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<h1>Appellant wins appeal on duty demand & penalty for alleged underpayment on fabrics. Misdeclaration not deliberate.</h1> The appellant successfully appealed against duty demand and penalty imposition by the Collector for alleged short payment of duty on fabrics processed. ... Demand - Limitation Issues involved: Appeal against duty demand and penalty imposition by Collector on appellant for alleged short payment of duty on fabrics processed.Misdeclaration of cost of gray fabrics: The appellant's advocate argued that any misdeclaration of the cost of gray fabrics was not by the appellant but by the suppliers. The Collector found that the appellant failed to receive or ascertain the correct value, but there was no evidence of the appellant's knowledge or deliberate misdeclaration. The proviso under Section 11A would not apply in this case as there was no fraud or contravention by the appellant.Brokerage charges and interest inclusion: The consideration regarding brokerage charges incurred by the owners of gray fabrics and the department's claim for inclusion of interest on the cost of gray fabrics was dismissed. The department failed to prove that these costs were actually incurred, and their relevance to the case was not established.Shrinkage and charges incurred: Duty was claimed on elements related to shrinkage and charges not included. The appellant argued against the duty demand citing the limitation period. The lot register showed shrinkage, which was known to officers, and there was no suppression or misdeclaration. The defense of limitation was not accepted as the general knowledge of fabric shrinkage did not override the duty demand.Extended period misapplication: The department misinterpreted the proviso under Section 11A(1) by claiming the extended period for duty recovery. The duty was not paid due to misdeclaration by the senders, not the appellant, hence the extended period did not apply for this duty recovery.Remand for duty determination: The matter was remanded to the Commissioner to determine the actual duty payable, considering the includible elements in the value of gray fabrics. The appellant was given two months to provide necessary materials for duty calculation.Confiscation and penalty: The confiscation and penalty imposed on the appellant were deemed unsustainable based on a judgment of the Delhi High Court. The appeal was disposed of accordingly.
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