TaxTMI 
TaxTMI 
2007 (8) TMI 276
X X X X Extracts X X X X
X X X X Extracts X X X X
....thority completed the proceedings and passed the impugned order. A brief summary of the order is set out in the tabular column given below Appeal No. Appellant Respondent Order-in- Original No. Duty/Penalty Representative for the appellant C/37/2006 M/s. Big Bags India Pvt. Ltd. CC, Bangalore OIO No. 24/2005 dated 16-12- 2005 Customs Duty of Rs. 21,71,073/-; Excise Duty of Rs. 19,24,942/- & Penalty of Rs. 6/- lakh under Customs Act under Rs. 12/- lakh Central Excise Shri K. Ravi Sharikar, Advocate C/38/2006 Smt. Rekha Ravish Kamath, Managing Director, BBIPL -do- -do- Penalty of Rs. 2/- lakh -do- C/39/2006 Mr. Ravish Kamath, Chief Executive Officer -do- -do- Penalty of Rs. 5/- lakh -do- C/47/2006 Suresh Kumar Ramsisaria, Director of M/s. Chakrapani Vyapar Pvt. Ltd. -do- -do- Penalty of Rs. 1/- lakh Shri B. N. Gururaj, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... M/s. Shyam Textiles and Director of M/s. Chakrapani Vyapar Ltd. under Section 112(b) of the Customs Act/Rule 25 of the Central Excise Rules. The appellants strongly challenge the impugned order. 3. S/Shri K.S. Ravi Shankar and B.N. Gururaj, learned advocates appeared for the appellants. The following points were urged. (i) The CBEC Circular No. 122/95-Cus., dated 28-11-1995 requires that on issues relating to interpretation of statutory provisions or the scope of Notification, the matter should be referred to CBEC. In the present case, the issue involved is the eligibility of the appellant to the benefit of exemption Notification No. 52/2003-Cus. dated 31-3-2003 and also Notification No. 22/2003-C.E. Other interpretations of statutory provisions related to private bonded warehouse were also involved. Therefore, it was the duty of the learned Respondent to refer to the Board for further clarification before issuing the Show Cause Notice and saddling the appellant with the demand. The following case laws were relied on to hold that before taking an action the Development Commissioner should have been consulted. (a) Vishal Footwear Ltd. v. CC -1999 (114) E.L.T. 60 (T). (b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pondent is not in accordance with the decision of the Tribunal rendered in the case of Vista Pharmaceuticals v. CC - 2007 (141) ECR 202 (T). (x) The Show Cause Notice has ignored the inward receipts of materials and has taken only outward entries. (xi) The Revenue cannot be permitted to view a document in a one-sided manner but should appreciate the same in totality. If the Revenue had taken into consideration the inwards column of the register, it would be apparent that the worksheets of ,,the Show Cause Notice are based on arbitrary mathematical models having ignored inward receipts of material and taken only outwards en tries. In the inwards in kg in "Material In and Out Register" shows a total of 3,80,376 kgs. This figure has been totally ignored by the department and the investigations which vitiates the worksheets to the Show Cause Notice in their entirety. (xii) According to the appellant, the quantum of stock as per books was 2,19,689.93 kg. The stock purportedly made out by DRI being 2,90,505.80 kg. There should have been an excess stock of 70,815.87 kg and there would have not been any shortage of stock. This has not been appreciated by the Respondent. (xiii)T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s from Big Bags without the knowledge of their owners. The depositions of drivers' show that they were picked up at tempo stand or through intermediary and neither of them knew what kind of goods they were required to transport. (ii) In both the cases, the drivers of seized vehicles have not been impleaded. Only owners have been impleaded. Since owners were not present at the time of engaging the vehicles or loading of goods or movement of vehicles, they did not possess the guilty knowledge that the goods were contraband. (iii) The drivers also did not have guilty knowledge of nature of goods. In the first appellant's case, the tempo was hired from tempo stand at SJP Road, Bangalore. In the second appellant's case, one of the intermediary parties engaged the vehicle and instructed the driver to proceed to Big Bags. Neither person could have known the non-duty paid nature of plastic granules. (iv) When neither owner nor driver had the guilty knowledge, the Commissioner was wrong in ordering confiscation of vehicles. Burden of proof not discharged by the Revenue. (v) Appellants rely on ratio of Upendra Singh v. CC - 2002 (145) E.L.T. 111 (Tri.- Kol.) when the drivers do n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d the case stated that in order to meet the urgent export obligations, the appellant had to procure locally the raw materials. As and when the imported duty free materials are obtained, they would return the materials borrowed. According to him, this was done to meet the exigencies. He emphasized the point that the appellant unit had fulfilled the export obligations and even the Development Commissioner had allowed the unit to exit from the EOU scheme. He said while demanding duty, the Adjudicating Authority has not taken into account the receipt of the raw materials. Further he submitted that on the basis of the DRI investigation, the Development Commissioner issued a Show Cause Notice and the same is still pending. In view of these submissions, he urged that the demand of duty is not sustainable. 6.2 The Adjudicating Authority has examined all the points raised by the appellants thoroughly and he has given very detailed findings. Removal of duty free goods has been confirmed by Shri Ravish Kamath, CEO of the appellant firm. Shri H.N. Ananth Kumar, Manager (Excise & Customs) has also confirmed the removals. There is no allegation that the above statements have been given under ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....order, we find that the Adjudicating Authority while demanding Customs duty has invoked Condition No. 3(d) (I)(ii) of the Notification No. 52/2003-Cus. dated 31-3-2003 as amended read with Section 72(d) of the Customs Act, 1962. Similarly, while demanding the Central Excise duty the Adjudicating Authority has invoked Condition No.(4)(a)(ii) of Notification No. 22/2003- Central Excise dated 31-3-2003 as amended. The point is that the goods obtained duty free have been diverted. In terms of the relevant provisions of the exemption notifications, the appellants are liable to discharge the duty. Hence, the question of time bar also does not arise. In view of these things, the objection that Section 28/Section 11A have been invoked in the Show Cause Notice is not a very strong ground for setting aside the demand. There are many rulings which hold that invoking an incorrect provision of law would not vitiate a Show Cause Notice and demand. It is also to be borne in mind that the Adjudicating Authority in his order has correctly invoked the provisions of the Notifications. Further when the goods obtained duty free are bonded in the bonded warehouse, diversions to domestic market unauthori....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hin such extended period as the said officer may, on being satisfied that there is sufficient cause for not using them as above within the said period, allow; Condition No. 3(d)(I)(ii) of the Notification No. 52/2003-Cus.-dated 31-3-2003 (3) The unit executes a bond in such form and for such sum and with such authority, as may be specified by the said officer, binding himself, (a)……………………… (b)……………………… (c)………………………. (d) to pay on demand- (I) an amount equal to duty leviable on the goods and interest at a rate as specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue) issued under section 28AB of the said Customs Act on the said duty from the date of duty free import of the said goods till the date of payment of such duty, if - (i)…………………. (ii) in the case of goods other than capital goods, such goods as are not proved to the satisfaction of the said officer to have been used in connection with the production or packaging of goods for export out of India or cleared for home consumption within a period of three years from the date of impor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cations and the appellant is liable to discharge the duty liability which is equal to the duty foregone by the government. The department is not bound to assume that the goods received are of the same type and quality as the goods diverted. Therefore, we cannot fault with the Adjudicating Authority for not giving any allowance for the goods received into the factory and shown in the "In and Out Register". 6.8 It is also been contended that Central Excise duty can be demanded only from the manufacturer and not on the buyers. This contention is also baseless as the appellants in the present case obtained the goods duty free in terms of the Central Excise Notification and did not use the same in the manufacture of goods to be exported but diverted it to the domestic area. In such cases the appellants are liable to pay the duty demanded in terms of the said Notifications. 6.9 The appellant has furnished the details of raw materials procured/imported/local (duty free) for the period between September 2001 and 4th September 2004 to show that when the DRI visited their premises, they had excess stock. In our view this point is not relevant. There is categorical evidence to show that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d that in terms of the Board's resolution dated 6-9-2004 as Managing Director, the decisions taken by Shri Ravish Kamath is biding on her. In our view, the penalty on Smt. Rekha Ravish Kamath is not warranted as there is no clear finding that she was involved in the day-to-day affairs of the company. 6.10.3 As regards the penalty on Shri Suresh Kurnar Ramsisaria, Proprietor of M/s. Shyam Textiles and Director of M/s. Chakrapani Vypar Ltd. under Section 112 (b) of the Customs Act/Rule 25 of the Central Excise Rules, the learned Commissioner has given his findings in 107 to 109 of the impugned order. It is on record that for the transport of the imported goods of the appellant, Shri Suresh Kumar Ramsisaria had fabricated the documents because the invoice was raised in the name of M/s. Chakrapani Vypar Ltd. and Form 39C in the name of M/s. Shyam textiles, even though the goods were removed from the bonded warehouse of M/s. Big Bags India. He has also extracted from the statement of Shri Suresh Kumar Ramsisaria to establish that he had indeed knowledge of the fact of receiving duty free materials from the appellant unit. In these circumstances, the Commissioner has held that penalty....