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2019 (11) TMI 193

..... cs etc. as such which was procured by them subject to condition of use of same in manufacture and export of finished goods - cross-examination of witnesses - HELD THAT:- Pursuant to investigation undertaken by the revenue, it was found that the Appellant Unit had been showing the receipt of raw material i.e. transfer print paper, fabric etc in their factory and its use in manufacture of export goods which was shown to have been cleared to M/s Sunshine and Al-Amin Exports. The investigation at M/s Al-Amin and Sunshine showed that infact they did not receive any goods from the Appellant Unit but received a premium of ₹ 4 to 5 from Shri Mahendra Sancheti, director of Appellant Unit in whose favour the CT-3 certificates were issued. Shri Rashid Sayyed, the partner of M/s Al-Amin in his statement stated that one Shri Bilal Latif Memon used to supply readymade cheap goods after purchasing from open market to M/s Sunshine and M/s Al- Amin through the tempos of Shri Akbar Tempowala. No goods were received from M/s Laurel. The EOUs used to do minor jobs of sewing and packing and export the goods. It was found that all the goods were brought by these firms from market. No physical evid .....

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..... of Section 114A of the Customs Act, 1962 to the assessee without any authority of statute. 1.1 The brief facts of the case are that the show cause notices dt. 28.02.2005 and 24.10.07 issued on the allegation that the Appellant Unit has illegally diverted duty free imported and indigenous raw materials i.e Transfer Print paper, Grey Fabrics and Knitted Fabrics etc. as such which was procured by them subject to condition of use of same in manufacture and export of finished goods. That the raw materials were shown to have been received on papers only. Also the finished goods were shown to have supplied to M/s Al-Amin Exports and M/s Sunshine Exports both 100 % EOUs who were showing procurement of goods i.e Dyed fabrics/ Transfer Print Fabrics from Appellant assessee Unit under the cover of invoices/ AR-3s against CT -3 Certificate issued to them. However the consignee EOU Units instead did not receive any finished goods of M/s Laurel but were showing manufacturing activities so as to fulfil the export obligations and were exporting cheaper quality bought out items like scarves, dupattas etc. procured from the domestic market through Shri Bilal Latif Memon, proprietor of M/s Lazio Expo .....

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..... 24.10.2007 for the period July 2001 to February 2003 based upon same investigation was issued proposing to demand of customs duty amounting to ₹ 80,80,985/- foregone on 1453175 Mtrs of imported heat Transfer Print Paper and Customs duty amounting to 1,27,50,177/- foregone on 722130.52 Mtrs of Imported Polyster Knitted/ Woven Fabrics u/s 72 read with proviso to Section 28 of the Customs Act, 1962 along with interest from M/s Laurel Apparels Pvt. Ltd.; to impose penalty u/s 112/114A of the Customs Act. It was also proposed to confiscate the duty free raw material which was not available for confiscation in terms of Section 111 (d), 111 (j) and 111 (o) of Customs Act, 1962. In respect of indigenous raw materials, it was proposed to demand central excise duty of ₹ 2,35,49,645/- on 1494194.50 mtrs. of indigenously procured knitted/ woven Grey Fabrics in terms of proviso to section 11A (1) of Central Excise Act along with interest and to confiscate the goods so procured ; to impose penalty u/r 25 of the Central Excise Rules, 2002. Penalty was also proposed on M/s Al-Amin Exports M/s Singh Overseas, M/s Arya Dyeing and Printing Mills, M/s Pinkline and M/s Shivshakti Industrie .....

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..... on. It was necessary to allow cross examination. He relies upon the judgments in case of J & K Cigarettes Ltd. 2009 (242) ELT 189 (DEL). He submits that the adjudicating authority has also disobeyed the direction of the Tribunal directing him to undertake the adjudication of the SCNs after obtaining consent of the Development Commissioner under whose jurisdiction of EOUs fall. He also submits that even after filing of ROM application the Tribunal while disposing of the same has again given direction that the adjudicating authority is bound by the decision of the tribunal or other judicial forums. In spite of the specific order of the tribunal and accepting the applicability of its precedent judgment- in case of Defiance clothing Co. 2008 (87) RLT 743, the adjudicating authority has unjustly entered into discussion and by relying upon some other judgment and inapplicable circular of the Board and has held that there is no need to have prior approval from the Development Commissioner. That the re-warehousing certificates were received by the Appellant duly countersigned by the Range Superintendents having jurisdiction over the receiving EOUs and when the SCN & Adjudication or .....

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..... ed by the Appellant were undoubtedly Inbonded in their factory premises as found during the visit of the Central Excise officer on 4/5 Dec 2002. (v) OIO No. 10/04/Adj./JPR/2003/3722 DT. 29.03.04 issued by CCE, Jaipur in case of M/s Pink line Exim Pvt. Ltd.(100% EOU) (vi) OIO No. 02/Commr/SU/08/Cus dt. 18.01.2008 and SCN No. V (Prev.) Misc/Enq./6/2002 dt. 06.06.2006 issued by CCE, Rohtak to M/s Singh Overseas (100% EOU) 2.1 He submits that the buyers/ brokers have categorically deposed that they had purchased the goods from Shri Mahendrakumar Sancheti. Their contention is not supported by any evidence that the material infact were supplied by M/s Bindal as claimed by them. The adjudicating authority did not consider that from the recorded statements of buyers it is apparent that none of them has stated that they have purchased goods from Appellant Company. They gave the name of Shri Mahendra Bhai Sancheti who is also the director in M/s Bindal who was the seller and who acted through its director Shri Mahendra bhai. This fact was supported by the evidence of sales invoice, goods inventory and payment details etc. in records of M/s Bindal. The adjudicating authority has erred by reje .....

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..... in in his statement stated that one Shri Bilal Latif Memon used to supply readymade cheap goods after purchasing from open market to M/s Sunshine and M/s Al- Amin through the tempos of Shri Akbar Tempowala. No goods were received from M/s Laurel. The EOUs used to do minor jobs of sewing and packing and export the goods. It was found that all the goods were brought by these firms from market. During visit to the factory of M/s Al-Amin it was found that the machines were not capable of being run except one sewing machine and one pleating machine and 65000 pcs of dyed and printed scarf were supplied by Shri Bilal Latif Memon after purchasing from open market. No legal document was found to show the purchase of such goods. Shri Rashid Sayyed, Partner of M/s Sunshine also stated that entire operation of M/s Sunshine was looked after by Shri Irfan Rasul Gulam and Haroon Razak Chhaya. In factory there was small stock of chindis and cut-pieces sent by Shri Bilal Latif Memon which had no relation with CT-3 issued by them. Shri Rashid in his statement dt. 21.06.2003 also stated that fabrics was purchased by them from Surat and after cutting and stitching the dupattas and scarves were exporte .....

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..... epared. Statement of Shri Satish R. Desai, Manager cum authorised signatory of M/s Ravi Transport was recorded on 28.06.2003 who stated that the vehicles mentioned in invoices showing clearance of goods to M/s Al-Amin and M/s Sunshine from M/s Laurel did not belong to his firm and he never sent any vehicle to M/s Laurel. Statement of Shri Latif Memon of Lazio Export was also recorded wherein he stated that he had given export orders for M/s Al-Amin and M/s Sunshine and bought made ups and readymade garments for them for enabling third party exports. The statement of tempo driver who transported goods from Surat godown of Shri Latif to factory of M/s M/s Al-Amin and M/s Sunshine was recorded wherein he stated that he has transported goods three times during the month of June, 2003. Shri Rashid Ahmed Sayyed, Partner of M/s Sunshine Overseas in his statement dt. 30.07.2003 also stated that the contents of his and Kaushik Majumdar retraction affidavits were wrong and were filed on direction of Shri Haroon Razzak Chhaya and Shri Irfan R. Saiyed. Shri Haroon Razak Chhaya in his statement dt. 30.07.2003 also stated that the retraction affidavits were wrongly filed and were false. In his s .....

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..... irmed by authorised signatory of Shri Bindal Silk, Shri Bhoop Singh. Further the brokers viz. Shri Keshrichand Bachhawal of M/s Raj Tex, Shri Rajendra Prasad Kabra, Shri Jethmal and Shri Ramdev Choudhary in their statements admitted selling imported grey fabrics and knitted fabrics and heat transfer print of M/s LAPL on brokerage basis. No physical evidence of transportation of finished goods could be shown by M/s Laurel. This clearly shows that M/s Laurel instead of use of duty free raw material in manufacture of finished goods to be exported, has sold the raw material in open market. 5. As regard the contention of the Appellant that the adjudication proceedings should have been initiated only after receiving clearance from the Development Commissioner as per the earlier Tribunal remand Order based upon judgment in case of Defiance Clothing Co. 2008 (87) RLT 743 (CESTAT), we find that the adjudicating authority has elaborately dealt with the above aspect. We are in agreement with his view that the reference to the Development Commissioner is required to be made only where any interpretation of policy/ procedure is required. However the present case pertains to illegal diversion of .....

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