AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (7) TMI 146
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....s of shortage of imported materials and non-movable items; DRI has undertaken investigation and found shortage of 29,145.65 Meters of silk; after investigation, DRI issued Show Cause Notice dated 27.08.2008; the allegations were mostly based on audit reports except the allegation of shortage of 36409 Mtr/1609 pcs of silk fabrics reimported. The demands raised in the Show Cause Notice were confirmed by Commissioner of Customs, Bangalore, Commissioner of Customs, Bangalore, vide impugned Order 02/2010 dated 24.03.2010; Learned Commissioner confirmed the duty demand of Rs. 1,19,08,353 along with interest and penalty while confiscating the goods imported duty free. Hence the appeal, C/1139/2020; the appellants deposited an amount of Rs. 75, 60,000 during investigation. 2. Learned Counsel for the appellants, Shri N. Rajagopalan submits that the impugned order has been passed assuming that the shortages have been accepted by the Managing Director and Manager Imports-Exports; a perusal of their statements would clearly establish that the appellant has given due explanation; in their letters dated 18.03.2006 to SBI and letter dated 13.06.2006 to Canara Bank, the appellant has categoricall....
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....bulation in paragraph 6301 the order would dearly establishes that the re-imported goods were re-processed and re-exported; there was no mis-declaration at the time of re-import; * Since the shortages were duly explained, without admitting the same, there was no question of retraction from the statements. Commissioner is wrong in concluding that the shortages were admitted and the statements were not retracted. * in respect of the goods under Sl. No.1, and 2, the alleged shortage was due to work-in-process goods; as this very name suggests, these goods were under process and hence allegation of not being used in export productions fails; in respect of Sl. No.5 and 6, shortages are not established; re-processing, re-importing and export are continuous process; hence, it is not correct to say they were not used in in connection with exports. * in respect of Sl. Nos. 3, 4 and 7 of the table, its alleged that duty has not been paid on them; in respect of Sl. No. 3, duty is of export and hence, confirmation of duty is premature; in respect of Sl. Nos. 4 and 7, the goods are available within the bonded premises duly covered by a bond; hence no duty was required to be paid till de-b....
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.... hence a liberal interpretation is called for. The Hon'ble Apex Court has in paragraph 7 of the judgment in Moser Baer India Ltd Vs CC, Noida 2015 (325) ELT 236 (SC) interpreted the scope of the exemption notification 53/97-Cus. The Apex Court has ruled that it is not necessary that the material which is imported into India has to be used in the manufacture of articles which are to be exported out of India. Even if the said material is used "for the purpose of manufacture of articles" or "for being used in connection with the production or packaging or for job work", the same shall still be covered by the aforesaid notification and thus would not attract any customs duty. The judgment of the CESTAT in CCE, Hyderabad Vs Dr. Reddy Lab Ltd., 2010 (253) ELT 316 (Tri-Bang.) is also to the same effect; in any case, the appellant has submitted copies of a few shipping bills to the adjudicating authority; he has not appreciated the evidence in proper perspective. Out of 12 shipping bills, 4 pertained to exports from the re-imported stock; commissioner observed that the quantity exported vide these 4 SBs is less compared to the re-imports; Commissioner attempted one to one correlation w....
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....rmitted under section 28; the extended period cannot be invoked as proper declaration was made in the bills of entry; in terms of judgment of the Apex Court in Moser Baer India Ltd (supra) the demand is time barred; assessment orders were not reviewed; as the appellant has shown that duty itself is not payable, interest is also not attracted; Board have vested the Chief Commissioners with powers to waive interest vide their circular No.10/2006-Cus dated 14.02.06; accordingly, the adjudicating authority ought to have desisted from charging interest. Learned Counsel also submits that as there was no mis-declaration, confiscation tinder section 111(m) is not tenable; as the goods are used in export production or in connection with export production, confiscation under section 111(o) is also not tenable; as the goods are not seized, no confiscation can be ordered. Learned Counsel further submits that penalty under section 114A is not attracted as the duty has not been levied on account of collusion or any willful mis-statement or suppression of facts; shortages were alleged without 100% physical stock taking; looking at the volume handled by appellants, shortage may not be even 1%; Com....
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.... without seeking extension was also considered; as per Notifications 53/97-Cus dated 3.6.97 and 52/03-Cus dated 31.3.2003, exemption is available only when the goods imported duty free are used in manufacture of the export goods; appellant accepted the shortages of imported goods and the fact that goods re-imported were not re-exportable; contention that duty cannot be demanded before expiry or the bond period is incorrect; appellant has failed to provide satisfactory explanation to the investigating authorities with regard to the irregularities in the stock verification; the contention of the appellant that there is no allegation of clandestine removal is incorrect. 12. Tracing the chronology of events, Learned Authorised Representative submits that DRI visited appellants on 1.6.2006; statements of Shri K Sheshadri Manager (Exports) were recorded on 11.10.2007, 18.10.2007, 21.11.2007 and 23.11.2007; statement of Shri Deepak Jagany Chief General Manager (Fin) was recorded on 15. 11.2007; stock verification was conducted on 22.11.2007 and 11.12.2007; statement of Shri Shyam Goenka, MD was recorded on 28.12.2007; appellants submitted data on 20.5.2008 and on 05.6.2008 and SCN was is....
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....41 (SC); 1998(98) ELT 50 (Mad); 2013 (289) ELT 3 (SC) followed in 2011 (270) ELT 643 (SC) (viii). Mysore Chipboards Ltd Vs CCE, Mysore 2012 (282) ELT 112 (Tri-Bang.) (ix). Hazari Singh Vs Union of India 1999 (110) ELT 406 (SC) (x). Kollatra Abbas Ram Vs GOI & Others 1984 (15) ELT 129 (Ker) (xi). CCE, Mumbai Vs Kalvert Foods India Pvt Ltd. 2011 (270) ELT 643 (SC) (xii). Ahmednagar Rolling Mills Pvt Ltd Vs CCE Aurangabad 2014 (300) ELT 119 (Tri. Mumbai) (xiii). CCE, Delhi- IV, Faridabad Venus Ill pea Paramount Pvt Ltd 2006 (204j ELT 22 (P & H) (xiv). CC, Mangalore Vs Jindal Vijayanagar Steel Ltd 2017 (346) ELT 378 (KAR.) 15. Heard both sides and perused the records of the case. The main allegations in the SCN are about the shortage of the imported material at the appellant's premises which were certified by their internal auditors and later verified by the officers of DRI. The officers of DRI have found in addition to the shortages detected by the auditors, shortages in respect of goods claimed to have been re-imported by the appellants in consequence to the rejection of the same by the foreign buyers. The details of shortages noticed by the auditors and the officers o....
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.... they duty cannot be demanded. The appellants, moreover, pleaded that the demand cannot be made in terms of the warehousing provisions as the Bond period is not over. They also contested that demand cannot be under Section 28 as the goods were imported after duly filing the Bills of Entry and after due examination by the officers. They also submitted that penalty cannot be imposed under Section 114A of Customs Act,1962 and the goods cannot be confiscated. 17. Revenue contends that audit of annual accounts of a company is compulsory and is indispensable part of business; all companies registered under Company's Act 1956 are required to maintain proper books of accounts in terms of provisions of Sections 209, 224 & 224(1) of the Company's Act 1956. Revenue argues that in the instant case, audit was conducted, report was prepared, finalized and submitted by M/s Gnanoba & Bhat, Chartered Accountants; further the "Report on Audit of Inventory and Receivables" have been prepared by the M/s Gnanoba & Bhat in accordance with the generally accepted principles of the casting and in line with the mandatory Accounting Standards (AS-2) and that they have based their report on Annual Financial ....
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.... to SBI is before the officers visited the premises of the appellant. The contents of the letter, reply by Bankers etc. have not been verified and discussed in detail. Other contentions of the appellants regarding the non-accounting of stock of work in progress; physical impossibility of counting the stock within 2 days; shortage being within permissible limits; eligibility to retain samples in terms of FTP etc have not been investigation and answered. Officers have not taken physical stock. Therefore, we find that this extent, we hold that demand of duty in respect of SI No. 1 to 5 & 7 of the table given at Para 59.2 of the OIO are not sustainable. 19. Regarding the shortage of 36049 Mtr/1609 Pcs in respect of re-imported export goods, we find that the appellants submitted that no physical stock was carried; Manager, Import Export has stated that re-imported stock was not separately stored and they got mixed with regular stock and therefore, one-to-one co-relation was not possible. They also submitted that among the shipping bills, they provided to the Department, four shipping bills pertain to the export of re-imported goods after processing. However, we find that Learned Commis....
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....tilized within the prescribed period nor any extension was sought. We find that among other conditions, Notification No. 52/2003 requires the appellants "to maintain proper account of the receipt, storage and utilization of the goods." The investigation conducted by the Revenue shows that the so-called re-imported goods were not found in the factory premises and no proper accounts of the same has also been done. We find that the appellants have taken the plea that import, export, re-processing and re-export is a continuous exercise and that the re-imported goods were in the work in progress. We find that this argument is not acceptable. It is not the case of the appellants they have maintained records showing the receipt, utilization and disposal of re-imported goods. Under the circumstances, we find that the appellants have violated the conditions of the Notification and in terms of the Bond they have submitted at the time of import, they are liable to pay duty along with applicable interest. Therefore, to this extent, we find that demand in respect of Serial No. 6 above is sustained. Learned Counsel for the appellants relied upon the Final Order No. 21297-21298/2019 dated 20.12.2....