TMI Blog2016 (8) TMI 1283X X X X Extracts X X X X X X X X Extracts X X X X ..... iling the exemption notification have to be strictly interpreted, Further, acceptance of certificate given by Deputy Commissioner Smt. Kailasam in the import of pipes cannot validate the end-use certificate for other imports. The circumstances of the issuance of this certificate being abnormal and contrary to established procedures with no physical examination of goods raises serious question about its admissibility. In view of these facts, the argument that the certificate should be accepted is not tenable, particularly given dubious methodology of issuance of certificate writ large on the circumstances - the certificate of the Deputy Commissioner Mrs. Parvathi Kailasam is not an admissible piece of evidence. The main basis of examination was whether there was mens rea in her action or not. Any finding on that fact cannot take away from the entire set of evidences in the present proceedings, which point to issuance of a dubious end use certificate. The appellant failed to produce production records before the search party for verification of any clearance. No proof was shown that the imported scrap was received in the factory and used in the manufacture. As a matter of fact, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore rightly confirmed the demand of duty from appellant no1 and imposed penalty on appellant no 1 - he role of Shri A.V. Subba Reddy and Sh. D. Ramana Reddy in diversion of the impugned goods and rendering them liable to confiscation has been correctly analysed by the Ld. Commissioner in para 20 and 21 of the impugned order. Penalties imposed against both of them are also upheld. Appeal dismissed - decided against appellant. - C/230-232/2011 - 41246-41248/2017 - Dated:- 17-8-2016 - Shri D.N. Panda, Judicial Member And Shri Devender Singh, Technical Member Shri S. Jaikumar, Advocate, for the Appellant Shri K. Veerabhadra Reddy, JC (AR), for the Respondent ORDER Per: Devender Singh On behalf of three appellants viz., M/s. Thirven Steels Pvt. Ltd, Shri A.V. Subba Reddy, Shri D. Ramana Reddy in appeal Nos.C/230-232/2011, ld. Counsel submits that the appellant M/s. thriven Steels Pvt. Ltd., is the manufacturer of MS Ignots, who imported Non Alloy Steel melting scrap from Singapore during the period 1999 to 2001 in terms of 66 Biffs of Entry. The quantity imported was 1332.4 MTs. There was claim of Cenvat credit of addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of natural justice and providing necessary documents to the appellant shall re-adjudicate the matter in accordance with law. 1.5 Consequent upon remand of the matter by Tribunal as above, present impugned order No.14898/2011 dated 28.02.2011 has emerged. By this order, the Customs Commissioner has denied concession in basic customs duty availed by the appellant and sought recovery of Customs duty of ₹ 294,35,480/- with consequence of penalty and interest enumerated in para 22 of the said order. 1.6 Prior to the passing of above readjudication order dated 28.02.2011 the excise Commissioner issued SCN to the appellant on 08.03.2005 and proposed to deny the cenvat credit of additional duty of customs of Rs.73,53,294/- paid on the imported scraps. On examination of various evidences, the Excise Commissioner dropped the proceedings by order No.01/2011 dated 27.01.2011. Revenue did not go in appeal against that order. Therefore findings there on reached to finality. Whether there was review of that order to file appeal by Revenue or not is not known. 1.7 It was further submission of the appellant that when the imported scrap were found by Excise Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... products in its factory in Cuddapah. But the adjudicating Commissioner under customs law although depicted the extract of statements of the Dy. Commissioner recorded on 28.6.2002 in para 12, at page 6 of the readjudication order dated 28.20.2011, he disbelieved the appellant's plea of transportation of the scrap through alternate economical routes and held that the scrap upon clearance from Chennai Port, reached the godown of Kothari group of Companies in Chennai, and were not transported to the appellant's factory. 2.4 The investigating authorities made correspondence with the Commercial Tax Officer to ascertain transportation of the goods from Chennai to Cuddapah in A.P. Also certain communications were exchanged between them. But the appellant was not confronted with the outcome of the enquiry made with the Commercial Tax Officer. The Customs adjudicating Commissioner denied cross-examination of the Commercial Tax officer. 2.5 When Shri D. Ramana Reddy, Manager of appellant stated in his statement dated 5.3.2002 (in the Mahazar) during investigation that there were two heaps of scrap available in the factory, those were neither weighed by the investigating auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held against the appellant that the imported scrap were neither transported to the factory nor used in manufacture by appellant. The adjudicating authority fully relied on the decision of his predecessors in respect of Shri Shantilal Kothari and Shri Pradeep Kabra even though statements of Sh. Shantilal Kothari and Shri Pradeep Kabra were on record admitting that the goods upon clearance were transported to the godown of M/s. Kamachi Steel ltd., belonged to the Kothari Group of Companies. There was presumption by the customs commissioner that the goods without being transported to the factory of the appellant were diverted from the premises of Kothari Group of Companies elsewhere. That Authority recorded in his order that the appellant failed to produce evidence in respect of movement of goods from Chennai to its factory at Cuddappah in A.P. discarding plea of transport through alternate route. (f) Placing defense on para-15 of the impugned order, it was submitted on behalf of the appellant that when the authority had all the material before him to appreciate that the Dy. Commissioner had issued end-use certificate on the basis of the outcome of her visit to the factory of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the excise proceedings were good evidence in favour of the appellant and that is even in the Customs proceeding. 3.3 Placing defence on para-20 of the re-adjudication order, Id. Counsel emphasized that the customs Commissioner has exonerated Mr. Shantilal Kothari and Pradeep Kabra, even though investigation gathered evidence to show that they took delivery of imported scrap and transported to their godown without enquiring where the goods have gone thereafter. Shri Pradeep Kabra was the owner of M/s. Time Enterprises and the was agent of Shri Shantilal Kothari who jointly dealt with the imported goods and he being his representative opened the bank account in Union Bank of India under the control of Shri Shantilal Kothari , and dealt the proceeds of the deals. Shri Pradeep Kabra categorically stated in his statement dated 06.09.2002 at page 110 of the appeal folder that he knew the MD of the present appellant i.e., Shri A.V. Subba Reddy, only through Shri Shantilal Kothari. But such facts were brushed aside by adjudicating Commissioner. 3.4 Placing the statement recorded from Shri Shanthilal Kothari on 06.09.2002, learned Counsel brought out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating no , I can't answer I do not know etc. as well as I shall produce document within 15 days , because of the above difficulties of the appellant. 4.1 Learned Counsel summarized his arguments as under:- (a) Dy. Commissioner's end use certificates were relied in a proceeding before the Bangalore Bench of Tribunal in which the appellant was the party and that proceeding went in favour of the appellant in terms of Final Order No.676 677/2009 dated 28.05.2009. That also reached finality due to dismissal of Civil Appeal by the Apex Court as reported in - 2015 (318) ELT A256 (S.C.). Accordingly that evidence cannot be contradicted in the present proceeding to draw any contrary view. (b) End use certificate proves receipt of goods by the appellant in its factory and use thereof in manufacture. That satisfies the condition of the imported scrap. The end use certificates were found to be proper by a detailed examination in the excise proceeding of the same appellant in the order No.01/2011 dated 27.01.2011 (Ref. page 119 of the appeal folder). Veracity of the certificate in customs proceeding cannot be questioned. (c) The chronology of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts. 5.1 Per contra, assailing the arguments of the appellants, Ide DR on behalf of Revenue argued as under:- (a) The object of the Central Excise Act 1994 and Customs Act, 1962, are to achieve object of the respective state. Therefore adjudication order are passed under the provisions of different statutes on different issues, under two different premises of law, jurisdiction and distinct provision of the respective law. Excise Commissioner was concerned with the controversy on the claim of cenvat credit by M/s. Thriven Steels Pvt Ltd. That is distinct from the controversy on grant of duty concession availed by the importer appellant. Duty Concession Notification has certain Conditions. Those were violated by the appellate company. (b) Bill of Entries were filed by the appellant M/s. Thriven Steels Ltd., claiming to be the importer of the imported scrap from the high seas sellers in the course of import for which this appellant is answerable to the allegations in the SCN and is liable to the consequence of re-adjudication (c) Excise proceeding was completed on the basis of end use certificate obtained fraudulently from the Dy. Commissioner Smt. Parvathi Kail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt nor used in the manufacture of the final products. (i) Appellant did not discharge its burden of proof to show that the imported scraps were received in its factory and were used in the manufacture. (j) SCN was issued on the basis of material facts and evidence came to the notice of investigation and allegations made were well founded. Production record was not produced before search party for verification of clearances. No excisable goods were manufactured by appellant using imported scraps. When appellant did not come out with clean hands to produce statutory record for scrutiny, no afterthought pleas of appellant are entertained by Adjudicating Authority. (k) When no document of imports were available in the searched premises and investigation was answered stating that the documents are with CHA, that proved that the appellant has never brought imported goods to its factory nor used the same in manufacture. But were diverted from the godown of M/s. Kothari Group of Companies and whereabouts thereof was not made known to investigation. Revenue confronting all such material facts discharged its burden of proof and preponderance of probability was in it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le evidence to demonstrate that the goods were transported as claimed by appellant. Enquiry made with the Commercial Tax Department revealed that not even a single truck carrying any imported scrap had crossed the commercial tax check post route. Appellant failed to adduce any proof to establish its plea for which it was liable to the consequences of adjudication. To support its contention, Revenue relied on the judgement in the case of Kanungo Co. Vs. CC, Calcutta - 1983 (13) ELT 1486 (S.C.). According to Revenue, preponderance of probability is in its favour relying on the decision in the case of CCE Vs. Gujarat Ambuja exports 2016 - TIOL - 118-SC-Cus. 2002- TIOL-253-SC-Cus. (q) When the goods did not reach to the factory of the appellant, Dy. Commissioner's certificates were proved to be false and Sri Subba Reddy's reply to the question No.20 stating that no records other than RG 23A were available in factory premises corroborated that. When relevant records were not produced to prove that imported scraps were received in the factory and used in manufacture, appellant was liable to the consequence of re-adjudication. (r) When the end use certificate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irupathi 2010-TIOL-357-CESTAT-Bang. That has no consequence to the present proceeding. On the plea of exoneration of the Dy. Commissioner on different ground appellant should not get any sympathy and relief in the present appeals when the adjudication is based on evidence. That is sustainable. (v) The re-adjudication is supported by evidence. That having been made according to the remand direction, the authority has not acted beyond its scope. The parties before the Chennai Bench of Tribunal were only re-adjudicated and consequence of adjudication has rightly flown against them. 5.2 In rejoinder, on behalf of the appellants learned Counsel submits as under:- (a) The mahazar dated 5.3.2002 shows that two heaps of scrap were available in the searched premises. But the search party did not make any weighment thereof nor also found out physically the contents thereof. They merely relied on the witness of the panchnama. Therefore, Shri Ramana Reddy in his statement dated 5.3.02 in replied to question No.4 stated that the stock of quantity of imported goods did not exist in the heaps and that was retracted later. Revenue cannot further hold that the heaps contain only i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also argued that in the latter, the appeal of the appellant on valuation issue was dismissed by the Hon'ble Supreme Court, and thus the said order of the Tribunal has become final. We find that the end use certificate issued by the Deputy Commissioner Srimati Parvathi Kailasam is not a reliable document for more than one reason. The Deputy Commissioner has issued end use certificate at the request of the appellant, but not in discharge of her regular duty. No mandatory verification report was called for from the concerned field office. No copy of the certificate was kept in office records and no relevant proof emanated from jurisdictional Commissionerate in that regard. It is also not disputed that the Deputy Commissioner has admitted that she had issued the certificate only on the basis of records presented by the appellants without physically verifying the receipt or use of imported scrap. Destuffing of scrap from the container was not physically verified by the Deputy Commissioner. Besides, there are clear inconsistencies in the statement dated 28.6.2002 of Mrs. Parvathi Kailasam. In her statement dt. 28.6.2012, she claims to have visited factory on 16.2.2001 whereas her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p was not available physically for verification. At no stage, the RG-23A register has been disowned or disputed by the appellant. The representative of the appellant, Shri D. Ramana Reddy who was present at the time of search failed to demonstrate that 3489 MT of imported scrap actually existed. He showed two heaps of scrap to the search team. One heap consisted of locally procured scrap without payment of duty for which no account was maintained and the other heap which he showed consisted of loose and small pieces of metals and rusted tins of paint and baby food tins of Indian origin. Thus verification by investigation team showed that the closing stock of imported scrap was not there on the day of search. We are not convinced by the argument that panchnama witnesses were not competent witnesses who subscribed to the panchnama without knowing the truth. Panchas do not have to be experts in a field. They have to be independent and neutral, which is not proved otherwise in this case. 11. We also find it strange that the appellant failed to produce production records before the search party for verification of any clearance. No proof was shown that the imported scrap was received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the benefit of customs duty in terms of notification no.17/01-Cus was availed for import of scrap and subject to use of goods in question in concerned unit, this Tribunal has held that when there is no material on record to reveal that the authority issuing end use certificate had occasion for physical verification of the material or utilization thereof, such end use certificate cannot by itself establish actual use of material and the onus shifts to the respondent to establish transport of material, (CCE, Chandigarh Vs. Kisco Castings, - 2010 (261) ELT 190 (Tri.-Del.) Hence, in this case, the burden was evidently on the appellant to establish true state of affairs in relation to transport of imported scrap. This burden was not discharged by the appellant and therefore, they are not entitled to the duty concession. The argument of appellant that Abdul Hakim only took cash and hence there were no lorry receipts does not wash as payment in cash does not ipso facto preclude issuance of lorry receipt. Besides, Abdul hakim categorically denied transporting goods to Cudappah. We also find that documents submitted by Abdul Hakim show that Mercury Transport handled the consignments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts and circumstances of this case. 14. At one stage, learned Advocate for the appellant submitted that diversion, if any happened, it happened in Kothari godown and not at the factory. It was argued that the Commissioner had exonerated Shri Shantilal Kothari and Pradeep Kabra, even though the investigation showed that they had taken the delivery of the imported scrap and transported the same to their godown without enquiring where the goods have gone thereafter. Shri Pradeep Kabra was an agent of Shri Shantilal Kothari and under his control. In his statement dated 6.9.2002, Shri Kabra stated that he knew, MD of the appellant, Shri A.V. Shri Subba Reddy only through Sh. Kothari. He also referred to the evasive reply of Shri Kothari to certain questions and claimed that he was consciously involved in the import. Likewise CHA and transporter were also aware of the import of scrap which went to Thondiarpet. Hence it was argued that exonerating these people is unreasonable and prejudicial to the appellant. We find that the above claim of the appellant is based on assumptions and presumptions. Admittedly, the responsibility for the receipt and use in the manufacture of imported scrap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by facts. All the above facts indicate that the so-called bank transactions were an elaborate modus operandi to camouflage their misuse of notification. 17. The appellant have relied on the case law of Bhoormal Premchand Vs. CCE, Madras - 2000 (125) ELT 118 (Mad.) to argue that preponderance of the probability was in their favour. On analysis of relevant facts and circumstances, we are not in agreement with this proposition. On the contrary, we find that Revenue has proved that there is much higher probability of goods not having reached the factory and not used for manufacture in the factory of the appellant. 18 In view of foregoing discussion and findings, we find that the impugned goods never reached the factory of the appellant and were not used in the factory for intended manufacture. As a result, the appellant failed to fulfil the condition of the notifications mentioned in the show cause notice rendering the goods liable to confiscation. Commissioner has therefore rightly confirmed the demand of duty from appellant no1 and imposed penalty on appellant no 1. We also find that the role of Shri A.V. Subba Reddy and Sh. D. Ramana Reddy in diversion of the impugned goo ..... 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