2005 (8) TMI 258 - AT - Customs

EXIM Policy - Advance licence, DEEC Scheme - Exemption - Demand -Confiscation, Penalty - Natural justice - Cross examination

Issues Involved:
1. Import of duty-free Cassia under DEEC Scheme.
2. Fulfillment of export obligations by M/s. Rekha Overseas.
3. Allegations of diversion of imported goods and export of synthetic Cassia Oil.
4. Denial of natural justice by not allowing cross-examination.
5. Validity of documentary evidence and rebuttal by the Department.

Issue-wise Detailed Analysis:

1. Import of Duty-Free Cassia under DEEC Scheme:
M/s. Rekha Overseas imported 80.576 MTs of Cassia valued at Rs. 31,22,337/- under a quantity-based advance licence issued by the Chief Controller of Imports and Exports, under the DEEC Scheme and Customs Notifications No. 159/90 and 122/92. The imports were made in four consignments and cleared under four Bills of Entry.

2. Fulfillment of Export Obligations by M/s. Rekha Overseas:
Under the DEEC Scheme, M/s. Rekha Overseas was required to export 810 kgs of Cassia Oil manufactured from the imported Cassia. They filed three Shipping Bills covering the total quantity of 810 kgs of Cassia Oil with a total F.O.B. value of Rs. 33,94,534/-. The export documents indicated that M/s. Rekha Overseas fulfilled their export obligations. The Spices Board certified that M/s. Natcon, the supporting manufacturer, manufactured the Cassia Oil and accounted for the wastage. The Customs House Laboratory test reports confirmed the samples drawn from the export consignments were Cassia Oil.

3. Allegations of Diversion of Imported Goods and Export of Synthetic Cassia Oil:
The Directorate of Revenue Intelligence (DRI) investigated and alleged that M/s. Rekha Overseas diverted the imported Cassia to the local market and exported "Synthetic Cassia Oil" instead of genuine Cassia Oil. It was alleged that M/s. Natcon manipulated their records to show receipt and processing of Cassia. A show-cause notice was issued demanding duty of Rs. 33,43,308/- and proposing penalties on the involved parties.

4. Denial of Natural Justice by Not Allowing Cross-Examination:
M/s. Rekha Overseas contested the allegations and requested permission to cross-examine the individuals whose statements were relied upon in the show-cause notice. This request was denied by the Commissioner. The appellants argued that the denial of cross-examination and reliance on retracted statements without allowing cross-examination amounted to a denial of natural justice.

5. Validity of Documentary Evidence and Rebuttal by the Department:
The appellants produced documentary evidence, including certificates from the Spices Board and chemical test reports, to prove compliance with the DEEC Scheme. The ALC Circular No. 9/92 provided for advance licences for importing Cassia for manufacturing and exporting Cassia Oil. The Spices Board's certificates confirmed the manufacturing capacity and proper accounting of wastage. The Customs House Laboratory reports confirmed the export of Cassia Oil. The Tribunal found that these documents carried a presumption of authenticity under Section 114(e) of the Evidence Act, which the Department failed to rebut. The Commissioner erred in rejecting this documentary evidence based on statements without proper rebuttal.

Conclusion:
The Tribunal found that M/s. Rekha Overseas fulfilled their export obligations under the DEEC Scheme and that the Department failed to rebut the documentary evidence. The denial of cross-examination was a violation of natural justice. The impugned order was set aside, and the appeals were allowed, concluding that the import/export goods did not attract Sections 111 and 113 of the Customs Act, and the penal provisions of Section 112 were not applicable.

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