2018 (3) TMI 1261 - AT - Customs

Violation of actual user condition - Diversion of imported goods in Local Market - goods intended for the purpose of N/N. 150/94 - Confiscation - Held that - the diversion of goods under the garb of Naval clearance stands accepted by Shri Hemant Shah and Shri Kirit Kamdar in their statements dt. 28.10.97 and 04.11.97 wherein they have categorically stated that the diverted goods were sold in the open market. Further the goods are exempted from duty in terms of N/N. 150/94 - Cus only when the goods are procured by the Government of India or shipped on the order of the department of Govt. of India - None of the conditions of the notification has been followed by the Appellant firms. Extended period of limitation - Held that - This is a clear case of evasion of duty by frauds. However the demands beyond the period of five years are not sustainable. Confiscation - redemption fine - Held that - since the goods are not available therefore there is no ground to confiscate the same and therefore no redemption fine can be imposed. Penalty u/s 112 (a) and u/s 114 (ii) of CA - Held that - the Appellants have played active role in claiming illegal benefit of exemption by diverting the goods - Also penalty under Section 114 (ii) of the Customs Act is imposable for the violations committed by the Appellants - penalties upheld. Appeal disposed off.

Issues:
1. Alleged diversion of imported goods intended for Indian Navy.
2. Confiscation of goods, demand of duty, and penalties imposed.
3. Validity of statements obtained during investigation.
4. Applicability of exemption notifications.
5. Invocation of relevant sections of the Customs Act.
6. Imposition of penalties under specific sections.
7. Adjudication of appeals against the impugned orders.

Detailed Analysis:
1. The case involved the alleged diversion of imported engineering goods intended for the Indian Navy, which were instead diverted to the local market. The investigation revealed discrepancies in the clearance process and the unauthorized diversion of goods by the appellants.

2. The adjudicating authority confirmed the proposals for the confiscation of diverted goods, demand of duty, and imposition of penalties. The appellate tribunal upheld the impugned orders, except for setting aside redemption fines and demands beyond five years against certain appellants. Penalties were upheld against all appellants involved in the evasion of duty.

3. The validity of statements obtained during the investigation was challenged by the appellants, claiming that the partners' statements regarding the diversion of goods were obtained under duress. However, the tribunal found the statements to be credible evidence of the illegal diversion of goods.

4. The appellants argued for the applicability of exemption notifications and authorization to supply goods to the Indian Navy. However, the tribunal found that the conditions of the relevant notification had not been met by the appellants, leading to the conclusion of illegal diversion.

5. The invocation of relevant sections of the Customs Act, particularly Sections 71 and 72, was contested by the appellants. They argued that the sections were wrongly applied in the case of local diversion of goods. The tribunal, however, found that the provisions were correctly invoked based on the evidence presented.

6. Penalties under Sections 112(a) and 114(ii) of the Customs Act were imposed on the appellants for their active role in the illegal diversion of goods and fraudulent evasion of duty. The tribunal upheld the penalties as applicable to the violations committed by the appellants.

7. The appeals filed by the appellants against the impugned orders were adjudicated, resulting in the dismissal of appeals by certain individuals and partial allowance for others. The tribunal disposed of all appeals based on the findings and upheld penalties against the appellants involved in the evasion of duty.

This detailed analysis covers the various issues involved in the legal judgment, providing a comprehensive overview of the case and the tribunal's decision.

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