TaxTMI 
TaxTMI 
2020 (1) TMI 981
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....1962 (Section 28AA with effect from 08.04.2011). c. I confiscate the excess found goods valued at Rs. 3,08,18,771.47/- (Rupees Three Crores Eight Lakhs Eighteen Thousand Seven Hundred Seventy One and Forty Seven paise) under Section 111(l), 111(m) & 111(o) of the Customs Act, 1962. However, noticee is given an option to redeem the same on payment of Redemption Fine of Rs. 50,00,000/- (Rupees Fifty Lakhs only) under Section 125 of the Customs Act, 1962 which shall be recovered from them. d. I impose a penalty of Rs. 25,00,000/- (Rupees Twenty Five Lakhs only) under Section 112(a) of the Customs Act, 1962 on the noticee which shall be paid by/ recovered from them. Since penalty is imposed under Section 112 in view of 5th proviso to the Section 114A, no penalty can be levied on them under Section 114A." 2.1 Imports made by the Appellants were self assessed by them under Section 17(1) of the Customs Act, 1962, they being the ACP Clients. They had imported various parts of Aircraft classifiable under heading 8802, and cleared them availing the benefit of exemption under Notification No 21/2002-Cus dated 01.03.2002 (at S No 346D) as amended by Notification No 37/2007....
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.... Aggrieved by the impugned order, appellants have filed this appeal. 3.1 We have heard Shri Prashant Patankar, Consultant for the Appellant and Shri Ramesh Kumar, Assistant Commissioner, Authorized Representative for the revenue. 3.2 Arguing for the appellants, learned consultant submitted that- • The proceedings in the impugned order have been initiated entirely on the basis of M/s Pee Dee Kapur & Co report, pointing to shortages and excess in the inventory of the imported goods. No separate verification of the inventory was undertaken by the department to determine the actual shortages and excesses. The report of M/s Pee Dee Kapur & Co itself has observed that at most of the locations, the verification list of items provided to them was not an updated list and the same was updated post their verification. Also no statement of M/s Pee Dee Kapur & Co was recorded; • Internal Audit was undertaken by the appellants after the receipt of M/s Pee Dee Kapur & Co report to reconcile the excesses and shortages pointed out. After reconciliation undertaken by the internal audit, the excess and shortages will be Rs. 6,02,240/- and Rs. 8,83,709/- respectively. W....
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....hey fulfil the conditions of exemption notification in respect of the imported goods post importation as has been held by the Apex Court in case of Mediwell Hospitals and Healthcare Pvt Ltd [1997 (89) ELT 425 (SC)]. Also in case of Wockhardt Hospitals and Heart Institute [2006 (200) ELT 15 (Bom)] has held that duty can be demanded without invoking extended period of limitation under Section 28. • The issue is squarely covered by the decision of the Hon'ble Bombay High Court in case Greaves Cotton [2008 (225) ELT 198 (Bom)] wherein it has been held that duty can be demanded in respect of shortages in respect of the goods against which CENVAT credit has been taken. • Since the goods which have been shown in excess are the goods which have been cleared without declaring them on the import Bill of Entries, they are liable for confiscation and the order of Commissioner confiscating the goods and allowing them to be redeemed against redemption fine cannot be faulted with. • The penalty under Section 112(a) of the Customs Act, too is justified for the reason that appellants have failed to properly account for the goods cleared by them availing the be....
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....covered the following Locations of Air India Limited (Wide Body) (Erstwhile NACIL (A)) Mumbai; • Old Airport - Kalina (OAP) • New International Passenger Terminal Complex (NPTC) • Air India Building (AIB) BASIS We have based our assignment on listing of balance quantity and their unit values retrieved from "Oracle" system used by MMD and other related records/ documents, made available to us by AGM MMD for various stores. METHODOLOGY ADOPTED 1. On the basis of computer record for inventory made available to us, we carried out the physical verification for the same in the presence of Departmental Representatives 2. After verification, discrepancies observed during physical verification were submitted to the Departmental Representatives, Manager or In Charge of the respective stores and their acknowledgement & confirmation was obtained. The same has been reported in enclosures of this report. 3. During physical verification, availability of item was relied upon on the basis of Item Code Nos. allotted to the concern items and description by the stores representative. 4. We have carrie....
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....ctober 31st,2012 is credible record of the shortages and excesses of parts which were not accounted for and should be accepted as correct report since the outsourcing work of maintaining records was given to the Chartered Accountant's firm by the noticee themselves on quarterly basis and that the noticee had failed to submit any corroborating document to justify the report of their Internal Audit Team as proper and correct. I also find that since the audit report submitted by the outsourcing firm reported such a huge shortage and excesses, the noticee has, as an after-thought, generated a report prepared by the Internal Audit Team. Since the noticee has not submitted any base/corroborating documents to prove that the report prepared by the audit team is proper and correct. It appears that this report is a feeble and ill-founded defence for evading payment of duty on the short / excess found goods. In view of the same, I find that the noticee has cast aspersions on Pee Dee Kapur's Report wherein they should have initiated proper investigation before forwarding the same to their Internal Audit Team which they failed to do so. I find that there were differences between Pee Dee Kapur's....
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....t that during the course of Audit of Records of the respondent by Internal Audit Officers of Central Excise, it was observed that in the Cost Audit Report for the year 2002-2003, for the physical verification of inventory, there was shortage of raw material worth Rs. 33,42,161/-. The amount involved CENVAT (Central Value Added Tax) Credit of Rs. 5,34,746/-, which was claimed by the assessee, although raw materials were not used in or in relation to manufacture of the final product. Thus, Cenvat credit worth Rs. 5,34,746/- was claimed without justification or rather without being entitled to do so. Show cause notice dated 15-12-2004 was issued directing the assessee to show cause as to why demand of Rs. 5,34,746/- may not be confirmed, why interest under Section 11AB of the Central Excise Act, 1944 may not be recovered and why penalty under Section 11AC of the Central Excise Act, 1944 may not be imposed. Upon considering the statement of Shri S.P. Ponde, Senior Executive (Commercial) and Authorized Signatory of the noticee for Central Excise matters, as recorded on 9-2-2005 and even after taking into consideration a letter-cum certificate dated 16-5-2004 furnished by Shri D....
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....nvat Credit Rules, 2002, any other material is required to record a finding in favour of the Department that it is the burden of proof of the assessee to "justify the Cenvat credit availed. It is necessary to refer the orders of the Joint Commissioner as also the Commissioner (Appeals) because they have applied Rule 7(4) in correct perspective. In view of failure on the part of the assessee to account for utilization of the inputs which were short and upon which Cenvat credit was claimed, but were not accounted in the Audit Report as utilized in the production, the two lower authorities have decided the matter against the assessee, and therefore, those authorities cannot be said to have read Rule 7(4) in an incorrect manner. 6. So far as the order of CESTAT is concerned, it has mainly relied upon the decision of the Tribunal, at Delhi in the matter of Maruti Udyog Ltd. v. Commissioner of C. Ex., Delhi-III, reported in 2004 (173) E.L.T. 382. We must state here itself that the decision of the Tribunal is certainly not binding upon us and it is a question as to whether we should approve the view taken by Delhi Tribunal in Maruti Udyog case and followed by the Tribunal in the ....
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....person claiming exemption certificate should establish that the pre-conditions prescribed under the notification are fully satisfied. ......" This view has been reiterated by the Five Member Bench of Hon'ble Apex Court in case of Dilip Kumar & Co [2018 (361) ELT 577 (SC)] in following words- "38. We will now consider another Constitution Bench decision in Commissioner of Central Excise, New Delhi v. Hari Chand Shri Gopal, (2011) 1 SCC 236 = 2010 (260) E.L.T. 3 (S.C.) [hereinafter referred as 'Hari Chand case' for brevity]. We need not refer to the facts of the case which gave rise to the questions for consideration before the Constitutional Bench. K.S. Radhakrishnan, J., who wrote the unanimous opinion for the Constitution Bench, framed the question, viz., whether manufacturer of a specified final product falling under Schedule to the Central Excise Tariff Act, 1985 is eligible to get the benefit of exemption of remission of Excise duty on specified intermediate goods as per the Central Government Notification dated 11-8-1994, if captively consumed for the manufacture of final product on the ground that the records kept by it at the recipient end would indicate its "int....
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....with fine after the option is exercised? According to the Tribunal, the duty demand under Section 125(2) can be sustained only if the option is exercised and not otherwise. In other words, the finding of the Tribunal is that the owner of the confiscated goods is not liable for payment of duty under Section 125(2) if he does not exercise the option of redeeming the goods by paying the fine in lieu of confiscation imposed under Section 125(1). 41. We find it difficult to accept the above interpretation of Section 125(2). It is well established in law that the taxing statutes have to be construed strictly and unless the literal meaning leads to anomaly or absurdity, the golden rule of literal interpretation should be adhered to. Literal meaning of Section 125(2) is that, whenever the goods liable to be confiscated under the Customs Act are allowed to be redeemed by giving an option to pay fine in lieu of confiscation imposed under Section 125(1), the owner of such goods or the person referred to in Section 125(1) shall, in addition to the fine be liable to any duty and charges payable in respect of such goods. In other words, under Section 125(2), the duty payable on the conf....
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....t allowed clearance for home consumption unless the duties of customs as assessed and other charges payable under the Act are paid. Thus, the duties of customs leviable on importation gets crystalised on assessment and has to be paid before seeking an order for clearance of the goods. Where the imported goods are confiscated before an order for clearance is made with an option to redeem the goods on payment of fine in lieu of confiscation, then the duty on such goods does not become payable on imposition of fine in lieu of confiscation but has to be paid before seeking clearance of the goods. In such a case if the clearance of the goods is not sought for, the question of paying duty does not arise at all. 45. However, in cases where the dutiable goods are cleared for home consumption without payment of duty and are confiscated subsequently under Section 111(o) with an option to redeem the same on payment of fine in lieu of confiscation imposed under Section 125(1), then, the duty on such goods as per Section 125(2) becomes payable, on imposition of fine in lieu of confiscation. The reason is that, in such cases, the clearance of the goods was subject to fulfilment of the c....
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....firmed by Hon'ble Bombay High Court as reported at [2015 (318) ELT A259 (Bom)], holding as follows we are not in position to uphold the order of confiscation of goods and the fine imposed- "9. We have given careful consideration to the submissions. As rightly pointed by the learned counsel, the Hon'ble High Court of Punjab & Haryana, in Raja Impex case (supra), has rendered decision on identical issue. One of the substantial questions of law placed before the High Court by the department was whether redemption fine under Section 125 of the Customs Act could be imposed where the goods were neither available for confiscation nor cleared under bond/undertaking. The Hon'ble High Court followed the ratio of the Apex Court's judgment in Weston Components case and held that, as the goods in question had been allowed to be cleared without execution of any bond/undertaking by the importer, no redemption fine could be imposed under Section 125 of the Customs Act in lieu of confiscation. Reproduced below is the relevant part of the High Court's judgment. "12. It may also be noticed here that in the case of M/s. Weston Components Ltd. v. Commissioner of Customs, New Delhi (su....
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....s been imposed when the goods were not available for confiscation, the same having been exported many years ago. Neither was any bond with a security in any format available with the Department to be enforced. In view of this it is clear that the redemption fine imposed was totally outside the purview of legal provisions in this regard. Therefore, we set aside the order impugned and allow the appeal with consequential relief as per law." (emphasis supplied). Dismissing the department's Civil Appeal filed against the above order of the Tribunal, the Apex Court ordered vide 2005 (184) E.L.T. A36 (S.C.) as under: "We see no reason to interfere with the impugned order. The appeal is dismissed." (emphasis supplied) In the result, the view taken by the Tribunal in Chinku Exports case stands affirmed by the Apex Court and consequently the similar view taken by the P & H High Court in Raja Impex case is a binding precedent while the contra decision of the Madras High Court in Venus Enterprises case ceases to be good law on the point. It may be noted contextually that the dismissal, by the apex Court, of the SLP filed by M/s. Venus Enterprises did not have the eff....