2008 (5) TMI 478 - AT - Customs

Summary

Issues:
1. Denial of DEEC benefit for exported goods.
2. Confiscation of export and imported goods.
3. Duty demand and penalties imposed.
4. Allegation of mis-declaration and swapping of samples.
5. Denial of natural justice in cross-examination.
6. Legal plea regarding duty demand on the Power of Attorney holder.

Analysis:

Issue 1: Denial of DEEC benefit for exported goods
The appellants, M/s. Charminar Exports and M/s. Shine Global Houseware Ltd., faced a show cause notice for denying DEEC benefit in respect of exported goods. The Department proposed confiscation of export and imported goods, duty demand, and penalties on individuals associated with the companies. The Commissioner of Customs upheld the proposals, leading to fines and penalties being imposed on the appellants.

Issue 2: Confiscation of export and imported goods
The Department alleged that the exported SS utensils were of inferior quality and that the imported raw material was diverted without being used in manufacturing the export goods. The case revolved around the swapping of test samples, with the Revenue contending that the test reports favoring the exporters were obtained after swapping samples. Statements by involved parties indicated swapping of samples, leading to confiscation of goods and imposition of fines and penalties.

Issue 3: Duty demand and penalties imposed
The Commissioner imposed fines and penalties on the appellants and individuals associated with them in lieu of confiscation of goods and for alleged mis-declaration and diversion of imported raw material. The penalties amounted to significant sums, reflecting the severity of the allegations and findings made during adjudication.

Issue 4: Allegation of mis-declaration and swapping of samples
The core factual issue centered on the swapping of test samples, with statements indicating orchestrated sample swapping to misrepresent the quality of exported goods. Despite test reports favoring the exporters, the Revenue contended that the reports were unreliable due to the alleged swapping of samples, which formed the basis of the Department's actions and the subsequent adjudication.

Issue 5: Denial of natural justice in cross-examination
One of the primary grounds for appeal was the denial of natural justice to the appellants by refusing permission to cross-examine the officers involved in drawing test samples. The appellants asserted that the alleged swapping could not have occurred in the presence of Customs officers who drew the samples. The Tribunal found merit in this ground, emphasizing the importance of allowing cross-examination for a fair adjudication process.

Issue 6: Legal plea regarding duty demand on the Power of Attorney holder
A legal plea was raised concerning the demand of duty on the Power of Attorney holder for M/s. Charminar Exports. The argument posited that duty demands should have been directed at the individual who filed the relevant Bill of Entry, rather than the Power of Attorney holder. This plea was to be considered by the adjudicating authority in the subsequent proceedings.

In conclusion, the Appellate Tribunal set aside the impugned orders and allowed the appeals by way of remand, directing the Commissioner of Customs to re-adjudicate the show cause notices. The Tribunal emphasized the need for cross-examination of relevant officers and individuals involved in the sampling process to ensure a fair and just determination in the cases.