TaxTMI 
TaxTMI 
1994 (9) TMI 219
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....t the yarn cleared (though following a wrong procedure because of the misunderstanding by the department) have been actually used in the export goods and they have been duly exported. In reply to the learned SDR's argument, Shri K. Srinivasan, the learned Consultant, contended that the Department had all along been referring to only advanced licence. They have imported fibre under more than one advance licence import against the other advance licences. However, he could not give the details of the same. He pleaded that this was not the question put to them nor a specific allegation made on this. We, however, observe that the quantity covered by the show cause notice is specific and these are claimed to have been removed under RT-12. Returns with remarks for export in relaxation of Rule l9l-B. Hence we are unable to agree with the learned Consultant Shri K Srinivasan that no specific allegation is made on this. On the contrary, the cause for demand is directly related on the non-export of yarn cleared under the declaration as for export purposes. Hence, even if a wrong procedure is followed because of the wrong advice of the Department officers, it does not take away the substantive....
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..... Since the appellants are responsible assessees having their factory for over a period of three decades, they did not want to prolong the litigation with the Department despite the merits of the arguments with regard to the applicability of extended period under Section 11A, he would concede to the payment of duty as confirmed by the Collector, with the suitable deductions being made in regard to the exports already effected in regard to the yarn produced and cleared to Vikroli factory imported against one of the D.E.E.C licences. In this context, he points out that as against the import made under Advance Licence No. 2956010, dated 3-5-1983, the Assistant Collector (Customs) has already discharged the export obligation. He refers to Page 41 of the paper book filed by them, indicating the export obligation discharged in regard to the aforesaid DEEC licence. In view of this letter dated 14-8-1985 from the Assistant Collector of Customs, in the form of secondary evidence, he would plead for reducing the demand to the extent of about Rs. 21.00 lacs in respect of which the export obligation has been fulfilled in regard to the imports of fibre made under the aforesaid licence. Subject ....
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.... of penalty. He also would plead that had the department accepted their suggestion and prescribed Rule 191B, which is the procedure to be followed in such a case, such a situation would not have been created. Hence the responsibility for creation of this demand itself lies with the department. However, since they could not fulfil the export obligation on account of cancellation of the export orders and disruption caused on account of the strike in Ankleshwar factory, quantities covered by the second DEEC licence remained to be exported and they had to be sold in the open Indian market. Since they are morally and legally bound to pay duty in respect of this quantity, they are conceding to the payment of this duty in full, subject to the deduction being made in regard to the quantities covered by the secondary evidence in regard to the DEEC licence No. 2956010, where export obligation has been fulfilled. That could not however be construed that they have made any deliberate fraud or wilful misstatement calling for imposition of penalty. In the circumstances he would only request for setting aside the penalty imposed and does not contest the demand in regard to the quantity covered by....
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....of quantities cleared at the earlier stages, when the matter came up for consideration before the Tribunal twice, we cannot overlook this piece of secondary evidence indicating fulfilment of export obligation in regard to one of the DEEC licences. Hence we direct the Collector to allow suitable deduction in the quantum of demand, after causing necessary verification of this piece of evidence and after due enquiry as to whether the yarn produced out of fibre imported against the said licence No. 2956010 has been received in Vikroli factory for conversion into fabrics, which were ultimately exported. If the Collector is satisfied on the basis of the secondary evidences produced by the appellants in this regard, suitable deduction in the quantum of demand may be allowed. Subject to this eligibility for deduction on this count, the demand is otherwise confirmed as unchallenged. 5.2 Now coming to the penal liability, which is seriously contested before us, we find that in this case, the appellants, approached the Department and intimated that fibre imported against DEEC licences are being processed at their factory for conversion into yarn and such yarn will be removed to their Vi....