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TMI Blog2000 (8) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor that a quantity of 1531.189 MTs of imported raw material was not accounted for as the appellants had illegally removed and disposed of the same. He, therefore, confirmed the Order-in-Original No. CEX/31/PIV/90, dated 29-8-1990 passed by the Assistant Collector, Pune in demanding duty of Rs. 10,72,361/-. 2. We shall deal with these two appeal seriatum; (a) Appeal C. 659/92 : This is an appeal against the decision of Collector (Appeals) whereunder he had upheld an order passed by the Assistant Collector, Pune confirming the demand of Customs Duty of Rs. 10,72,361.59 on 1531.189 MTs of imported items found short during the stock taking of their EOU. The appellant owned 100% EOU licence as such for manufacture and export of processed pulses. In this appeal the issue for consideration is whether benefit of exemption Notification No. 13/81-Cus., dated 9-2-1981 could be denied to the imported raw material merely on account of certain procedural lapses committed by the appellants. It is the case of the appellants that the resultant finished goods have already been exported in discharge of the export obligation in terms of the bond executed by the appellant at the time of duty free ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the demand. He argued that the receipt of specific information can be no ground for confirming the demand. He also stated that lower authorities had failed to understand the true import of statement of Shantilal, he stated specifically that the appellant s letter dated 10-1-1990 and 23-1-1990 showed that they had never accepted the shortages. The so called payment of the duty could not be treated as accepting any liability as they were made without prejudice to the rights of the appellants. The letters themselves would prove that economic duress under which duty had been deposited. He stated that department had not proved the disposal of goods inasmuch as removal from the bonded area has not been proved. He challenged the findings of the authorities that appellant s explanation was an afterthought as the same could have been stated either in the course of stock taking or in the statement of Shantilal. He specifically stated that due to the bunching of vessels in the port and late arrival of the vessel M.V. Shazle, the appellant had stored the goods in an area other than the bonded warehouse and such storage has been specifically informed to the authorities who had approved orally. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k taking was conducted on the basis of specific information. Appellant accepted the shortage in raw material and voluntarily paid customs duty. 6. In Appeal 165/91 the Collector acting as original authority has held that shortages has been established and imposed the penalty. The onus is only on the appellant to explain the shortages as only he know the facts which are within his knowledge viz. the expalanation of the circumstances under which the shortages has occurred. 7. The explanation given by the appellants regarding the shortages was an after thought as in the case of stock taking they never mentioned about the stocks was available in the premises of the factory though outside the Custom House bonded warehouse. Even in the statement of Shantilal Lunkad made had not mentioned anything about it. 8. Argument of the appellant have to be seen in the light of the letter written on 10-1-1990. On 10-1-1990 the letter mentions inter alia as follows : It is brought to the notice of your Honour that certain stocks of pulses are lying outside the bonded warehouse. Due to circumstances beyond our control belonging to the said EOU, we were forced to keep the stock outside because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds executed by the assessees under the Customs Act or under any other Act has to be in the name of the President of India in terms of Article 299 of Constitution of India. Here no such written agreement as indicated above had been produced by the appellants. We, therefore, find that there has been clandestine removal. Therefore, the duty is leviable. 9. Argument of Shri Vipin Jain that the foreign exchange has been earned and also statements showing the commodities only quantity discharged of the various bonds end use certificate in our view cannot be helpful inasmuch as here charge is removal of goods from warehouse which is violation of Section 111(j) of the Customs Act. Therefore, in our view the both appeals cannot be accepted. As far as the duty element is concerned, admission of the partner made on 23-1-1990 much after the search definitely show that the explanation given by the appellants has found by the lower authorities that its afterthought is absolutely correct. 10. The ld. C.A. appearing for the appellants argued that the impugned show cause notices could not have been issued by Pune Collectorate as the import has been done only in Mumbai and only the Mumbai Colle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act and no assessment has been made. In such a case, there is no assessment or order passed by a proper officer having territorial jurisdiction over the place where the goods have been seized. The proper officer having jurisdiction over the place of clandestine import and the proper officer having jurisdiction over the place of seizure, either of them can take action. The latter can himself take action or he can bring the facts to the notice of the former, who can thereupon take action. The cause of action which commenced at the place of clandestine import continues and removal or transfer of such goods is part of the continuing cause of action. A part of the cause of action is at the place to which the goods are conveyed and the proper officer having territorial jurisdiction over the place of seizure has jurisdiction to initiate, conduct and conclude adjudication proceedings. In such a case, the Collector of Customs having territorial jurisdiction over the place of seizure has jurisdiction to grant extension of period under the proviso to Section 110(2) of the Act. 11. We, therefore, find no hesitation in holding that the orders passed by the lower authorities are perfectly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant Collector of Customs, in the bond department at Bombay and the Collector confiscating, the goods at Pune which requires to be resolved. At the very least, the order of confiscation become difficult to sustain in the light of the discharge of the bond. I must make it clear that I am not by any means saying that present confiscation must be set aside. All that I say is that there must be a satisfactory explanation, for the reason for which the bond has been cancelled before any order of confiscation can be passed. 15. In this background, the view expressed (in Paragraph 9 of the order) that since the confiscation under Clause (j) of Section 111 of the Act, the question of whether the bond has been redeemed is irrelevant, is difficult to accept. 16. It was the contention of the appellant that the goods were in fact present in another premises next to the bonded warehouse. It was contended that the bond officer in-charge of the bond had permitted orally storage of the goods outside the bonded area, in response to a written application of the licence. This has not been accepted on the ground that contracts in exercise of the executive power of the President of India, should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant that the goods had been received and were permitted to be kept in the adjoining warehouse. If not, it would demolish his claim. 18. These aspects are required to be considered before the matter can be properly decided. In addition, I must express my disagreement with the view expressed in Paragraph 10 of the order, dealing with the contention of the appellant that only the officer in Bombay has jurisdiction to issue the demand. In my view, the decision of the Tribunal in Engee Industrial Services v. CCE - 1996 (87) E.L.T. 152 would not apply to the facts of the case before us. The Tribunal had said in Paragraph 9 of that decision that in case of seized goods in respect of which no order has been passed under Section 47 of the Act, either the proper officer has jurisdiction over the place of import and the proper officer having jurisdiction over the place of seizure can take action. The case before us was not a case of clandestine clearance. The import was perfectly legal and proper. The goods have been ordered to be confiscated under Clause (j) of Section 111 of the Act that is on the ground that they have been improperly removed from the warehouse. The notice demanding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants are a 100% EOU. Such units are required to obtain a private bonded warehousing licence in terms of Section 58 of the Customs Act, 1962. They have to file a warehousing bond under Section 59 of the said Act undertaking to pay the duties, etc. payable under Section 61(2) of the Act. Section 61(2) provides for payment of duty on goods found short in a warehouse or where the goods have exceeded the warehousing period. This bond remains in force as long as the private warehouse is in existence. Such units are entitled to import raw materials, etc. in terms of certain notifications. The present appellants were availing this benefit in terms of Notification No. 13/81-Cus. In terms of this notification, for each import the importer had to file a bond for fulfilment of the export obligation. On completion of export of the resultant products made out of the imported raw materials, the individual bonds filed would get cancelled and discharged. Thus, the present Appellants had filed two sets of bonds. The enforcing authority in the case of warehousing bond was the bond officer who was an officer of the Pune Collectorate. The bonds filed for clearance of each consignment of the imported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sultant product was exported. An end use certificate was given by the bond officer in the case of each individual consignment. In the end use certificate it was clearly mentioned that the obligation under the individual bonds had been completely fulfilled. These were placed before the authorities at the entry port who cancelled the individual bond. These facts are not disputed. It is also not disputed that except for the goods imported under this notification, no other goods were brought inside the private bonded warehouse. At the same time, however, the officers at Pune had determined the shortage and had confirmed the duty. This contradiction was sought to be explained by the Appellants by submitting that even at the time of stock taking it was pointed out that not all the imported goods had been kept in bonded warehouse but that some goods had been kept in the adjacent premises, which were not bonded, but were inside the factory premises. This point was also made before the Commissioner (Appeals) by the licensee in contesting the demand. The learned Commissioner did not accept this claim but instead referred to Shantilal s statement and holding that no such claim was made therei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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