TaxTMI 
TaxTMI 
2017 (7) TMI 165
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....nd executed with the Department, inasmuch as, they had procured huge quantity of raw materials, namely, polyester fabrics from some of the 100% EOUs under CT-3 certificate, but instead of utilising the same in the manufacture of goods and exporting the same, they exported cheaper varieties of made-up garments i.e. scrarves and dupattas manufactured out of bought out items from local market, and the raw materials procured duty free were diverted into the Domestic Market. Consequenlty, show cause notice was issued to them proposing confiscation of the goods and penalty under the Customs Act,1962 to the Appellant and other noticees. On adjudication, the ld. Commissioner though imposed penalty under various provisions of the Customs Act, 1962 o....
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....of the Act, which has not been disputed by the respondent-Unit. It is an admitted position that the respondent being a 100% EOU, diverted the goods illicitly into the open market and the raw materials which were procured by forgoing the Customs duty were not used for the purpose for which they were imported. From the material on record, it appears that when the respondent-Unit imported the goods and was permitted to ware house the goods in the private bonded warehouse without payment of the duty, the respondent-Unit furnished the Bond in form B-17. In the said form, the respondent-Unit also agreed to abide by the conditions mentioned in the written Bond. The relevant conditions are reproduced as under :- 10. We, the obligor, shall fulfill ....
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....half by the Director General of Foreign Trade, pay duty of Excise leviable on such articles under Section 3 of the Central Excise Act, 1944 and duty of Customs & Central Excise leviable on the raw materials/ components parts used in the manufacture of such articles as are not allowed to be sold in India in accordance with the provision of Exim policy. 13. We, the obligors, shall comply with the conditions and limitations stipulated in the said Import and Export Policy as amended from time to time or the Assistant/Deputy Commissioner of Customs/Central Excise permitting the goods imported into India or sourced indigenously for the purpose of aforesaid or the articles manufactured or package therefrom to be taken outside the undertaking temp....
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.... which were procured by forgoing the Customs duty were not used for the purpose for which they were imported, the Customs authorities were authorized to confiscate such goods which are illicitly diverted. It is required to be noted that the respondent - Unit was permitted to deposit the goods in a bonded warehouse without making payment of the Customs duty, on certain terms and conditions and one of the condition was that the finished product was required to be exported, meaning thereby the goods which were permitted to be imported and thereafter deposited in a warehouse without payment of customs duty, were not required to be sold in the open market in India. Thus, once the confiscation of such goods was authorized, Section 125 of the Cust....
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....rned, considering the language used in Section 125 of the Customs Act, we do not agree with the same. As observed hereinabove, Section 125 of the Act shall be applicable in a case where confiscation of any goods is authorized by the Customs Act. If it is found that there is breach of any of the provisions of the Customs Act and/or even the Export/Import Policy, and/or there is a breach of any of the terms and conditions on which goods were permitted to be imported without payment of duty and permitted to be deposited in the Warehouse, confiscation of such goods can be said to be authorized thereafter, when it is found that the goods are not available for confiscation as the same were illicitly diverted to the open market, and the purpose fo....