TaxTMI 
TaxTMI 
2024 (5) TMI 1051
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Surat-I. The officers searched the office premises in the presence of two independent Panchas and Shri Gajanand Surajbhan Agarwal, Director of both the units and seized the statutory records of M/s Anita Synthetics P Ltd (100% EOU). Another team of Central Excise officer headed by Superintendent, Central Excise and Customs, HPIU-Ii Surat-I, visited the factory premises of M/s Anita Synthetics P Ltd (100% EOU) Block No.46, GIDC, Pipodara, Surat on 07.08.1999 for preventive checks. After detailed investigation and recordings of statements of various persons and records recovered from the different premises of the appellant a Show Cause notice F No. V(CH.54) 15-16/OA/2004 dated 07.05.2004 was issued wherein the following proposals were made:- "26. Now, therefore, M/s. Anita Synthetics Pvt. Ltd. (100% EOU), Block No. 46, GIDC, Pipodara, Dist. Surat are hereby called upon to show cause to the Commissioner, Central Excise & Customs, Surat-11, 2nd floor, New Central Excise Building, Opp. Gandhi Baug, Chowk Bazar, Surat as to why: (i) the duty of Customs amounting to Rs. 3,43,597/- (BCD @35% Rs. 135262.00 + CVD @34.5% Rs. 179995.00 + CESS @0.05% Rs. 261.00 + SAD@ 4% Rs. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 114A of Customs Act, 1962. (x) The said goods 1.e.7156.720 Kgs of imported polyester filament yarn valued at Rs.3,86,-163/-, though not available for seizure, should not be confiscated under provisions of Section 111(0) of Customs Act, 1962 & redemption fine under Section 125 of Customs Act, 1962 should not be imposed on them & recovered by enforcing the terms of Bond & Bank Guarantee. (xi) The said goods i.e.110647.580 Kgs of polyester filament yarn valued at Rs.60,85,617/-, though not available for seizure, should not be confiscated under provisions of Rule 209 of erstwhile Central Excise Rules, 1944/ Section 111(0) of Customs Act, 1962 & redemption fine under Section 34 of Central Excise Act, 1944/ Section 125 of Customs Act, 1962 should not be imposed on them & recovered by enforcing the terms of Bond & Bank Guarantee (xii) The said goods l.e.4966.650 Kgs of polyester filament yarn valued at Rs.2,73,166/-, though not available for seizure, should not be confiscated under provisions of Rule 209 of erstwhile Central Excise Rules, 1944 / Section 111(0) of Customs Act, 1962 & redemption fine under Section 34 of Central Excise Act, 1944 / Section 125 of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Rs.2,73,166/- procured duty free under Notification No.1/95- CE dated 04.01.95 / Noti. No. 53/97-Cus dtd. 03.06.97 and cleared illicitly, and order its recovery from M/s. Anita Synthetics Pvt Ltd., 100% EOU, Pipodara, Surat under proviso to Sub-Section (1) of Section 11A of Central Excise Act, 1944/Section 72 and proviso to Section 28(1) of Customs Act, 1962. The demand is being confirmed both under Customs and Central Excise provisions because the assessee had not maintained separate registers entries for procurement of indigenous raw material or imported goods. Also they could not segregate or identify the origin of raw materials imported or indigenous. (iv) The interest at the, appropriate rate per annum on evaded duty mentioned at (i) above is confirmed under Section 72 read with Section 28AB of Customs Act, 1962. (v) The interest at the appropriate rate per annum on the evaded Duty mentioned at Sr. No. (ii) & (iii) above, is confirmed under section 11AB of Central Excise Act, 1944/under Section 72 read with section 28AB of Customs Act, 1962. (vi) I impose penalties of Rs. 54,10,612/- and Rs. 2,42,867/- on M/s. Anita Synthetics Pvt Ltd., 100% EOU und....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../s. Aditya Yarn Pvt Ltd separately under section 112(b) of Customs Act, 1962 and Rule 209A of erstwhile Central Excise Rules, 1944." 1.3 The adjudicating authority while confirming the demand, confiscation relied upon various statements, physical stock taking and records recovered from the appellant. Being aggrieved by the Order-In-Original the appellants filed the present appeals. 2. Shri Hasit Dave Learned Counsel appearing on behalf of the appellants submits that the Commissioner Surat has passed impugned order without complying the direction given by the CESTAT in the remand order dated 26.11.2014. According to which the Commissioner was suppose to conduct the cross-examination which he miserably failed to do so despite the specific request made by the appellant. Therefore, all the statements relied upon in the present case are liable to be straightaway discarded and if this be so statements being a sole basis of this case the entire impugned order liable to be set aside. 2.1 As regard first demand of Rs. 3,43,597/-, he submits that it is only based on finding weight of physical stock of grey fabrics (finished goods) less by 7156.720 Kgs since the recorded stock was 13....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ement appears taken in coercion and the same is not correct. 2.5 He further submits that in the entire investigation the department has not found a single buyer of the alleged diverted raw materials, nor any financial flow back from the appellant of these 3 buyers. No financial flow back from 3 buyers nor as any diverted raw material been ever intercepted nor has the department found single piece of evidence to support their version. The another evidence of the department to allege clandestine removal of raw material is based on 1 test report of the chemical examiner dated 21.01.1999, which showed that weight of grey fabrics is less in the sample drawn than what is recorded in the books of accounts. 2.6 He submits that the director of appellant company had immediately stated during investigation that these samples on which the test report is conducted are taken from 1 lot only of rejected consignment, having both low quality and weight of goods. Therefore, test report based on such 1 lot of rejected goods, cannot be made the basis for alleged clearance of 110647 Kgs of PFY (Raw material). Therefore, the test report cannot be relied for allegation of clandestinely clearance. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....it contains,-- (a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable; or (b) when the person who made the statement is examined as a witness in the case before the Court and the Court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. (2) The provisions of sub-section (1) shall, so far as may be, apply in relation to any proceeding under this Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court.]" 4.1 From the plain reading of Section 9D of Central Excise Act, 1944, we find that it is mandatory on the part of the Adjudicating Authority to conduct the examination-in-chief of the witnesses and thereafter allow the assessee to cross-examine the witnesses. After that when the witness stands by with their statement those statements can be used as admissible evidence for a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... books, for this reason also it cannot be said that there is a weight differences and clearance of the same clandestinely. 4.5 We are also of the view that weight of the finished goods (grey fabric) cannot be assumed or counted to be the same as the imported raw material PFY to allege such illicit removal of PFY. Admittedly the raw material used in manufacturing process would be much less than weight of finished goods. Hence mererly by taking statements which are not admissible as held above, the clandestine removal is not established. 4.6 As regard the demand of Rs. 54,10,612/- and Rs. 2,42,867/- under Section 3 of Central Excise Act are concern. We find that it is an allegation that the appellant has clandestinely removed duty free raw material by manufacturing and clearing grey fabric (finish goods) showing the excess weight than the actual weight of grey fabrics, in their statutory records is also based on assumption and presumption only. This allegation is based on firstly the statements of 3 buyers only, whose cross examination was not permitted and who have vaguely stated that they have received less grey fabric by 20 Kgs per 100 linear meters. It is surprising that if....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... judgments:- a) In the case of R.K.K.R. Steels Ltd Vs. Commissioner of Customs (Export), Chennai reported at 2019 (367) ELT 346 Hon'ble Madras High Court has passed the following decision:- "7. We do not agree with the stand taken by the Tribunal, because the test reports are based on random samples drawn by the Department. Admittedly, when the first sample was drawn, after the assessee presented the bills of entry for clearance, there was no notice to the importer as to from which container the samples were drawn. Though the goods have been released, it is only a case of provisional release and the Department having accepted the request made by the appellant for a re-test and the test report on the second test having gone in favour of the assessee and the benefit having been extended to the remaining goods, in our considered view, the transaction cannot be split up into two, more so when there is no notice issued to the assessee as to from which containers the samples were drawn at the first instance. " b) In the case of Jupiter Trading Company vs. Commr. Of Cus. C.Ex. & S.T. reported at 2019 (369) ELT 1524 CESTAT Bangalore bench has passed the following....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 12 and 34 was that the wool content was more than 40 per cent, but ignoring that conclusion the authorities resorted to levy duty by resort to the finding arrived at by core-drill test on bale No. 19. The procedure adopted by the Customs authorities was entirely misconceived and cannot be sustained either in law or by principles of natural justice. In my judgment, the finding of the Customs authorities that the import of woollen rags by the petitioners is not eligible for duty exemption is totally incorrect and deserves to be set aside. The petitioner are entitled to the clearance without payment of any duty." e) In the case of York Exports Vs. Commissioner of Customs (Export), Mumbai reported at 2004 (169) ELT 175 the CESTAT Mumbai Bench has following view:- "3. We note that only two test reports covering two shipments, out of the sixteen export consignments from which samples were drawn, showed adverse reports viz., presence of acrylic fibres. In all eighteen consignments were exported and no samples were drawn from two export shipments. The Commissioner accepted the description of export consignments from which no samples were drawn. Thus, out of eighteen ship....