2000 (5) TMI 417 - AT - Customs

Customs duty demand and penalties set aside due to diversion of raw materials for home consumption

The Tribunal set aside the Commissioner of Customs' order confirming a duty demand and imposing penalties on the main appellant and others. The case ... Natural justice Issues:- Confirmation of duty demand and imposition of penalties by the Commissioner of Customs- Allegations of contravention of provisions of Notification No. 203/92-Cus.- Denial of cross-examination of supporting manufacturers by the Commissioner- Interpretation of Circulars issued by Directorate General of Foreign Trade and CBEC- Finding by the Commissioner regarding disposal/diversion of imported raw materials- Consideration of date chart showing fulfillment of export obligations before import of raw materialsConfirmation of Duty Demand and Imposition of Penalties:The judgment deals with a case where the Commissioner of Customs confirmed a duty demand of Rs. 49,62,573/- and imposed personal penalties on the main appellant and its directors, along with other connected persons. The appellants contended that the impugned order was passed without considering their detailed reply, leading to a remand for fresh adjudication after dispensing with the pre-deposit conditions.Allegations of Contravention of Provisions of Notification No. 203/92-Cus.:The appellants imported raw materials but were alleged to have diverted them for home consumption instead of utilizing them for the manufacture of export products, contravening Notification No. 203/92-Cus. The Commissioner's order observed such violations, leading to the imposition of duties and penalties. The appellants argued that they fulfilled export obligations before disposing of the imported raw materials.Denial of Cross-Examination and Interpretation of Circulars:The appellants requested cross-examination of supporting manufacturers, which was denied by the Commissioner. The appellants relied on Circulars issued by the Directorate General of Foreign Trade and CBEC to argue that manufacturing export products from raw materials procured outside the duty exemption scheme did not contravene Notification No. 203/92. The Tribunal noted that the circulars were not considered by the adjudicating authority.Finding on Disposal/Diversion of Imported Raw Materials:The Commissioner found that the appellants disposed of the imported raw materials before fulfilling export obligations. However, the appellants presented a date chart showing that in most cases, the disposal occurred after fulfilling export obligations. They also highlighted that a significant portion of export obligations was met even before importing the raw materials, which the Commissioner did not consider. Consequently, the matter was remanded for fresh adjudication.Remand for Fresh Adjudication:The Tribunal set aside the impugned order and remanded the matter to the Commissioner for re-adjudication, instructing to consider all factors presented by the appellants in their reply to the show cause notice. The appeals of other connected appellants were also allowed for re-adjudication in conjunction with the main appellant's appeal.