2009 (9) TMI 700 - AT - Central Excise

Summary

Issues involved: Alleged diversion of duty-free materials, poor quality of exported consignments, violation of principles of natural justice, involvement of different parties in fraudulent activities.

Alleged diversion of duty-free materials:
The main applicant, a 100% EOU, imported duty-free materials for manufacturing and exporting garments. However, during a visit to their premises, no records related to the materials were found, and it was revealed that the materials were diverted for other purposes. The original authority confirmed a demand of around Rs. 2.5 crores towards the diverted material and imposed penalties on the involved parties.

Poor quality of exported consignments:
The Revenue argued that the exported consignments were of sub-standard quality and not manufactured from the duty-free materials. Discrepancies in declared values and weights of the exported garments were highlighted, indicating a mismatch with the imported consignments. The involvement of different parties in handling the materials and exports was also emphasized.

Violation of principles of natural justice:
The appellant claimed a violation of natural justice due to delays in responding to the show cause notice and alleged lack of personal hearing intimations. However, the Tribunal found no prima facie evidence of such violation, noting that communications were sent as per legal requirements.

Involvement of different parties in fraudulent activities:
It was observed that one of the involved parties knowingly participated in the illegal diversion of duty-free materials and exporting sub-standard items to fulfill export obligations. The seriousness of the allegations and findings led the Tribunal to view claims of poor financial status with skepticism, especially due to lack of concrete evidence supporting such claims.

Judgment:
The Tribunal disposed of the stay petition by directing the main applicant to deposit a specified amount towards duty and penalty, along with similar directives for the other involved parties. Failure to comply would result in dismissal of the appeals. The matter was scheduled for compliance reporting on a specified date.