TMI Blog2004 (7) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... of November 96. Shri K. Sarover, Chief General Manager of the appellant Company identified the bearings and the machinery on which they had been mounted. He gave details of bearings mounted on the main equipment and stated that the bearings covered by the above said two bonds had been utilized in implementation of project before they were debonded from the CWC warehouse. The warehoused goods were removed clandestinely and the bills of entry were subsequently filed to regularize the clearances after removing the goods clandestinely. Accordingly show cause notice was issued on 21-5-98 to the appellants and their officers. The case was adjudicated by Commissioner of Customs Bangalore under his Order No. 7/99-Cus., dated 5/7-5-99 confiscating the goods valued at Rs 15,88,375/- but allowed these goods to be redeemed on a fine of Rs. 12 lakhs. He also demanded duty of Rs. 43,18,783/- along with interest of Rs. 14,12,988/- and imposed a penalty of Rs. 60 lakhs on the appellants. This Order of the Commissioner was challenged before the Tribunal and the Tribunal in its Order No. 2250/99, dated 31-8-99 remanded the case for readjudication. After considering the appellants arguments and the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s items imported by the appellants which were required to be mounted on various machineries. These bearings were bonded under bond No. 10/95-96, dated 7-3-96 and 2/96-97, dated 19-4-96. He pleaded that these bearings were removed from the warehouse under cover of 2 ex-bond bill of entries both dated 22-11-96. The said ex-bond bill of entries were duly counter signed by custom authorities and 'pass out of customs charge' was given. He pleaded that the Hon'ble High Court had directed the Commissioner to decide the case as per the direction given by the Tribunal in para 6 of the CEGAT order dated 31-8-99. He stated that the order of the Commissioner is not legal and correct on the following grounds: (i) Commissioner has gone contrary to the directions of the High Court as well as Tribunal. (ii) The Commissioner has analysed the statement of Shri Sarovar to prove that it substantiates the allegation of clandestine removal of bearings. This is contrary to the direction of CEGAT dated 31-8-99 wherein in no uncertain terms the CEGAT has held that statements of Mr. Sarovar does not in any way substantiate the claim of clandestine removal. (iii) Reliance placed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (vii) Demand under Section 72 is without jurisdiction as has been dealt with in para 40 of the Commissioner's order. Section 72(i)(a) can be invoked only where any warehoused goods can be removed from a warehouse in contravention of Section 71 and Section 71 stipulates that no warehoused goods shall be taken out of warehouse except on clearance for home consumption or re-exportation or for removal to another warehouse or as provided by the Act. In this case goods have been cleared by filing ex-bond bill of entry. (viii) Reliance on Khaja's evidence (paras 26 and 44) is in violation of principles of natural justice. Opportunity to cross-examine Shri Sarovar should have been provided but it was refused on the ground that his statement was recorded under Section 108 of the Customs Act. (ix) The documents have precedence over the statements. Even if Shri Sarovar's statement is inculpatory in nature when there are documents to establish that goods were removed legally, the document will prevail over the statements recorded under Section 108 of Customs Act. They relied on the Tribunal's decision in the case of Philips Fernandes v. Commissioner of Customs, Mumbai [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neither Customs officer was there nor the warehouse keeper of the CWC was there. In order to conceal the clearance of the packages of machines they were replaced by the original packages, by filling these up with old junk machines, scrap and stones which were available in the appellants site for erection of the plant and these packages were replaced again in the warehouse so that neither the warehouse manager of CWC nor the customs officer could detect any movement of the packages from the open warehouse. Accordingly the case was booked for which separate proceedings were done. On further investigation, the officers further detected irregularities in clearance of the bearings which were used in the plant which was inaugurated by the Chief Minister on 22-8-1996. On 12-11-1997 after detecting the irregularities, the officers visited the appellants premises again on 22-11-97 and on identification of the bearings which were alleged to have been removed by them clandestinely the same were seized on 22-11-97 on their being identified by Shri Sarovar, the Chief General Manager of the appellant Company. The present proceeding, were initiated only in respect of the bearings covered by the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re found missing he stated that the goods as received were properly warehoused but the warehouse premises is open yard with wire fencing. He suspected the top management of M/s. JVSL to have taken out the materials missing from the bonded warehouse. Since all the items were machinery and parts thereof which could be used in only by them, theft from warehouse might have taken place after his office hours. He was the only employee of CWC working in that warehouse at Toranagallu. Para 5 of the show notice also mentioned that Shri K. Sarovar Chief General Manager of the appellants in his statement dated 27-8-1997 has stated that the manner in which the packages were removed from CWC yard. In para 9 of the show cause, Shri P.K. Kedia General Manager of JVSL in his statement dated 8-9-1997 has given the entire manner how these warehoused goods were taken out without the knowledge of the CWC and Customs authorities. From this statement it is clear whatever is the observation of the Tribunal in para 6 regarding clearance of the goods from warehouse is not based on the evidence recorded in the show cause notice and relied upon by the Commissioner but was general observation as pleaded by ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r observations and after further hearing the appellants shall pass detailed speaking order. Now since the Commissioner after hearing the appellants and considering all the points as mentioned in the para 6 has passed the impugned detailed speaking order which is as per the direction of the Tribunal and the High Court. There is no infirmity in the order as has been pointed out by the appellants. All the fallacies pointed out by the appellants in the statement of Shri Sarovar has been duly considered by the Commissioner in para 46 of his order and has given a very detailed and fact finding order based on the evidence on record as indicated in the show cause notice. Therefore his order is correct in law and the same should be upheld. 10.We have carefully considered the submissions made by both the sides. The main issue to be decided is whether the bearing covered by bonds No. 10/95 and 2/96 were cleared clandestinely or under cover of Ex-bond bills of entry filed by appellants. We find that in para 6 of the Order dated 31-8-1999, the Tribunal has given the following direction to the Commissioner of Customs. "The Commissioner in the de novo proceedings shall take into consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated inside their premises. The show cause notice dated 21-5-1998, issued to the appellants clearly shows in para 3 that Shri P.K. Mathew, Manager, Central Warehousing Corporation and in charge of the warehouse in his statement dated 23-8-1997 has clearly admitted that he is the only employee of CWC working in that warehouse at Toranagallu and he stated that Top Management of M/s. JVSL would have taken out the material missing from the bonded warehouse since all the items were machinery and parts thereof which could be used only by them and theft in the warehouse might have taken place after office hours. In para 5 to Para 9 of the show cause notice, how the goods were removed from the warehouse without knowledge of CWC and Customs is explained in the statements of the various officers of the appellants and which has been taken into account by the Commissioner in his order. Therefore the appellants have not denied the possibility of taking out the goods from the bonded warehouse with the help of cranes and labourers in the night and replacing the same packages after filling up the same with junk machinery, scrap and stones as has been admitted in the various statements of Shri K. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 212 H 25 Nos. Run out Table on 28-9-1996 and 31-10-1996 (f) A 216 H 25 Nos. As at (e) above Bond No. 2/96 (g) AD 8310 97 Nos. As at (a) above (h) AW 212 H 75 Nos. As at (e) above The above dates are the ones pertaining to placement of basic equipments on foundations for which a contractor has raised bills and copies of which are furnished." Thus Shri Sarovar after verifying the record has stated that certain goods pertaining to bond No. 10/95 and 2/96 have been utilized in implementation of the project before these were debonded from CWC bonded warehouse. He has also given the details of the bearings mounted on the main equipment and dates of placement of basic equipment on foundation. His statement does not show the date on which the bearings were mounted on the main equipment. In para 22 of the Order, the Commissioner has observed that in an undated letter of Shri Sarovar written to Dy Director DRI Bangalore he has clarified that their contractor M/s. TTG Industries Ltd., had installed the machinery and at the end of each month they were showing the items ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove its case with mathematical precision, but what was required was the establishment of such a degree of probability that a prudent man may on its basis believe in the existence of the facts in issue. We find that the findings of the Commissioner are according to the law as in the case of clandestine removal it is not always possible to establish the exact date of clearance but if the period during which clearance have taken place is established, then it is sufficient to say that the goods have been removed within that period. In the present case, the reports of M/s. TTG Industries as mentioned above read with the statement of Shri Sarovar and Mahazar dated 22-11-1997 clearly shows that the bearings were removed during the period from July to October. Thus on the direction of the Tribunal he has analyzed the evidence and came to the conclusion that bearings in dispute were cleared from the warehouse from July to Oct., 1996. The appellant's submission that the warehouse goods were removed under cover of ex-bond bill of entry and after proper officer has passed the order to out of customs charge. This is also discussed by the Commissioner in paras 26 to para 29. We find that once it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the goods are liable for confiscation. 13. The appellants in their appeal have raised various points. All these points are already considered by the Commissioner in his order and we find that the findings of the Commissioner does not require any modification as we do not find anything wrong in the Order of the Commissioner. The order of Commissioner is based on evidences and not on conjunctions and surmises as claimed by the appellants. 14. The appellants have claimed that they have paid the duty before issue of show cause notice and in view of the Tribunal's decision in case of Commissioner of Central Excise, Gurgaon v. Machino Montell (I) Ltd. - 2004 (168) E.L.T. 466 once the duty has been paid before issue of show cause notice, no penalty can be imposed under Section 11AC of Central Excise Act and no interest can be demanded under Section 11AB. By following ratio of this decision of the Larger Bench of the Tribunal, we find that in the present case the appellants had deposited the Customs duty of 43,18,783/- and interest of Rs. 14,12,877/- voluntarily as mentioned in para 2 of the show cause notice. Therefore these amounts were paid before the issue of show cause notice ..... X X X X Extracts X X X X X X X X Extracts X X X X
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