2004 (7) TMI 217 - AT - Customs

Clandestine removal - Warehoused goods - date of clearance thereof - Evidence - Adjudication order - setting up the steel plant in 1997 and used to warehouse imported goods in the Central Warehousing Corporation - HELD THAT - We find that the findings of the Commissioner are according to the law as in the case of clandestine removal it is not always possible to establish the exact date of clearance but if the period during which clearance have taken place is established, then it is sufficient to say that the goods have been removed within that period. In the present case, the reports of M/s. TTG Industries as mentioned above read with the statement of Shri Sarovar and Mahazar dated 22-11-1997 clearly shows that the bearings were removed during the period from July to October. Thus on the direction of the Tribunal he has analyzed the evidence and came to the conclusion that bearings in dispute were cleared from the warehouse from July to Oct., 1996. The appellant's submission that the warehouse goods were removed under cover of ex-bond bill of entry and after proper officer has passed the order to out of customs charge. This is also discussed by the Commissioner in paras 26 to para 29. We find that once it has been established from the records that impugned goods were cleared clandestinely between July to October 1996, clearance of same goods under ex-bond bill of entry on 22-11-1996 becomes manipulated. This has been discussed by Commissioner in Para 26 of the Order as to how packages were cleared without opening the same. Only marks number of packages with reference to invoice were seen. Contents of the packages were not examined. Since the clearance of contents of packages which were originally warehoused as done clandestinely, and packages were again placed back in the warehouse after removing the bearings as discussed earlier, and contents of packages were not examined when Ex-bond bill of entry was filed, hence it cannot be said that clearance under ex-bond bill of entry was of the bearings. Since the appellants have used fraudulent method for removal of the goods, there was no need of review of order of assessment as held by Supreme Court in the case of Union of India v. Jain Shudh Vanaspati Ltd. 1996 (8) TMI 108 - SUPREME COURT . Demand under Section 72 of Customs Act is correct in law as the goods have been removed from the warehouse improperly without payment of duty. The appellant's reliance on decisions in case of RP Industries v. Collector of Customs 1995 (9) TMI 173 - CEGAT, BOMBAY and on the ground that documents have precedence over statement is not helpful to them. The statements relied upon in this case are supported by documents of the appellant's contractor whereas the clearances under ex-bond bill of entry on which appellants have relied become fraudulent once it has been established that goods were cleared much before filing the ex-bond bill of entry. Other issues raised by them are discussed from paras 30 to 39 of the impugned order. He therefore finally came to the conclusion that it is proved beyond doubt that JVSL had cleared the impugned goods clandestinely from the Govt. bonded warehouse without a valid EPCG and without filing proper ex-bond bill of entry. Thus, we find that the Commissioner has meticulously examined all the issues and considered all the observations of the Tribunal in para 6 of the order dated 31-8-1999 and after examining the evidence produced by the appellants had come to the conclusion that the appellants had contravened the provisions of the Customs Act and they are liable for penalty and also liable to pay duty and the goods are liable for confiscation. The appellants in their appeal have raised various points. All these points are already considered by the Commissioner in his order and we find that the findings of the Commissioner does not require any modification as we do not find anything wrong in the Order of the Commissioner. The order of Commissioner is based on evidences and not on conjunctions and surmises as claimed by the appellants. The appellants have claimed that they have paid the duty before issue of show cause notice and in view of the Tribunal's decision in case of Commissioner of Central Excise, Gurgaon v. Machino Montell (I) Ltd. once the duty has been paid before issue of show cause notice, no penalty can be imposed under Section 11AC of Central Excise Act and no interest can be demanded under Section 11AB. By following ratio of this decision of the Larger Bench of the Tribunal, we find that in the present case the appellants had deposited the Customs duty of 43,18,783/- and interest of Rs. 14,12,877/- voluntarily as of the show cause notice. Therefore these amounts were paid before the issue of show cause notice. Now following the decision of Larger Bench in case of CCE v. Machino Montell (I) Ltd. 2004 (4) TMI 101 - CESTAT, NEW DELHI , we set aside the penalty imposed on the appellants and interest demanded under the Customs Act. Rest of the order of Commissioner is upheld. Ordered accordingly.

Summary

Issues Involved:
1. Legality of the Commissioner's order in light of Tribunal and High Court directions.
2. Validity of reliance on statements, particularly those of Shri Sarovar.
3. Jurisdiction and procedural correctness of the demand and penalty imposed.
4. Examination of evidence regarding clandestine removal of goods.
5. Applicability of penalty and interest when duty is paid before the show cause notice.

Detailed Analysis:

1. Legality of the Commissioner's Order:
The appellants argued that the Commissioner's order contradicted the directions of both the High Court and the Tribunal. They contended that the Commissioner did not adhere to the Tribunal's specific directions in para 6 of the order dated 31-8-1999, which required a detailed speaking order considering all submissions and observations. The Tribunal found that the Commissioner had indeed followed the directions and provided a comprehensive order based on the evidence.

2. Validity of Reliance on Statements:
The appellants claimed that the Commissioner wrongly relied on the statement of Shri Sarovar, which they argued did not substantiate the allegations of clandestine removal. The Tribunal noted that the Commissioner had carefully analyzed the statement of Shri Sarovar, which included admissions about the utilization of goods before debonding from the warehouse. The Tribunal upheld the Commissioner's reliance on these statements, finding them supported by documentary evidence.

3. Jurisdiction and Procedural Correctness:
The appellants argued that once goods are cleared by the proper officer, the Commissioner had no jurisdiction to question the clearance. They cited the Supreme Court ruling in Shipping Corporation of India Ltd. v. C.L. Jain Woollen Mills, which emphasized the control of customs authorities over warehoused goods. The Tribunal found that the clandestine removal was established through substantial evidence, and the Commissioner was within his jurisdiction to demand duty and impose penalties under Section 72 of the Customs Act.

4. Examination of Evidence:
The Tribunal examined whether the bearings covered by bonds No. 10/95 and 2/96 were cleared clandestinely. The Commissioner's findings, based on statements and documentary evidence, indicated that the goods were removed before the official debonding dates. The Tribunal supported the Commissioner's conclusion that the goods were clandestinely removed between July and October 1996, as corroborated by the reports of the contractor M/s. TTG Industries and the statement of Shri Sarovar.

5. Applicability of Penalty and Interest:
The appellants contended that since they had paid the duty before the issuance of the show cause notice, no penalty or interest should be imposed, referencing the Tribunal's decision in Commissioner of Central Excise v. Machino Montell (I) Ltd. The Tribunal agreed, setting aside the penalty and interest imposed on the appellants, as they had voluntarily paid the duty and interest before the show cause notice was issued.

Conclusion:
The Tribunal upheld the Commissioner's order regarding the demand for duty and the confiscation of goods but set aside the penalties and interest imposed, aligning with the precedent that no penalty or interest is applicable if duty is paid before the show cause notice. The Commissioner's detailed and evidence-based findings were affirmed, dismissing the appellants' claims of procedural and jurisdictional errors.