TaxTMI 
TaxTMI 
TaxTMI 
2022 (6) TMI 432
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....tiny of the documents revealed that, besides physical exports, Appellant also cleared Brass and Copper Alloys Rods to 100% EOUs and SEZ and availed the benefit of Deemed Exports thereon and subsequently they claimed Advance Authorization from the DGFT, Rajkot for duty free import of raw materials i.e. Brass/Copper Scrap/Zinc Scrap; that they had done physical exports under claim of Rebate and also clearances were made to 100%EOU and SEZs on payment of Central Excise Duty which was later claimed back through refund from the DGFT (in case of EOU units) and their Jurisdictional Central Excise Division (in case of SEZ units); that they have availed the Cenvat Credit of CVD and SAD on imports of Brass scrap after payment of duty and same was later shown as utilized for payment of duty on clearances made for domestic sales as well as exports and deemed exports; that the clearances were mostly done to 100% EOUs without any CT-3 and on payment Central Excise Duty which was later claimed back through refund of Terminal Excise Duty (TED) from the DGFT, Rajkot and in a few cases the clearances were made to 100% EOUs under CT-3 and similarly where clearances of Brass Rods and Copper Alloys Ing....
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.... duty on imported material as also Central Excise Duty on the material cleared with payment of duty under valid duty paying documents to the tune of Rs. 1,26,99,092/- and Rs. 90,59,957/- along with interest and penalty. The said show cause notice was also proposed penalty on the Director as well as respective EOUs. The show cause notice was adjudicated by the Principal Commissioner vide impugned order dated 31.03.3017, wherein he passed order as under: (i) Hold that goods of 261009 Kgs. of Brass Scrap imported is liable for confiscation under the provision of Section 111(o) of the Customs Act, 1962. Since the goods are not available either physically or released after seizure through bonds, refrain from the imposing any redemption fines under the provisions of 125 of the customs Act, 1962. (ii) confirmed the demand of Customs duty amounting to Rs. 1,26,99,092/- leviable on import of total 261009 Kgs. of Brass Scrap imported under the provisions of Section 28(4) of the Customs Act, 1962. (iii) recover interest at the appropriate rate on above amount of Custom Duty under the provisions of Section 28AA of the Customs Act, 1962. (iv) Impose penalty of Rs. 1,26,99,092/- and an a....
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....lized such materials in manufacturing of final products and cleared the same in domestic market with payment of duty. In view of para 4.12 of HBP Exporters are allowed to export material in anticipation of authorization. 2.2 He submits that Appellant transported materials to M/s Jakap Metind Pvt. Ltd. and M/s Apple International in his own vehicle and to M/s Shrijikrupa Exports through either M/s Haresh Transport or M/s Shree Laxmi Transport Co and to M/s Srijan Exports through M/s Jaipur Golden Transport Co. Pvt. Ltd., which is an admitted facts and the department has questioned transportation of materials only to M/s Srijan Exports and M/s Shrijikrupa Exports. The explanation for transportation of goods by the owner of the transport agency was not questioned. On the contrary the statement of authorized person of such transportation agency were conveniently ignored and proves beyond doubt that material has been transported to M/s Srijan Exports and M/s Shrijikrupa Exports. 2.3 He further submits that on 5-9-2013, the officers visited the factory premises and impounded certain documents including statutory record, copy of ARE-3 etc. That officers recorded statement of authorized ....
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....TP for the year 2009- 2014 and has observed that Appellant has not fulfilled the condition prescribed under the said notification i.e. has not produced certificate issued by the Jurisdictional Central Excise Officers certifying the use of materials within 6 months from the date of clearance. However, he has overlooked the facts that Appellant have not availed the exemption under Notification No. 98/2009-CUS dated 11.09.2009 but have availed the exemption under Notification No. 96/2009 -CUS dated 11.09.2009 and have obtained certificate from Chartered Accountant certifying the fact that the material imported is used in manufacturing of final product. In terms of Notification No. 96/2009 clause (v) the importer is required to obtain the certificate either form Jurisdictional Central Excise Officer or from the Chartered Accountant. 2.7 He argued that for the charges of clandestine removal positive evidence required. He placed reliance on the following decisions: * Commissioner of C.Ex. Vs. P.D. Industries Pvt. Ltd. 2016-340-ELT 249 (Tri. Del) * Davinder Sandhu Impex Ltd. Vs. CCE 2016(337) ELT 99 * Century Metal Recycling Pvt. Ltd. Vs. Commissioner of C.Ex. 2016(333)ELT483 * C....
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....by wrongly availing customs exemption notification and the central excise duty has been demanded on clandestine clearance of the finished goods in the open market. 4. We have considered the submissions made by both the sides and perused the Appeal records.As regard the demand of customs duty we find that the case of the department is that Appellant have obtained 11 Advance Authorization from DGFT for duty free import of raw material under Notification No. 98/2009 -CUS. dated 11.09.2009. The said Advance Authorization and subsequent Export Obligation Discharge Certificate have been obtained by Appellant on the basis of clearance shown to have made to four 100% EOUs and claimed the same a Deemed Export Benefits. It has been alleged that in actual no such clearances have taken place and accordingly the exemption of customs duty for the imports made under the said 11 Advance Authorization has been wrongly availed and the same is required to be rejected. Whereas, here Appellant produced the sample copy of Bill of entry and claimed that they have not availed the exemption under Notification No. 98/2009-CUS dated 11.09.2009 but has availed exemption under Notification No. 96/2009-CUS dat....
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....al for the first time in the impugned order has sustained the proceedings on the basis of first proviso to Section 4(1)(a) of the Act. It was argued that the first proviso to Section 4(1)(a) of the Act was never invoked by the Department either in the show-cause notice or in the impugned order and it was for the first time that the Appellate Tribunal in the impugned order has sought to sustain the impugned order by invoking the first proviso to Section 4(1)(a) of the Act. It is thus seen that the Tribunal has gone totally beyond the show-cause notice and the order of the Collector, which is impermissible. The Appellate Tribunal cannot sustain the case of the Revenue against the appellants on a ground not raised by the Revenue either in the show-cause notice or in the order. 17. In this context, we may usefully refer to the judgment of this Court in the case of Reckitt & Colman of India Ltd. v. CCE. This Court held that it is beyond the competence of the Tribunal to make out in favour of the Revenue a case which the Revenue had never canvassed and which the appellants had never been required to meet." [Emphasis supplied by us]. 4. In view of the said decision of this Court in Sa....
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....anctioned under those provisions, the proper authority is DGFT who can initiate proceedings against the petitioners for violation of exemption notification and the Advance Authorization Licence. Now, it is an admitted fact that the Advance Authorization Licence of the petitioners is still valid and no action is taken by the DGFT for breach of condition thereof. As such, initiation of proceedings by the customs is nothing but an exercise of power in excess of jurisdiction. When the Custom Department has exercised power in excess of jurisdiction, than, this Court can exercise its extraordinary writ jurisdiction under Article 226 of the Constitution of India. Therefore, considering peculiar facts of this case, the impugned order-in-original is required to be set aside. 36. In view of the above, the present petitions deserve to be allowed. Accordingly, the petitions are allowed. The impugned Order-in-Original No. MUN-CUSM-000-COM-030-16-17, dated 31-3-2017 passed by respondent No. 2 is hereby quashed and set aside." 4.4 Further, we also observed that Para 4.1.5. of Chapter 4 of the Foreign Trade Policy allowed the Advance Authorization holder to dispose off the product manufactured ....
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.... Customs Act, 1962 could be demanded on these goods which the appellant manufactures in its factory in India and sells in the domestic Tariff area and therefore no penalty can be imposed on the appellant, or anyone else for this contravention. We are not able to understand the rationale for demanding duty on the goods under consideration under Section 28 of the Customs Act, 1962. The Show cause notice does not propose to demand custom duty on the Fabrics the appellant imported on any ground such as that they were not utilised in the manufacture of exported goods. Such a demand could be justified where goods are manufactured by a 100% export oriented unit in a factory in a free trade zone using imported raw materials or components are cleared to a buyer in the domestic tariff area they are not imported.The 100% export oriented unit and a free trade zone are located in India. What is correctly payable is excise duty. The proviso under sub-section (1) of Section 3 of the Central Excise Act, 1944 provides that the duties of excise payable on such goods manufactured in a free trade zone or by export oriented unit shall be equal to the aggregate of the customs duties leviable under Secti....
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.... the benefit of notification No. 53/97-Cus. dt. 3-6-97, should have discharged the duty. 5. After hearing the ld SDR, we find that the main issue involved relates to the determination of FOB value of export to arrive at the quantum of eligible domestic clearances and whether the same should include only physical export or it should include deemed export as well. If deemed exports are held to be not included, then the quantum of clearances permitted in DTA will be accordingly reduced. This issue has been decided by the Tribunal in favour of the assessee on a number of precedent decisions, holding that the value of deemed export should be included while determining the FOB value of export, based on which DTA clearances are permitted. However, in this case, the assessee is not in appeal before us. The duty on finished goods stands demanded on the ground that the same is in excess of the permissible limit for the purpose of DTA clearance. The department's claim is to the effect that the raw material used in such finished products cleared in DTA should be treated as not used for the intended purposes and the duty on import should be demanded. We do not agree with this view. In this ca....
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....the given set of facts and in absence of any adverse evidence, it cannot be said that finished goods were clandestinely cleared in open market. There are several judicial pronouncements of the Hon'ble Apex Court, High Courts and Tribunal wherein it has been consistently held that in the case of clandestine manufacture and removal of goods, Revenue has to prove it beyond doubt. We rely on the Hon'ble High Court judgment in the case of Commissioner of Central Excise v. Brims Products - 2011 (271) E.L.T. 184 (Pat.) wherein it was held that:- "8. Facts emanating from the records, disclose that the Central Excise authority itself has held with regard to two consignments out of four, that the investigation is incomplete and has been carried out only at the transporters end, thus, does not reveal actual purchase by the buyers. The authorities with regard to the aforesaid two consignments have also extended benefit of doubt to the respondent. We are of the opinion that there could not have any reason for arriving at different conclusion with regard to the remaining two consignments. 9. In our opinion, since the charge was for clandestine manufacture and surreptitious removal of finishe....
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....ements were recorded has not been made available to them by the adjudicating authority. In view of the various judgments relied upon, it was also argued that no investigation has been extended to the suppliers of raw materials or purchasers of finished goods to establish whether such clandestine removal of excisable goods have actually been undertaken by the appellants or not. It was emphasized that cross-examination of the persons whose statements have relied upon is obligatory to be provided especially when the statements are retracted by the appellants. 6. It is observed from Para 3.1 of the show cause notice dated 1-5-2009 issued to the appellants that stock yard of M/s. Sunrise Enterprise, Mehsana was searched by the departmental officers and during such checks it was found by the officers that TMT Bars lying in the stock were embossed with 'VARSANA' on each bar which was explained by Shri Mukeshbhai Virabhai Patel of M/s. Sunrise Enterprise have been manufactured by M/s. Varsana Ispat Limited, Kutch. Further, this paragraph also states that the stock lying in the stock yard of M/s. Sunrise Enterprise also had the stock received from M/s. Sakeen Alloys Pvt. Limited, but on v....
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....de by the investigating authority. (vi) Any cash amounts seized from the factory premises or dealer's premises or residential premises searched during investigation. (vii) Confessionary statements of the persons concerned with the clandestine manufacture/removal of excisable goods. 9. It is observed from the case records that in the present proceedings, there are few confessional statements of the persons which were later retracted by the persons concerned. The confessional statements subsequently retracted can be argued to be an afterthought under a proper legal advice but to observe the principles of natural justice, it becomes necessary to provide cross-examination of such witnesses, as held by various judicial courts including the Hon'ble Supreme Court relied upon by the appellants. In the case of CCE v. Omkar Textiles - 2010 (259) E.L.T. 687 (Guj.), it was held by the Jurisdictional Gujarat High Court that onus is on the Revenue to furnish the evidence to prove the charges of clandestine removal and it is not sufficient if some confessional statements have been given by the Director of the Company. Similarly, in the case of CCE v. Arsh Casting Pvt. Limited [2010 (252) E.....
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....emises have not been corroborated by adducing evidence of any of the customers though the enquiries were conducted at different places as deposed by Shri Anurag Sharma, Inspector, in his cross-examination on 4-3-2002. Out of 19 consignments said to have been cleared by the Appellant No. 1 without payment of duty on the basis of five transporter, we observe that in respect of two consignments, it has been mentioned by the Revenue that the same may not pertain to the Appellants. Further, only one transporter Shri Sanjay Garg of M/s. Balaji Transporter Co. was produced for cross-examination which accounts for only two consignments out of 19 consignments in question. Shri Garg, it is observed from the record of cross-examination, has deposed that they generally work as commission agent and provide transport to Appellant No. 1; the payment is used to be received directly by the drivers after delivery of the goods at the consignee's end and in case the driver did not report back for the next 3-4 days, it was presumed that the goods had reached the consignees end. Further, the name of the Applicant No. 1 on one GR No. 34 had been written not by Shri Sanjay Garg, but by his brother, whose ....
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....of the goods will not stand established when based on the entries made by the assessee's employee in a diary or on the basis of third party's record in the absence of any corroborative evidence. It has also been the consistent view of the Tribunal that the statements of the witnesses, without allowing the assessee to test the correctness of the same by cross-examining those witnesses; cannot be made the basis for holding the allegation against the assessee. (Takshila Spinners v. CCE, supra). Similar views have been expressed by the Tribunal in the case of Haryana Petrochemicals Ltd., supra wherein the Tribunal has held that reliance cannot be placed on the documents maintained by a third party "who did not have the courage to come forward for cross-examination in order to test the veracity and correctness of the private record maintained by him." It has also been held by the Tribunal in the case of Kothari Synthetics Industries v. CCE, Jaipur - 2002 (141) E.L.T. 558 (T) that entries made in the transport Register of the transport company could not be accepted as a conclusive proof of clandestine receipt of goods from that transport company for want of corroboration from any tangibl....
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....e the place of evidence. The Revenue has, thus, not proved its case against the Appellants in respect of 149 consignments. We, therefore, set aside the demand of duty and penalty imposed on Appellant-company and consequently the demand of interest." 11. From the above settled law, it is clear that in a clandestine removal case, the facts of clandestine removal of excisable goods cannot be established only on the basis of certain statements which are retracted later but there has to be positive evidences like purchase of excess raw materials, shortage/excess of raw materials/finished goods found in the stock/factory premises of the appellant, excess consumption of power like electricity, any seizure of cash during the investigation when huge transactions are made in cash. In the present case also, it is observed, from the annexures to the show cause notice dated 1-5-2009 issued to the appellants, that there were huge cash transactions to the tune of Rs. 11.23 Crores. When such large number of transactions involving huge amounts are being undertaken in clandestine removal activities, it is very likely that some cash would have been seized. There is not a single instance where eithe....