2023 (4) TMI 454 - AT - Customs

Violation of principles of principles of natural justice - non-supplying the copies of relevant RUD as well as not allowing the cross examination of the witnesses even after the request made by the appellant - main contention raised by the appellant is that they have not been supplied with copy of 162 shipping bills which is alleged to have been manipulated by the appellant - demand based on assumption and presumptions - HELD THAT - The position is that the relied upon documents (RUD) have not been served to them. Undisputedly, only copies of 8 originals and 4 duplicate shipping bills have been supplied to the appellants. Though it is alleged that all the 162 shipping bills were manipulated and the entire duty forgone has been confirmed, the department has not been able to furnish these documents to the appellant. Needless to say that appellant has to be furnished with all documents relied by department so that they are put to notice to know about the allegation and they are given a fair chance to defend the case. Further evidence relied by the department are statements of few third party exporters. Though the appellant requested for cross examination of these witnesses, the department has not acceded to the request. It is seen that there is complete violation of the principles of natural justice by not supplying the copies of relevant RUD as well as not allowing the cross examination of the witnesses even after the request made by the appellant. The department cannot confirm the demand on the basis of assumption and presumptions. The allegations raised in the SCN have to be established by evidence. The noticee has a right to get the copies of documents. Department has to record reasons for denying the request for cross examination. The cross examination cannot be denied stating that no purpose will be achieved. The department has not been to establish the allegations raised in the SCN and further there is blatant violation of principles of natural justice - the demand cannot sustain and requires to be set aside. Appeal allowed.

Summary

Issues involved:
The issue involved in the judgment is the violation of export obligation under Export Promotion Capital Goods (EPCG) licences, manipulation of shipping bills, duty exemption under Customs Exemption Notification No.110/95, imposition of penalties, and the principles of natural justice.

Details of the judgment:

Violation of export obligation under EPCG licences:
The appellants, M/s.Pravin Tex, imported knitting and embroidery machines under EPCG licences but failed to fulfill the export obligation as per the licences. The duty exemption availed under Notification No.110/95 was found to be violated, leading to a demand for the full duty foregone amounting to Rs.29,99,322 along with interest. The original authority imposed penalties on the appellants and third-party exporters for non-compliance.

Manipulation of shipping bills:
The department alleged that the appellants manipulated shipping bills to obtain Export Obligation Discharge Certificates. The shipping bills did not have endorsements of the EPCG licence numbers and the appellant's name, raising doubts about the authenticity of the exports made through third parties. The department's findings were based on a few shipping bills and statements from third-party exporters.

Principles of natural justice:
The appellants contended that they were not provided copies of all 162 shipping bills for verification and were denied the opportunity to cross-examine witnesses. The department's failure to supply relevant documents and allow cross-examination amounted to a violation of natural justice principles. The Tribunal emphasized the importance of providing all relevant documents to the appellant and allowing cross-examination to ensure a fair defense.

Judgment and conclusion:
The Tribunal found that the department failed to establish the allegations with proper evidence and violated principles of natural justice by not providing necessary documents and denying cross-examination. As a result, the demand for duty and penalties could not be sustained. The impugned order was set aside, and the appeals of the appellants were allowed with consequential relief, if any, as per law.

Separate Judgment:
No separate judgment was delivered by the judges in this case.