2025-VIL-1063-CESTAT-CHD-CU
  1. Home
  2. 2025-VIL-1063-CESTAT-CHD-CU

CUSTOMS CESTAT Cases

Customs – Sections 28 and 58 of Customs Act, 1962 – Import of goods – Allegation of clandestine removal – Jurisdiction to issue show cause notice – Appellant, a 100% Export Oriented Unit (EOU), obtained warehousing license under Section 58 of the Act for purpose of warehousing of duty-free imported goods and for in-bond manufacturing of their export products – On conclusion of investigation, officers alleged that Appellant had been diverting duty-free imported goods into local market and were fabricating records to show clearance of goods for exports/deemed exports without any actual movement of goods – After issuance of show cause notice, Commissioner confirmed demand of duty – Whether Central Excise Officers have jurisdiction to issue show cause notice to recover Customs Duty in respect of an EOU – HELD – Central Government has issued Notifications from time to time authorizing officers of Central Excise as officers of Customs – Vide Circular No.16/2004-Cus., it was clarified that proper officer for investigation, issue of show cause notice and adjudication is the officer having administrative control over EOU and accordingly, Commissioner of Central Excise was authorized to administer 100% EOUs and as proper officer for issuance of SCN. Central Excise authorities have jurisdiction over EOUs under their administrative control to issue show cause notices demanding customs/excise duties – Impugned show cause notice is not without jurisdiction – Appeal partly allowed - Maintainability of show cause notice – Whether department has made out a case for issue of show cause notice – HELD – Impugned show cause notice, though alleges that raw material and capital goods procured duty free have been cleared without payment of duty and without appropriate permission, does not refer to any bill of entry under which impugned raw material was imported availing Notification No.53/97. Bill of Entry is the basic document, vide which, quantity imported and warehoused and duty foregone etc. can be ascertained. Demanding of any duty without reference to any authentic documents, is not only without any basis but also is not permissible. On the single point alone, show cause notice falls flat – Show cause notice demanding duty cannot proceed on inaccurate and incorrect figures. Stock taking was done in a very casual and lackluster manner. Non-raising of an objection by Appellant on stock taking cannot be a justification for issuance of show cause notice on such ascertained stock after a lapse of more than five years – Department has not made out a case for issue of show cause notice - Issuance of show cause notice – Bar of limitation – Whether show cause notice is barred by limitation – HELD – Revenue issued a show cause notice alleging clandestine removal on basis of stock improperly ascertained five years ago – Case of Revenue is that Appellants have executed a B-17 Bond as per Notification No.53/97 and demand was raised in terms of bond executed and therefore, limitation will not apply. Said issue has come before Tribunal in a few cases and it was continuously held that limitation provided under Section 28 of the Act applies inspite of conditions of B-17 Bond – Extended period could not have been invoked in absence of requisite ingredients – Appellants have a strong case in their favour on limitation. Impugned show cause notice is barred by limitation - Demand of duty – Sustainability – Whether demand of Customs duty, on various counts, confirmed on Appellant is sustainable – HELD – As far as demand of duty on various shortages, removal for job work/export is concerned, Commissioner relies on stock taking and statement of Authorized Signatory of Appellant, who is stated to have accepted the shortages and diversion of goods imported duty free in domestic market. Commissioner loses sight of fact that stock was not physically verified and it was only an estimation. Clandestine removal cannot be alleged on basis of stock-taking which was done only on eye estimation. Statement not corroborated by any evidence brought on record to establish diversion of impugned goods, cannot be relied upon. Investigations conducted did not provide any evidence to prove that Appellants have diverted goods into local market. Demand confirmed on account of shortages found, clearances for job-work and export, is erroneous and legally not sustainable – Demand raised under deemed exports are on a different footing from demands raised on basis of shortages, as these are based on claim of Appellants themselves. Confirmation has been mainly on basis of re-warehousing certificates, without going into other evidences put forth by Appellants – Though impugned order is liable to be set aside, issue needs to go back to adjudicating authority to re-quantify demand on deemed exports claimed by Appellants.
Download File

Quick Search

/

Advance Search

GST Resources

/

Gst Rate Finder

Weekly Summary

VIL Video

GST changes in July '25
By Vivek Jalan

Create Account

Security-Code
New Code?

Log In

New User ? Forgot Password ?

Forgot Password

Security-Code
New Code?
Please Note: This facility is only for Subscribing Members.

Email this page

Feedback this page

Schedule a Demo

Schedule a demo to know the features and advantages of VILGST portal. Get to know the tips to find the desired results in faster way.

Caselaw Request Form (CRF)

Didn’t find what you are searching for? No worries, please give us the following details and VIL will email you the desired Caselaws at the earliest:

Security-Code
New Code?