The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), confirmed the customs duty demand in the matter of diversion of imported/indigenous goods procured customs duty free.
M/s Punjab Exports, the appellant was licensed to operate as a 100% Export Oriented Units (EOU) for the manufacture of Fabrics and Garments; they were importing raw material i.e. polyester yarn, polyester fabrics, woollenyarn, synthetic waste, acrylic fibre and acrylic tow and availing exemption under Notification No. 53/97-Cus dated 03.06.1997 and was also procuring the goods from indigenous sources.
An investigation was initiated against M/s Punjab Exports and on conclusion, a show cause notice, was issued alleging diversion of imported/indigenous goods procured duty free. The show cause notice proposed confirmation of duty of Rs. 5 crores along with interest, penalties on various persons and a redemption fine allegedly liable for confiscation, was imposed.
Manoj Nayyar, the Authorised Representative for the Revenue, submitted that the mistake committed by the adjudicating authority is evident from the fact that the show cause notice clearly mentions that M/s KansalTexo Tubes (P) Ltd is a 100% EOU.
The Adjudicating Authority has clearly held that M/s KansalTexo Tubes (P) Ltd was not a 100% EOU on the basis of the invoices issued and has totally ignored the assertion in the show cause notice that M/s KansalTexo Tubes (P) Ltd was a 100% EOU and has not carried out or got conducted any enquiry to come up such a conclusion.
The Tribunal of SS Garg, Judicial Member and P Anjani Kumar, Technical Member observed that “We find that adjudicating authority was not correct in extending the benefit of Notification No. 2/95-CE dated 04.01.1995 to the respondents without verifying the relevant facts. The appeal is partly allowed confirming the duty of Rs. 5 crores against M/s Punjab Exports along with interest and equal penalty; maintaining the redemption fine of Rs. 25 lakhs imposed on M/s Punjab Exports.”
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