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TMI Blog2006 (8) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... raw material (yarn) from specified 12 indigenous manufacturers on CT-3 under the benefit of exemption available on such receipts. They manufactured the final products and cleared the same to holders of Advance Release Orders (AROs), Duty Free Replenishment Certificates (DFRC) and also against foreign exchange as per paras, 7.2, 7.4 and 9.10(b) of Exim Policy 1997-2002 after the concerned officers endorsed the AROs, DRFC, Advance Licences and the remittance certificates of supply effected on foreign exchange. 1.4 The transportation of the goods, both incoming and outgoing on factory gate delivery basis and vehicle numbers, if any, mentioned on the documents, were entered, as per the intimation, by the Porters/Coolies, of the purchasers is claimed. Similar claims are made for movements effected to job workers. 1.5 Under this factual position, the officers visited the factory premises, detained the goods, searched the premises same and found - (i) Daily receipts and issues of indigenous and imported raw materials, (written up to entry 55 dated 29-10-2001). (ii) Daily stock register (written up to 22-10-2001). (iii) &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arnings as a percentage of export performance. (4) That as per audited Balance Sheet for 1999-2000 and as transpired from the statements of their responsible concerned persons, the Appellants could not prove transportation and delivery of their goods to their customers in the local market, in terms of proviso to Section 3 of C. Ex. Act, 1944 and hence it leads to the conclusion that the said goods were cleared into local market without payment of duty and hence, C Ex. duty along with interest is payable on this count. (5) That during the period 2000-01 the finished goods shown to have been cleared to M/s. Sudarshan Texport Pvt. Ltd. and M/s. Santo-gen Textiles Mills Ltd. by the Appellants were never received by the said parties and hence, duty along with interest is payable on this count. (6) That during 2001-02 the Appellants purportedly cleared polyester Texturised yarn against foreign currency in terms of para 9.10(b) of erstwhile Exim Policy, to M/s. Sudarshan Texport Pvt. Ltd., M/s. Ceejay Exports, M/s. Awin Exim Co. and M/s. Kakada Impex but it has been admitted by the personnel of the said companies t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Annexure N, N1, O, S and T1 to the SCN under proviso to Section 28(1) of C.A., 1962, in terms of Notn. 53/97-Cus. (N.T.), dated 3-6-97 and Bond executed, with interest under Section 28AB of CA, 1962 and penalty under Section 114A of CA., 1962, 112(a) and 117 of C.A., 1962; (d) Recovery of C.E. duty of Rs. 13,60,000/- on the Texturised machine valued at Rs. 85,00,000/-, under proviso to Section 11A(1) of CEA 1944 r/w Notn. No. 1/95-C.E., dated 4-1-95 with interest under Section 11AB and penalty under Section 11AC ibid, Rules 9(2), 173Q and 226 of erstwhile CER, 1944 and Rule 25 of CER, 2002. Thus the total duty of Rs. 38,22,80,864.98 was proposed to be recovered. All the aforesaid goods be held liable to confiscation for contravention of various provisions of law. (e) (i) Confiscation of goods valued at Rs. 1,52,01,852.70 seized under Panchanama dated 16-7-2003 under provisions of Sections 111(d), 111(j) and 111(o) of C.A., 1962 and Rule 25 of CER, 2002; (ii) Confiscation of texturising machine valued at Rs. 85,00,000/- purported to be procured under CT3 Certifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 24024 kgs. (viii) Imposed fine of Rs. 15,00,000/- on the Texturising Machine valued at Rs. 85,00,000/- seized on 26-9-2003, in lieu of its confiscation under Sections 111(d), (g) and (o) of CA, 1962 and Rule 25 CER, 2002. (ix) Imposed fine of Rs. 50,00,000/- on the imported and indigenous plant and machinery and parts thereof valued at Rs. 1,41,62,850/- seized on 26-9-2003, in lieu of its confiscation under Sections 111(d), (g) and (o) of CA, 1962 and Rule 25 CER, 2002. (x) Imposed penalties on other notices. 1.9 The total demand in the SCN was Rs. 38,22,80,865/- which has been reduced to Rs. 33,57,46,382/- and confirmed. The reduction is on account of the following reasons: (i) Clearances to Shrishti Impex Pvt. Ltd. involving duty of Rs. 27,45,639/- allowed to them (Reduction in Annexure "B" Demand). (ii) Amount of duty of Rs. 4,37,71,519.12 (Reduction in demand at Annxure "D" due to calculation mistake). (iii) Amount of Rs. 17,324.00 (typographical mistake in Annexure "M"). 1.10 The ld. Commissioner has arrived at his finding based on : (a) The system of physi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . six months after their reply. (h) The documents furnished under their letter dated 22-12-2004 were only photocopies of few odd nos. of invoices ARE3As, CT-3s, letters of permission from D. C. Kalyan and these could not be verified from the prescribed Registers nor could they refute the charge that the clearances were not made to the parties mentioned in the invoices. (i) The Appellants could not properly account for the stock found in the unit, at the time of officers' visit nor could they explain and correlate it with the stock in Annexures 118 and 77, which led to the detention and eventual seizure of the stock. They furnished the stock position of raw materials as on 24-1-2003 different at different times i.e. through their letters dated 10-2-2003, 6-3-2003, affidavit in Writ Petition on 24-4-2003 and letter dated 30-7-2003. (j) The subsequent explanation offered could not establish a correlation of the stock with entries in 118 and 77 Registers. (k) In their writ petition they claimed the PTY as finished goods as manufactured by them but eventually in their reply dated 30-7-2004 and final reply dated 7-12-2004 they accepted that PTY was obtained under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellants, through their replies intended to sideline the main issues through confusion, with frequent change in their stand as per their convenience. They repeatedly denied having received the relied upon documents, insisted upon repeated inspection of documents withdrawn by the department, although the department had supplied all the documents. (v) The Appellants' request for cross-examination not justified in the facts and nature of the case. (w) The Appellants in their final reply changed their stand to deny receipt of most of AR3s but still accepted receipt of AR3s from Sanghi, Simco and HPCL. (x) The date of production was given in the beginning as 22-12-97 but later on the said date was given as 6-9-99 which was reiterated before High Court and in the final reply to the SCN, but this could not explain the imports of dyes and chemicals without payment of duty vide Bill of Entry dated 12-11-97 and CT3 issued in 98-99 for procurement of machinery and seeking permission of Development Commissioner for supply of PFY to ARO holder, which was granted on 30-12-97 for specified Qty. subject to the verification by Bond Officer, of actual manufacture of PFY. (y)&e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 (SIC). A redemption fine of Rs. 15 lakhs has been offered without giving a break up. If the machine is required to discharge duty under Section 11A, it would be indigenous i.e. Indian capital goods, then confiscation arrived under Sections applicable to an imported machines are exhibition of a desire to somehow order confiscation or mixed up state and non-application of mind. Such confiscations cannot survive. (ii) The plant, machinery and parts similarly are ordered to be confiscated under the same provisions of Customs Act, 1962 and Rule 25 of the Central Excise Rules, 2002 and common redemption fine is offered as in case above. Such common fines cannot be upheld. No duty demands are confirmed. (iii) Since the machines, the capital goods and machinery & parts were found within the premises of an EOU, duty demands cannot be effected, since the EOU is not debonded by the impugned order or otherwise. It is settled position that duty demand on capital goods have to be determined as per the decision in the case of SIV Industries, 2000 (117) E.L.T. 281 (S.C.) (para 23), whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . There is therefore no justification or force in the contention raised by M/s. STPL that the notice is to be "served" on them on or before 9-10-2003. The goods were seized on 16-7-2003 and Show Cause Notice has been issued and served within 6 months of the seizure. That the notice was issued on 9-10-2003 cannot be disputed and is clearly evident from the facts of pasting on the office premises of M/s. STPL, by displaying on notice board of the office, sending through Postal Authorities on 9-10-2003 and service on one notice. The notice is properly issued within the stipulated time period. It is seen that the yarns were initially s detained on 23/24th January 2003 when the officers visited the factory premises of M/s. STPL (a 100% EOU). No record private or records as prescribed statutorily) was made available to the officers on demand on these days. As discussed above, in sub-paras 52.2, they have made repeated false claims of submitting statement of details and have given varying figures in their explanations from time to time." These findings prima facie, cannot be upheld. Confiscation orders arrived are to be set aside fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n would be eligible and the same should be granted and no duty to be demanded" The above contention misrepresents the legal position. The decision of the Supreme Court in the case of SIV Industries Ltd. was in context of the 100% EOU being debonded and determines that duty on goods lying in stock on debonding is to be charged under the main provision of Section 3(1) and not under proviso to Section 3(1) applicable for 100% EOU. This interpretation is based on the scheme of 100% EOU which required it to export the entire production except that which was allowed to be sold in DTA by the Development Commissioner, and provisions of Section 3(1) as it then existed. There is no warrant to create a new category of clearances of EOU viz goods not exported and sold in DTA without requisite permission of Development Commissioner. The decision did not lay down that if goods are cleared contrary to the scheme and statute even then the duty liability would be under the main Section 3(1) of the Central Excise Act, 1944. Initially the Board had misinterpreted the ratio of the decision of Supreme Court in the case of SIV Industries Ltd. [2000 (117) E.L.T. 281 (S.C.)] in clarifying under their Cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) of Exim Policy 97-02. PTY 250 Tonnes valued at US$ 4000001- and Dyed Polyester Texturised Yarn 250 Tonnes valued at US$ 4500001 - to M/s. Awin Exim Company. (c) Joint Development Commissioner vide Letter SEEPZ/EOU/28/DE/99/1335, dated 15-1-02 permitted supply of Twisted Polyester Texturised Yarn Semi Dull Raw White 250 Tonne valued at US$ 3750001- and Dyed Polyester Texturised Yarn 250 Tonne valued at US$ 4000001- to M/s. Ceeiay Exports under Para 9.10(b) of EXIM Policy 1997-2002 read with Paras 9.25 and 9.26 of Handbook of Procedure. (d) Asstt. Development Commissioner vide their letter No SEEPZI28/EOU/09/97/946, dated 3 8-2002 permitted under Para 6.9 (b) of Exim Policy 2002-07, clearance of Polyester texturised Yarn, Semi Dull Raw White 250 tonnes valued at 3,75,000.00 US$ and Dyed Polyester Texturised Yarn 250 tonnes valued at 450000.00 US$ to M/s. Pet Plastics Ltd. it is seen that the permission was granted subject to the condition, inter alia, that "The purchaser of the goods in the DTA shall be liable to pay excise duty, sales tax and such other taxes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FRC license, the supplies would be regarded under Para 10.2(a) as deemed exports and as such would be entitled to the benefit under Para 10.3(c) by way of refund of terminal excise duty. In this case also there would be a requirement to pay .... duty to the Central Excise and later claim refund from the Min. of Commerce. However, no duty has been paid by M/s. STPL on such clearances and they were required to pay the Central Excise duty. These findings are not upheld following the Tribunal's catena of decisions where they have held that no demands could be effected on such clearances made on ARO, DFRC, foreign exchange under Para 9.10 of Exim Policy; prima facie these demands therefore cannot be sustained. The following cases settle the law, are correctly relied by the appellant assessee viz : (a) Maruti Cottex Limited v. Commissioner of C. Ex., Hyderabad-III - 2005 (183) E.L.T. 393 (Tri. - Bang.) (b) Commissioner of Central Excise, Surat-I v. Suresh Synthetics - 2005 (190) E.L.T. 199 (Tri. - Mumbai) (c) Interdril Asia v. Commissioner of Central Excise, Belapur - 2006 (193) E.L.T. 440 (Tri. - Mumbai) (d)&nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be misdirected and not permissible in law. This view in Carrier Aircon was decided on the basis of the submission made by Revenue. Now, at this prima facie, case, Revenue cannot plead to the contrary. Duty demands therefore prima facie cannot be upheld. (ii) It is found that the allegation of the officers signature being forged not owned by the officers, is a serious charge with quasi criminal and criminal liability. The assessee applicant and others had sought the cross-examination of the various persons. That has not been allowed. This has resulted in a serious denial of natural justice and consequent orders, relying on such forged/not owned up by officers signature to arrive at goods not being rewarehoused and or diverted cannot be upheld. The examination of RTO officers and tempo drivers as sought may not be necessary as held, but the cross-examination of the officers who deny the signature and the expert whose opinion is relied was sine qua non. Since it is assessees plea that goods were dealt on factory gate receipt/delivery basis the transporters evidence may only be corroborative either way, but primary evidence of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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