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2018 (9) TMI 1290 - AT - CustomsSmuggling - import of Raw Cashew Nuts (RCN) without payment of Customs Duty - N/N. 18/2015-Cus. - Diversion to other units which have not been authorized for the purpose of processing RCN imported duty-free - The primary allegation of the Department is that RE have diverted/sold 2801.41 MTs of imported RCN out of a total of 3073.331 MTS imported by them. Held that:- It is not known how in para 7.1 of the Show Cause Notice it has been alleged that RE had received only 81.05 MTs of RCN and hence it appears to reason that this conclusion may be a deduction arrived at from the documents seized - In the same para 7.1 it is alleged that RE used 190.48 MTs of RCN to process 47.62 MTs of cashew kernels for export. From para 5.4 of the Notice, we find that the quantity of 190.48 MTs of RCN receipts in RE is also a deduction based on quantity of 47.62 MTs of processed cashew kernels exported vide Shipping Bills 8243331/13.06.2016, 8317986/17.06.2016 and 8354161/18.06.2016 - these two allegations are at variance and are contradicting one another. Another allegation in the Notice is that RE were directly sending imported RCN to various units of RA or to other firms at Kollam/KK district directly from the port of import in violation of the procedures prescribed in para 4.35 of HBP and condition (x) of Notification 18/2015-Cus. At the same time, the Show Cause Notice elsewhere alleges that RE had “sold” the imported RCN to commission agents/other buyers. There is also an allegation that in some cases such sales have been effected under sales invoice and even payment of sales tax. There is a finding that RCN processed by processing units were sold in the local market; that RA have sold cashew kernels processed out of imported cashew nuts to different firms, etc. However, as in the other allegations of sale of imported RCN directly from the port, no evidences to corroborate these allegations have been brought forth or adduced. Credence is also found in the appellants’ submission that they regularly export pre-dominantly to the USA and the cashew kernels which are exported to that country have to meet the stringent USA Regulatory Approvals, apart from high quality specifications required by the customers. For this reason only the appellants are importing RCN in shell from abroad because the export orders require a better quality of cashew kernel which is not available in India. If this be the case, we wonder what the appellants would achieve by selling the imported RCN, since the cashew kernel of Indian origin would not be accepted by the buyers abroad. The non-inclusion of all the supporting manufacturers in the Advance Authorizations are then only a procedural aberration that can surely be condoned. The allegations raised in these proceedings and consequential demand and penalties confirmed by the impugned Order against RE cannot be sustained and will have to be set aside - appeal allowed - decided in favor of appellant.
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