TaxTMI 
TaxTMI 
2025 (12) TMI 709
X X X X Extracts X X X X
X X X X Extracts X X X X
....d LDPE and LLDPE granules. For making fabrics and slings, PP granules and master batches are primarily used, while LDPE and LLDPE granules are mainly used for liners and pouches. b. These goods are imported without payment of customs duty in terms Notification No. 52/2003-Cus dated 31.03.2003. The Appellant also procure indigenous materials claiming exemption from central excise duty under Notification No. 22/2003-CE dated 31.03.2003. These exemptions are consistent with applicable Foreign Trade Policies from 2004-09 and 2009-14. c. During an audit, the Internal Audit Party, Tirunelveli found that the quantity of raw materials such as Master Batches, LDPE and LLDPE granules were consumed over and above the Standard Input Output Norms (SION) fixed by the DGFT and accordingly issued show cause notices for the following periods involving the following Raw materials: Sl. No. Show Cause Notice No. and date Period covered Input Materials Duty demanded (Rs.) A SCN No. 13/CE/COMMR /2013 dated 03.07.2013 June,2008 to March,2013 Master Batches alone 71,70,522/- B SCN No. 2/COMMR/2014 dated 23.01.2014 January,2009 to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y serve as an average benchmark and is not rigid; consumption can vary due to machinery, labor efficiency, and processes. Past Tribunal's decisions and Supreme Court's rulings have rejected demands based solely on deviation from average norms. ix. The appellant has asserted that there was no excess consumption or misuse, supported by accepted audit reports and no proper objection by authorities during the period. x. Penalty under relevant Customs/ Central Excise enactments was disputed as not applicable since no intentional misuse or evasion was established. e. The Commissioner of Central Excise, after perusing the records, confirmed the demands and other proposals made raised in the Show Cause Notice regarding demand of interest and imposition of penalties. 3. Aggrieved by the aforesaid impugned order, the Appellant have filed these appeals before this Tribunal. The Ld. Counsel Mr. S. Muthu Venkataraman represented the Appellant and submitted written submissions dated 07.08.2025 which inter-alia contained the following: - i. That where the appellant has violated any terms and conditions of the licenses issued by the DGFT, the Department shoul....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The Department erred by assessing raw material usage without accounting for the actual content of polypropylene granules, LDPE/LLDPE granules, liners, and filler cords in the manufactured FIBC bags. This oversight makes their calculations inaccurate. e. It was also contended that several Courts and Tribunals have ruled that SION norms alone cannot justify recovery of duty, as deviations from these norms do not imply that imported materials were not used in manufacture as required under the notification. In support of this contention, the appellant has relied upon the following case laws: - i. PSL Ltd. Vs. Commissioner of Customs reported in 2015(328) ELT 177 (Tri.-Ahmd.) ii. Commissioner of Central Excise, Indore Vs. Agarwal Indotex Ltd reported in 2010 (261) ELT 935) iii. Goodluck Garments Pvt Ltd. Vs. Commissioner of Central Excise & Customs., SURAT-II, Surat reported in 2019 (365) E.L.T. 893 iv. IOCEE Exports Ltd. Vs. Commissioner of Central Excise reported in 2021 (376) E.L.T. 311 (Mad.) v. Adsorbent Carbons Private Ltd Vs. Commissioner of CGST and Central Excise, The Joint Commissioner of CGST and Central Excise reported i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in 2024(2) TMI 206- CESTAT Ahmedabad b. M/s. Pelican Grani Marmo Pvt Ltd Vs. Additional Commissioner, Commissionerate, Jodhpur (Rajasthan) reported in 2023(2) TMI 740- CESTAT New Delhi c. GKB Ophthalmic Ltd. And GKB Vision Ltd. Vs. Commissioner of Customs reported in 2017(9) TMI 1662-CESTAT Mumbai d. Ms. GKB Ophthalmics Ltd., M/S. GKB Vision Limited Vs. Commissioner of Customs, Mormugao Harbor, Goa reported in 2020 (2) TMI 1087 Bombay High Court e. Commissioner of Customs (Import), Mumbai Vs. M/S. Dilip Kumar and Company & Ors. reported in 2018 (7) TMI 1826 - Supreme Court (LB) 6. Heard both sides and carefully considered the rival submissions including the evidence available on appeal records and the case laws relied upon. 7. The issues to be decided in these appeals are: - i. Whether the Appellant's consumption of inputs namely Master Batches, LDPE, and LLDPE is in compliance with the Standard Input Output Norms (SION) as prescribed in Notifications No. 52/2003-Cus dated 31.03.2003, No. 22/2003-CE dated 31.03.2003, and the relevant Foreign Trade Policy provisions, and whether excess consumption as compared to SION can justify....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g of goods in accordance with SION. Here, the condition Tays emphasis on the usage of goods in accordance with SION and not just whether the goods are used in the manufacture of export goods, which implies that for the goods used in excess of the norms prescribed in SION the exemption is not available 8. (a) On perusal of the SION for Plastic Products it is seen that for some of the items like ABS Briefcases /Suitcases/ Beauty Cases (Sl. No. H1), Articles made of HDPE/PP twine/Rope or Articles made of blend of HDPE & PP Twine /Ropes (Sl. No. H24), HDPE/PP Beautycase /Briefcase/ Suitcases (31. No. H115) separate notes have been given for coloured export items allowing coloured master batch as an input but reducing the relevant polymer weight by 0.02kg/kg. In the list of SION for the item Coloured PP Woven tube/sack with U.V. Stabilization (Sl. No. H59) the quantity of Colour Master batch allowed as input has been prescribed as 0.03 kg/kg. Similarly for the item Coloured HDPE Tarpaulin with UV Stabilizer (Sl. No. H60) the quantity of Colour Master batch has been prescribed as 0.03 kg/kg. However, in respect of Flexible Intermediate Bulk Containers (Sl. No. H97) the colour ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l norms are fixed by the Norms Committee:" 8. In view of the foregoing, I pass the following order. Order The appellant are hereby ordered to make a representation, within one month from the date of receipt of this order, to their jurisdictional Development Commissioner for fixing of input-output norms for Colour Master batches, being an additional item other than those given in SION. The appellant on receipt of the order fixing the norms from the Development Commissioner may inform the same to the Original Authority along with a copy thereof within 15 days from the date of receipt of the fixation order. The appeal in A.No. 30/2017(TVL) is remanded back to the Original Authority to re-determine the demand based on the input norms to be fixed by the Development Commissioner for Colour Master batches, after extending personal hearing to the appellant. The Order-in-Original No. 19/CE/AC/2016 dated 26.12.2016 passed by the Assistant Commissioner of Central Excise, Rajapalayam Division is set aside." 12. Thus, in terms of the above, the appellant was directed to make a representation to the jurisdictional Development Commissioner for fixing of inpu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mption 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 certain quantities of duty-paid Cenvatable inputs in the manufacture of export products. There is no dispute about export of the final products. The inputs going into export product need not suffer duty. It could be procured duty-free or if it was duty-paid, the same can be taken as Cenvat Credit. The said Cenvat Credit is useable for paying duty on the goods cleared to the domestic market or the same is eligible as refund. Under these circumstances, the order of the Commissioner (Appeals) holding that the/refund claim is admissible cannot be faulted. 6. In view of the above the appeal by the Department is rejected. The cross objection, which is merely in support of the order of the Commissioner (Appeals) is a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....able to actual use of the goods for the purpose of manufacture to ensure that there is no diversion of goods or that imported raw material is not clandestinely removed. In the present case, as noticed earlier, it is not the case of the respondent that any part of the imported fabric has been diverted or clandestinely removed. The only allegation is that the waste generated is more than the standard input-output norm, which has nothing to do with the fulfilment of export obligation or compliance with the conditions of the exemption notification. Under the circumstances, the raw material being exempted under Notification No. 13/81-Cus., dated 9-2-1981, the demand of Customs duty on imported raw materials contained in wastage in excess of input-output norms is not justified." 16. In the instant case, it was contended by the Appellant that there was no specific evidence to indicate that the materials procured vis-à-vis the final products that were exported, were not accounted for nor unsubstantiated to indicate any excess materials have been imported or procured locally, or that the exemption had been claimed without authorization. It was further put forth that the Appellant ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cussed case laws. 19. We have carefully considered the submissions made by both the sides. The Ld. AR has relied upon the following decisions viz., Amardeep Exports Vs. C.C Jamnagar (Prev) [2024(2) TMI 206- CESTAT Ahmedabad], M/s. Pelican Grani Marmo Pvt Ltd Vs. Additional Commissioner, Commissionerate, Jodhpur (Rajasthan) [2023(2) TMI 740- CESTAT New Delhi], GKB Ophthalmic Ltd. and GKB Vision Ltd. Vs. Commissioner of Customs [2017(9) TMI 1662 CESTAT Mumbai], Ms. GKB Ophthalmics Ltd. & M/S. GKB Vision Limited Vs. Commissioner of Customs, Mormugao Harbor, Goa [2020 (2) TMI 1087 - Bombay High Court] and Commissioner of Customs (Import), Mumbai Vs. M/S. Dilip Kumar and Company & Ors. [2018 (7) TMI 1826 - SC(LB)] to support his contention that where SION norms are not followed, duty demands are sustained. However, as the issue is being remanded to the Original Adjudicating Authority, the relevancy and applicability of these decisions may be examined in detail. 20. Further, we find that the above judicial precedents and jurisprudence on this topic have evolved over period of time and the adjudicating authority did not have the benefit of these precedents at the time of concluding ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....AD dated 26.04.2006 3. Central Excise - New System of Audit of Accounts no. C.No. III/10/210/2006-IAD dated 24.05.2007 4. Central Excise - New System of Audit of Accounts no. C.No. III/10/5/2009-APC dated 03.04.2009 5. Central Excise - New System of Audit of Accounts no. C.No. III/10/276/2009-IA dated 06.12.2010 24. We find in this context, the Hon'ble Allahabad High Court in the case of Commissioner of C. EX., Noida Versus Accurate Chemical Industries 2014 (310) E.L.T. 441 (All.) has held that extended period of limitation cannot be invoked in a case where short payment could have been detected by the jurisdictional officer. 25. Furthermore, with regard to the contention that for non/incorrect disclosure of relevant details in ER-2 returns, the Appellant have placed reliance on the following rulings to substantiate non invocability of extended period: - i. CCE Vs. Chemphar Drugs & Linments, 1989 (40) ELT 276 (SC), "8. Aggrieved thereby, the revenue has come up in appeal to this Court. In our opinion, the order of the Tribunal must be sustained. In order to make the demand for duty sustainable beyond a period of six mo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ord both in law and even otherwise is well known. In normal understanding it is not different that what is explained in various dictionaries unless of course the context in which it has been used indicates otherwise. A perusal of the proviso indicates that it has been used in company of such strong words as fraud, collusion or wilful default. In fact it is the mildest expression used in the proviso. Yet the surroundings in which it has been used it has to be construed strictly. It does not mean any omission. The act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to escape from payment of duty. Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression." iii. Uniworth Textiles Vs. CCE, Raipur, 2013 (288) ELT 161 (SC) "24. Further, we are not convinced with the finding of the Tribunal which placed the onus of providing evidence in support of bona fide conduct, by observing that "the appellants had not brought anything on record" to prove their claim of bona fide conduct, on the appellant. It is a c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ve years. That unless the assessee is put to notice the assessee would have no opportunity to meet the case of the Department. It was held : ...There is considerable force in this contention. If the department proposes to invoke the proviso to Section 11-A(1), the show-cause notice must put the assessee to notice which of the various commissions or omissions stated in the proviso is committed to extend the period from six months to 5 years. Unless the assessee is put to notice, the assessee would have no opportunity to meet the case of the department. The defaults enumerated in the proviso to the said sub-section are more than one and if the Excise Department places reliance on the proviso it must be specifically stated in the show-cause notice which is the allegation against the assessee falling within the four corners of the said proviso...." (Emphasis supplied) 26. Hence, on account of the fact that the burden of proof of proving mala fide conduct under the proviso to Section 28 of the Act lies with the Revenue; that in furtherance of the same, no specific averments find a mention in the show cause notice which is a mandatory requirement for commencement of ....