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2017 (7) TMI 337 - CESTAT CHENNAI100% EOU - clandestine removal of raw materials from JDL-EOU to JDL-DTA, without any approval from concerned authorities - Held that: - from the SCN itself, it clearly emerges that the goods so found removed from JDL-EOU were very much located and detained in JDL-DTA unit. In the circumstances, taking note of the fact that both the units are adjacent to each other under a common management, the averment that removal of goods had only been necessitated due to destruction caused in one unit due to Tsunami, should not be summarily rejected. The only infraction that comes up is that appellants have removed the goods without any prior permission or for that matter, any post-facto permission. But given the facts that the goods removed to the adjacent unit have been found available, even such infraction would only have to be considered as a procedural lapse which should not be given the colour of clandestine removal with intent of evading duty. When the impugned goods not found at the EOU unit have, however, been subsequently found in their adjacent DTA unit, there cannot be any demand of customs duty on such goods. Penalty u/s 11AC - Held that: - Imposition of equal penalty u/s 11AC ibid on JDL-EOU and confiscation of the detained goods valued at ₹ 3,01,98,135/- will also, in consequence, not sustain. Penalty u/r 25 - Held that: - Penalty of ₹ 15 lakhs imposed u/r 25 of CER on JDL-EOU is therefore, unnecessary and excessive - what that has happened is a procedural violation for which, in our considered opinion, imposition of such huge penalty is an overkill. We therefore hold that interest of justice for such a procedural lapse would be best served by limiting the penalty to ₹ 25,000/-. Penalty u/r 26 - Held that: - there is no justification for imposition of penalty of ₹ 1 lakh on JDL-DTA u/r 26 ibid since the adjacent unit was only used to store the goods temporarily. It is also pertinent to note that JDL-DTA has not been issued a SCN. This penalty against JDL-DTA is therefore set aside. Appeal allowed - decided partly in favor of appellant.
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