TaxTMI 
TaxTMI 
2015 (1) TMI 368
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....ects for a period of 10 years. On the basis of the said permission, the Assistant Commissioner of Central Excise issued a Private Bonded Warehouse Licence No.1/95 for manufacture and export of Plastic Carry Bags classifiable under Chapter 39 of the First Schedule to the CETA, 1985 at the premises of 500A, Perali Road, Virudhunagar. The Assessee was permitted to import the raw materials namely HDPE/LDPE/LLDPE/PP granules (in short, plastic granules) duty-free in terms of Customs Notification No.53/97-Cus. dated 6.3.1997, through Tuticorin Port, subject to the conditions amongst others that the imported duty-free plastic granules would be used by the Assessee for in-bond manufacture of export goods (plastic carry bags). 2.1 On 12.1.2001, the Central Excise Officers of Headquarters Preventive Unit of the Madurai Commissionerate visited the Assessee's factory. As a follow up action, the said officers, visited the Assessees sister unit namely M/s. Priya Mills, (M/s. Priya), M/s. Rajalakshmi Mills, (M/s. Rajalakshmi) and M/s. Universal Poly Bag situated adjacent to Assessee's factory premises and also searched various other premises and seized several documents and recorded statement....
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....d on them under Section 112/117 of the Act, 1962 and separate penalty under Rule 209A of the erstwhile Central Excise Rules, 1944. There was also a proposal to impose penalty on high-sea seller of duty-free imported plastic granules to the Assessee, namely:- M/s. Alagendran Group Companies, Chennai, M/s. Ramya Polymer Agencies Pvt. Ltd., Madurai, M/s. Sri Lakosha Polymer (P) Ltd., Coimbatore and M/s. Seven Seas Polymers Pvt. Ltd., Karur, under Section 112 of the Customs Act, 1962. All the noticees were directed to submit their reply to the Commissioner of Central Excise, Madurai. 4. The Assessee and the other co-noticees submitted reply to show-cause notices. On 23.9.2003 and 24.9.2003 the Assessee cross-examined various persons including the concerned Central Excise officers who attended export-import formalities at the Assessees factory, as permitted by the Adjudicating authority. The Assessee and others appeared in personal hearing on 31.3.2011 and 1.4.2011 before the adjudicating authority. The Assessee raised a preliminary objection insofar as show-cause notice dated 26.3.2002 is not valid and liable to be dropped on the ground that the Superintendent of Central Excise is ....
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....against appeals of the Revenue in respect of dropping of demand of central excise duty. 7. All these appeals were heard extensively on 29.6.2014, 23.7.2014, 24.7.2014 and 25.7.2014. Both sides argued at length and also filed written submissions with compilation of case laws. The learned Special Counsel appearing for Revenue reiterated written submission, also referred to grounds of appeal, earlier written submission and case laws filed by them. He explained the modus operandi of diversion of duty-free virgin granules by the Assessee, as they obtained such granules either purchasing from High Seas Sellers (HSS) or directly importing them. The imported granules reached their private bonded warehouse and removed the same through their sister concerns M/s. Priya Mills and Rajalakshmi Mills under out-passes. Thereafter, the said sister units sold the imported granules to the same HSS and other local buyers under the cover of their invoices. It is stated that 6966 MTs of duty-free virgin plastic granules were resold to HSS and 1176 MTs were sold to others. The Out-Registers/Out-Passes maintained at the Assessees premises are corroborative with the records of HSS and other dealers/man....
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....orded approval of show-cause notice. The learned Special Counsel also filed a compilation of 'Statutory Provisions for Issue of SCN - Finance Act, 2000 - Commissioner Orders'. 8. The learned Senior Advocate on behalf of the Assessee and other co-noticees submits that the entire proceeding suffers from gross illegality. It is submitted that show-cause notice dated 26.3.2002 was issued by the Superintendent of Central Excise (SPAC) in violation of 3rd proviso to Section 28(1) of the Act, 1962 as it stood at the relevant time. It was issued without prior approval of the Chief Commissioner of Customs. It is also submitted that the Superintendent of Central Excise is not the proper officer under the Act 1962. All the appeals filed by the Revenue should be dismissed on this ground alone. He relied upon various decisions. 8.1 On 12.1.2001, the Central Excise officers of the Headquarter Preventive Unit visited and searched the factory premises and other premises of the sister units of the Assessee. The goods seized from the sister unit M/s. Priya on 12.1.2001 were re-processed granules. The officers drew the samples of the seized material but no test report was communicated. It is im....
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....isit of the officer on 12.1.2001) for the period from 23.8.2002 to 22.8.2007. The Superintendent of Customs, Tuticorin, permitted the Assessee to transact business with Customs House, Tuticorin as self-exporter / importer. 9.2 The main raw materials for manufacturing plastic carry bags are HDPE, LLDPE, LDPE and PP granules and master batches. They imported the plastic granules without payment of duty directly and also through High Sea Sellers under exemption Notification No.53/97-Cus. dated 6.3.1997 subject to the condition that the duty-free imported granules shall be used for the manufacture in-bond export goods. They procured master batches from the domestic markets. As per Notification No. 53/97-Cus. the Assessee is required to fulfill the conditions amongst others, as under:- (1) The imports, clearance, export, transfer and usage of the goods and goods manufactured there from and the net foreign exchange earning as a percentage of export shall be subject to the conditions of the "Export and Import Policy" (2) The importer has been granted necessary license for the import of the goods for the sai....
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....goods without payment of duty for the purpose of manufacture of articles of export out of India. So, it is appropriate to examine as to whether the Assessee had discharged the export obligation as per EXIM Policy. 10.1 The Revenue relied upon the various corroborative evidences and supporting evidence to establish that the Assessee exported bogus items and the imported goods were diverted in the local market. On the other hand, the Assessee placed various substantial evidences to establish that the goods exported were genuine. It has also refuted the allegations made in the show-cause notice. 10.2 Revenue in Grounds of Appeal contended as under:- (i) Evidences on inflated Weight, Value and Export of bogus items:- The modus adopted by the Assessee for inflating quantity and value of export of bogus items revealed manipulation jointly for mutual benefit of the Assessee and M/s. Dart (i.e. customer). By a fax message recovered from the premises of Inspecting agency, M/s. Dart had requested for ....
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.... (2) Your invoice 39/99, Nafia Invoice 100235 A (Our P.O. 8941) - Please explain why you added three item 900-50-60-10 when the total amount of the invoice is identical to our P.O) $116 added for resin)? I dont understand why you are complicating the invoicing'. The fax message dated 8.4.2000 of M/s. Dart along with proforma invoice would show that the Assessee had supplied more items instead of one item ordered by M/s. Dart. (iv) Evidence on Role of Inspecting Agency:- Shri P.S. Nathan, Proprietor of M/s. Apporva Agency (Inspecting Agent of M/s. Dart) in his statement dated 6.9.2001 had clearly explained how the price had been fixed. It is obvious from the statement that Shri Nathan was fully aware of the price. As the inspection report was based on value of export goods the inspecting agency had to be aware of the basis on which price was fixed. Shri Nathan in his statement dated 15.5.2001, stated that he was not aware of the existence of the Singapore firm. Shri Govindarajan, employee of SGS Ltd. Teynampet, Chennai (another inspecting agency of M/s. Dart) in his statement dated 6.6.2001 stated that weight parameters were not tallying with the....
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....was in possession of 9 extruders and in July 2000, 11 extruders were use. The Fax message dated 12.9.2000 of the Assessee to their customer seized from M/s. Apoorva Agency (Inspecting Agency) stated that their total capacity was 11 containers per month. It was stated by the Assessee in their letter to Mr. Eugune that their capacity, both printed and plain, was 10 containers per month. On reading of the fax message and the letter, it is clearly evident that in the year 2000, the production capacity was around 10 to 11 containers only. Even the other corroborative evidences with respect to the documents recovered from the Assessee and the job worker proved that they have not produced much quantity on job work basis and only intermediate process had been done on job work. 11. The Assessee in their reply to show-cause notice as well as cross-objection filed before the Tribunal and written submissions refuted the allegations, which are briefly as under:- (a) During the entire investigation at the factory or elsewhere i.e. the port of shipment, the Department did not find any material evidence in basing its estimations for exce....
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....bsp; (iii) Since Dart insisted that the bag making should be done by using heat sealing machines to have better sealing strength. (The cost of the machines will be twice or thrice of the normal machines). The company had to import around 5 machines more to accommodate their requirements. (iv) Since bags have to be supplied to supermarkets, Assessee was forced to use more percentage of master batches to create better opaqueness for the bags. (v) They also wanted the bag to be delivered in a printed form and to achieve good printing quality company had to buy graver printing machines. (vi) They were insisting that both the handle width should be uniform and identical and in the process there is bound to be higher rejection which had to be costed to the product value. (f) M/s. Dart insisted that the Assessee should continue to issue proforma invoice for a lesser weight and v....
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....eir liability to recall the container Dart vide letter dated 30.6.2000 suggested the following course of action to the assessee:- (i) That it shall convince the customer to take the goods failing which the consignment would be rejected (ii) It is therefore suggested that the normal operations of selling the goods to merchant exporters and clearing the documents through bank can be avoided since Dart was unwilling to remit the monies before it could sell the consignment to customer (iii) It is therefore suggested that a direct invoice be raised by the Assessee on Dart without involving the bank (iv) Since RBI regulations do not approve of this the Assessee continued with the existing practice of selling the goods to merchant exporters. (h) As regards the documents of Annexure to Show Cause Notice, there was a last minute request from Nafla orally to add a few items and this was acceded to as a business request. The added items were duly invoiced and sale proceeds realized. Since proforma invoice was already sent to Dart, there was a difference between the documents and actual shipment and may be they h....
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....re between 6.38 and 8.13. This shows that all the goods were not of uniform weight and variations are inherent and do exist as a matter of fact. Therefore, a few transactions cannot be the basis for deciding 300 transactions. Normally, the reports are prepared a day or two before the actual export and there is room for rectification before the export which has been done in the instant case. Inspection was done on 27.9.2000 and the export was done on 10.10.2000 and therefore the Assessee had made good the defects pointed out before export of the goods. The actual tonnage of export is only 18.28 Tons under AR4 124 dated 10.10.2000. The role of Shri P.S. Nathan is very limited and it cannot be equated with the role of the Government officials. (l) The Assessee purchased cartons from regular vendors and statements were obtained from them. In addition to the above, the Assessee had themselves manufactured cartons from the good quality corrugated sheets that were received as inter-leaving partitions in the imported containers to hold the slippery plastic granule bags. The above fact is also supported by the seizure of ....
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....es and evidences namely fax message found in their premises. It is seen from the impugned order that the Adjudicating authority had seen from the File that a letter C. No. V/12/14/2001 dated 6.6.2001 by fax was sent by the Deputy Commissioner of Central Excise (Preventive) to Shri Amid Fried of Dart. But no reference was made by the Revenue in the show-cause notice and even before the Tribunal. The Adjudicating Authority has observed as under:- Regarding the allegation that the units at Singapore are fictitious entities, as rightly argued by Global, ECGC, a Government of India undertaking having certified the genuineness and credit worthiness of the said merchant exporters and further standing as guarantor in cases of default in payment, the credibility and existence of the overseas merchant exporting firms cannot be called into question without credible and unimpeachable evidence which is totally absent in this case. 100. It is on record that the Branch Manager, Tamilnadu Mercan....
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....y for dispatch in packed condition. The test conducted, known as load bearing test is merely to ensure that each variety of bag is capable of holding a prescribed weight and if it passes the test there would be no objection for clearing the consignment. Thus Shri P.S. Nathan as an Inspecting Agent has a very limited role to play and he has absolutely no role to play in fixing price or to comment upon the genuineness of either the quantity exported or the existence of overseas firms. In his statement dated 6.6.2001, when asked as to whether Dart had any buying agents in the names of Trinity Concepts, Trident Concepts, Nafla Trading, Oasis Resources and others, he replied that some of the names mentioned were familiar and he had to ascertain from Dart as to whether Dart had any connection with those firms or any of these firms acted as Dart agents. However, in the statement recorded on 6.9.2001, he deposed that the documents shown to him established that the firms Nafia and Trinity were floated by Global to cover up their shady transactions. His volte face defies logic. Besides, in the reply filed by Global, it was pointed out that the suggestion made by Shri P.S. Nathan in para 82 o....
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....common feature in international trade. Sometimes, it is difficult for M/s. Dart to send fax to Virudhunagar office and they would forward it to his office. After going through the entire facts he agreed that the expressions 'manipulated or fabricated' in his statement should not have been used by him as they are incorrect. 12.3 After going through the deposition of Shri Nathan, Inspecting Agency, during cross-examination, it appears that the fax and phone numbers of M/s. Dart were given to the investigating officer for clarification of fax message, purchase order, proforma invoice etc. The adjudicating authority observed that Deputy Commissioner of Central Excise (Preventive) made correspondences but, it was not disclosed in the show-cause notice and therefore it is difficult to accept manipulation of export on the basis of the said evidences. The supply of the goods to the Singapore firms were under ECGC scheme and the details of the said firm are available on record. It cannot be expected that the buyer would come forward to verify their transaction, unless any enquiry would be initiated by the investigating agency and the contention of the Revenue in the grounds of appeal can....
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....items are in the export consignment. We have also seen that the Range Officers in their cross-examination stated that the investigating officers noticed the consignments of export of the goods. It is difficult to accept the plea taken by the Revenue in their appeal as stated above. The failure to examine the export consignment by the investigating officers would raise a benefit of doubt, which would go in favour of the Assessee. 12.7 The Central Excise officers have narrated the procedures of verification of export and import consignment in detail in their deposition during the cross-examination before the adjudicating authority. (I) Shri T. Rajendran, Superintendent of Central Excise during the cross-examination in his deposition dated 23.9.2003 stated that he had served as Superintendent in-charge of the assessee-company. It is stated that after receipt of the intimation of arrival of imported goods, he deputed the officers and based on their report and records, issued the Warehousing Certificate. It is also stated that on receipt of the AR4 Form, he deputed the Inspector to carry out the checks and th....
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....entral Excise, in his deposition on 23.9.2003 stated that on receipt of containers of the imported goods, the Assessee intimated them. They visited the factory and verified the seal and ask them to break open the seal and the goods will be examined. Once the description in the Bills of Entry tallies with the particulars, the goods will be unloaded into the bonded store room. He also narrated the procedure of import and export followed by him as stated by the earlier officers. It is categorically stated that to comply the procedure of export, it would take about two to three hours. They have also examined the finished goods area, which is part of the manufacturing hall. He has noticed the production activities and it is confirmed that the assessee had applied for clearance of wastes and rejects. It is stated that on 12.1.2001 (i.e. the date of visit by the Preventive Officers), he supervised export consignment and the officers were doing investigation and allowed the export of the goods. (IV) Shri M. Subramanian, Superintendent of Central Excise, in his deposition on 23.9.2003 stated that he served as an Inspector of Central Excise in the Range Office of the assessee during the p....
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....d have to see whether the container is loaded or not and whether the container is empty. (b) They would go to the manufacturing hall in the factory premises where the export consignment will be stocked and seen the cartons and count all the cartons by way of files and columns. (c) They took three cartons at random. It is the Departmental officers' prerogative to choose the carton at random. There will be a cellophone tape closing the carton, they would open the carton and would see the contents of the carton and there will be plastic carry bags. The cartons are again closed. Then test the weight of the cartons selected and the weights and tally with the declared weight. They had never found waste in the cartons. (d) There may be minor variations, on an average it should tally with the declared weight. Mild variations are possible and they take 3 numbers of cartons and arrive at the weight. AR4 will be with them. After the sample weighment is over, the goods will be allowed to be loaded. (e) He confirmed the permission letter vide C,No. V/16/108/99 dt. 1.12.2000 for sale of waste and rejects into DTA arising out of production and permission granted, the copy of which....
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.... on 26.3.2002 and all the depositions of the Central Excise officers were taken on 23.9.2003. Personal hearing was granted on 31.3.2011 and 1.4.2011 and adjudication order was passed on 4.6.2012. We find that the officers were not re-examined and the depositions of the officers, were within one and half years from the date of show-cause notice and adjudication order was passed after about 9 years. There is no allegation of collusion between the Central Excise officers and the Assessee. So, we accept the depositions of the officers as legal and proper and reject the contention of the Revenue that the depositions lacked credibility. 12.10 Section 137 of Evidence Act, 1872 provides that examination of the witness, subsequent to the cross-examination by the party who called him, shall be called his re-examination. Section 138 of Evidence Act, 1872, provides that re-examination shall be directed to the explanation of matters referred to in cross-examination. The very purpose of re-examination is to explain matters which have been brought down in cross-examination. We find that no effort was made to re-examine the Central Excise Officers and therefore such statements of Central Excise....
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....oms authorities should not take a contrary view that would render export promotion scheme unworkable. Customs and Central Excise exemptions are dovetailed to export promotion policy. Therefore, the same goods cannot be treated as export by export promotion authority and non-export by another governmental authority. In a three legged race for export promotion by the Customs and Export Promotion authority, the two authorities cannot run in opposite directions. Lack of clarity, if any, should be resolved in a manner facilitating the advancement of the policy and not in a manner that defeats public policy. In the case of CCE, Hyderabad Vs. Sanghi Spinners (I) Ltd. - 2007 (209) ELT 43 the Tribunal rejected the appeal filed by the Revenue and observed that Development Commissioner examined the issue in the light of EXIM Policy and permitted to dispose of goods in DTA. Customs Department cannot take a view contrary to that Development Commissioner. In any event, this fact has a persuasive value to hold that the goods were exported. 13. The other part of the appeal of Revenue is that the Assessee received the imported plastic granules at their factory and thereafter the same were cl....
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....l stock position and the other was fabricated to show surplus stock at the depot of Virudhunagar to enable them to issue sales tax forms. The adjudicating authority should not have allowed the cross-examination of Arun Thangam and S.K. Sridhar as they are co-noticees. (d) If the transaction was genuine and involved transfer of title of goods and amount, the HSS should have received post-dated cheques and not blank cheques. Shri Muralithan, as a partner of M/s. Priya Mills has deposed in his statement dated 23.4.2001 that major quantity of reprocessed granules was received from the Assessee. (e) The Assessee in their letter dated 5.12.2000 had informed the Range Officer that the rejects diverted contained master batches which include inks and materials to render these goods of lesser value as it could be used in the manufacture of buckets, marks etc. So, the claim of the Assessee that the said waste could be reprocessed and sold at a higher value should be rejected. (f) The virgin granules were meant for first use and the reproce....
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....ountal has to be verified at their end and they do not form part of the Assessee's books to defend the matter. It is not uncommon to provide dispatch details to any buyer. As regards fax message dated 14.4.2000, the details have been faxed using the Gobal fax machine. It does not mean consignments have been sent from Global. There is no indication to this effect in the document seized. (iii) The documents referred to as Annexure C-13 is a document sent by Shyam Plastics to Arun Thangam. This is pure calculations and workings and does not suggest any sale of granules or reprocessed etc. In fact this document only goes to vindicate the Assessees stand that Seven Seas arrive at a landed cost including duty and being a sale to 100% EOU excludes the duty components. Commercially it is not viable to purchase the product at a landed cost including duty since whether through high sea sales or through direct import when a 100% EOU imports, the goods are free from duty. Therefore, credit of the duty difference is a very transparent mode of price finalization and nothing adverse could be drawn from such printing pattern.  ....
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....However, for reasons best known, they have chosen not to record the number of machines available and their capacity. The physical stocks of raw material and finished goods were also verified and compared with the statutory register and revenue found no discrepancy and for reasons best known they have not brought out these facts in the mahazar. (vii) Even during the investigation Murali had gone on submitting that waste and rejects will emerge at various stages, extrusion rejects, bag making rejects, printing rejects, quality rejects and rejects which can arise on account of inspection. The chart referred to has only recorded rejects at one stage and that too it pertains to rejects out of few machines out of the total machines. (viii) Now coming to waste, the policy permits the maximum limit of 5% of the total quantity of imported granules. The Assessee were however averaging around 17% and the matter was referred to MEPZ and MEPZ had in turn had referred the matter to Ministry of Petroleum. A technically qualified person deputed by Ministry visited t....
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.... rejects would be sold to M/s. Priya or M/s. Rajalakshmi by stuffing the same in the imported outer bags which originally contain the imported granules. After reprocessing, the sister concerns were selling the reprocessed granules again in the same used packing materials, which would save the extra packing cost. In other words, what were sold only reprocessed granules but the packing materials used were original import of virgin granules. Traders were also insisted on this, since they were able to command a better price if reprocessed granules are sold in outer cover bags with these brand names, since it had a better price. Therefore, the brand name sabic, equate etc. are nothing but the brand names found on the packing materials which contained reprocessed materials arising out of waste and rejects. It is categorically stated that the traders received reprocessed materials from M/s. Priya, M/s. Rajalakshmi and they issued a blank cheque in one for confirming transaction, but the said units were not made party of the proceedings and they are not noticees in the Show Cause Notice. (xi) Revenue relied u....
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....mber 1998 to 12.1.2001 involving customs duty of Rs. 16,13,10,303/-. The details of diversion of goods are as under:- Details Qty. in MTs Annx. No. To Sri Lakosha Polymers - On High Sea Sale 225.25 D-1 To Ramya Polymers - On High Sea Sale 606.75 D-2 To Alagendran Group - On High Sea Sale 1834.00 D-3 To Alagendran Group - On Direct Sale 360.75 D-4 To Seven Seas Polymers - On High Sea Sale 2050.60 D-5 To Seven Seas Polymers - On Direct Sale 1889.28 D-6 To their sister concerns (CPP/Sree Raja) 116.95 D-7 Direct Sale to Local Dealers and Manufacturers 1058.99 D-8 Total 8142.57 14.1 The Assessee in reply to show-cause notice stated that the total quantity of about 3000 MTs as mentioned in Annexure D-1, D-2, D-3 and D-4 are related to sale of reprocessed granules by the sister units, out of about 4290 MTs cleared by the Assessee to their sister units as waste and rejects as mentioned hereinabove. Annexure D-5 and....
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....he Assessee to M/s. Shyam Plastic, consultants who supplied imported plastic granules by way of high sea sales. He was maintaining reconciliation statement of transaction of supplies of Shyam Plastics in his memory pad of computer as he introduced them in his business interest for calculation of commission in his personal capacity in transaction of Shyam Plastic. They have 1200 buyers/dealers in their role. It is stated that his note book form or diary form available in the computer as referred in his statement is the memory pad. He clarified that the noting 'market price = HSS consideration + clearing charges + customs duty' as mentioned in the show-cause notice in respect of supplies of imported plastic granules by Shyam Plastic to the Assessee. It is stated that the abbreviation 'RP' means re-processed granules, in other words, granules are re-claimed from waste which were supplied by M/s. Priya, M/s.Rajalakshmi. It is further stated that the investigating officer did not seize any record or document to show that 2050.60 MTs and 1889.28 MTs had been delivered by the Assessee. He categorically stated that the investigating officer did not seize any single consignment during trans....
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....ng before the Tribunal, it was informed that the said samples were not sent to chemical test. Further, the investigating officers detained the plastic granules packed in bags bearing foreign marking from the premises of M/s. Alagendran Polymers (P) Ltd. Chennai vide mahazar dated 19.1.2001, M/s. Alegandran Exports Ltd, Chennai vide mahazar dated 19.1.2001 and M/s. Lakosha Poly Packs Industries, Virdhunagar vide mahazar dated 19.1.2001. The Assessee in reply to show-cause notice stated that the goods were detained in three premises of the high sea sellers but there was no seizure of the goods and no show-cause notice was issued which would establish that the goods were reprocessed granules and not virgin granules. 14.5 Revenue in the grounds of appeal before the Tribunal stated that high sea sellers had admitted the fact of receipt imported virgin granules and no show-cause notice was issued for confiscating these detained goods, which is apparently a mistake. Furthermore, it is seen from the deposition of Shri Arun Thangam, Director of M/s. Seven Seas Polymers Ltd. before the Commissioner of Central Excise on 23.9.2003 that the investigating officers did not seize any consignmen....
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....e granules only by the foreign markings on the bags in which the granules were packed. Thus, the officers were not sure as to whether the contents were of foreign origin or not. Secondly, the offending nature of the goods was as told and admitted by one Shri David who was a security. To my mind, nay, even to a person of reasonable disposition, evidence of such incriminating nature cannot be vouched by a security staff. Thirdly, neither Shri Muralidharan nor any other staff admitted to the offending nature of goods. Fourth, though samples were drawn for test under test memos addressed to the Chemical Examiner, Customs House, Chennai, the result of chemical test is not known. Under these circumstances, I have no reason to hold that the goods seized were imported plastic granules belonging to Global. Since right from inception Global and Priya had been maintaining that the goods seized were reprocessed granules, I agree that the goods are as they said and not as alleged in the notice. 14.7 The Hon'ble Supreme Court in the case of Polyglass Acrylic Manufacturing Co. Ltd. Vs. Commissioner of Customs, Vishakapatnam - 2003 (153) ELT 276 (SC) observed that test report obtained at the in....
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....evidences. In view of the decision of the Honble Kerala High Court in the case of P.V. Vargheese (supra), the third party statement should be tested in cross-examination and as such we are unable to accept the contention of Revenue that the adjudicating authority should not allow the cross-examination. Apart from that, the purpose of cross-examination is to find out the truth and detection of falsehood in human testimony. It is well settled that the adverse party have a right to cross-examine and in the facts and circumstances of the present case, the adjudicating authority righty had given such opportunity to do so. 14.9 In this context, the observation of the Tribunal in the case of Tejwal Dyestuff Industries Vs. CCE, Ahmedabad - 2007 (216) ELT 310 (Tri Ahmd.) may be referred as under:- It appears that, having obtained confessional statements the Revenue Officers did not carry out the detailed investigation into the relevant aspects of the case, particularly, the Bank accounts of Bhimanis and the working of the assessee's factory. Recording of the confessional statement w....
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.... the particulars in the RG-23 Register reflecting the invoices and the existence of octroi receipts as also the expert opinion in respect of LAB having been used in the final product, altogether create a doubt as to the correctness of the contents of the statements of Naresh, Hitesh and Ilesh. The pre-ponderance of probabilities in the context of all other evidence vis-a-vis the confessional statements does not lead to the conclusion of inadmissibility of Modvat/Cenvat credit as reached by the Commissioner. 14.10 In the present appeal, the main thrust of the Revenue is that the investigating officers conducted searches of 40 premises from 18.1.2001 and ending on 8.9.2001 and recorded 51 statement of various persons. There is seizure of voluminous records recovered from various premises and on that basis the charges were framed in show-cause notice. The charges were framed, mainly on clandestine removal of duty-free imported plastic granules from warehouse and sold in DTA and the export of bogus consignment. On the other hand, the Assessee submitted that 40 premises were searched but not a single gram of duty-free imported granules was found. Similarly, the goods were exported o....
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....nd documents recovered from their premises. Revenue contended that the Department had a strong and meritorious case had the adjudicating authority chose to apply the standard proof of preponderance of probability, which the adjudicating authority failed to do so. Revenue relied on the decision of the Hon'ble Madras High Court in the case of Santhanam Vs. Collector of Customs, Madurai - 1995 (79) ELT 564 (Mad.) and the decision of the Hon'ble Supreme Court in the case of Collector of Customs, Madras & Others Vs. D. Bhoormull - 1983 (13) ELT 1546 (SC). In the case of Santhanam (supra), the issue involved is that principle of natural justice have been violated, inasmuch as the statement recorded from several persons have been relied upon, without furnishing a copy of statements to the petitioner. In the case of D. Bhoormull (supra), the issue involved is that the effect of application of Section 106 of Evidence Act to cases under Section 167(8) of the Sea Customs Act, which relates to discharge of burden of proof. In the facts and circumstances of the present case, both the case laws relied by the Revenue are not applicable, as stated above. 15. Revenue in the grounds of appeal sta....
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....Ltd. Calcutta Vs. Collector of Central Excise, Calcutta - 1984 (15) ELT 451 (d) Reliance Industries Ltd. Vs. Collector of Central Excise, Mumbai - 1999 (112) ELT 653 (e) A. Rathinam Proprietor, Michael Match Works Vs. Collector of Central Excise - 1992 (60) ELT 451 (f) Kale Khan Mohd. Hanif Vs. Collector of Central Excise, Nagpur - 2001 (132) ELT 374 In all these cases, the Tribunal had observed that the Central Excise officers visited the factory of the Assessee as it was in physical control by the Department. So, it cannot be concluded that there has been deliberate suppression of facts with intent to evade payment of duty. In the present case, after considering the deposition of the Central Excise officers, as stated above, that the Departmental officers were in a position to have sufficient knowledge of the process ....
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....received granules from the applicant in exchange for master batches sold, other corroborating documents, etc. which have to be tested on the touch stone of admissibility as evidence by in-depth inquiry, including by way of cross-examination. This could be achieved only at a regular, adjudication forum, and not at the Settlement Commission, whose wherewithal is very limited. As a result, the Bench is not persuaded to accept the liability of Rs. 71,63,397.27 as full and true liability of the main applicant-company, for admission of this application. This is, as already stated above, without any prejudice to the legal validity and the correctness of the pleas raised by the applicant against the allegations in the SCN and their plea that the notice has not adduced adequate and acceptable evidence in support of the said allegations, on all of which the Bench refrains from any view. In view of the above, we are unable to accept the contention of the Revenue that the adjudicating authority had not considered the observation of the Settlement Commission. In other words, the adjudicating authority tested the case on the touch stone of admissibility as evidence by in-depth inquiry, inclu....
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....unable to accept that the impugned order is a non-speaking order. 17.2 On perusal of the records, we find that the Assessee in their reply to show-cause notice and written submission before the Tribunal attempted to refute the charges by para-wise comments. The adjudicating authority had also considered the depositions made during cross-examination. The decision of the Hon'ble Supreme Court in the case of Vinod Solanki (supra) though relied upon by the Revenue, would help the Assessee. In that case, the Hon'ble Supreme Court observed as under:- In the instant case, the Investigating Officers did not examine themselves. The authorities under the Act as also the Tribunal did not arrive at a finding upon application of their mind to the retraction and rejected the same upon assigning cogent and valid reasons therefor. Whereas mere retraction of a confession may not be sufficient to make the confessional statement irrelevant for the purpose of a proceeding in a criminal case or a quasi criminal case but there cannot be any doubt whatsoever that the court is obligated to take int....
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.... enquiry with the foreign buyer and the correspondences with the foreign buyer as referred in the adjudication order was not disclosed in the show-cause notice and even in the appeal before the Tribunal, and such burden cannot be shifted on the Assessee. In this context, it must be noted that there may be error of appreciation of facts and law by the adjudicating authority, which would be cured by the appellate forum as per our legal system and therefore such expression towards the Adjudicating authority who passed the adjudication order in exercise of quasi-judicial power is not proper. The Tribunal in the case of Indian Petrochemicals Ltd. Vs. Collector of Central Excise - 1992 (61) ELT 138 (T) observed as under:- In the face of the officials having physical control and the records being checked and scrutinised every day and in that event to hold that there is a calculated fraud with connivance of the officials of the Department does not behold to the status of the learned Collector. It is now well settled that the adjudicating officers or Appellate Court should use temperate lan....
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....ept of 'reasonable opportunity' includes various safeguards and one of them, in the words of the learned Chief Justice, is : (a) An opportunity to deny his guilt and establish his innocence, which he can only do if he is told what the charges leveled against him are and the allegations on which such charges are based; 28. It is no doubt true that at the stage of show cause, the person proceeded against must be told the charges against him so that he can take his defence and prove his innocence. It is obvious that at that stage the authority issuing the charge-sheet, cannot, instead of telling him the charges, confront him with definite conclusions of his alleged guilt. xxxx xxxx xxxxx xxxxx xxxx xxxxx 33. The principle that justice must not only be done but it must eminently appear to be done as well is equally applicable to quasi judicial proceeding if such a proceed....
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....p; (b) in any other case, within six months from the relevant date, serve notice on the person chargeable with the duty, or interest which has not been levied or charged or which has been so short-levied or part paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice : Provided that where any duty has not been levied or has been short-levied or the interest has not been charged or has been part paid or the duty of interest has been erroneously refunded by reason of collusion or any willful misstatement or suppression of facts by the importer or the exporter or the agent or employee of the importer or exporter, the provisions of this sub-section shall have effect as if for the words "one year" and "six months", the words "five years" were substituted. Provided further that where the amount of duty which has not been levied or has been short-levied or erroneously refunded or the interest payable has not been paid, part paid or erroneously refunded is one crore rupees or less, a notice under this sub-section shall be served by the Commissioner of Customs or with his p....
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....ence (received for concurrence and issue of SCN and denova notice) in respect of Division: Dindigul and Virudhunagar including HPU (Headquarters Preventive Unit) cases of above Divisions. (d) Commissioner of Central Excise, Madurai, vide Establishment Order No. 91/2001 dated 20.7.2001 allocated charges among DC/AC and one Deputy Commissioner was allocated for the work of Preventive, Service Tax, Statistics, SPAC and Training. 19.3 On the basis of the above Office Orders, the learned Special Counsel submitted that the Superintendent who has signed the present show-cause notice, assigned the work of issue of show-cause notice in respect of Dindigul and Virudhunagar including cases of Headquarters Preventive Unit. Hence, the Superintendent was competent to issue the show-cause notice, once the same was approved by the Chief Commissioner. In support of his contention the learned Special Counsel placed a copy of the letter C.No. V/39/15/6/MDU/2002-CZO dt. 08.03.2002 issued by the Additional Commissioner (CCO), O/o the Chief Commissioner of Central Excise, Chennai. The relevant portion of the said letter is reproduced below:-  ....
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....sp; b) Section 2 (b) of the Central Excise Act, 1944 defines a Central Excise Officer which includes "any other officers of the Central Excise Department". c) The Board's Circular No.F.No.437/8/910Cus-IV dated 13.5.1992 as partially amended vide circular No.47/97-Cus dated 6.10.1997 also emphasized that proceedings under the extended period of limitation for demanding duties through show cause notices can be issued by the Commissioner of Customs and the cases decided only by them. Modifications, if any, have been only in the limited extent of low revenue matters where it could be issued and adjudicated by the Additional commissioner. (d) Relied upon the decision of the Hon'ble Supreme Court in the case of Commissioner of Income Tax, Bihar & Orissa Vs. Maharam Pratapsingh Bahadur of Gidhaur, (1961) 2 SCR 760 / AIR 1961 SC 1026 / (1961) 41 IT....
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....he show-cause notice vide Office Order dated 18.7.2001. This is clear from the order dated 7.6.2001 of the Commissioner that the new Section known as Show Cause Notice Prior Approval (SPAC) will be responsible for the processing of Show Cause Notice for taking approval of the Commissioner or Chief commissioner. Further, the Commissioner, by Establishment Order No. 91/2001 dated 20.7.2001 allocated the Deputy Commissioner to monitor the works allocated to the Superintendent of new Section SPAC. The Superintendent would process the proposal and concurrence received for issue of SCN and denova notice in respect of the Division, which would be monitored by the Deputy Commissioner of Central Excise. It is settled rule of interpretation that where express provisions were made in the statute to exercise the power by a particular person then the doctrine of implied power cannot be invoked. After amendment of provisions of Section 28 of Act, 1962 and Section 11A of the Act, 1944, the Commissioner of Central Excise, Madurai, by letter dated 27.6.2000 stated that the concurrence by the Commissioner or Chief Commissioner based on monetary limit has become part of law for the purpose of issue o....
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....statement and the demand of central excise duty is not sustainable. 23. We find force in the submission of the learned Special Counsel that the percentages of Waste and Rejects appear to be excessive should be examined. Revenue contended in their appeal that the Assessee had obtained permission for the first time for clearance of 216.250 MTs of rejects and 230.050 MTs of waste from the jurisdictional Assistant Commissioner only on 14.2.2000 and they effected sale of rejects to DTA much before the date of permission from the Assistant Commissioner. It is also stated that the Assessee had obtained approval from the Development Commissioner, MEPZ, increasing the percentage of waste only after the investigation of the Preventive Unit on 12.1.2001. The Assessee in their reply stated that they were averaging the waste around 17% and hence the matter was referred to MEPZ. So, this issue is required to be examined as per EXIM Policy. 23.1 In the case of L.R. Brothers Indo Flora Ltd. Vs. Commissioner of Customs 2008 (232) ELT 77, the Tribunal held as under:- 5. We have given careful con....
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....y the Board of articles manufactured wholly or partly from the goods for the period stipulated by the Board or such extended period as may be specified by the said Board. It is thus clear that if the Board of Approval or the Development Commissioner concerned determines that the units failed to export the fixed percentage of articles for the specified period, then in such case it may be held that the conditions of the exemption notification has been violated. At this stage, it will be open for this Department to issue a show cause notice to the unit for demanding the due duty on the imported goods. Normally the customs authorities should immediately inform the Development Commissioner in case a 100% EOU ceases production prematurely or fails to commence production or export within the stipulated period. In case the Development Commissioner initiates action against the unit for non-fulfilment of export obligation etc. simultaneously, the customs authorities should issue show cause notice for failure to comply with conditions of Notification 13/81-Cus., dated 9-2-81. The demand of duty should be confirmed only after a definite conclusion has been arrived at by the Development Comm....