2015 (11) TMI 757 - AT - Customs

Waiver of pre deposit - import of goods against advance licence - diversion of goods - Held that - In this case the allegation made against the applicants is that they have imported goods (duty free) and diverted into the open market on the basis of certain statements recorded during the course of investigation and on the fact that applicants were not having any manufacturing facility of the resultant product which were required to be exported by them. We have seen that initially it was alleged that the imported goods have been diverted to Shri Sheetal Kumar Vij who was actively engaged in diversion. But after thorough investigation, it was found that Shri Sheetal Kumar Vij have no role in diversion of imported goods by the applicants and that part of the order has attained finality. - It is also submitted by the Ld. Counsel that when export obligation has been accepted by the DGFT and if the applicant is not having manufacturing facility in their factory, the goods can be manufactured on job work basis and the export obligation can be discharged in the light of the decision of Hon ble High Court of Punjab and Haryana in the case of Rakesh Nayar (2010 (1) TMI 492 - PUNJAB & HARYANA HIGH COURT) and also pleaded the financial hardship. All these evidences or the contentions shall be considered at the final hearing of the case that the retracted statement cannot be basis of confirmation or demand or the applicants are not having manufacturing facility in their factory. - applicants have failed to make out a case of complete waiver of pre deposit - partial stay granted.

Summary

Issues:
Waiver of pre-deposit of demand of duty, interest, and penalties imposed on applicants.

Analysis:
The judgment involves the consideration of applications seeking waiver of pre-deposit of demand of duty, interest, and penalties confirmed against the applicants. The applicants were engaged in manufacturing various products by importing raw materials on the strength of advance licenses. The case revolved around allegations of diversion of duty-free imported goods into the domestic market instead of using them for manufacturing and exporting the end product to discharge export obligations. The Directorate of Revenue Intelligence (DRI) investigated the matter, and duty was demanded from the applicants along with penalties. The applicants contended that they had discharged their export obligations, and the investigation's allegations were not sustainable. They argued that the duty demand was not justifiable based on legal precedents cited. The applicants also highlighted that they had manufacturing facilities and had fulfilled export obligations, producing evidence such as shipping bills and redemption certificates issued by the Directorate General of Foreign Trade (DGFT).

The applicants further argued that the statements recorded during the investigation were retracted, and there was no concrete evidence to support the allegations. They emphasized that they had the necessary manufacturing facilities and had complied with export obligations, challenging the duty demand and penalties imposed. The Revenue, however, maintained that thorough investigations revealed the applicants' involvement in diverting imported goods into the open market, emphasizing the lack of manufacturing facilities and the issuance of licenses under actual user conditions. The Revenue also clarified that despite initial allegations against a third party, subsequent investigations exonerated them. The Adjudicating authority upheld the duty demand against the applicants based on the evidence presented during the investigation.

After hearing both parties, the Tribunal considered the submissions and evidence presented. The Tribunal noted the contentions regarding retracted statements, manufacturing facilities, export obligations, and financial hardships. While acknowledging the arguments made by the applicants, the Tribunal found that a complete waiver of pre-deposit was not warranted at that stage. Citing a decision of the Hon'ble High Court of Rajasthan, the Tribunal directed the applicants to make a pre-deposit of 7.5% of the confirmed duty amount within a specified period. The Tribunal granted a stay on the pre-deposit of the balance amount of duty, interest, and penalties pending the appeals' pendency. The applications for waiver of pre-deposit were disposed of with these terms, providing a clear directive for compliance and further proceedings.

Overall, the judgment delves into the complexities of duty demands, allegations of diversion, retracted statements, manufacturing facilities, and compliance with export obligations, culminating in a directive for partial pre-deposit and stay on the balance amount during the appeal process. The legal arguments, evidentiary considerations, and financial hardships were thoroughly analyzed to reach a balanced decision in the interest of justice.