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2022 (8) TMI 337 - AT - CustomsExemption from Customs Duty - actual user condition - imports of Polyester lining material - diversion of same to the local market instead of using the same for manufacture of export garments - recording of statements - inordinate delay in completion of proceedings by the respondent or not - actual transshipment of the imported material to the Appellant s factory in Jaipur or not - receipt of imported material and utilization of the same for manufacturing export goods - diversion of the imported goods or not - disclosure of second factory to the D.R.I. where it claimed to have received the imported material - A.P.E.C. registration certificate in respect of the second factory was issued after the initiation of the investigation by the D.R.I. or not. Whether there was an inordinate delay in completion of proceedings by the respondent and the passing of the impugned order? - HELD THAT - Inordinate delay in taking the proceedings relating to a show-cause notice to its final conclusion has been held by the Bombay High Court in THE BOMBAY DYEING AND MANUFACTURING COMPANY LIMITED VERSUS DEPUTY COMMISSIONER OF CGST CX, DIV-IX, MUMBAI CENTRAL GST COMMISSIONER 2022 (2) TMI 783 - BOMBAY HIGH COURT to be violative of natural justice. Further, the Gujarat High Court in SUNRISE REMEDIES PVT. LTD. VERSUS UNION OF INDIA 2019 (8) TMI 1397 - GUJARAT HIGH COURT has remarked at paragraph 6 that proceedings cannot be a hanging sword on an assessee without justifiable cause. If proceedings do not culminate within a reasonable period of time then they stand vitiated. Thus, the delay of over a decade here, especially when genuine efforts have been made by the Appellant to participate in them, truly violates the Appellant s right to natural justice and vitiates the entire proceeding. Whether there actually was a transshipment of the imported material to the Appellant s factory in Jaipur? - HELD THAT - The Department has not been able to advance any counter to the implications of thesedocuments except the refrain of these documents being fake and forged. The respondent has not dealt with these documents at all. Finally, the statements of U.S. Pandey, of Gurpreet Singh, the proprietor of M/s. Sunny Transport, which are to the effect that trucks, bearing Nos.HR 38C 6024 and HR 51 GA 1619, have transported the imported goods from Delhi to Jaipur have not been contradicted by the Department with any level of sufficiency. Even if there are contradictions between the statements of the Appellant s partner Mr. Bihari on 25th June, 2003 and, later, on 16thMarch, 2004, the story of the transportation of the goods from Delhi to Jaipur is consistent. There is simply nothing in the record or in the contentions advanced on behalf of the Department which would give sufficient reason for this Tribunal to disbelieve the evidence of the said persons. Whether the Appellant had received the imported material and utilized the same for manufacturing export goods. Alternatively, whether there was diversion of the imported goods? - HELD THAT - There are mere assumptions and presumptions based on little to no evidence to buttress the allegation that the goods were diverted - the A.P.E.C. certificate it is found was issued much prior to the date on which the investigation began as found from a perusal of the A.P.E.C. certificate dated 25th August, 1999. The said certificate was renewed from time-to-time and issued afresh on 17th March, 2004. Sales Tax registration certificate dated 16th August, 1999 as well as factory licence dated 24th August, 1999 was issued in favour of the appellant with respect to the factory of the appellant situated at 4-5, Shiv Vihar Colony, Palliwalon Ka Bagh, Sanganer In fact, the said address has been acknowledged by the Textiles Committee, Govt. of India, Ministry of Textiles by its registration renewal certificate dated 09th April, 2001. The appellant got Customs exemption under the notification dated 01st March, 2002 on the strength of the A.P.E.C. certificated dated 25th August, 1999. Whether the Appellant had disclosed the second factory to the D.R.I. where it claimed to have received the imported material and whether the A.P.E.C. registration certificate in respect of the second factory was issued after the initiation of the investigation by the D.R.I.? - HELD THAT - The certificate issued on 17th March, 2004 was not the first certificate, nor was it procured after the investigation had begun. The factory address of the appellant had been incorporated in the A.E.P.C. certificate on 25th August, 1999. The certificate of that was merely renewed from time-to-time and issued afresh on 17th March, 2004. Hence, there was no attempt by the appellant to make the D.R.I. miss the wood for the trees and invent a new factory belatedly. In fact, material seized by the D.R.I. under the Panchanama dated 25th June, 2003 shows that the said factory at the said address was visited. Material seized on that date also contained both the office address and the factory address of the Appellant. Appeal allowed.
Issues Involved:
1. Inordinate delay in completion of proceedings and passing of the impugned order. 2. Actual transshipment of the imported material to the Appellant's factory in Jaipur. 3. Receipt and utilization of the imported material for manufacturing export goods versus diversion of the imported goods. 4. Disclosure of the second factory to the D.R.I. and the timing of the A.P.E.C. registration certificate issuance. 5. Validity of the impugned order. Issue-wise Detailed Analysis: Issue I: Inordinate Delay in Completion of Proceedings The proceedings took 14 years from the issuance of the show-cause notice on 09th November 2004 to the passing of the impugned order on 29th June 2018. The Appellant had requested expeditious disposal, and there was no explanation from the Department for the delay. Citing precedents, the Tribunal held that such inordinate delay violated natural justice and vitiated the proceedings. Issue II: Transshipment of Imported Material to Jaipur The Tribunal found that the letter from the Additional Commissioner, C.T.D., Jaipur dated 09th March 2004, did not specify truck numbers, making it insufficient to prove no transshipment. Conversely, a certificate dated 29th January 2005 verified that the trucks carrying the imported material had crossed the Shahjahanpur check post. Documentary evidence, including G.R. Nos. 3533 and 3543 and statements from transporters, supported the Appellant's claim of transshipment to Jaipur. The Department's claim of forged documents was unsubstantiated. Issue III: Utilization of Imported Material for Manufacturing Export Goods The Tribunal found the utilization chart submitted by the Appellant to be credible. The chart showed consumption and stock of the imported material, and the Appellant's explanation of wastage and damage during manufacturing was plausible. The Department failed to provide evidence of local sales or diversion of goods. The Tribunal concluded that the goods were received and utilized by the Appellant for manufacturing export goods. Issue IV: Disclosure of the Second Factory and A.P.E.C. Certificate Timing The Tribunal found no suppression of the second factory's existence. The factory address was included in the A.P.E.C. certificate dated 25th August 1999, which was renewed and issued afresh on 17th March 2004. The Panchanama dated 25th June 2003 indicated that the D.R.I. was aware of the factory. The Tribunal rejected the claim that the A.P.E.C. certificate was contrived. Issue V: Validity of the Impugned Order Given the findings on the previous issues, the Tribunal concluded that the impugned order was unjustified. The appeal was allowed with consequential relief, and the impugned order was set aside. Conclusion: The Tribunal found in favor of the Appellant on all issues, concluding that the proceedings were unduly delayed, the imported material was transshipped and utilized for manufacturing export goods, and there was no suppression of the second factory's existence. The impugned order was set aside, and the appeal was allowed with consequential relief.
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