TaxTMI 
TaxTMI 
2026 (6) TMI 591
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....ufacture and export of silk fabric. The appellant imported silk yarn and grey silk fabrics without payment of duty, availing the benefit of Notification No. 53/1997-Cus., dated 03.06.1997, and Notification No. 52/2003-Cus., dated 31.03.2003. Upon manufacture, the silk fabric was exported. The exported silk fabric was thereafter re-imported, processed, and, after rectification of defects, reexported. 3.2 It is stated that, during the course of a statutory audit of the appellant, a shortage of imported material was noticed. Consequently, the Directorate of Revenue Intelligence (DRI) conducted an investigation and found a shortage of 29,145.65 meters of silk fabric. A show cause notice dated 27.08.2008 was issued, culminating in the determination of demand. An Order-in-Original came to be passed on 24.03.2010, denying the benefit of Notification Nos. 53/1997. and 52/2003, demanding customs duty, and further demanding interest and imposing penalty under Section 114A of the Customs Act, 1962 (for short "the Act"). 3.3 Aggrieved thereby, the appellant preferred an appeal before the Tribunal. The Tribunal, while upholding the levy of customs duty, set aside the penalty imposed under....
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....rts effected subsequent to the issuance of the show cause notice cannot be taken into consideration. It is submitted that the imported silk fabric would not have been exported but for the initiation of proceedings. It is further contended that the burden lies on the respondent to establish that the entire reimported quantity was available as stock, which burden, it is submitted, has not been discharged. 6. Both CSTA No. 6/2021 and CSTA No. 2/2021 were admitted on 04.01.2023 to consider the following substantial questions of law: In CSTA No. 6/2021 "(i) Whether the Tribunal is right in holding that the Revenue could not have imposed penalty as there is no suppression of facts by the Respondent with the intention to evade customs duties? (ii) Whether the Tribunal was right in holding that the Audit Report, based on the respondent's records, is not a statutory report and is hence unreliable?" In CSTA No. 2/2021: "(i) Whether the proceedings initiated by the Directorate of Revenue Intelligence for recovery of Duty forgone on final products by denying the benefit of exemption of impugned notifications under Section 28(1) of the Customs....
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....he applicable legal position, the proper officer determined the customs duty, interest, penalty, and other applicable levies. 7.2 Upon consideration of the factual matrix, the Tribunal held that the appellant had violated the conditions of the aforesaid notifications and that the demands raised were sustainable. However, the Tribunal set aside the penalty imposed under Section 114A of the Act. While doing so, it is evident that the Tribunal confirmed the levy of duty and interest by invoking the extended period under Section 28 of the Act, despite the bills of entry having been assessed by the proper officer at the time of import. However, insofar as the penalty under Section 114A, being consequential in nature, is concerned, the Tribunal deleted the same on the ground that penal provisions could not be invoked where the goods had been permitted to be cleared by the officers, a reasoning which is assailed as unsustainable. 7.3 The period covered by the show cause notice spans from 1998-99 to 2007-08. Section 28 prescribes a period of five years from the "relevant date" for issuance of a show cause notice under Section 28(1). The expression "relevant date" is defined in Explan....
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....8) of Section 28 of the Act. 7.8 To the aforesaid extent, the impugned order of the Tribunal is set aside, and the Order-in-Original is restored insofar as it relates to the imposition of penalty under Section 114A of the Act. 8. Learned counsel for the appellant, by way of an alternative submission, contends that, at the time of inspection, out of 36,409.25 meters of re-imported silk fabric, 7,263.60 meters was found available as physical stock, leaving a differential quantity of 29,145.65 meters. It is submitted that the said shortage pertains to the period from 1998-99 to 2007-08. 8.1 It is further contended that, if the shortage relatable to the period from 1998-99 to 2002-03 being barred by limitation is excluded, only the balance quantity would be liable to duty. It is also submitted that the available physical stock of 7,263.60 meters ought to be given due adjustment against the shortage determined for the period from 2003-04 to 2007-08. 8.2 The aforesaid submission is advanced on the premise that, subsequent to the issuance of the show cause notice, exports were effected utilizing the re-imported silk fabric. It is further contended that no material other than t....