Per T.K. Jayaraman : These appeals have been filed against the OIO No. 03/2000 dated 25.1.2000 passed by the Commissioner of Customs, Bangalore.

2. The brief facts of the case are as follows:

The appellant is a 100% EOU set up to manufacture mulberry silk fabrics. They were permitted to import raw silk yarn duty free. Intelligence was received that the appellants resorted to diversion of the imported duty free material in violation of the provisions of 100% EOU scheme. Searches were conducted at various premises. There was difference between the stock of raw silk and the finished goods, which were available at various locations in the factory and the book balances. The statements of Shri U.B. Venkatesh, Managing Director of the Company were recorded under Section 108 of the Customs Act. In the statement he has admitted diversion of raw silk imported duty free to the local market. There was also evidence of manipulation of the productions figures in view of diversion of the raw silk to local market. These facts have been admitted by Shri Venkatesh. The appellants had deposited a sum of Rs. 18 lakhs vide TR 6 Challan dated 15.5.1998 and 16.5.1998 towards customs duties and other liabilities. The investigating officers estimated that the total quantity of imported raw silk removed clandestinely to be 15,543.40 Kgs. While arriving at the above figures, they have taken into account 30% wastage as per industry norms. As removals have taken place in small quantities over a period of time as per the statement of Shri Venkatesh, the mean value of total inputs has been adopted for arriving at the duty payable by the appellants. Show cause notice was issued to the appellants for demand of duty on the raw silk surreptitiously removed. Penalties were also proposed. After completing the procedural formalities, the Commissioner passed the impugned order confirming a demand of Rs. 49,88,529/- towards Customs duty under proviso to Section 28 (1) of the Customs Act, 1962. Interest under Section 28AB was demanded. Equal penalty under Section 114A of the Customs Act, 1962 was imposed on the first appellant. A penalty of Rs. 10 lakhs has been imposed on Shri U.B. Venkatesh, MD. The appellants have strongly challenged the impugned order. Hence, they have come before this Tribunal for relief.

3. Shri Ramesh N., the learned Advocate appeared for the appellants and Shri Ganesh Havanur, the learned SDR for revenue.

4. The learned advocate urged the following points:

(1) The statements of Shri Venkatesh were recorded under duress. They were not voluntary.

(2) There was violation of Principles of Natural Justice as documents listed at Sl.Nos. 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.

(3) 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 part of the appellants. The total quantity of samples sent for the purposes of booking orders to foreign countries is 518.074 Kgs. The said samples have been sent by air through reputed courier services thus evidencing, the proof of export.

(4) The appellants requested the wastage to be fixed at 34.76% and if it is admitted, difference in raw material to the extent of 4607.902 Kgs. would be got covered.

(5) The show cause notice and the impugned order speaks of Section 28 (1), Section 28AB, Section 65, Sections 111 (d), 111 (o), 112 (a) (i), and 114A of the Customs Act. These provisions are not applicable to the present case. The correct provisions would be Sections 17, 46, 58, 59, 60, 61, 64, 65, 68, 71 and 72 of the Customs Act, 1962. The provision for imposing penalty in this case would be 117 and not 114A.

(6) The instant