2020 (3) TMI 490 - AT - Customs

Immunity from penalty - co-noticee - Import of Crude Palm Oil meant for use in manufacture of soap - Violation of import condition - diversion of goods to open market instead of using the same for the given purpose - benefit of concessional rate of duty denied - Sl. No. 30 of Notification no. 21/2002-Cus dated 1.3.2002 - Application to Settlement Commission - principles of natural justice. Immunity to the appellants due to the order of Settlement Commissioner in favour of the main noticee - HELD THAT - The act committed by three of the present appellants is an act in addition to that as were committed by the remaining Noticees the appellants cannot be entitled for the blanket immunity. Otherwise also the immunity from prosecution has not been granted even to Mr. Lalit Goyal the Proprietor of main Noticee M/s. Pioneer Soap and Chemicals. The penalty has simultaneously been imposed upon the remaining Noticees/ applicants of 127 B Customs Act. In addition the Settlement Commissioner has granted liberty to the Revenue to take the appropriate action against the remaining Noticees i.e. the appellants herein. Hence the benefit of KVS Scheme cannot suo moto be extended to the appellants. Reliance placed in the decision of Hon ble High Court of Gujarat in the case of M/S. SHREE NAKLANK LIMITED VERSUS CUSTOMS EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AHMEDABAD 2018 (11) TMI 81 - GUJARAT HIGH COURT . It was held that it is the assessee who applies for settlement alone whose application would be considered and either granted or rejected in the terms of settlement fulfilment of such terms by the applicant and the resultant grant of immunity would be only in relation to assessee who applied for the settlement. There is no warrant under the statutory provision that upon one assessee applying for settlement such settlement being granted and terms of settlement being fulfilled. Any other assessee even if he hopes to be co-noticee can avoid further adjudication of this case. It was clarified that Department can still proceed against co noticee who was facing only notice on penalty. Jurisdiction of Central Commissioner - Competent officer to issue invoices - HELD THAT - All details indicated the quantity of goods to be imported the applicable notification the port of importation and giving an undertaking have to be furnished along with application before the Assistant Commissioner / Deputy Commissioner of excise only as is required under Rule 4 of Customs Rule. It is thereafter that the Assistant Commissioner or Deputy Commissioner of Customs can allow the benefit of exemption notification on the basis of the Certificate to be given by Assistant Commissioner / Deputy Commissioner Excise as stand clarified from Rule 5 of Customs Rule. Rule 7 thereof in addition require the importer to maintain the simple account of imported goods and consumption thereof for the information purpose for use as and when required by the officer of Central Excise. These Rules makes it abundantly clear that Commissioner Central Excise is a competent officer to issue invoices. Personal hearing / opportunity of cross examination - HELD THAT - It is quite apparent from the order under challenge that despite ample effective opportunities of personal hearing being given the appellants have not properly put forth their defence. They had rather adopted a strategy of seeking adjournments and therefore were noticed absolutely non cooperative by the adjudicating authority below. It is thereafter that the matter was decided based on the facts on record and the written reply received by the respective noticee. These observations are sufficient to hold that there is no denial of opportunity of being heard. The grievance of violation of principle of natural justice on this account is therefore not sustainable. The plea of denial for cross examining the witnesses is concerned as already observed there was rather non cooperation on part of the appellant. Irrespective that cross examination is the key for fair trial so as to dug out the actual truth but the same cannot be claimed as a matter of right or as a statutory mandate specifically when appellant were not even keen to submit their defence. Hence their grievance on this aspect is also hereby rejected. Merits of the case - HELD THAT - There were reports proving that M/s. Pioneer Soap and Chemicals the main noticee / noticee no. 1 have issued fake invoices in the name of fictitious firms such as M/s. Ashtuosh Traders noticee no. 7 M/s. Kamakhya noticee no. 9 M/s. N.K. Enterprises noticee no. 11 showing manufacture and clearances of the soap from CPO imported by them illegally for taking exemption under impugned notification and diverting the impugned CPO to noticee no. 2 to 4 without using the said imported goods in manufacture of soap i.e. for the declared intended use. This evidence proves that the various tankers which arrived at the factory of noticee no. 1 at different dates during the relevant period had transported some or the other quantity of CPO under respective GRs and form ST 31 of M/s. Genex Foods. This receipts and ST 3 returns are corroborating the statement of Shr. Harjinder Singh of M/s. H.G. Oil Carries against 3 of the appeals. Despite this evidence the Director of M/s. Genex Foods Pvt. Ltd. Sh. Rohit Agarwal (one of the appellant) opted to not to appear for rebutting the said evidence but to sent a simple letter alleging the show cause notice to be illegal - The statements on record are in due corroboration of the documents which sufficiently establishes that appellants were knowingly dealing with CPO imported by M/s. Pioneer Soap and Chemicals in a clandestine and illegal manner thereby making the said imported CPO liable for confiscation. It was observed that for transporting CPO to Delhi the bills of M/s. Venkuth Sales Corporation Trinagar Delhi as well as of GRS of M/s. Jaspreet Road Lines of Punjabi Bagh New Delhi were used and that of M/s. NC Traders Mayur Vihar Delhi were used. The investigation revealed that no such firm was found existing at the given address. Except that address of M/s. Jaspreet Road Lines were found to be that of M/s. HG Oil carriers. This finding again when read in light of Sh. Harinder Singh that GR 3 were handed over to him by Sh. Lalit Goyal proprietor of M/s. Pioneer Soap and Chemical establishes the clear nexus between all the co-noticees for the alleged violation of the impugned notification including the appellant herein. There is no infirmity in the order under challenge when a penalty has been imposed upon three of the appellants herein under section 112 B of the Customs Act - order under challenge is therefore upheld - appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Immunity due to the order of Settlement Commissioner in favor of the main noticee.
2. Jurisdiction of Central Commissioner.
3. Personal hearing/cross-examination.
4. Merits of the present case.

Issue-wise Detailed Analysis:

A. Immunity to the appellants due to the order of Settlement Commissioner in favor of the main noticee:

The main beneficiary, M/s. Pioneer Soap & Chemicals, along with other co-noticees, was penalized by the Settlement Commission. The appellants argued that the case against them should be closed as the main noticee's case was settled. However, the Tribunal noted that the Settlement Commission had given liberty to the Revenue to proceed against the remaining co-noticees. The Tribunal emphasized that the merits of the case against co-noticees must be examined separately. The appellants were found to have committed additional offenses, such as unauthorized transportation of crude palm oil (CPO) and were not entitled to blanket immunity. The Tribunal cited the Gujarat High Court's decision in Shri Naklank Ltd., which clarified that only the assessee who applied for settlement could avoid further adjudication, not the co-noticees.

B. Jurisdiction of Central Commissioner:

The Department alleged that the importer misused the exemption by diverting the imported CPO to the open market instead of using it for manufacturing soap. The Tribunal referred to the Samtel Colour Ltd. case, which clarified that the Assistant Commissioner of Central Excise has jurisdiction over the factory and can issue notices for recovery of differential duty. The Tribunal concluded that the Central Excise Commissioner was competent to issue the notices in this case.

C. Personal hearing/cross-examination:

The appellants claimed they were denied personal hearings and cross-examinations. The Tribunal noted that ample opportunities for personal hearings were given, but the appellants were non-cooperative and sought adjournments. The Tribunal held that there was no denial of natural justice. Regarding cross-examination, the Tribunal observed that it is not a matter of right, especially when the appellants were not keen to submit their defense. The Tribunal rejected the appellants' grievance on this aspect.

D. Merits of the present case:

The Tribunal examined the evidence, including reports and statements, proving that M/s. Pioneer Soap & Chemicals issued fake invoices and diverted the imported CPO to the appellants. The statements of witnesses and documents corroborated the involvement of the appellants in the illegal diversion of CPO. The Tribunal concluded that the appellants were knowingly dealing with the imported CPO in a clandestine manner, making it liable for confiscation. The Tribunal upheld the penalties imposed on the appellants under Section 112 B of the Customs Act.

Conclusion:

The Tribunal found no infirmity in the order under challenge and upheld the penalties imposed on the appellants. The appeals were dismissed.