2018 (10) TMI 396 - HC - Customs

Clandestine removal of imported goods - Imported fabric was not utilized for the manufacture of readymade garments, which had to be exported - case of appellant is that demand based solely on the statements of the Director of the Company, which was, later on retracted - time limitation. Held that - The Director of the Company had categorically stated in his two statements that such goods were sold in the market to one Iqbalbhai. The second of these two statements was recorded nearly eight months after the raid. Partial retraction of this statement came much later. In such statement also, the assessee admitted partial diversion of the goods. The details and whereabouts of Iqbalbhai could not be provided by him - Both the Commissioner (Appeals) and the Tribunal were of the opinion that the statements of the Director recorded by the raiding party were in terms of Section 108 of the Customs Act, which was admissible in evidence. The entire issue is, thus, based on appreciation of the materials on record. No question in this respect arises. Time Limitation - Held that - This ground also has no merits - When the show cause notice was issued beyond a period of one year from such visit, which is the normal period of limitation, the Tribunal and the High Court held that such notice was time barred - the Department could not establish that there was any suppression of fact/s or fraud on the part of the assessee. Appeal dismissed.

Summary

Issues:
Challenge to judgment of Customs, Excise & Service Tax Appellate Tribunal and dismissal of rectification application by appellant.

Analysis:
The appellant challenged the Tribunal's judgment based on the detection of clandestine removal of imported goods during a raid at the factory premises. The Director of the Company admitted to the removal of imported fabrics without utilizing them for manufacturing goods to be exported. The Department issued a show cause notice for recovery of Customs Duty, which was resisted by the appellant. The competent authority confirmed the demand, and subsequent appeals were dismissed. The main contentions raised were the retracted statements of the Director and the time bar on the notice due to the date of the raid. The authorities concluded that the allegations of clandestine removal were established based on the Director's statements, which were admissible as evidence under Section 108 of the Customs Act. The issue revolved around the appreciation of evidence on record, with no question of law arising in this regard.

The appellant's argument on limitation was also dismissed as the statute allows an extended period of five years for issuing show cause notices in cases of fraud or evasion of duty. The authorities believed there was an attempt to evade duty, justifying the extended limitation period. A comparison was drawn with a previous case where a notice issued beyond the normal limitation period was held time-barred due to lack of evidence of suppression or fraud by the assessee. In that case, discrepancies in stock registers were attributed to an error by the company's assistant, leading to a different outcome compared to the current situation.

Ultimately, the Tax Appeal was dismissed, affirming the findings of the lower authorities. The Civil Application was also disposed of accordingly, upholding the decision against the appellant.