2003 (4) TMI 168 - AT - Customs

Evidence - Statement - Relevancy - EXIM - DEEC Scheme - Appeal to Appellate Tribunal - Precedent - Penalty - Imposition of

Issues Involved:
1. Utilization of imported goods as per the terms of the advance licenses.
2. Admissibility and probative value of statements recorded under Section 14 of the Central Excises and Salt Act, 1944.
3. Validity of the demand for duty under Notification No. 204/92.
4. Confiscation of goods under Section 111(o) of the Customs Act, 1962.
5. Imposition of penalties on the importer and its Vice President.
6. Authority of the Customs department to demand duty and monitor export obligations.
7. Relevance of the Sale of Goods Act, 1930 to the sale of imported goods.
8. Claim for interest on evaded duty based on the Supreme Court judgment.

Detailed Analysis:

1. Utilization of Imported Goods:
The Customs department received information that the imported stainless steel plates were not utilized in manufacturing the resultant engineering product for export but were sold to three parties without permission from the licensing authority. The investigation revealed that the goods were sold before the export obligation was fully discharged. The statements from various individuals confirmed the sale of the imported goods, contradicting the claim that the goods were supplied for manufacturing flanges for export.

2. Admissibility and Probative Value of Statements:
The statements were recorded under Section 14 of the Central Excises and Salt Act, 1944, and not under Section 108 of the Customs Act, 1962. The Tribunal held that these statements, although not recorded under Section 108, still had probative value as they were voluntarily made without coercion. The fact that none of the individuals retracted their statements further confirmed their voluntary nature, making them admissible as evidence.

3. Validity of the Demand for Duty:
The show cause notice cited the provisions of Notification 204/92, which required the importer to make a declaration to pay duty if the conditions of the notification were not met. The Tribunal found that the demand for duty was validly raised based on the undertaking given by the importer at the time of clearance. The contention that the demand was barred by limitation under Section 28 of the Customs Act was not applicable as the notice did not rely on this provision.

4. Confiscation of Goods:
The Commissioner ordered the confiscation of 52.741 tons of stainless steel plates under Section 111(o) of the Customs Act, 1962, with an option to redeem them on payment of a fine. The Tribunal confirmed the confiscation, stating that the goods were sold in contravention of the notification's terms, making them liable for confiscation.

5. Imposition of Penalties:
The Commissioner imposed a penalty of Rs. 1 crore on the importer and Rs. 10 lakhs on its Vice President, K.L. Dhingra. The Tribunal upheld the penalties, finding that Dhingra knowingly arranged for the sale of duty-free imported goods, constituting a breach of the notification's conditions. The penalties were deemed commensurate with the gravity of the offense.

6. Authority to Demand Duty and Monitor Export Obligations:
The appellant argued that the licensing authority, not the Customs department, was responsible for monitoring export obligations under the DEEC scheme. The Tribunal rejected this contention, citing the Supreme Court judgment in Shashank Sea Foods Pvt. Ltd. v. CCE, which affirmed the Customs authorities' power to order confiscation under Section 111(o) of the Act.

7. Relevance of the Sale of Goods Act, 1930:
The appellant's reliance on the Sale of Goods Act, 1930, to argue that there was no sale of goods due to the absence of a written contract was dismissed. The Tribunal clarified that an oral contract of sale is valid and enforceable, and the conduct and circumstances indicated that a sale had occurred.

8. Claim for Interest on Evaded Duty:
The Commissioner sought to recover interest on the duty evaded by Akai Impex, citing the Supreme Court judgment in Agricultural & Processed Food Products v. Oswal Agro Furane Ltd. The Tribunal dismissed this claim, stating that the Supreme Court's order was specific to that case and not a general rule. There was no provision in the Customs Act, 1962, for the levy of interest at the relevant time, and the Tribunal could not go beyond the statute's limits.

Conclusion:
The Tribunal dismissed all the appeals, confirming the demand for duty, confiscation of goods, and imposition of penalties. The Customs authorities were found to have acted within their powers, and the statements recorded under the Central Excises and Salt Act, 1944, were deemed admissible. The claim for interest on evaded duty was rejected due to the lack of statutory provision.

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