TMI Blog2017 (8) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... in the impugned order is not supported by any show cause notice thereat and hence will have to be set aside, which we hereby do. There is an allegation in the SCN that the appellant had connived with Kunal Overseas in obtaining duty free licence in the name of Kunal Overseas and after taking possessionof the goods were instrumental in illegal diversion and sale in the local market for monetary gain - there is no legal sanction for such adjustment and appropriation of monies deposited by one person towards liability of another. It is not even the case that appellants have given No Objection Certificate or a carte blanche of any sort to the department to go ahead with such adjustment / appropriation. This being so, the impugned adjustment / appropriation is unsustainable in law. The order of the adjudicating authority for adjustment of ₹ 28,00,000/- (Rupees twenty eight lakhs only) towards penalty imposed on another person will require to be set aside, which we hereby do - appeal allowed - decided in favor of appellant. - C/248/2007 & C/249/2007 - 41348-41349/2017 - Dated:- 7-7-2017 - Ms. Sulekha Beevi C.S. Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Tec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2017, when the matter came up for hearing, both the appellants were represented by Shri Kishor K.Acharya, Ld. Advocate who reiterated the submissions in the grounds of appeals. 3.1 Ld. Advocate also made oral submissions which can be summarized as under : In respect of Appeal C/248/2007 filed by Shri Pradeep S. Mehta: (i) Goods were sold to Kunal Overseas with proper documentation only. Duty free clearances would have been permitted only after satisfying as to the proper high sea sales contract and other relevant aspects. (ii) It is not necessary that licensee should have manufacturing facilities since policy provides for supporting manufactures and duty free goods can be got processed from any supporting manufacturer. Therefore, after the goods were sold on high seas, appellant was not required to keep track of the same. In the statement given by him, he was made to admit that he helped Kunal Overseas to sell the goods and give names of persons to whom the said 300 MTs of LDPE was said to have been sold, however, such purchase was denied by the said persons. Whatsoever business transaction was entered into with Kunal Overseas was in good faith and was a norma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t such appropriation. The case had been detected and investigated by the D.R.I. Ld. A.R. takes us to para-13 of the SCN to contend that Shri Pradeep Mehta / M/s.Vishal Exports Overseas Ltd. had made payment of ₹ 28 lakhs towards duty liability arising out of diversion of 300 MTs of LDPE cleared duty free under Advance Licence No.3208193 dt. 25.3.98 under Bill of Entry No.28500 dt.27.05.98 only. He further submits that the SCN, in para 20 (c), had proposed adjustment of the amount of ₹ 28 lakhs against duty payable / penalty imposed. In the circumstances, when the deposit of ₹ 28 lakhs even if made by Vishal Exports only towards duty liability, it can very well be adjusted against the consequential penal liability. 5. Heard both sides and have gone through the facts. 6. In respect of appeal filed by Shri Pradeep S.Mehta, the grievance of the appellant is that penalty has been imposed under Section 112 of the Customs Act, 1962 when the SCN had proposed such penalty only under Section 114A ibid. We find that Section 114A of the Customs Act has a provision for enhanced penalty equal to the duty or interest determined under Section 28 ibid, in cases where such du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Parekh, M.D. of Kunal Overseas Ltd. Revenue has tried to defend this appropriation by stating that amount of ₹ 28 lakhs was deposited by Vishal Exports themselves vide their letters dt.21.1.99 and 2.9.99, towards duty liability only. However, we are afraid that this appropriation does not have any legal merit. In the first place, the said deposit was admittedly made only by this appellant and therefore, at the most, it could have been adjusted and appropriated towards any duty liability that would have been proposed and demanded from them. This is certainly not the case here. From the facts of the case, it is evident that Vishal Exports came into the picture as a high seas seller of 300 MTs of LDPE to M/s.Kunal Overseas, who, in turn, cleared those goods duty free under advance licences. True, there is an allegation in the SCN that the appellant had connived with Kunal Overseas in obtaining duty free licence in the name of Kunal Overseas and after taking possessionof the goods were instrumental in illegal diversion and sale in the local market for monetary gain. However, in the first place, these allegations themselves have not been fully corroborated in the Show Cause Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within a period of three months or in the event that no stay is granted, the bank guarantee, directed by the High Court to be furnished, for withdrawing the above amount will stand discharged]. We are therefore of the view that no prima facie case has been made out by the Revenue for stay of operation of the impugned order in so far as it relates to directing refund of ₹ 2,00,30,000/- to M/s. Dimple Overseas Limited/V.K. Gandhi and accordingly we dismiss the application C/Stay-2398/2002. (ii) CCKandla Vs Adani Enterprises Ltd. 2007 (211) ELT 616 (Tri.-Ahmd.)- Para-6 of the said decision is reproduced below for ready reference : 6.We have considered the submissions. We notice that no duty has been confirmed by the authorities below against the respondent company. When that being the case, the question of adjusting dues from the amount deposited by the company is not legal especially when there is no consent from the respondent company as rightly held by the Tribunal in the case of M/s. C.H. Shah Co. v. C.C., Mumbai cited supra. The dues are required to be recovered only from the persons concerned namely from whom the amounts are due. In view of the ..... 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