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2015 (1) TMI 368 - AT - Customs100% EOU - export obligation - validity of show cause notice - clandestine clearance plastic granules imported duty free to the sister and other concerns - manipulation of statutory production reveals so as to show excess production and excess export - violation of conditions of Notification No. 53/97-Cus. dated 6.3.1997 - Penalty u/s 114A, 112/117 and u/s 11AC - Held that:- On a plain reading of 3rd proviso to Section 28(1) of the Customs Act, 1962, as it stood during the relevant time, we find that it is mandatory that where the amount of demand of duty is more than Rs. One crore, no notice under this sub-section shall be served except with the prior approval of the Chief Commissioner of Customs. In the present case the demand of customs duty of ₹ 16,13,10,303/- under Section 28(1) of the said Act vide show-cause notice dated 20.6.2002 shall be served with the prior approval of the Chief Commissioner of Customs. - There is no indication that the approval was also accorded under 3rd proviso to Section 28(1) of the Customs Act, 1962. - the submission of the learned Special Counsel that the Superintendent of Central Excise was delegated power to issue the show-cause notice vide Office Order dated 18.7.2001 is not acceptable. - The action of Superintendent to issue notice demanding duty under Section 28(1) of the Act, 1962 vide Notice dated 26.3.2002 is contrary to the provisions of law. The adjudicating authority dropped the Show Cause Notices on merit. Taking into account of the overall facts and circumstances of this peculiar case, in our considered view, the show-cause notice cannot be dropped only on the jurisdiction point, when the assessee contested the demand on merit as well as availed the opportunity of cross-examination of various persons as prayed for. We make it clear that this order would not become a precedent that the Show Cause Notice issued beyond jurisdiction, would be held valid by the appellate authorities. Regarding the demand of Central Excise duty, it has further been alleged that the Assessee cleared carry bags sold to DTA without accounting and payment of central excise duty of ₹ 4,61,692/- and it is based on out-passes of the Assessee to its sister unit. This was supported by the statement dated 15.6.2001 of Shri Arun Thangam, Director of M/s. Seven Seas Polymers (P) Ltd. The Assessee in their reply to show-cause notice stated that they have not sold plastic bags, but waste and rejects to M/s. Priya, who tried to segregate the good one and on test basis effected a few sales as seconds, which was not find good market and the idea was dropped. - The evidence relied upon by the Revenue would show clearances of ‘carry bags seconds’. Apparently, the statement of Shri Arun Thangam is not corroborating with evidence. - the allegation of clearance of plastic carry bags is on the basis of statement and the demand of central excise duty is not sustainable. The percentages of Waste and Rejects appear to be excessive should be examined - Revenue contended in their appeal that the Assessee had obtained permission for the first time for clearance of 216.250 MTs of rejects and 230.050 MTs of waste from the jurisdictional Assistant Commissioner only on 14.2.2000 and they effected sale of rejects to DTA much before the date of permission from the Assistant Commissioner. It is also stated that the Assessee had obtained approval from the Development Commissioner, MEPZ, increasing the percentage of waste only after the investigation of the Preventive Unit on 12.1.2001. The Assessee in their reply stated that they were averaging the waste around 17% and hence the matter was referred to MEPZ. So, this issue is required to be examined as per EXIM Policy. We, therefore, set aside the impugned order and remand the matter to the Commissioner for de novo adjudication of this matter after ascertaining from the Development Commissioner/Board of Approval about their decision with regard to the question of fulfilment of the export obligation and achieving NFEP. The show cause notice issued to the appellant is to be adjudicated only after the Development Commissioner/Board of Approval gives the findings on the issue of meeting the export obligation and achieving the NFEP. The appeals are disposed of in the above terms. - Matter remanded back.
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