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2023 (2) TMI 1039 - AT - CustomsClandestine removal of the goods from trading unit at KASEZ - Revenue proceeded on the premise that Appellant was engaged in diversion of goods in DTA clandestinely and fabricated the records to show that said goods were exported - diversion of goods to DTA - existence of concrete evidences or not - HELD THAT - The allegation of clandestine removal of the goods from trading unit at KASEZ, which was under the physical control of the department, to the Domestic market no cogent evidence was produced by the revenue. Not a single customer is brought on records who has received the clandestine removed goods. No documentary evidence is produced in the form of transport receipts, delivery challans or any other documents relating to removal of disputed goods. No evidences produced regarding the receipts of payment against the clearances of disputed goods in domestic market. No transporter or any person are brought on records who has transported the disputed goods in domestic market. It is well settled that the charge of clandestine removal of goods, cannot be established on assumptions and presumptions. Such a charge has to be based on concrete and tangible evidence. Reference may be made to OUDH SUGAR MILLS LTD. VERSUS UNION OF INDIA 1962 (3) TMI 75 - SUPREME COURT , wherein the Apex Court has observed that demand of duty cannot be raised on the strength of assumptions and presumptions. There should be sufficient evidence of the removal of the goods alleged to have been manufactured and cleared without payment of duty. The charge of clandestine removal must be based on tangible evidence and not on inferences involving unwarranted assumptions. Further, in RADHA MADHAV CORPORATION LTD. VERSUS COMMISSIONER OF C. EX., DAMAN 2013 (6) TMI 395 - CESTAT, AHMEDABAD , the issue was raised in a case where the allegation was that there was clearance of plastic film in the guise of Lay Flat Tubing (LFT). After examining the facts of the case at length, it was held that a link between the documents recovered in the search and the activities of the appellant in their factory is required to be proved. Thus, the present demand which has been confirmed against Appellant by the impugned order, is not based on evidence. Unless there is conclusive evidence that Appellant has clandestinely cleared the disputed goods without payment of duty, liability cannot be placed on Appellant on the basis of conjectures and surmises. Therefore, the demand based on assumption and presumption is not sustainable. In the present case, it is not proved that the original goods were loaded in the container and the same was cleared from SEZ. If the contention of the revenue is presumably accepted that the appellant have cleared the original goods from their SEZ then, as per the allegation of investigation that the appellant have attempted to export the inferior quality of goods, the investigation could not bring on record particularly from the SEZ records that the disposal of the original goods and procurement of low quality goods in the guise of original goods. The entire case was based on the document but no physical movement or diversion could be established. In this fact, the demand of customs duty is not sustainable and consequently, the confiscation of goods is also incorrect and illegal. Appeal allowed.
Issues Involved:
1. Allegation of clandestine removal of goods from Kandla SEZ. 2. Mis-declaration of goods' description and weight. 3. Demand for customs duty and imposition of penalties. 4. Validity of evidence and investigation conducted by the authorities. 5. Legal basis for demanding customs duty under the Customs Act for goods from SEZ/EOU. 6. Admissibility of various documentary and testimonial evidence. Issue-wise Detailed Analysis: 1. Allegation of Clandestine Removal of Goods from Kandla SEZ: The Revenue alleged that the appellant clandestinely removed goods from Kandla SEZ to the Domestic Tariff Area (DTA) and attempted to export inferior quality goods. The Tribunal found that there was no cogent evidence produced by the Revenue to support this allegation. The Tribunal emphasized that the charge of clandestine removal must be based on concrete and tangible evidence, not on assumptions and presumptions. The Tribunal referred to precedents like Oudh Sugar Mills Ltd. v. Union of India, which states that demands cannot be raised on assumptions and presumptions. 2. Mis-declaration of Goods' Description and Weight: The goods declared in the Shipping Bill were described as "Fancy Scarves Made from Polyester Knitted Fabrics and Fancy Dupattas made from 100% Polyester Filament Yarn" with a declared weight of 19002 Kgs. However, upon examination, the goods were found to be of inferior quality with a net weight of only 1450 Kgs. Despite this, the Tribunal found that the goods received from M/s Cosmic were the same as those entered for export and there was no evidence of any clandestine removal or mis-declaration by the appellant. 3. Demand for Customs Duty and Imposition of Penalties: The Commissioner confirmed the customs duty demand and imposed penalties on the appellants. However, the Tribunal found that the demand was not sustainable as it was based on assumptions and lacked concrete evidence. The Tribunal highlighted that the goods received from M/s Cosmic were entered for export and there was no clandestine removal. Consequently, the demand for customs duty and penalties was set aside. 4. Validity of Evidence and Investigation Conducted by the Authorities: The Tribunal noted that the investigation by the authorities did not bring any concrete evidence to prove the clandestine removal of goods. No customers, transporters, or any other persons were identified who could confirm the alleged removal. The Tribunal also pointed out that the statements of drivers and preventive officers, recorded by the CBI, confirmed that the goods were directly transferred into the container without any removal or diversion. The Tribunal criticized the reliance on assumptions and the lack of a thorough investigation. 5. Legal Basis for Demanding Customs Duty under the Customs Act for Goods from SEZ/EOU: The Tribunal observed that the demand for customs duty under the Customs Act was erroneous. It noted that prior to 11.05.2007, excisable goods produced in SEZ or by 100% EOU were liable to excise duty, which should be collected at the rate of aggregate duties of Customs. The Tribunal emphasized that the demand should be based on the Central Excise Act, 1944, and not the Customs Act. The Tribunal cited several decisions to support this view, including CCE v. Suresh Synthetics and Saheli Synthetic Pvt. Ltd. 6. Admissibility of Various Documentary and Testimonial Evidence: The Tribunal found that the documentary evidence, such as the CBI charge sheet and statements of drivers and preventive officers, supported the appellant's case that there was no clandestine removal. The Tribunal criticized the Commissioner for not considering these crucial pieces of evidence. The Tribunal also noted that the goods were in the original packing and there was no evidence of any change of goods en route. The Tribunal concluded that the demand for customs duty was not sustainable based on the evidence presented. Conclusion: The Tribunal set aside the impugned orders and allowed the appeals with consequential relief, stating that the demand for customs duty was not sustainable on merit and was based on assumptions and presumptions without concrete evidence. The Tribunal emphasized the need for thorough investigation and concrete evidence to support allegations of clandestine removal.
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