TaxTMI 
TaxTMI 
2025 (8) TMI 510
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....s, 2008 the 2008 Rules read with section 4A of the Central Excise Act, 1944 the Central Excise Act. The order also rejects the duty exemption claimed by the appellant under Notification No. 98/2009-Cus dated 11.09.2009 the Exemption Notification and confirms the demand of differential duty. The order also confiscates the goods and imposes penalty under section 114A of the Customs Act, 1962 the Customs Act. 2. Customs Appeal No. 50005 of 2020 has been filed by Suveet Kalra, Director of the appellant for quashing that part of the order dated 24.09.2019 passed by the Principal Commissioner that imposes penalty upon him under section 112 (a) and (b) of the Customs Act as also under section 114AA of the Customs Act. 3. The appellant is engaged in the business of trading in wood and leather treatment chemicals, paints, lacquers, varnishes and glues. These products can be classified in two categories, namely "Lacquers" and "Hardners". The appellant is either importing the said goods or purchasing the same locally. These products are classifiable under Customs Tariff Heading CTH 3208 and assessment is governed by section 4A of the Central Excise Act in terms of Notification No. 49/20....
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.... CIF, as detailed at Annexure: C-1 seized at various premises and ordered for provisionally release, should not be confiscated under Section 111(d) and (m) of the Customs Act, 1962; (v) goods valued at Rs. 92,69,059/- CIF, as detailed at Annexure: C-2 seized at various premises and ordered for provisionally release, should not be confiscated under Section 111(d), (o) and (m) of the Customs Act, 1962; (vi) the remaining goods of Annexures: A-1 and A-3 (excluding the goods as appearing in Annexure: C-1) to this show cause notice valued at Rs. 3,61,24,465/- CIF, should not be held liable to confiscation under Section 111 (d) and (m) of the Customs Act, 1962; (vii) the remaining goods of Annexures: A-2 and A-4 (excluding the goods as appearing in Annexure: C-2) to this show cause notice valued at Rs. 5,67,00,893/- CIF, should not be held liable to confiscation under Section 111 (d) (0) and (m) of the Customs Act, 1962 (viii) penalty under Section 112 (a) & (b) or Section 114A of the Customs Act, 1962 should not be imposed on them, in relation to the above goods; (ix) amount of Rs. 35,00,000/- deposited voluntarily during investigation should....
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....a) & (b) or Section 114A of the Customs Act, 1962 imposable on Noticee No. 1 and under Section 112 (a) & (b) and 114AA on Noticee No.2?" 10. The main issue relates to mis-utilisation of the DFIA by the appellant. The finding recorded by the Principal Commissioner on this issue is as follows: "35. Now coming to the issue whether the duty exemption claimed by the importer under Notification No. 98/2009-Customs dated 11.09.2009, for goods imported vide Bills of Entry, as detailed in Annexure: A-2 & A-4 to the present SCN, against DFIA scrips, as listed in Annexure-B to the present SCN, is admissible or otherwise. The allegation as per the SCN is that the importer has misutilized the DFIA scrips issued to the finished leather/ leather gloves exporters, for effecting duty free clearance of Imported Goods as the scrutiny of certain DFIA scrips revealed that 'Special lacquer for brush off/two tone' which was actually used in manufacture of the export product, was allowed to be imported under the said DFIA scrips. However, the noticees were importing and trading in 'MILESI' brand lacquers, sealer and hardeners etc. from overseas supplier M/s IVM which has been u....
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....her. Literature (Colloids and Surfaces A: Physicochem. Eng. Aspects 472 (2015) 21-25, Progress in Organic Coatings 56 (2006) 178-184. International Journal of Adhesion & Adhesives 25 (2005) 320-328, etc) suggest that the usage of polyurethane and epoxy (directly or modified) have been successfully tested on leather. Hence, the materials, submitted by DRI for their evaluations, are mainly meant for application on wooden products (as specified and found out from above results) and can be used on leather products with different components and combination (as found out from above results). 15. A perusal of the aforesaid Test Report clearly shows that though the materials submitted for evaluation were mainly meant for application on wooden products, but they could also be used on leather products with different components and combination. The inference drawn by the Principal Commissioner from the Test Report is, therefore, not correct. The Lacquer imported by the appellant is, therefore, capable of being used in the leather industry as well as in the wood industry. 16. This apart, even the DGFT in its Policy Circular No. 72 dated 24.03.2009 issued a clarification regardin....
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.... DR could not justify as to how "Apple Juice Concentrate" would not be covered under the description "Relevant Fruit Juice/Pulp/Puree", when the fact that Apple Juice Concentrate can inter alia be used in the manufacturing of export product in DFIA "Assorted Confectionary and Biscuits", is not in dispute, and the Ld. Advocate has produced evidence to show that the imported product can be used in manufacturing of various products which includes candies and confectionary applications and pies and bakery goods." 21. It, therefore, follows that though the original exporters had exported leather or leather products and the appellant purchased the DFIAs, the lacquer imported by the appellant is capable of being used in the leather industry as well as in wood industry and, therefore, the appellant would be entitled for exemption under the Exemption Notification. 22. An important issue that also arises for consideration in this appeal is whether the statements of persons made under section 108 of the Customs Act can be considered relevant in terms of section 138B of the Customs Act. This aspect has been considered by the Principal Commissioner in the following manner : "In r....
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.... these statements which are referred to either in section 9D of the Central Excise Act or in section 138B of the Customs Act. A bare perusal of sub-section (1) of these two sections makes it evident that the statement recorded before the concerned Officer during the course of any inquiry or proceeding shall be relevant for the purpose of proving the truth of the facts which it contains only when the person who made the statement is examined as a witness before the Court and such Court is of the opinion that having regard to the circumstances of the case, the statement should be admitted in evidence, in the interests of justice, except where the person who tendered the statement is dead or cannot be found. In view of the provisions of sub-section (2) of section 9D of the Central Excise Act or sub-section (2) of section 138B of the Customs Act, the provisions of sub-section (1) of these two Acts shall apply to any proceedings under the Central Excise Act or the Customs Act as they apply in relation to proceedings before a Court. What, therefore, follows is that a person who makes a statement during the course of an inquiry has to be first examined as a witness before the adjudicating....
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....of the Customs Act would not be relevant as the procedure contemplated under section 138B of the Custom Act was not followed in the present case. 27. As would be seen from paragraph 37.4 of the order dated 24.09.2019 passed by the Principal Commissioner, statements made under section 108 of the Customs Act have been relied upon for holding that the goods are liable to confiscation under sections 111(d), 111(m) and/or 111(0) of the Customs Act. Such statements, in view of the aforesaid discussion, could not have been relied upon. Thus, goods were not liable to confiscation. In this view of the matter, penalty under section 112(a) and (b) of the Customs Act could not have been imposed upon Suveet Kalra. 28. The order passed by the Principal Commissioner also imposes penalty upon the appellant under section 114A of the Customs Act. As it has been found that duty was not short paid, penalty under section 114A of the Customs Act could not have been imposed upon the appellant. 29. Another issue that arises for consideration is the determination of the retail sale price. 30. Section 12 of the Customs Act is the charging section which provides that duties of customs shall be le....
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....ted. Thus, in the absence of a machinery to determine the relevant retail sale price, no demand of differential CVD could have been validly raised. The relevant portion of the decision is reproduced below: 17. We find that in view of the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 issued on 1-3-2008, it is abundantly clear that in the absence of such rules issued in terms of sub- section (4) of Section 4A of the CEA, there was no statutory machinery to determine the retail sale price in respect of goods manufactured and cleared by a manufacturer without declaring the RSP on such goods. In the absence of a similar machinery to determine the relevant RSP in CTA, no demand of differential CVD could have been validly raised. In this connection, we rely on the following observations of this Tribunal in the case of Millennium Appliances India Ltd. v. Commissioner of C. Excise, Hyderabad [2009 (248) E.L.T. 713 (Tri.-Bang.)] on the applicability of Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 prior to 1-3- 2008: "It can be noted that these rules came into force with effect from 1-3-2008. We are o....
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....er, the only basis in the show cause notice provided for re-determination of the value is that the said two MRP Lists reflect MRP of combined pack of lacquer, sealer, hardener and thinner sold by the appellant with the mixing ratio of the products in the combined pack for application whereas, the goods i.e. lacquer and hardners which were imported were individual items and so the retail sale price of such import items were required to be re-determined. It was also observed that some products imported by the appellant were not mentioned in the MRP Lists. This cannot be the basis for having a doubt about the truth or accuracy of the value declared in relation to imported goods for rejecting the declared value in terms of rule 12 of the 2007 Rules. 37. In this view of the matter, retail sale price could not have been re-determined. 38. Penalty under section 114AA of the Customs Act has also been imposed upon Suveet Kalra. The Principal Commissioner has found that he was responsible for import, purchases, sales and marketing of all the products imported by the appellant but he did not intentionally declare the actual retail sale price and got the goods cleared by mis- declaring t....