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2025 (5) TMI 1016 - AT - Central ExciseNon-submission of re-warehousing certificate in respect of certain clearances made by the Appellant to EOUs and SEZs - benefit of N/N. 22/2003-CE and 53/2003-Cus (NT) and related circulars - HELD THAT - The entire section/unit dealing with 100% EOU/SEZ matters was closed by the Customs department in its office at New Customs House Mumbai and the jurisdiction of the Commissioner had travelled into the hands of multiple Commissioners in the meantime for which no document was traceable from the department side and surprisingly Appellant who is contesting to get necessary relief had refused to produce documents concerning proof of receipt of goods by the consignee as reveal from para 17. Therefore neither the department has any right to raise a demand in the absence of any documentary proof to substantiate such demand nor the Appellant could be absolved of its liability since it refused to cooperate in the adjudication process in furnishing proof of delivery of goods to the customers. However having regard to the fact that there was specific direction given by this Tribunal in its order dated 13.03.2023 that Officer at the consignee s end would be in a better position to confirm the receipt of goods or otherwise available their own record as well as records of the consignee s and as consignee had not been examined or contacted to furnish the required proof of receipt of goods by them that would have met the requirement of para 3b of Circular No. 579/16/2001-CX dated 26.06.2001 the demand for non-furnishing of proof of re-warehousing certificate alone can t form the basis to confirm the said demand. Conclusion - i) The appellant did not comply with the obligation to produce re-warehousing certificates but also did not cooperate in submitting collateral evidence. ii) The department failed to verify receipt of goods from consignee offices despite attempts. iii) The demand for duty based solely on non-submission of re-warehousing certificates was unsustainable. The order passed by the Commissioner of Central Tax Raigarh (Appeals) vide Order-in-Appeal No. NA/96/RGD APP/2021-22 dated 05.07.2021 is hereby set aside - Appeal allowed.
The core legal questions considered in this judgment revolve around the confirmation of duty demand against the appellant for non-submission of re-warehousing certificates related to clearances made to Export Oriented Units (EOUs) and Special Economic Zones (SEZs) under specific notifications granting duty exemption. The principal issues include:
1. Whether the appellant fulfilled the obligation to submit re-warehousing certificates as required under Notification No. 22/2003-CE and 53/2003-Cus (NT) and related circulars. 2. The procedural and substantive obligations of the department and the appellant in verifying receipt of goods by consignees, including the issuance of reminders and collection of proof. 3. The evidentiary burden on the appellant to prove receipt of goods by the consignee and the department's duty to verify such receipt before confirming duty demand. 4. The legal consequences of the department's failure to obtain proof of receipt from consignee offices and the appellant's refusal to furnish collateral evidence supporting receipt. 5. Whether the demand for duty can be confirmed solely on the basis of non-submission of re-warehousing certificates without satisfactory proof from either party. Issue-wise detailed analysis: Obligation to submit re-warehousing certificates and related procedural requirements: The legal framework comprises Notification No. 22/2003-CE and 53/2003-Cus (NT), and Circular No. 579/16/2001-CX dated 26.06.2001. The circular mandates that the consignor must receive a duplicate copy of the warehousing certificate endorsed by the consignee within ninety days of removal of goods. Failure to receive such certificate triggers liability for duty payment. Additionally, the Superintendent-in-charge of the consignor must send weekly reminders to the Superintendent-in-charge of the consignee if the original warehousing certificate is not received within ninety days, and if still not received after a further sixty days, escalate the matter to the Assistant/Deputy Commissioner for verification or recovery of duty. The Court noted that these obligations are cast on both the supplier and receiver ends to ensure proper accounting and verification of goods movement under bond. Department's and appellant's conduct in verification and evidence collection: Upon remand from the Tribunal, the adjudicating authority sought to verify receipt of goods by consignees through correspondence with multiple Customs divisions across India. However, due to the passage of time, reorganizations, and abolition of the dedicated 100% EOU/SEZ section, the department was unable to obtain any confirmation or documentary evidence from consignee offices. This failure was attributed to structural changes and lack of record availability at the department's end. Simultaneously, the appellant was requested to submit collateral evidence supporting receipt of goods. The appellant, through legal counsel, contended that the requirement to submit such proof did not arise as it was the department's responsibility to obtain confirmation from consignee divisions. The appellant also asserted that proof of export/delivery had been submitted in earlier proceedings and was part of the record before the Tribunal. However, the adjudicating authority observed that the appellant was less than cooperative, refusing to share documents that could assist in reaching a conclusion, and had ignored directions from the Tribunal to submit collateral evidence. Application of law to facts and evidentiary findings: The Court emphasized that neither the department nor the appellant fulfilled their respective obligations adequately. The department failed to secure satisfactory proof of receipt from consignee offices despite multiple attempts and reminders, while the appellant refused to provide collateral evidence that could have substantiated the claim of receipt of goods. The Court acknowledged that the department's inability to trace records was partly due to organizational changes and the abolition of the relevant section handling 100% EOU/SEZ matters. Conversely, the appellant's lack of cooperation in the adjudication process was also noted as a significant factor preventing resolution. Importantly, the Court referenced the Tribunal's earlier observations that officers at the consignee's end would be better positioned to confirm receipt of goods from their own records and that the consignor's failure to produce warehousing certificates alone could not justify confirming the duty demand. Treatment of competing arguments: The appellant argued that the burden to confirm receipt lay with the department and that prior submissions of proof should suffice. The department maintained that due to non-submission of re-warehousing certificates, duty was payable. The Court balanced these positions by highlighting procedural lapses on both sides and the necessity of cooperation to fulfill statutory requirements. The Court rejected the department's unilateral confirmation of demand in absence of proof and also criticized the appellant's refusal to assist in the inquiry, underscoring that compliance with procedural safeguards is essential for those availing exemption benefits. Conclusions: The Court concluded that the demand for duty based solely on non-furnishing of re-warehousing certificates could not be sustained without satisfactory proof of non-receipt of goods by the consignee. The failure of the department to obtain confirmation from consignee offices and the appellant's refusal to provide collateral evidence created an evidentiary vacuum that precluded confirming the demand. Accordingly, the order imposing duty demand was set aside, and consequential relief granted to the appellant. Significant holdings include the following verbatim excerpt of legal reasoning: "Having regard to the fact that there was specific direction given by this Tribunal ... that Officer at the consignee's end would be in a better position to confirm the receipt of goods or otherwise available their own record as well as records of the consignee's and as consignee had not been examined or contacted to furnish the required proof of receipt of goods by them, that would have met the requirement of para 3b of Circular No. 579/16/2001-CX dated 26.06.2001, I am of the considered view that demand for non-furnishing of proof of re-warehousing certificate alone can't form the basis to confirm the said demand." Core principles established include: - The dual obligation on consignor and consignee to maintain and produce warehousing certificates and proof of receipt under bond removals. - The necessity of departmental diligence in verifying receipt of goods through consignee offices before confirming duty demand. - The requirement that appellants availing exemption benefits must cooperate fully in adjudication proceedings, including furnishing collateral evidence when directed. - The insufficiency of confirming duty demand solely on non-submission of re-warehousing certificates without corroborative proof of non-receipt. Final determinations on issues: - The appellant did not comply with the obligation to produce re-warehousing certificates but also did not cooperate in submitting collateral evidence. - The department failed to verify receipt of goods from consignee offices despite attempts. - The demand for duty based solely on non-submission of re-warehousing certificates was unsustainable. - The appellate order confirming duty demand was set aside with consequential relief.
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