can show cause why the case cannot be initiated against him for such a demand. What is implied in the rules of natural justice has been expressly made explicit in the section under review. In our view, therefore, the provisions of Section 28 of the Act could not have been made applicable to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it may even be irrecoverable loss due to the process of manufacture of the final product. It can be invisible. The table to the notification also states how-much is the percentage of gold which could be allowed for wastage. In fact the explanations contained under the table state clearly that mountings and findings and wastages arising therefrom are allowed. The same has been explained in Paragraphs 3.2 to 3.6 of the appeal which read as under :- "3.2 The appellants further pointed out that as the Assistant Commissioner ought to be aware the seals were removed by the concerned Officers on 7-2-1996 after which the appellants began the process of recovery of gold. In view of the large quantity of dust involved from which the gold was to be recovered and in view of the limited refining capacity available with the appellants, the appellants worked hard to recover the gold from the dust by the deadline of 29-2-1996, that was fixed by the Assistant Commissioner in his letter referred above. 3.3 The appellants further pointed out that the total recovery came to 15,272.40 grams about which the Bond Officer was orally informed. A letter dated 8-3-1996 (Annexure 3 hereof) was also addre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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