The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed customs duty demand and observed that the audit on selected basis undermines purpose of departmental audit.
The appellant, Fiberweb India Ltd, is 100% EOU engaged in the manufacture of Polypropylene Spun Bond Non-Woven Fabrics. They imported raw-material “Polypropylene” from Singapore for use in manufacture for the final product.
The show cause notice was issued to them on 19.06.2015 demanding Anti-Dumping Duty on imported “Polypropylene” used for the manufacture of finished goods and the same was demanded by invoking provision of Notification No. 5/94-CUS read with Notification No. 52/2003-CUS dated 31.03.2003 read with Section 9A (2A) (ii) of Customs Tariff Act, 1975. It was adjudicated against the appellant company and its director and which has led to the present appeal by the aggrieved persons.
Counsel for the appellant emphasised that when the goods are cleared in DTA, the Anti-Dumping Duty could not be levied on raw material brought under bond, as goods were not having same characters after manufacturing process as the original raw material which was imported.
A Two-Member Bench of the Tribunal comprising Raju, Technical Member and Somesh Arora, Judicial Member observed that “The rejection of the plea relating to earlier periodic audits of the appellants by the adjudicating authority is not sustainable. Simply stating that audit does not check thoroughly but only on selected basis is nothing but exercise of undermining the purpose of departmental audit. It also does not bring on record as to what records were checked/not checked by the audit, while giving such findings.”
Quashing the customs duty demand the Tribunal noted that the department while demanding duty was not sure of the provision of law under which the same had to be demanded and even the penalty has been imposed under Section 112 of Customs Act, 1962, whereas the duty should have been demanded under Central Excise Act and penalty imposed under Central Excise Act/ Rules only.
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