Export to another EOU on record verification defeats duty demand and penalty when export documents are accepted on appeal.

Duty and penalty could not be sustained where goods cleared under bond to another 100% EOU were established as exported on appellate record verification. The appellate authority could accept export-related documents already within the department's control, and the objection that they were not produced before the original adjudicating authority was rejected. Once the fact of export was not in dispute, the foundation for confirming duty disappeared. The duty demand and corresponding penalty were therefore held not sustainable, subject only to the limited shortage addition already sustained by the lower appellate authority.

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Issues: Whether duty and penalty could be sustained when the goods cleared without payment of duty were shown to have been exported to another 100% Export Oriented Unit and the relevant export documents were accepted on appellate verification.

Analysis: The goods had been removed under bond under the erstwhile Rule 13 of the Central Excise Rules and the department did not dispute that they were received by another EOU. The Commissioner (Appeals) verified the available records and accepted the export-related documents. The objection that such evidence ought to have been produced only before the original authority was rejected, as the appellate authority had power to scrutinize and accept material already within the department's control. In the absence of any dispute on the fact of export, the basis for confirming duty did not survive.

Conclusion: The duty demand and the corresponding penalty were not sustainable.

Final Conclusion: The appeals failed and the order setting aside the duty demand was upheld, save for the limited confirmation already sustained on shortage by the lower appellate authority.

Ratio Decidendi: Where export to another EOU is established through record verification, the appellate authority may accept such evidence and duty cannot be confirmed merely because the documents were not produced before the original adjudicating authority.

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