2000 (8) TMI 943 - AT - Customs

Summary

Issues Involved:
1. Denial of benefit of exemption Notification No. 13/81-Cus due to procedural lapses.
2. Imposition of penalty for violation of Sections 111(j) and 112 of the Customs Act.
3. Jurisdiction of Pune Collectorate to issue the demand notice.
4. Validity of the warehousing bond cancellation.

Issue-wise Detailed Analysis:

1. Denial of Benefit of Exemption Notification No. 13/81-Cus:
The appellant contended that the benefit of exemption Notification No. 13/81-Cus should not be denied due to procedural lapses, as the finished goods had already been exported, fulfilling the export obligation. The alleged shortage of 1531.189 MTs of imported raw material was due to storage in an adjoining place with the department's oral permission. The Assistant Collector and the Collector (Appeals) had confirmed the duty demand of Rs. 10,72,361/- on the grounds that the appellant had not accounted for the imported raw material properly.

2. Imposition of Penalty for Violation of Sections 111(j) and 112 of the Customs Act:
The Collector imposed a penalty of Rs. 25 lakhs on the appellant for violating Sections 111(j) and 112 of the Customs Act. The appellant argued that the penalty was unjustified as the goods were stored with the department's oral consent. The department contended that the appellant's explanation was an afterthought and that the shortage was established during stock-taking. The Collector held that the appellant failed to provide a satisfactory explanation for the shortages, thus justifying the penalty.

3. Jurisdiction of Pune Collectorate to Issue the Demand Notice:
The appellant argued that the Pune Collectorate lacked jurisdiction to issue the demand notice as the import was done in Mumbai. The Tribunal referred to the case of Engee Industrial Services P. Ltd. v. Collector of Customs, Bombay, which stated that in cases of clandestine removal, both the proper officer at the place of import and the place of seizure have jurisdiction. The Tribunal upheld the jurisdiction of the Pune Collectorate, stating that the clandestine removal justified the Pune Collectorate's action.

4. Validity of the Warehousing Bond Cancellation:
The appellant argued that the bond executed at Bombay was discharged, indicating compliance with the export obligations. The Tribunal noted a contradiction: the bond was discharged by the proper officer in Bombay, yet the goods were found short during stock-taking in Pune. The Tribunal emphasized the need for a satisfactory explanation for the bond's discharge before any order of confiscation could be passed. The Member (Technical) highlighted that the department did not act upon the appellant's letter indicating storage outside the bonded warehouse, which should have been verified.

Separate Judgments Delivered:
- Member (Judicial): Concluded that the orders passed by the lower authorities were justified and upheld the duty demand and penalty.
- Member (Technical): Disagreed with the Member (Judicial) and argued for a remand to the Commissioner for reconsideration of the issues, particularly the bond cancellation and jurisdiction aspects.
- Third Member (Technical): Agreed with the Member (Technical) that the matter should be remanded to the Commissioner for a fresh decision, considering the relevant issues.

Final Order:
The appeal was allowed, and the impugned order was set aside. The matter was remanded to the Commissioner (Appeals) to pass orders in accordance with law after hearing the appellant and considering the submissions raised.