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2016 (3) TMI 701 - CESTAT MUMBAI

2016 (3) TMI 701 - CESTAT MUMBAI - 2016 (335) E.L.T. 83 (Tri. - Mumbai) - Demand of Customs duty - Platinum imported but found shortage - Explanation provided but not found acceptable by revenue in terms of condition No.3 of Notification No.137/2000-Cus dated 19/10/2000 - Held that:- the records did not match the actual stocks. On one hand excess loss has been sought to be explained on account of using Gold jewelry machines for making platinum jewelry, while on the other it is claimed that the s .....

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have not fulfilled the conditions of the notification and have failed to account for the platinum and therefore, liable to payment of duty on the unaccounted platinum. - Imposition of penalty - Invokation of Section 114A of the Customs Act, 1962 - Held that:- Section 114A can be invoked where the duty has not been levied by reason of collusion or any wilful mis-statement or suppression of facts but here there is a bland allegation, there is no evidence of any wilful mis-statement or suppres .....

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edemption fine - Held that:- as per Hon'ble Supreme Court decision in a case, if the goods are released in custody of a person under a bond then the same can be confiscated even if the same are not physically available. But here, there was no bond for the use of goods in a particular manner. Therefore, the goods can not be confiscated followed by the decision of Tribunal in the case of SS Watch Industries Vs. CC (I) New Delhi [2008 (11) TMI 420 - CESTAT, NEW DELHI]. - Decided partly against the .....

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2 for checking the stock of gold, platinum and diamonds. On comparing the said stock with that recorded in their books of accounts certain variation was detected. The variation in the quantity in the gold and diamonds was satisfactorily explained by the respondent. However, they could not explain the shortage of 5,987.17 gms of platinum in the stock. The respondents tried to explain the shortage as manufacturing loss and possible thefts. This explanation was not found acceptable in terms of cond .....

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of ₹ 9,70,039/- on the said platinum. It was also alleged that the said platinum was liable to confiscation under Section 110 (o) of Customs Act, 1962. It was also alleged that the respondent had violated the provisions of Chapter 9A of the (Export-Import) EXIM Policy as well as the Handbook of Procedures, 1997-2002 prescribed in para 9A.5 to the effect that the wastage/manufacturing loss of platinum in the manufacture of jewellery shall be within overall percentage prescribed in Appendix .....

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s were aware of the excess manufacturing loss, the permissible limit and they failed to inform the Revenue resulting in clear violation of the condition 3 of the Notification No.137/2000-Cus. As a result, the platinum found short was held to be liable to confiscation under Section 111 (o) and 111(d) of the Customs Act, 1962. However no confiscation was ordered as goods were not available. It was also held that the duty of ₹ 9,70,040/- was payable by the respondent under Section 28 of the C .....

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sing penalty on the respondent, the Commissioner imposed a penalty of 25% of the duty payable under Section 114A of the Customs Act, 1962. There was no order of confiscation or imposition of redemption fine in lieu of confiscation. Revenue is in appeal against the said order on the ground that the Commissioner ought to have confirmed penalty equal to the duty evaded and not merely 25% of the duty involved under Section 114A of the Customs Act. The commissioner ought to have imposed a redemption .....

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confiscation of the missing platinum and has not imposed any redemption fine in lieu of confiscation under Section 125 of the Customs Act. It was argued that since the goods were released on the strength of a bond, a redemption fine is imposable even if the goods were physically not available for confiscation. Revenue relied on the decision of the Honble Supreme Court in the case of Weston Components - 2000 (115) ELT 278 (SC). 3. The learned Counsel for the respondent argued that no penalty ca .....

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hich is used for processing gold jewelry, for manufacture of platinum jewelry. It was also argued that a limit of 9% wastage does not cover intangible manufacturing loss. It was argued that they had maintained the records properly and they submitted that they were not aware of exact shortage, which they could have come to know only at the end of year during the physical stock taking and it is incorrect to say that they have not maintained the records properly or have violated the condition of No .....

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has not been specified in the impugned order. It was argued that physical stocktaking was to be conducted at the end of the financial year, but the customs authorities visited their premises on 18th & 19th March, 2002. It was argued that the respondent would have intimated the said shortage of platinum to the Customs authorities at the end of the financial year, i.e. on 31/03/2002. It was argued that the respondents were not aware of the exact shortages of platinum as they were expecting to .....

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bition at the time of import of platinum. It was argued that in view of the above, no fine can be imposed in lieu of confiscation. As regards the penalty under Section 114A, it was argued that neither any intention to evade duty on the part of the respondents nor there is any allegation in the show cause notice that the respondent had any intention to evade duty and therefore, imposition of penalty by the Commissioner under Section 114A of the Act is illegal and bad in law. It was argued that th .....

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4. We have gone through the rival arguments. 5. We find that there was no evidence of any clandestine removal of platinum. In the initial stages, the respondent had hinted some thefts however there was no further investigation on that line. The shortages of platinum are either on account of process loss or pilferages. Notification No.137/2000-Cus allow the import of these goods subject to execution of bond in the form specified by the Assistant Commissioner or Deputy Commissioner binding himself .....

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of Customs in the prescribed Appendix 16 of the Handbook of procedure Vol.I. It can be seen that total responsibility has been placed on the importer to use the goods in proper manner and to maintain records. In the instant case the records did not match the actual stocks. While on one hand excess loss has been sought to be explained on account of using Gold jewelry machines for making platinum jewelry, on the other hand it is claimed that the shortage may have been in the dust which was to be p .....

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have not fulfilled the conditions of the notification and have failed to account for the platinum and therefore they are liable to payment of duty on the unaccounted platinum. 6. Section 114A of the Customs Act, 1962 can be invoked only in cases where the duty has not been levied by reason of collusion or any wilful mis-statement or suppression of facts. In the instant case while there is a bland allegation, there is no evidence of any wilful mis-statement or suppression. The notice alleges that .....

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tification No.137/2000 which require them inter-alia to dispose of the said goods or service in terms of the notification and bond. The said bond also bound them to the condition that in case of failure to utilise the said goods for the said purpose within a period of five years to pay an amount equal to the duty leviable on the said unutilized goods along with interest @ 25% on the said duty from the duty of importation till payment of such duty. Revenue has relied on the decision of the Honbl .....

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subsequently it is found that the import was not valid or that there was any other irregularity which would entitle the customs authorities to confiscate the said goods, then the mere fact that the goods were released on the bond being executed, would not take away the power of the customs authorities to levy redemption fine. 2 The appeal is dismissed. It is apparent from the decision of Hon ble Supreme Court that if the goods are released in custody of a person under a bond then the same can b .....

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which are not available for confiscation, provisions of Section 125 are attracted only in the cases when either the goods are physically available for confiscation or the goods had been released provisionally against the Bond and as per the terms of the conditions of the Bond, the person from whose possession/control the goods had been seized, is bound to produce the goods whenever called upon to do so. We are supported in this view from the judgment of Honble Punjab & Haryana High Court in .....

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15) E.L.T. 278 (S.C.) is applicable only in those cases where the goods had been released against a bond executed by the person from whose possession/control the goods had been seized and that when the goods have been released against a bond, the position is as if the goods were available. Same view has been taken by the Tribunal in the case of G.M. Exports v. Commissioner of Customs, Bangalore reported in 2008 (226) E.L.T. 571 (Tri.-Bang.). In this case, the goods held to be liable for confisca .....

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reason that the Adjudicating Authority has not ordered for confiscation of the raw materials despite there being a bond executed by the assessee. We find that the main plank of the Revenue s appeal is that the commissioner has erred in refraining from formally confiscating and imposing redemption fine on of goods. In our view, the revenue appeal is on diversion of imports and inasmuch as when the goods are not there for confiscation, the question of confiscation cannot arise. Reliance placed by .....

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e the submissions. The Hon ble Supreme Court had clearly held in the case of Weston Components Limited that when the goods are released provisionally on execution of bond, confiscation can be affected even if the goods are not available. The natural conclusion is that the goods should have been released on bond which would mean that the goods have been taken possession of by way of seizure and subsequently released on execution of bond. Admittedly that is not the situation in this case also. In .....

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