TMI Blog2010 (3) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... L for short) had imported MS scrap under Notification No. 203/92-Cus., dt. 19-5-1992 and under Notification No. 83/90-Cust. dt. 20-3-1990 also after it had closed down its manufacturing facility. On 28-5-1994, at the time of visit of the officers, the Managing Director of KAL Shri Atma Ram Kejriwal (ARK for short) estimated the stock of imported and indigenously procured scrap in stock which showed shortage in comparison to stock as per records. 681 MTs of MS scrap imported under DEEC scheme availing exemption under Notification No. 203/92-Cus., dt. 19-5-1992 was gathered to have been cleared to a fictitious firm viz. M/s. Goodwill Enterprises, Bangalore (GWE). Another quantity of 1029.60 MTs of MS scrap imported paying concessional rate of duty under Notification No. 83/90-Cus., dt. 20-3-1990 was cleared to M/s. Unitility Alloys (P) Ltd. in the name of M/s. King Steels, M/s. Sagar Steels, etc. After due process, the Commissioner passed the impugned order confirming demand of following amounts towards inadmissible exemption availed under Notification No. 203/92-Cus. and Notification No. 83/90-Cus., ordering confiscation of the imported goods and imposition of penalties on persons c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mises and conjectures without evidence. (e) The impugned order was passed relying on evidences obtained from witnesses who were not allowed to be cross-examined by the appellants. (f) The finding of clearance of imported scrap to fictitious firms like M/s. Goodwill Enterprises etc. was not based on any evidence. The so called fictitious firms had bank accounts which had been operated. (g) The assessee had only failed to fulfil export obligation, which was required under the notification, owing to reasons beyond its control. (h) Provisions of Section 111(o) were not attracted in the facts of the case and no penalty was imposable under Section 112(a) of the Act. They relied upon the following case laws:- (i) Maruti Udyog Ltd. v. CC, Kandla [2001 (132) E.L.T. 340 (T)] (ii) Fal Industries v. CC, Chennai [2003 (159) E.L.T. 215] (iii) Touch Stone Mining v. CC [2004 (163) E.L.T. 398 (Del.)] (iv) Meirs Pharma (India) Pvt. Ltd. v. CC, Chennai [2004 (167) E.L.T. 53] KAL sought waiver of demand of Rs. 1,41,076/-, vacation of orders of fine of Rs. 18 lakhs and penalty of Rs. 16 lakhs. Other appellants seek to vacate the personal penalties on simi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not fulfilled and the reason for non-fulfilment was neither intentional nor deliberate. Thus the provisions of Section 111(o) of the Customs Act, 1962 were not invocable in the facts and circumstances of the case and consequently no penalty was imposable as held by the Hon'ble Tribunal in the following case laws :- (a) Maruti Udyog Ltd. v. Commissioner of Customs, Kandla [2001 (132) E.L.T. 340 (Tri.-Mumbai)] (b) Fal Industries Ltd. v. Commissioner of Customs, Chennai [2003 (159) E.L.T. 215 (Tri.-Chennai)] (c) Touch Stone Mining v. Commissioner of Customs, New Delhi [2004 (163) E.L.T. 398 (Tri.-Del.) (d) Meirs Pharma (India) Pvt. Ltd. v. Commissioner of Customs, Chennai [2004 (167) E.L.T. 53 (Tri.-Chennai)]. 7. During hearing the learned Counsel for the appellants submitted the appeals sought to vacate only the penalties imposed. There was no proposal in the show cause notice to confiscate the impugned goods or any finding in the impugned order that the appellants had rendered the goods liable for confiscation under Section 111(o) of the Act. When export obligation was not fulfilled and the importer paid exemption availed (at the time of import), liability t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As regards the penalty imposed on the assessee, we find that show cause notice contained averment that the goods were liable to confiscation under Section 111(o) of the Act with reasons therefore, tentatively found at that stage. The assessee was asked to show cause as to why penalty should not be imposed under Section 112(a)(ii) of the Act. 8.1 We find that the provisions requiring issue of show cause notice have been enacted in the Act to ensure that no failure in observing principles of natural justice arise in the adjudication proceedings under the Act and that the affected parties are afforded adequate hearing. In the instant case, we cannot hold that the proposals to penalize the assessee were made in the show cause notice in a vacuum. Such proposals followed the liability to confiscation of the goods imported for violation of provisions of notifications tentatively found in the notice. After narrating the offending transactions engaged in by KAL and others, the show cause notice stated that the goods involved were liable for confiscation. This is followed immediately by the proposal to penalize the assessee under Section 112(a)(ii) of the Act. 9. We find that in the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt held that since the provisions of FERA, 1973 have been mentioned and all allegations and charges against the appellant were mentioned in clear terms in the show cause notice, the proceedings do not get vitiated. In this case also, it is not the argument of the appellant that facts have not been clearly mentioned and real ground has not been brought out………" From the above observations of the Tribunal, we find that the assessee had been put on notice before their liability to penalty were found in the impugned order. However, as regards the respective offending transactions of the appellants, we find as follows :- 10. In 1997, KAL had sought time from the adjudicating authority to complete export as required. Till date, admittedly, KAL have not made any progress towards completing export obligation. There is no claim that KAL still has the impugned scrap. Therefore the liability of these goods to confiscation under Section 111(o) of the Act is established as was averred in the notice. There is no dispute that KAL had failed to fulfil condition of Notification Nos. 203/92 dated 19-5-92 and 83/90 dated 20-3-90 and thereby rendered the goods liable for confiscation under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to KAL and stood by the statement during cross-examination on 12-3-97. Hence Shri Ashok Kejriwal has to be held to have committed certain offence of abetting violation of conditions of notifications involved. 10.4 As regards Shri Athmaram Kejriwal, penalty under Section 112(a)(ii) was proposed in the show cause notice as follows :- "Shri Athmaram Kejriwal who created the fictitious unit Viz., M/s. GWE and cleared the material imported under DEEC scheme before discharge of export obligation and cleared the material imported in the name of King Steel, Sagar Steel etc. by misusing the benefit of Notification No. 83/90 dated 20-3-1990 as amended, is liable to penalty under Section 112(a)(ii) of the Customs Act, 1962." 11. We find that, though the liability to penalty of KAL for rendering the impugned goods liable for confiscation is obvious from the notice, Shri Athmaram Kejriwal or other appellants cannot be held to have been put on notice as regards their liability to penalty on the same ground. As regards these appellants, charges were found against them and they were found liable for penalty under Section 112(a)(ii) for various offences discussed in the show cause notice. AR ..... X X X X Extracts X X X X X X X X Extracts X X X X
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