AI Drafter 
TaxTMI 
TaxTMI 
2017 (12) TMI 265
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....ement is met from the indigenous sources. He pointed out that since they are 100% EOU the imported or indigenous raw material can be procured free of duty under Notification No. 53/97 customs dated 3-6-1997 and 1/95-CE dated 4-1-1995 respectively. Sometime in the urgent situation they also buying duty paid Aniline Oil from the market. 2.1 He pointed out that in term of Notification No.8/97-CE dated 1-3-1997 if an EOU manufacturers the products wholly from the indigenous raw materials, the duty liability would be same as that of a domestic unit. He further relied on Circular No.442/8/99-CE dated 4-3-1999 and Circular No. 85/2001-Customs dated 21-12-2001. He argued that said circular prescribed that for availing these exemptions EOU should maintain separate records and need not have separate machinery, separate godowns and separate branches of manufacturing process. Para 1 and 2 of the said Circular reads as follows: I am directed to invite your attention to the Board's Circular No 442/8/99-C.E., dated the 4th March, 1999 on the above subject. The Circular clarifies that the benefit of Notification No.8/97-C.E., dated 1-3-1997 will be allowed to the units using import....
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....of the above-said Circular. He argued that they have two separate tanks one of 20 Tons capacity and the other of 12 Tons capacity which were used for receiving Aniline oil. He argued that 20 tons capacity tank is used for storing imported Aniline Oil and other 12 tons for storing indigenous aniline oil. He pointed out that they have five different separate tanks which are connected through flexible pipelines, which has valves to control and regulate the supply from the receiving tank to the storage tank. These storage tanks have capacity ranging from 5MT to 16MT. From these storage tanks the aniline oil is then conveyed to the 18 small tanks(referred to as service tanks). These service tanks were also connected to storage tanks through valves to control the supply. Ld. Counsel argued that manufacture of finished goods in a batch process with each batch size of 185 kgs of aniline oil and196 kgs of Sulphuric Acid in each ball mill. He pointed out that they have 14 such ball mills. He pointed out that they have capacity of store up to 76.019MT of oil in following manner: a) 20MT of receiving tank. b) 50.619 MT of 5 storage tanks c) 5.400 MT of 18 service ....
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.... office with directions that the assistance of an expert in Materials Management should be obtained to study the documents of consumption and clearance of goods into DTA before any view is arrived at on whether imported Aniline oil could have beenused in goods which were actually cleared to DTA. f) While getting this exercise done by an expert material management the issue of separate tanks being maintained could also be considered and the facts regarding the same determined". Consequently the matter was re-adjudicated. Complying with the direction of the Tribunal the issue was referred to the Indian Institute of Material Management(Mumbai Branch) who replied vide their letter dated 25th May, 2006 which reads as under: "The worksheets indicating date-wise receipts, consumption of Aniline Oil (both imported as well as Indigenous) and also the finished goods manufactured as well as cleared by the assessee have been thoroughly studied by us. The formats used/applied for the datasheets to highlight the FIFO principles (Primary Receipts & Issues) are abundantly clear-cut and prima-facie, inour considered opinion, there appears to be excess consumption of imported An....
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.... receipt, consumption of aniline oil of both the category and also goods manufactured. They also pointed out that he was informed that records are available with Superintendent, Shri. Shetye and if they need same was produced. With respect to Revenue appeal in the matter, Ld. A.R. argued that Commissioner has erred in applying FIFO method to arrive at quantity of finished goods manufactured using imported aniline oil. He argued that since entire indigenous and imported oil were mixed entire production was out of mixed oil. 4. We have gone through rivals' submissions. 5. We find that while remanding the case this Tribunal has observed as follows: "We find prima facie charge of Aniline oil of imported origin being used in the manufacture of the products cleared to DTA could be arrived only after detailed examination of the records said to be maintained by the assessee is made and the principles of materials management especially FIFO principle applied. Thus it will require to be reworked out with the assistance of experts in the field of Material Management with the documents said to be available with the assessee for this purpose. Order is therefore required to be....
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....ly. We are of the view that above method cannot result in the conclusion that the entire quaintly cleared in DTA was not manufactured from indigenous aniline oil. The report of IIMM only states that some imported aniline oil has been used for goods cleared in DTA and that, however, does not lead to the conclusion that entire quantity of goods cleared in DTA were manufactured wholly or partly from imported aniline oil. 5.1 Ld. Commissioner has discarded the proposition made by the appellant regarding separate storage of aniline oil on the basis of statements of various employees who have categorically admitted that the imported and indigenous aniline oil procured was not stored separately. The statements made in the March, 2002 whereas retraction has been done in July, 2006. It is seen that first adjudication order in the first round of litigation was passed on Oct, 2003 and at that time no retraction was made. The retraction was made in the year 2006 clearly appears to be after thought and cannot be taken on face value and therefore has rightly been rejected. Therefore the order of the commissioner in so far as it relates to fact that imported and indigenous aniline oil not been....