2019 (6) TMI 1033 - AT - Customs

Tribunal overturns penalties for lack of evidence; revenue's case weakened by witness statement flaws

M/s Bharat Udyog, Suresh Pal, Harvinder Singh, Grape Marketing Pvt. Ltd., Chetan Jain Director, Lalit Gupta, Manish Gupta, Raman Gupta Versus Commissioner of Customs, Noida

M/s Bharat Udyog, Suresh Pal, Harvinder Singh, Grape Marketing Pvt. Ltd., Chetan Jain Director, Lalit Gupta, Manish Gupta, Raman Gupta Versus Commissioner ... Issues:1. Confirmation of duty of Customs against M/s Bharat Udyog2. Imposition of penalties under various sections of the Customs Act3. Allegation of diversion of imported goods in the local market4. Reliance on statement of witness without examination5. Lack of evidence by the revenue to establish the case6. Discrepancies in the revenue's allegations and findingsConfirmation of duty of Customs against M/s Bharat Udyog:The appeals arose from an Order-in-Original confirming duty of Customs against M/s Bharat Udyog. The duty was confirmed to the extent of Rs. 60,97,885 along with penalties under Sections 114A, 112(a), and 114AA of the Customs Act. The appellants were partners of M/s Bharat Udyog or M/s Grape Marketing Pvt. Ltd., involved in the import of goods on high sea sale basis. The dispute related to the import of Remelted Lead Ingots procured under an advance authorization scheme for manufacturing lead alloys in J & K. The appellants filed Bills of Entries for clearance of goods, which were then transported to Kathua for manufacturing final products meant for export.Imposition of penalties under various sections of the Customs Act:Penalties were imposed on the appellants under Sections 114A, 112(a), and 114AA of the Customs Act. The revenue alleged diversion of the entire consignment of imported goods in the local market, leading to the demand for payment of forgone customs duty. Investigations were initiated, culminating in the impugned order confirming the demand and imposing penalties. The Original Adjudicating Authority relied on a statement by a witness from M/s Grape Marketing Pvt. Ltd. to support the allegations.Allegation of diversion of imported goods in the local market:The revenue alleged that the imported goods meant for manufacturing lead alloys at the appellants' factory were diverted in the local market. The allegations were primarily based on the witness statement, which lacked specificity and was not substantiated by further evidence. The revenue failed to establish the diversion conclusively, as the goods were transported with proper documentation, including toll receipts, and the exported lead alloys were not disputed.Reliance on statement of witness without examination:The revenue's case heavily relied on the statement of a witness, Shri Ved Nath Tripathi, without examining him during adjudication. The statement lacked specific details and was not corroborated by additional evidence. The Tribunal found the reliance on the sole statement unjustified and unwarranted, highlighting the lack of thorough investigation by the revenue.Lack of evidence by the revenue to establish the case:Apart from the witness statement, the revenue failed to provide substantial evidence to support its allegations of diversion of imported goods. The Tribunal noted discrepancies in the revenue's findings and highlighted the lack of investigation into crucial aspects, such as the transportation process and the authenticity of documents issued by transporters.Discrepancies in the revenue's allegations and findings:The revenue's allegations of diversion of goods and non-utilization for export purposes were contradicted by the appellants' production of toll receipts and export records. The Tribunal found the revenue's case weak, lacking evidence of alternate procurement sources or concrete proof of diversion in the local market. The impugned order confirming the duty demand and penalties was deemed unsustainable, except for the admitted liability by M/s Bharat Udyog.In conclusion, the Tribunal set aside the penalties imposed on all appellants, except for the admitted liability by M/s Bharat Udyog, highlighting the lack of substantial evidence and weak grounds for confirming the duty demand.