2019 (2) TMI 1813 - AT - Customs

Advance Authorisation Scheme - Diversion of duty free import - Phenol - allegation established solely on the basis of stock statement record and the confessional statement of the partner but entries available in the record i.e. stock register, which was seized by DRI negates the allegation of alleged sale of duty free imported phenol - HELD THAT - Going by stock register extract copy containing seal of the DRI, on the day of sale of 2860 kg of phenol, the closing balance of phenol available with the appellant industry was 12.387 MT, as reveals from the said stock register extract and quantity of duty free stock, as pointed out by the appellant to be of 12.350 MT, has been reflected in the said register that has not been disputed by the respondent-department. Therefore, it can safely be concluded that balance stock available with the appellant was more than the duty free stock imported by it. A close scrutiny of the order of Commissioner of Customs, Goa at para 35 would reveal that on the same ground, duty demand of first sale of 3.8 MT on 1-6-2007 was waived off and the second sale was held to be dutiable on the ground that appellant had admitted the sale to have been made out of duty free stock. This being the sole justification found in Order-in-Original, apart from use of allegedly invalid licence which was not agitated by licence issuing authorities i.e. DGFT, no other course available before us to give a finding on the issue except placing reliance on the documentary evidence that surpasses the oral evidence as per the principle contained in Section 58 of the Indian Evidence Act. Thus, at the time of second sale also, appellant had sufficient stock of duty free phenol available at its disposal. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Imposition of duty liability, interest, and penalty on the appellant for alleged diversion of phenol
- Challenge to the order of the adjudicating authority by the appellant
- Dispute over the sale of duty-free imported phenol by the appellant
- Confessional statements and documentary evidence in the case

Analysis:
1. The judgment concerns the imposition of duty liability, interest, and penalty on the appellant for the alleged diversion of 6.66 MT of phenol, involving a duty amount from imported duty-free phenol. The appellant challenged the order of the adjudicating authority, which confirmed duty liability on the sale of 2.86 MT of phenol along with a penalty. The factual background revealed diversion of phenol through sale bills, leading to the imposition of reduced duty demand and a penalty by the Commissioner of Customs.

2. The appellant contended that the case of diversion was established based on stock statements and a confessional statement, but the stock register negated the alleged sale of duty-free imported phenol. The appellant argued that contradictory findings were given by the Commissioner, highlighting discrepancies in the assessment. The appellant's counsel emphasized that the confessional statements were not voluntary and were made under pressure, lacking corroborative evidence from the respondent-department.

3. The authorized representative for the respondent-department argued that the Commissioner's findings were based on the appellant's admission, which did not require further corroboration. The dispute revolved around the sale of phenol claimed to be duty-free imported and sold by the appellant, supported by a confessional statement. However, a close examination of the stock register revealed discrepancies, indicating that the appellant had sufficient duty-free stock available during the alleged sale.

4. After hearing both sides and reviewing the case record, the Tribunal concluded that the appellant had enough duty-free phenol in stock during the sale, as evidenced by the stock register extract. The Tribunal found no valid justification for the duty demand on the second sale, as the appellant's stock exceeded the duty-free quantity imported. Therefore, the Tribunal allowed the appeal and set aside the order of the Commissioner of Customs, Goa.

5. In the final order, the Tribunal overturned the decision of the Commissioner, highlighting the discrepancy in the duty demand and the availability of duty-free stock with the appellant. The judgment emphasized the importance of documentary evidence over oral statements, leading to the setting aside of the Commissioner's order.

This detailed analysis covers the issues raised in the judgment, providing a comprehensive overview of the legal aspects and arguments presented by both parties.