Excess Waste in Export Manufacturing Not Grounds for Duty Demand, Tribunal Rules; No Evidence of Misuse or Diversion Found.

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....The appellant, a 100% Export Oriented Unit (EOU), imported 'Milled Glass Powder' for manufacturing and exporting 'Bead glass' used in 'Electron Guns'. During August 2004 to March 2006, the actual waste generated exceeded the Standard Input-Output Norms (SION) of 4.76%. The Development Commissioner granted ad-hoc approval for 20.34% waste for six months, further extended by the Board of Approvals. Despite excess wastage over SION, the appellant fulfilled export obligations without diverting imported goods. Merely exceeding wastage norms without evidence of diversion cannot lead to a presumption of improper accounting or demand of duty under Customs Act Sections 65(2)(b) and 72(1)(d). The Tribunal set aside the demand of duty and interest, holding that excess wastage alone cannot treat imported goods as not used for manufacturing exports when obligations are met.....