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2021 (3) TMI 276 - HC - Central ExciseLevy of Penalty - Jurisdiction - failure of the Tribunal, to arrive at definitive findings of fact, despite being a final fact finding authority - diversion of imported material or not - demand of duty under the proviso to Section 28(1) of the Customs Act, 1962 - whether it is correct that duty if at all recoverable could only be in terms of Rule 8 of the Customs (Import of Goods at Concessional Rate of Duty for Manufacturer of Excisable Goods) Rules, 1996? - penalty. HELD THAT:- The reason for issuance of the Show Cause Notice is by reference to the standard input-output norms fixed in respect of the concerned industrial activity - the standard input-output norms can be treated as an indicator and that may not be a sole reason for initiation of proceedings. This aspect was considered by the High Court of Gujarat in the case of Goodluck Garments Pvt. Ltd. Vs. Commissioner of Central Excise & Customs, Surat-II [2019 (1) TMI 1514 - GUJARAT HIGH COURT]. The argument of the assessee therein was that the input-output norms were in the nature of guidelines and not a fixed formula. This aspect was considered and the Court held that the mere fact that the wastage was in excess of the input output norms, without anything more, would not be sufficient for the Assistant Collector to arrive at the satisfaction that the imported fabric had not been used for the manufacture of the articles for export. On a perusal of the reply given by the assessee dated 15.10.2009 to the Show Cause Notice dated 16.09.2009, the assessee has not made any unconditional acceptance of any diversion. All that they have stated is that the practice is common in the industry and they were not aware that a letter has to be obtained from the proper officer and they made it clear that they have not hidden any facts and have not caused any reason for the Adjudicating Authority to believe that the facts were suppressed. Therefore, the so called letter issued by the assessee cannot be taken to be a case where the assessee accepted the fact that they have not utilized the raw materials for the purpose for which it was imported - the materials which were available cannot be a reason for issuance of the Show Cause Notice dated 16.09.2009. The appeal filed by the assessee is allowed on a different ground than what was raised by the assessee, namely that standard input-input norms cannot be a sole basis for giving a cause of action for issuing the Show Cause Notice for determination of the wastage, when there is no allegation of diversion made against the appellant - order passed by the Tribunal vacating the penalty is sustained - Appeal disposed off.
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