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2022 (7) TMI 208 - AT - CustomsValidity and scope of SCN - evasion of duty - clandestine removal of finished goods from SEZ - it is alleged that SCN have been issued for confiscation on the owner-appellant, as required u/s 124 of customs Act - proper officer to issue SCN - evasion of duty by resorting to clandestine removal of finished goods - it is also alleged that payment for sales made clandestinely was collected in cash, which was deposited in various bank accounts - Confiscation - redemption fine - penalty - HELD THAT - Confiscation of goods on the basis of mere assumptions and presumptions and without there being any tangible evidence to correlate that the same are received from NTPL on which no duty of customs has been paid by the manufacturer, is contrary to the law propounded by this Tribunal in the case of M/S ARYA FIBRES PVT. LTD., M/S NOVA PETROCHEMICALS LTD. AND OTHERS VERSUS CCE AHMEDABAD-II 2013 (11) TMI 626 - CESTAT AHMEDABAD which is upheld by Hon'ble High Court of Delhi in the case of FLEVEL INTERNATIONAL VERSUS COMMISSIONER OF CENTRAL EXCISE 2015 (9) TMI 1151 - DELHI HIGH COURT . Appellant respectfully relies on the judgement of Hon ble Supreme Court in the matter of OUDH SUGAR MILLS LTD. VERSUS UNION OF INDIA 1962 (3) TMI 75 - SUPREME COURT , holding that duty demand cannot be based on inferences involving unwarranted assumptions. In terms of the law propounded by Hon ble Supreme court in the case of Canon India Pvt. Ltd., only the officer who was authorized to assess the goods cleared from SEZ, during the relevant period or his successor in the same post can issue demand of additional / differential customs duty which escaped levy for any reason, under section 28 of the Customs Act 1962, and no other officer can issue Show cause notice. Thus, the SCN is wholly without jurisdiction. The goods under dispute are not the specified goods under Section 123 of the Customs Act. In such facts and circumstances, when admittedly it is a case of town seizure, the onus lies on Revenue to prove that the goods/ pipes lying in the premises of this appellant have been received by him in a clandestine manner from SEZ unit, on which Custom duty have not been paid. The General Rule is that the goods which are available in the open market, are presumed to have suffered the duty. If it is alleged by Revenue that the goods lying or found in the shop/godown premises of the assessee are not duty paid, it is the onus on Revenue to establish such allegation. I find that save and except assumption and presumption, no cogent evidence has been led by Revenue in support of its allegation - When the transaction is through banking channels there is prima facie proof of genuineness of the transaction. The purchase invoices are supported with Road permit (pre-authenticated) under the Sales Tax/VAT law. Admittedly M/s NTPL manufacturer is situated in the SEZ premises. Such premises are bonded premises under physical control of the officers of Revenue. There is no allegation that the officers who were posted at the said SEZ Pithampur, were hand in glove with M/s NTPL and this appellant. It is nowhere adequately found how the finished goods went out from the factory premises (under physical control) without there being proper documents and entry in appropriate records. Neither it has been explained as to how M/s NTPL received raw material clandestinely. It is found that the show cause notice is prima facie based on bald allegation, which did not stand the test of adjudication. The impugned order of confiscation and penalty is also bad, as no SCN have been issued for confiscation on the owner-appellant, as required u/s 124. The show cause notice is bad as the same has been issued by the Officers of DGCEI, who are not the proper officer as required under Section 28(1)/28(4) of the Customs Act, as has been held by the Hon ble Supreme Court in the case of M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS 2021 (3) TMI 384 - SUPREME COURT which has also affirmed order of Hon ble Delhi High Court in the case of M/S MANGALI IMPEX LTD., M/S PACE INTERNATIONAL AND OTHERS VERSUS UNION OF INDIA AND OTHERS 2016 (5) TMI 225 - DELHI HIGH COURT . Appeal allowed.
Issues Involved:
1. Confiscation and redemption fine. 2. Penalty imposition. 3. Alleged clandestine removal of goods. 4. Validity of evidence and statements. 5. Jurisdiction of the officers issuing the show cause notice. Issue-wise Detailed Analysis: 1. Confiscation and Redemption Fine: The appellant, a dealer of iron and steel products, faced confiscation of 1,46,723 kg of pipes valued at Rs. 50,62,013/- and a redemption fine of Rs. 8 lakhs under Section 111(j) of the Customs Act. The goods were seized on the belief that they were cleared by M/s NTPL without payment of customs duty. However, the appellant contended that the goods were lawfully purchased from the open market, supported by purchase invoices and ledger accounts. The Tribunal found that the Revenue failed to prove that the goods were received clandestinely from SEZ unit NTPL, as required under Section 123 of the Customs Act. The confiscation order was set aside due to lack of evidence. 2. Penalty Imposition: The Commissioner imposed a penalty of Rs. 20 lakhs on the appellant under Section 112(ii) of the Customs Act, alleging their involvement in the clandestine receipt of goods from NTPL. The appellant argued that the penalty was based on uncorroborated statements and assumptions. The Tribunal noted that the statements used as evidence were either retracted or not tested by cross-examination, thus lacking evidentiary value. Consequently, the penalty imposed on the appellant was set aside. 3. Alleged Clandestine Removal of Goods: The investigation revealed that NTPL allegedly cleared goods without payment of customs duty and sold them to various firms, including the appellant. Statements from NTPL's Director and employees indicated that the appellant was a major buyer of these goods. However, the appellant provided documentary evidence of lawful purchase from the open market. The Tribunal concluded that the Revenue's allegations were based on assumptions and lacked tangible evidence, leading to the dismissal of the charges against the appellant. 4. Validity of Evidence and Statements: The appellant challenged the reliance on statements recorded during the investigation, arguing they were given under coercion and without the opportunity for cross-examination. The Tribunal agreed, stating that the statements had no evidentiary value as they were not tested per Section 138B of the Customs Act. The Tribunal emphasized the importance of cross-examination to validate such statements, thereby rejecting the evidence presented by the Revenue. 5. Jurisdiction of the Officers Issuing the Show Cause Notice: The appellant argued that the show cause notice was issued by officers of DGCEI, who were not the proper officers under Section 28(1)/28(4) of the Customs Act, as held by the Supreme Court in Canon India Pvt. Limited. The Tribunal concurred, stating that the notice was issued without jurisdiction, rendering it invalid. The Tribunal referenced the Supreme Court's ruling in Canon India Pvt. Limited, which affirmed that only authorized officers could issue such notices. Conclusion: The Tribunal allowed the appeal, setting aside the impugned order of confiscation and penalty. The confiscated goods were ordered to be released, and the show cause notice was deemed without jurisdiction. The decision was pronounced on 04.07.2022, providing consequential relief to the appellant.
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