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TMI Blog2010 (11) TMI 618X X X X Extracts X X X X X X X X Extracts X X X X ..... attas" under 21 shippings from ICD, Jodhpur. In respect of eight such consignments, the samples were drawn and got tested by Textile Committee for composition and grammage per sq. metre (GSM). The composition and GSM of the garments/scarves/dupattas being exported was compared with this particulars of the fabrics procured from the EOUs, as mentioned in the fabrics supplier's (EOU's) invoices, but same were found to be different. It, therefore, appeared that ladies scarves, nightwear and Dupattas being exported had not been made from the duty free polyester fabrics procured from other 100% EOUs. On inquiry with the EOUs, from whom the fabrics had been procured by the Appellant company free of duty, it was learnt that they had supplied 100% polyester fabrics, while the garments, scarves and dupattas being exported were found to be of polyester and cotton, polyester and zari or polyester and nylon. The GSM of the fabrics procured duty free from other EOUs and of the readymade garments, scarves and dupattas being exported was also found to be different. Statement of Shri Pradeep Kumar Pareek of the Appellant company was recorded on 1-10-02 where he stated that the stock of scarves lyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its Director Shri Mahesh Harlalka. 1.5 Earlier these appeals were dismissed for non-prosecution vide order No. 583-584/08-EX dated 5-8-08. However on a ROA being filed, the appeals were restored to original number vide miscellaneous order No. 9 & 9A/2010/EX dated 18-12-09. 2. Heard both the sides. 2.1 Shri Abhishek Jaju, Advocate, the learned Counsel for the Appellants made the following submissions. (1) There is absolutely no evidence brought on record to show that the raw material buyers were investigated and they have accepted the receipt of the diverted raw material from the Appellants. There is no evidence on record of purchase of old, sub-standard material. (2) There is no evidence which is categorical and clinching to establish that the goods were not manufactured out of the raw materials procured duty free from other 100% EOUs. (3) Reports of a few test reports have been made applicable to all the consignments without drawing any samples. (4) There is no evidence that the fabrics supplied by other 100% EOUs always showed the GSM in documents. The fabrics as supplied by other 100% EOUs were never tested so as to confirm that what wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of cut pieces and old saris and not from the fabrics procured duty free from other EOUs has been admitted by Shri Pradeep Kumar Pareek in his statement dated 1-10-02 recorded under Section 14 of the Central Excise Act, 1944. The statement of Shri Pareek is corroborated by the statement dated 4-10-02 of Shri Mahesh Harlalka and statement dated 14-5-03 of Shri Manohar Lal Saini; (3) The suppliers of the fabrics to the Appellant company, on inquiry with them, have confirmed that they had supplied 100% polyester fabrics to the Appellant company, while the fabrics of the goods is not only of different GSM but the composition is also different - polyester - cotton, polyester - polyamide, or polyester zari. Therefore it is clear that the fabrics procured duty free from other 100% EOUs has been illicitly diverted to market without payment of duty. (4) Since this is a case of fraud, duty demand has been rightly confirmed by invoking proviso to Section 11A(1) of the Central Excise Act and penalty has been rightly imposed on the Appellant company under Section 11AC. (5) Since Shri Mahesh Harlalka is involved in illicit diversion of fabrics procured duty free from other 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tement dated 1-10-02 of Shri Pradeep Kumar Pareek, of the Appellant company recorded under Section 14 of the Act wherein he has stated that the scarves lying in the factory and those exported had been made out of cut pieces and old saris and statement dated 4-10-02 of Shri Mahesh Harlalka affirming the statement of Shri Pradeep Kumar Pareek as correct. 4.1 From the records of the case, we find that the explanation given by the Appellant for discrepancies between the GSM and composition of the fabric material of the garments/scarves/dupattas being exported and the GSM and composition of the fabrics procured duty free from other 100% EOUs against CT-3 certificate is not satisfactory. The statements of Shri Pradeep Kumar Pareek, an employee and Shri Mahesh Harlalka, a Director of the Appellant company have to be seen in this background and, therefore, we are of the view that the same are their true, correct and voluntary statements, recorded under Section 14 of the Central Excise Act, 1944 and hence are admissible as evidence. We, therefore, uphold the Commissioner's finding that the Appellants have illicitly diverted the duty free fabrics procured against CT-3 certificates from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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