2013 (10) TMI 1056 - AT - Customs

Import of crude oil - Concessional rate of duty under Notification No. 81/202-Cus - Forged manufacturing of soap - Held that - DGCI on investigation on 15.2.2005 found that no machine was available for manufacture of soap nor any raw material or finished goods existed. So also, that one Shri Subhash Kumar, partner of the appellant M/s. Kesar Soap Mills was running a soap factory under the name and style of Tripti Soap & Chemicals but that was also found to be non-existent. The Authority tested retirement of Shri Surinder Kumar from the firm M/s. Kesar Soap Mills w.e.f. 9.3.2004 which proved to be false. Statement of Shri Surinder Kumar was recorded on 23.12.2006 who totally denied existence of the factory, carrying out of any manufacture and existence of record which proved that the appellant firm was only a bubble to defraud revenue. There was no certificate of Pollution Control Board to show even any step taken for setting up of the manufacturing concern - Various materials gathered in the cause of investigation proved that there was no purchase of caustic soda. There was no manufacture at all - When there was no basic evidence of existence of the factory nor any operation carried out, it is difficult to grant any relief to the appellants - Decided against assessee.

Summary

Issues Involved:
Adjudication on misuse of concessional rate of duty for import of crude palm oil for soap manufacturing.

Detailed Analysis:
The case involved an adjudication where the appellant, M/s. Kesar Soap Mills, imported crude palm oil availing a concessional rate of duty under specific notifications but failed to use it for soap manufacturing, leading to the duty foregone being called for restoration to the exchequer. The Revenue alleged that no manufacturing activities were conducted by the appellants, causing a significant loss of revenue. The investigation revealed the absence of any factory, machinery, raw materials, or finished goods at the business premises, indicating fraudulent practices to evade duty payment.

The evidence gathered during the investigation highlighted various discrepancies, such as the absence of essential manufacturing infrastructure, the preparation of bogus records to show production and sales, and the violation of conditions specified in the executed bonds. It was established that the imported crude palm oil was not utilized for the intended purpose, contravening specific customs notifications. The appellants were found liable for customs duty, interest on delayed payment, and penalties for misrepresentation and misuse of the concessional rate of duty facility.

The adjudicating authority concluded that the appellants did not have the necessary infrastructure for soap manufacturing, failed to obtain required registrations, violated bond conditions, and misstated facts to evade duty payment. The active partner of M/s. Kesar Soap Mills was held liable for penal action under relevant sections of the Customs Act for his involvement in the fraudulent activities. Despite the lack of evidence supporting the existence of manufacturing operations, the appeals were dismissed, emphasizing the difficulty in granting relief to the appellants due to the substantial evidence of non-compliance and fraudulent practices.

In summary, the judgment highlighted the serious repercussions of misusing concessional duty rates for imports, emphasizing the importance of compliance with regulations and the severe consequences of engaging in fraudulent practices to evade duty payments. The decision underscored the need for strict enforcement of customs regulations to prevent revenue losses and maintain the integrity of the import-export system.