2006 (10) TMI 341 - AT - Central Excise

Summary

Issues involved:
The issues involved in the judgment are confiscation of imported Polyester Filament Yarn, customs duty demand against M/s. Kansal Texo Tube Pvt. Ltd. (100% EOU), imposition of penalties under Sec. 112(a) and Sec. 112(b) of the Customs Act, and Rule 209A of the Central Excise Rules.

Confiscation of Imported Polyester Filament Yarn:
The Commissioner of Central Excise & Customs, Surat, confiscated the imported Polyester Filament Yarn under Rule 226 of Central Excise Rules, 1944, with an option to redeem on payment of a fine of Rs. 35,000. The goods were seized at the premises of M/s. Jay Krishna Sizers and M/s. Carewell Rayons Pvt. Ltd. The total duty demand amounted to Rs. 500589/-.

Customs Duty Demand against M/s. Kansal Texo Tube Pvt. Ltd. (100% EOU):
The 100% EOU had entered into an agreement to manufacture twisted PFY and POY for export, allowing them to import raw material without duty payment. However, investigations revealed clandestine removal of imported PFY, diversion of raw materials, and non-maintenance of proper accounts. Duty not paid at the time of import became recoverable under the provisions of Sec. 28 read with Sec. 72 of the Customs Act 1962. The duty demands were confirmed, and penalties were imposed on the EOU and its Director.

Penalties Imposed:
A penalty of Rs. One lakh was imposed on the 100% EOU under Sec. 112(a) of the Customs Act, and a penalty of Rs. 50,000/- was imposed on its Director under Sec. 112(b) of the Customs Act and Rule 209A of the Central Excise Rules, 1944. The penalties were challenged in the appeal.

Judgment Details:
The Appellate Tribunal upheld the confiscation and duty demands against the 100% EOU. The Tribunal found evidence of clandestine removal of duty-free goods, diversion of materials, and violation of notification provisions. The argument that the EOU was not the importer was rejected as the Director admitted importing PFY duty-free. The option to redeem the seized goods was given to the EOU, leading to the rejection of the argument. The penalty on the Director was set aside as it was a consolidated penalty not legally permissible.

Conclusion:
The appeal No. E/373/02 was allowed, while appeal No. E/377/02 was dismissed. The confiscation, duty demands, and penalties on the 100% EOU were upheld, with the penalty on the Director being set aside.