CESTAT rules in favor of EOU in duty demand case, directs deposit Rs. 7 lakhs

The Appellate Tribunal CESTAT, New Delhi, ruled in favor of the appellant EOU regarding the duty demand arising from under-valuation of goods sold to the DTA unit. The Tribunal found that the goods were correctly valued, matching export prices and following valuation practices. However, discrepancies in private records regarding clandestine clearance were acknowledged, and the revenue had a prima facie case. The appellant was directed to deposit Rs. 7 lakhs within six weeks, with further recovery stayed pending appeal disposal.

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Issues: Duty demand arising from under-valuation of goods sold to DTA unit of EOU and discrepancies in private record of recipient DTA unit compared to statutory record of EOU.

In the judgment by the Appellate Tribunal CESTAT, New Delhi, the duty demand of Rs. 72 lakhs arose due to disputes regarding under-valuation of goods sold to the DTA unit of the appellant EOU and Rs. 14 lakhs due to discrepancies in private record of the recipient DTA unit compared to the statutory record of the EOU. The Senior Counsel for the appellant argued that the goods were correctly valued as the sale price to the DTA unit matched the export price of identical goods and was in line with valuation practices as per Circular dated 30-9-1994 of the Central Board of Excise & Customs. He contended that the under-valuation finding was not sustainable. On the charge of clandestine clearance, it was argued that although sales invoice dates and dates of receipts in the private record did not match for some consignments, the accounts tallied in all other aspects, and the differences in dates should not be held against the assessee.

The Senior Counsel further argued that the valuation done by the revenue was as per Customs Valuation Rules and therefore, the assessable value determined was correct. Regarding clandestine removal, discrepancies revealed by the private record were admitted in the statements. The Tribunal found no merit in the under-valuation finding, stating that goods sold to the DTA unit were identical to the exported goods and thus should be valued the same. Citing a previous case, the Tribunal accepted the FOB value as a basis for valuation. However, regarding clandestine removal, the revenue had a prima facie case.

As a result, the appellant was directed to deposit Rs. 7 lakhs within six weeks and report compliance by a specified date. Upon this deposit, the requirement for further deposit was waived, and recovery was stayed pending the appeal's disposal. The order was dictated and pronounced in the Open Court.

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