2011 (5) TMI 455 - AT - Customs

High sea sale - Import of raw materials without payment of duty - Diversion of material - Appellants are alleged to have bought these goods from various importers who allegedly sold these goods on high sea sale basis to the Appellant - Revenue had specific information regarding selling/diverting of duty free imported raw material by the Appellants in the open market. There is no other evidence which would show that the Bills of Entry were actually filed by the Appellant. Rest of the allegation is listed on the presumption that these Bills of Entry were actually filed by the Appellant. - held that - We have not seen any reliable evidence by which we can conclude that the impugned Bills of Entry were filed by the Appellant and the goods were cleared by the Appellants. The fact that the Revenue had specific information about diverting the duty free raw material by the Appellant is not a sufficient evidence to confirm the duty demanded. - Decided in favor of assessee.

Issues: Alleged diversion of duty-free imported goods for sale in the market without payment of customs duty, demand of customs duty, confiscation of goods, penalty imposition, lack of evidence regarding filing of Bills of Entry.

Alleged Diversion of Duty-Free Imported Goods:
The main issue in this case revolved around the alleged diversion of duty-free imported goods by the Appellants for sale in the market without payment of customs duty. The Revenue contended that the Appellants had imported raw materials without payment of duty and diverted them for commercial purposes. The Revenue issued a show cause notice demanding customs duty amounting to Rs.2,53,07,032 on goods covered by 26 Bills of Entry, proposing confiscation of goods under Section 111(o) of the Customs Act, and imposition of penalties under Sections 114A and 112(a) of the Customs Act, 1962.

Defence of the Appellants:
The Appellants refuted the allegations, claiming they did not file the impugned 26 Bills of Entry, did not pay for the imported goods, and were merely in negotiations with parties for potential purchases while arranging funds. They argued that they had no involvement in the imports beyond these preliminary discussions.

Scrutiny of Evidence:
Upon reviewing the evidence presented, the Tribunal found a lack of substantial proof linking the Appellants to the filing of the Bills of Entry and subsequent clearance of goods. While Bills of Entry were filed in their name, the Tribunal noted that this alone was insufficient to establish their direct involvement. The Tribunal highlighted that the allegations were primarily based on presumptions rather than concrete evidence of the Appellants' actions. The Appellants' responses during adjudication indicated their engagement in negotiations and attempts to secure funds for the purchase of goods, but did not conclusively prove their direct participation in the import process.

Insufficient Evidence and Conclusion:
After considering arguments from both sides and examining the evidence, the Tribunal concluded that there was a lack of reliable proof to establish that the Appellants had indeed filed the Bills of Entry and cleared the goods. The Tribunal emphasized that specific information about the alleged diversion of duty-free goods was not adequate evidence to support the duty demand. Consequently, the Tribunal set aside the orders due to the absence of substantial evidence, providing relief to the Appellants.

This judgment underscores the importance of concrete evidence in establishing allegations of customs duty evasion and the necessity for a clear nexus between the accused parties and the purported illegal activities. The Tribunal's decision to set aside the orders highlights the fundamental principle of requiring substantial proof before imposing penalties or confiscating goods in customs-related cases.

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