2019 (1) TMI 563 - AT - Central Excise

100% EOU - clandestine removal - grey fabrics - non-re-warehousing of the goods - fake reware housing certificates - diversion of consignments - consignments were rejected by M/s Khan Garments and since another customer viz. M/s Asharani Garments Fabrics Pvt. Ltd. was ready to accept the consignments and the appellant was having valid CT-3 certificate the goods were diverted to said concern - Held that - The revenue has to show from their own records or from the investigation at the consignee s end that the goods did not reach the consignee. Since the department has made the allegation of non re-warehousing of the goods at the consignee s factory, it has to prove the same by substantial evidence and it cannot be made on assumption. It has to be shown as if the goods were not warehoused then where were the same diverted. In present case there is no evidence of diversion of goods. The Appellant has submitted the lorry receipt and the payment details to support the contention of clearance of goods to M/s Asharani Garments. It is also not the allegation that the goods were not consigned by the Appellant. The non attending of summon by the owner as he was on Haj and the same was communicated by his son cannot lead to inference that the appellant deliberately did not appear to attend the summon - Therefore in the given set of facts and in absence of any adverse evidence, it cannot be said that the goods did not reach the consignee or were not warehoused. Demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against duty demand and penalty
- Appeal against confiscation of raw material and finished goods

Analysis:
1. The appeals were filed against the duty demand and penalty imposed on the Appellant, as well as the confiscation of raw material and finished goods. The case involved a 100% EOU engaged in the manufacture of Twisted Yarn & Fabrics. The Appellant had removed grey fabrics to a trading company against certain certificates, which were later found to be fake. The consignments were diverted to another customer, leading to allegations of duty evasion and the use of forged documents to evade duty.

2. The jurisdictional authority reported that the records related to the consignee were not available, and there were discrepancies in the re-warehousing certificates. A show cause notice was issued proposing duty demands on finished goods and raw materials, along with penalties and confiscation. The demands were confirmed by the adjudicating authority based on the lack of genuine re-warehousing certificates.

3. The adjudicating authority ordered confiscation of goods and imposed penalties, citing the failure to submit genuine certificates. The Appellant appealed, arguing that the lower authorities erred in assuming duty evasion based on parallel proceedings against the consignee. The Appellant presented arguments supported by legal precedents and challenged the authenticity of the allegations.

4. The Appellate Commissioner upheld the demands, considering the silence of the Appellant in other proceedings as suspicious. The Appellant further contested the findings, emphasizing that the lack of certain officer names on certificates did not justify duty liability. The Appellant also raised concerns about the procedural aspects of the investigation.

5. The Appellant's counsel argued that the lower authorities' findings were incorrect and relied on legal precedents to support their case. The revenue, represented by the Assistant Commissioner, supported the lower authorities' decisions and cited relevant tribunal judgments.

6. After hearing both sides and examining the records, the tribunal found that the Appellant had produced re-warehousing certificates from the consignee. The jurisdictional authorities' reports were inconclusive, and the lack of certain records did not prove non-receipt of goods. The tribunal emphasized the need for substantial evidence to establish duty evasion and dismissed the allegations based on assumptions.

7. The tribunal also noted discrepancies in the duty demands on raw materials and finished goods, ruling that duty should only be imposed on finished goods. The confiscation of goods and imposition of fines were set aside based on the tribunal's findings regarding duty demands.

8. Ultimately, the tribunal set aside the impugned order, allowing both appeals and ruling in favor of the Appellant based on the lack of substantial evidence to support the duty demands and confiscation of goods.

(Judges: MR. RAMESH NAIR, MEMBER (JUDICIAL) And MR. RAJU, MEMBER (TECHNICAL))