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2019 (12) TMI 950 - AT - CustomsImport of restricted item - 100% EOU - import and clearance of fabric in to DTA without permission - shortage of stock - main allegation on the appellant is about non-reconciliation of stock of raw material and shortage of raw material - Whether the demand of duty from the appellants on the issue of shortages, shrinkages, non accountal and non-receipt of goods from job workers etc.? HELD THAT:- As the material is hydroscopic in nature, excess or shortage is bound to occur from the Bill of Entry quantity; therefore, the person was recording the actual weight of the material issued for production. We find that these aspects have also not been considered in the impugned order. Therefore, the shortage has been arrived at on the basis of assumption or presumption or on the basis of calculations. Moreover, going by the case laws submitted by the appellants, we find that finding of shortage cannot in itself be a conclusive proof of raw material being sold clandestinely or being used for manufacture of fabric which has been sold clandestinely. There is neither any allegation nor evidence regarding the clandestine clearance of such short-found material in the domestic market. That being the position, demanding of duty on mere shortages cannot be acceptable. Alleged import and clearance of fabrics in DTA - the department alleges that the appellants have imported fabrics whereas as per the license they were entitled to import only raw silk and that, they have cleared the imported fabrics under the guise of defects/waste - HELD THAT:- The fact that a Bill of Entry was filed at the time of import and the goods were warehoused under the supervision of an officer, the appellants cannot be found fault with. It was an act which was performed under the glare of the light and customs cannot allege that the appellants have wrongly imported the fabrics. It was open to the officers to disallow the clearance and warehousing. In case, it was a mistake on the part of the department, show-cause notice could have been issued within normal period and not invoking extended period. Even if it is held that the appellants have not received waste back from their job workers or the subcontractors of job workers, the applicable duty payable would be ‘Nil’. The whole exercise will be futile. Moreover, like the case of shortage in raw material, we do not find that the department has proved anything with evidence to show that the scrap has been cleared in the domestic market. Demand not sustainable - Once the duty demand itself becomes non-sustainable, the levy of penalties, on the appellant-company and the Managing Director, does not arise - appeal allowed - decided in favor of appellant.
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