Parry Sugars Refinery India Pvt Ltd Vs Commissioner of Customs (Preventive) (CESTAT Hyderabad)
M/s Parry Sugars Refinery India Pvt Ltd (the appellant) is an SEZ unit engaged in importing and processing bulk raw sugar. The appellant also operated three private bonded warehouses licensed under Section 58 of the Customs Act, 1962, located at Gowthami Godown, Vakalpudi, and New Port Area, Kakinada. Imported raw sugar was transported to the SEZ unit either directly from the port via Bills of Entry (BE) filed on the SEZ portal or indirectly through the private bonded warehouses using Into-Bond and Ex-Bond BEs filed on the ICEGATE portal. The BEs were assessed by authorities at the time of exit from the warehouse and entry into the SEZ unit.
During investigations, the Customs department identified alleged discrepancies in accountal at Gowthami Godown and raised concerns about certain goods, leading to the issuance of a Show Cause Notice (SCN) dated 07.04.2017. The adjudicating authority imposed a duty of Rs.1,34,19,320 under Section 72(1)(d) and penalties under Sections 72(1)(d), 112(a), 117, and 114AA. Confiscation of goods and Redemption Fine (RF) under Section 125 were also imposed.
The appellant challenged the duty demand of 1145.52 MT of unaccounted sugar, arguing that the calculations were incorrect and did not account for legitimate losses. The breakdown provided by the appellant showed discrepancies due to weather-related loss, including 742.45 MT of quality degradation and 222.23 MT of sugar washed out completely during Cyclone Roanu. The appellant also noted that certain shipments were rejected at the port, and there was no fresh intake of 328.66 MT, which had been considered by the department in its demand. The appellant argued that Section 72(1)(d) could not apply to goods properly ex-bonded and transported to the SEZ unit or exported. Section 23 of the Customs Act permits remission of duty on goods lost due to natural calamities, supported by insurance claims.
