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TMI Blog2011 (7) TMI 987X X X X Extracts X X X X X X X X Extracts X X X X ..... ating authorities conducted search operations at the factory premises, office premises and residential premises of one of the directors. During the search operations, physical stocks of raw materials were taken and it was noticed that there is a shortage of principal raw materials to the tune of 15,543.40 kgs. Show-cause notice was issued for demand of duty foregone by the Revenue on this quantity and also for imposition of penalty for violation of the conditions of notification and for demand of interest on the duty foregone. Appellant herein replied to the show-cause notice and attended the personal hearing granted by the Adjudicating Authority. The Adjudicating Authority after considering the submissions made by the appellants before him and going through the records, came to the conclusion that the appellant indeed had violated the conditions / scheme of the 100% EOU and held that the demand of duty needs to be confirmed. Coming to such a conclusion, he passed the following order. (i) I confirm the demand for an amount of Rs.49,88,529/- (Rupees Forty Nine Lakhs Eighty Eight Thousand Five Hundred and Twenty Nine Only) for M/s. SSL, being the Customs duty on 14853 kgs. of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to it for re-consideration of the entire issue after hearing both sides and taking into consideration the contentions raised on the merits of the show cause notice. In view of the above directions of the Hon'ble High Court, this matter is taken up for disposal. 4. The learned counsel appearing on behalf of the appellant would urged as under: (i) The statements of Shri Venkatesh were recorded under duress, they were not voluntary. (ii) There was violation of principles of natural justice as documents listed at Sl. No.13 to 19 at Para 30 at page 128 of the paper-book were not supplied. They were also not given a copy of the record of personal hearing. (iii) There are factual errors in arriving at the alleged difference between the quantity in the books and which were actually available. The stock of silk fabrics meant for export as samples which were lying in the sampling room was not at all considered by the DRI officers on 14.5.1998. This was an unintended omission on the part of the DRI officers and also on the party of the appellants. The total quantity of samples sent for the purposes of booking orders to foreign countries is 518.074 k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... improperly removed from the warehouse. As regards penalty, the right provision would be Section 117 only. Hence, invocation of Section 28 is not at all correct. Section 28 is applicable only when duty has not been levied or has been short levied or erroneously refunded which is not the case. Similarly, Section 112 speaks of penalty for improper importation of goods. That section cannot be invoked while dealing with Section 72 covered under Chapter IX of the Customs Act, 1962, which is exclusively a provision for demand of duty and levy of penalty in cases similar to the present one. (xiii) Section 114A deals with penalty for short levy or non-levy of duty in certain cases. This is not sustainable in law for the present case as it is not covered either under Section 28 of the Customs Act or under Section 112 of the Customs Act. (xiv) The impugned order has not dealt with the violation of the provisions of Section 72. Neither is a mention of Section 117. In that case, the impugned order should fail. On this ground alone, the impugned order is liable to be set aside. (xv) As per Ministry s Circular No.21/95-Cus. dated 10.3.1995, before taking action on the 100% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confessional statement which was retracted but again reiterated on 11.11.1998. It is his submission that the statements which were recorded of the Managing Director clearly gives the details which were only known to him. He would submit that the provisions of Section 72 could have been invoked in this case but it does not mean that just because the Revenue has not invoked Section 72, the entire show-cause notice is void. It is his submission that the conditions of Notification having been violated, the Revenue has correctly demanded the duty foregone. He would also submit that once the goods were held to be liable for confiscation, penalties imposed under Section 112 of the Customs Act will be applicable as the Revenue has invoked the provisions of Section 28 for the demand of duty on finding that there was violation of conditions of Notification and hence goods were liable for confiscation under Section 111 of the Customs Act, 1962. It is his submission that the penalty imposed on Managing Director was imposable for the offences made by him, as he was directly connected with the clandestine removal of duty free raw materials. 6. We have considered the submissions made at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such an allegation in the show-cause notice, the appellant was not able to produce any evidence that they had in fact used the said materials for the purpose of manufacture of the goods for export out of India. We find that the point raised by the learned counsel regarding non-applicability of Section 28 (1) of the Customs Act, 1962 would be of any consequence, as goods were imported by the appellant availing the benefit of Notification No.13/1981 and were assessed to nil rate of duty relying upon the benefit of said Notification. If the conditions of Notification are violated, the said notification clearly mandates about the demand of duty. We are of the view that once a benefit is extended to the assessee under Notification for discharge of nil rate of duty and such conditions are violated, it would amount to short levy which requires to be demanded from the assessee only under Section 28 (1) of the Customs Act, 1962. It is also seen from the records that the appellants were charged for violations of conditions attached for the import of goods. On such violation being done, the penalties were imposed under Section 112(a) and 114A of the Customs Act, 1962. In this case, there is ..... 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