DTA valuation for 100% EOUs and clandestine-removal demands require comparable import evidence and disclosure of relied-upon documents.

For DTA clearances by a 100% EOU, valuation is linked to the proviso to section 3(1) of the Central Excise Act and section 14 of the Customs Act, so assessable value should reflect contemporaneous imports of identical or similar goods in comparable quantities. Reliance on small-quantity sample imports or on the sale price of unrelated finished goods is not a proper basis unless supported by comparable evidence. In clandestine-removal proceedings, demands founded on diary entries or other relied-upon documents require supply of those documents to the assessee so the defence can be tested; without that, adjudication is incomplete.

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Issues: (i) Whether the assessable value of DTA clearances made by a 100% EOU could be rejected and re-determined on the basis of imported samples and the sale price of the DTA unit's finished goods. (ii) Whether the duty demand based on alleged clandestine removal, founded on entries in a diary recovered from the DTA unit, could be sustained without supplying the diary to the assessee.

Issue (i): Whether the assessable value of DTA clearances made by a 100% EOU could be rejected and re-determined on the basis of imported samples and the sale price of the DTA unit's finished goods.

Analysis: For DTA clearances by a 100% EOU, duty is chargeable under the proviso to section 3(1) of the Central Excise Act, 1944 and valuation is governed by section 14 of the Customs Act, 1962. The assessable value must therefore reflect the value of identical or similar imported goods in contemporaneous transactions and comparable quantity. The Department's reliance on small-quantity sample imports and on gold-coated capsules not manufactured by the unit was held to be misplaced. The Commissioner had also not examined the assessee's plea that other imports of similar goods in comparable quantities were at prices consistent with the declared DTA value.

Conclusion: The rejection of the declared DTA sale price was not sustainable and the issue was remitted for fresh adjudication after considering the assessee's comparable-import evidence.

Issue (ii): Whether the duty demand based on alleged clandestine removal, founded on entries in a diary recovered from the DTA unit, could be sustained without supplying the diary to the assessee.

Analysis: The demand rested on diary entries and the statement of a manager, but the assessee contended that the diary copy had not been supplied. In the absence of supply of the relied-upon document, the adjudication was held to be incomplete and the demand could not be sustained as it stood. The matter required reconsideration after furnishing the diary and examining the assessee's reply.

Conclusion: The clandestine-removal demand was set aside and remanded for de novo adjudication after supply of the diary and fresh consideration of the defence.

Final Conclusion: The common adjudication order was set aside in full and the disputes were sent back for fresh decision on valuation and clandestine removal, with all other legal points left open for consideration in de novo proceedings.

Ratio Decidendi: In valuation of DTA clearances by a 100% EOU, the declared value cannot be rejected unless the Department shows that contemporaneous imports of identical or similar goods in comparable quantity do not support it, and a demand based on relied-upon documents cannot be sustained without supplying those documents to the assessee for rebuttal.

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