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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 ..... , Advocate, for the Appellant. Shri Sunil Kumar, DR, for the Respondent. [Order per : Rakesh Kumar, Member (T)]. The facts leading to these three appeals are, in brief, as under. 1.1 The Appellant company are a 100% EOU engaged in the manufacture and export of readymade garments of chapter heading 62.01 and 62.02 of the Central Excise Tariff. Shri Mahesh Harlalka is the Director of the Appellant company. The Appellant company was procuring dyed/printed polyester fabrics from other 100% EOUs without payment of duty against CT-3 certificates issued by the Superintendent, Central Excise, Sikar. The Appellant company, during December 2002 - February 2003 period, exported 21 consignments declared to be - 100% poly x poly dyed/printed ladies nightwear, 100% poly x poly dyed/printed scarves and 100% poly x poly dupattas 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise Rules, 2002 ; and (c) imposition of penalty on Shri Mahesh Harlalka under Rule 26 of the Central Excise Rule, 2002. 1.3 The show cause notice was adjudicated by the Commissioner vide order-in-original No. 25/2004 dated 30-6-2004 by which - (a) duty demand of Rs. 3,03,51,929/- was confirmed against the Appellant company alongwith interest under Section 11AB ; (b) penalty of Rs. 3,03,51,929/- was imposed on the Appellant company under Section 11AC of the Central Excise Act ; and (c) penalty of Rs. 50 lakhs was imposed on Shri Mahesh Harlalka under Rule 26 of the Central Excise Rules, 2002. 1.4 Against the above order of the Commissioner these two appeals have been filed by the Appellant company and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned DR, defending the impugned order made the following submissions. (1) The composition and GSM of the fabrics of the readymade garments/dupattas/scarves being exported, as ascertained on being tested by the Textile Committee, is different from the composition and GSM of the fabrics supposed to have been used in manufacture of the goods being exported, as mentioned in the supplier EOU s invoices. This shows that the duty free fabrics procured for 100% EOUs against CT-3 had been illicitly diverted to the market and ladies nightwear/dupattas/scarves made of cheap and inferior quality fabrics were being exported; (2) The fact that the goods exported had been made 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 fabr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of scarf material procured from other EOUs is 23.6, the GSM of the fabrics of scarves in the export consignments is 64.3 to 67, clearly showing that the scarves being exported had not been made out of the material procured duty free from other EOUs. In respect of ladies nightwear and dupattas there is difference in the declared composition and GSM based on the composition and GSM of the fabrics procured duty free from other EOU, and the actual composition and GSM. (b) Statement of the suppliers of fabrics stating that 100% polyester fabrics had been supplied against CT-3 certificates. (c) Statement 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 compositio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y out of indigenous raw material and the DTA clearances are in accordance with the proviso of the EXIM policy i.e. with the permission of the Development Commissioner. This exemption, obviously, will not be applicable to this case where the duty free goods procured from other 100% EOUs for export production have been illicitly diverted and sold in DTA. 4.3 It has been pleaded that in accordance with the ratio of Hon ble Supreme Court s judgment in case of CCE, Delhi v. Maruti Udyog Ltd. reported in 2002 (141) E.L.T. 3 (S.C.) the price of the fabrics on which duty has been demanded, must be treated as cum duty price and assessable value must be calculated by permitting abatement of duty from the price. Tribunal in cases of Asian Alloys Ltd. v. CCE-III reported in 2006 (203) E.L.T. 252 (Tri. - Del.) and Sarla Polyester Ltd. v. CCE, reported in 2008 (222) E.L.T. 376 (Tri. - Ahmd.) has held that the ratio of Hon ble Supreme Court s judgment in case of CCE, Delhi v. Maruti Udyog Ltd. is not applicable to the cases of deliberate duty evasion by clandestine clearances. Therefore this plea of the Appellant is also not acceptable. 5. In view of the above discussion, we do not find any i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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