TaxTMI 
TaxTMI 
2025 (11) TMI 708
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....g their final product for export. They had imported the raw material, vinegar, free of duty under Notification No.52/2003-Customs, dated 31.03.2003 read with Foreign Trade Policy 2009-14 and they had also procured indigenous vinegar without payment of Central Excise Duty under CT3 Certificate in terms of Notification No. 22/2003-CE, dated 31.03.2003. 2.2 During the Audit of the appellant's accounts, it was noticed that there was an excess consumption of Vinegar over and above the SION norms for which an objection was raised. Objection was also raised for payment of duty on 1600 numbers of Crate Trolley without allowing depreciation on capital goods to the tune of Rs. 49393/- which were found missing in the factory premises and there was a duty demand on the HDPE barrels. 2.3 The department issued the Show cause notice demanding customs duty of Rs. 15,50,944/ Central Excise duty Rs. 55800/-on inputs and Rs. 49393/- on Trolley Crates along with interest and proposed penalties. 2.4 After due process of law, the Original Adjudicating Authority confirmed the demand of Customs Duty of Rs. 15,50,944/- under sec. 28 & 72 of the Customs Act 1962 Rs. 1,05,193/- under sec. 11A (1) of....
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....hly ER-2 returns prescribed for EOUs. From the particulars declared in the ER-2 returns it can be easily arrived at as to the quantity of Gherkins manufactured and the vinegar consumed in the manufacture. The ER-2 monthly returns have been regularly filed from June 2009 to October 2013. The show cause notice has been issued on 05.06.2014 invoking extended period alleging suppression that the extra consumption of preservative Vinegar in the manufacture has not been informed to the department. The Commissioner (Appeals) has observed that the manufacturer has not informed the extra usage of Vinegar to the DGFT and hence there was suppression. When all the particulars are furnished in the ER-2 then there was no suppression and no extended period can be invoked. In support of this connection they relied upon several case Laws. 4.3 The Ld. Consultant summing up his averments submitted that it is clear that the food product Gherkins have been subjected to extra preservative vinegar for longer life and exported. As the inputs were used only in the processing of Gherkins and exported to fulfil export obligation, no Customs duty can be demanded on exported goods on the allegation of consu....
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.... 8.1 We note that the SION (Standard Input-Output Norms) are permitted quantity for input entitlement for EOUs/related units. and Para 6.7(e), Hand Book of Procedures 2008-09 (effective 01.04.2008) provides a specific administrative remedy: where additional items are required or waste/scrap exceeds 2% of inputs, a Unit may file self-declared norms and the jurisdictional Development Commissioner may allow within three months from the date of filing, subject to final adjustment in accordance with norms fixed by the Norms Committee (DGFT). And Notification Nos.52/2003-Cus dated 31.03.2003 and 22/2003 CE dated 31.3.2003 sets out the Customs/Central Excise administrative framework for supply / imports to EOUs and empowers recovery of duty where conditions are violated. 8.2 We note that the SCN alleged that the appellant "has not regulated their operations based on the norms fixed by the Development Commissioner" and hence, the duty free concessions availed on imports/domestic procurement of vinegar was incorrect and appellant is liable to pay duty to the extent of such excess utilisation. 8.3 We observe from submissions before the Original Adjudicating Authority, the details of ....
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.... life span of the pickled gherkins was not long. When there is delay in export of the pickled gherkins, these are to be exported after adding additional vinegar to enhance its shelf life and to withstand the travel delays. 8.7 The Order-in-Original of Joint Commissioner has held in para 7 as follows: - ".............................. Appellants had procured 129080 litres of vinegar under Notification No.22/2003-CE, dated 31.03.2003 and imported 240000 litres of vinegar under Notification No 52/2003-Customs, dated 31.03.2003 as amended, without payment of duty. As per SION, for manufacture of 1 Kg. of finished goods, 0.400 litre of vinegar is allowed. During the period from June 2009 to October 2012, the appellants had consumed a total quantity of 369080 litres of vinegar in the manufacture of 449425 Kgs. of finished product. As per the ratio fixed in the SION, appellants should have consumed only 179770 litres of vinegar for the said manufacture of 449425 Kgs. of gherkins. As per the aforesaid provisions contained in the Hand Book of Procedures, the consumption of the inputs, i.e. vinegar is restricted to the allowance fixed in the SION by the jurisdictional Development....
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....appellant's case, they had consumed only 3,69,080 Ltr. This clearly shows that the appellant was well within the SION norms as regards the consumption of vinegar was concerned and they had fully complied with the conditions of said Notifications. Thus, from the above legal and factual information it can be surmised that the department had made selective referencing to suit their allegation and issued the notice without backing of facts. Considering the further fact that there was no allegation of mis-use or diversion of the alleged excess qty of vinegar or unaccounted manufacture and clearance of Gherkins the impugned demand merely based on SION norms was liable to be set aside and appeal is liable to be allowed on merits. 8.10 We observe that the respondent has not given any finding as to why the quantity gherkins in brine should not be taken for calculation, whereas the Appellants have claimed that vinegar is also used in gherkins in brine as submitted by them above, which was also put forth before the Lower Authorities who did not put forth any valid reasoning to brush aside the claim of the Appellant except for the fact, that the Appellant did not approach the Regulat....
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....n this particular case, we do not find any allegation or finding of diversion of any raw materials to contradict the claim of the applicant about the actual excess use of inputs (beyond SION norms). Further, there appears to be no provision restricting the quantum of refund as per SION norms. Therefore, we hold that the applicant has made out a case for waiver of pre-deposit of dues as per the impugned order ". b. In the case of CCE Indore Vs. Agarwal Indotex Ltd. - 2010 (261) ELT 935 (Tri-Del) again Tribunal Delhi has held in Para 5 of the order that: - "5. I have carefully considered the submissions and perused the records. At the outset, it is to be noted that SION norms are based on average consumption in the industry. The actual consumption by any manufacturer could be more or less. If the variation is very wide then it definitely calls for investigation. However, no presumption can be made that excess raw materials have been used merely because the quantity is in excess of SION norms. In the present case, certain presumptions have been made that the raw materials procured is in excess of the requirement merely based on SION norms. The respondents have used c....