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2019 (3) TMI 1421 - CESTAT HYDERABAD100% EOU - clandestine removal - terry towels - normal goods or substandard goods - penalty u/s 11AC - SCN alleges that they have cleared the goods without raising invoices clandestinely and presumes that the goods which they have cleared are similar to the goods which they would otherwise have cleared. Held that:- It is no longer disputed that the goods were cleared by the appellant without raising invoices and without paying duty and without making necessary entries in the records. In some cases, the recipients of these goods have given letters saying that they received samples free of cost and some cases the recipients have sent letters stating that the goods were seconds. If the goods were sent as samples to their respective customers to enhance their business, it is inconceivable that any businessman would send rejected sub-standard samples to promote their prime goods - the appellant has not substantiated his claim that the goods which they cleared were sub-standard goods. If they were, indeed, sub-standard goods, there was no reason for them to not to raise any invoice accordingly and make appropriate entries in their records. Thus, the appellant has cleared the goods clandestinely but has not been able to substantiate their claim that the goods were rejects or of substandard nature. Penalty u/s 11AC - Held that:- There is no ground to reduce the penalty under Section 11AC because they paid some amount of duty during investigation. However, after recomputing the demand taking the value of goods as cum duty value, corresponding changes need to be done in the penalty. The appeal is partly allowed by remanding the matter to the original authority for the sole purpose of recomputing the value of the goods as cum duty value and consequently recomputing penalty if necessary.
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