2017 (12) TMI 563 - AT - Customs

DEEC Scheme - Appellant falsely claimed that M/s Watan Tanning Industries Pvt. Ltd., (WTIPL), was supporting manufacturer of the appellant making use of the imports made by it. When investigation was made, WTIPL was found to be non-existent - Held that - Appellant no where brought out existence of any machinery or infrastructure facility of its own carrying out manufacturing activity. Nor it proved existence of manufacturing facility of supporting manufacturer - It has not come out with clean hands to establish it claim that the goods imported were not diverted to the market - appeal dismissed - decided against appellant.

Summary

Issues:
1. Alleged diversion of goods imported under DEEC Scheme for sale in the domestic market.
2. Confiscation of goods and imposition of penalty under Customs Act, 1962.

Analysis:
1. The case involved the appellant, a company engaged in importing dyes, chemicals, and fittings for tanning and manufacturing leather goods under the DEEC Scheme. The revenue contended that the appellant falsely claimed to have a supporting manufacturer, which was found to be non-existent upon investigation. The director of the appellant admitted that the imported goods were sold in the domestic market without being used in manufacturing. The revenue argued that goods under the DEEC Scheme cannot be sold as per import-export policy provisions.

2. The adjudicating authority held that the appellant's actions were not bonafide, as they knowingly diverted the imported goods for sale without using them in manufacturing. The authority imposed a fine in lieu of confiscation for the goods valued at ?1,72,04,853. Additionally, the benefit under the DEEC Scheme was denied, and a demand of ?3,02,87,112 was made under the Customs Act, 1962. Penalties were also imposed under Section 112(a) & (b) of the Customs Act, 1962 on the company and its directors for their involvement in the diversion of goods.

3. The appellant failed to prove the existence of its own manufacturing facility or the supporting manufacturer's facility. Despite not rebutting the charges of diversion, the appellant's appeal focused on reasons without clean evidence to support its claims. The Tribunal found no reason to intervene in the order, dismissing all three appeals due to the lack of evidence presented by the appellant to establish that the imported goods were not diverted for sale in the market.