2006 (6) TMI 343 - AT - Customs

Summary

Issues:
1. Demand of duty and penalty on imported Stainless Steel Coils and Sheets under the DEEC Scheme.
2. Discharge of export obligation with Advance Licences and subsequent investigation discrepancies.
3. Confessional statement admitting non-utilization of imported raw materials.
4. Challenge against duty demand based on factory existence for manufacturing export goods.
5. Lack of documentary evidence for job work manufacturing under the licences.
6. Tribunal's direction for pre-deposit of Rs. 50,00,000.

Issue 1: Demand of Duty and Penalty
The Commissioner demanded duty of over Rs.26 crores from the appellants for Stainless Steel Coils and Sheets imported under the DEEC Scheme, along with an equal amount of penalty. The appellants had obtained Advance Licences from DGFT for duty-free raw material imports to fulfill export obligations. The dispute arose when it was alleged that the imported materials were not utilized for manufacturing export goods, leading to the duty demand and penalty imposition.

Issue 2: Discharge of Export Obligation and Investigation Discrepancies
The Department issued a show-cause notice based on discrepancies found during investigations regarding the import of raw materials and export of finished goods under the Advance Licences. Discrepancies arose as different findings were recorded by DRI and Customs Officers regarding the existence of a manufacturing facility at the declared premises. A confessional statement admitting non-utilization and diversion of raw materials was also a significant factor.

Issue 3: Confessional Statement
The confessional statement by the appellant's proprietor admitting non-utilization of imported raw materials and their diversion was a crucial piece of evidence. The lack of retraction of this statement raised questions regarding the utilization of the imported materials for manufacturing export goods.

Issue 4: Challenge Against Duty Demand
The main factual question was whether the appellants maintained a factory for manufacturing export goods at the declared premises. The absence of documentary evidence for job work manufacturing under the licences weakened the appellants' challenge against the duty demand. The Tribunal found no prima facie case against the duty demand and penalty based on the available facts and evidence.

Issue 5: Lack of Documentary Evidence for Job Work Manufacturing
Despite claims that most manufacturing was outsourced to job workers, no documentary evidence supporting this claim was presented by the appellants. The absence of such evidence contributed to the Tribunal's decision not to find fault with the findings against the appellants regarding the diversion of imported raw materials.

Issue 6: Tribunal's Direction for Pre-Deposit
The Tribunal directed the appellants to pre-deposit Rs. 50,00,000 within six weeks as a condition, emphasizing compliance by a specified date. This pre-deposit requirement was likely to ensure financial commitment pending further proceedings in the case.

This detailed analysis of the judgment highlights the key issues, evidence, discrepancies, and the Tribunal's decision regarding the demand of duty, penalty imposition, and the challenges raised by the appellants.