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TMI Blog2012 (7) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... s JSG) is a 100% EOU approved by GOI for manufacture of (1) Metal Wares, Glass Wares, Wooden Wares (2) Decorative clocks, Lamp Sheds, Upholstery (3) Corrugated Boxes (4) Sculptures and Statutary in stones, Cement and Other material. 2. The Department got information that M/s. JSG was diverting the raw material imported duty free to their sister concern M/s. C. L. Gupta and Sons (hereinafter referred to as CLG). So they conducted simultaneous searches on the premises of both JSG and CLG on 2-1-2004. 3. Shortages of imported goods were found in the premises of JSG as under : Sl. No. Description of goods Quantity Value (Rs.) Duty Involved (Rs.) 1. Clock Movements (Foreign Origin) 33031 Pcs. 1008350.00 453760.00 2. Craft Paper (Indigenous) 109.475 MT 1478000.00 238314.00 3. Zinc Ingots (Foreign Origin) 381.84 Kgs. 17183.00 7797.00 Total 2503533.00 699871.00 4. The following materials were detected at the premises of CLG for which they were not able to show proper documents : Sl. No. Descrip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following findings : 11.9 I find that all the duty free imports were through regular channels, and were duly assessed and cleared by proper customs officers. The assessed bills of entry have not been revised. Similarly in case of Domestic Tariff Area (DTA) procurement, all the clearances were authorised/supervised by the proper Central Excise officers. The duty free imported and locally procured raw materials were brought to the private bonded warehouse after clearance. The Bond officer, Bond Superintendent and other officers noticee for most of the time. All the exports were effected under physical supervision of the jurisdictional Central Excise officers under the proper invoices, ARE-I forms and shipping bills after complying with the requisite formalities. The fact of export is established by the records of the Development Commissioner. 11.10 According to the Development Commissioner, Noida, Special Economic Zone, Noida F.No. 03/243/2000 - 100% EOU/11693, dated 18-10-2006, the noticee (now known as M/s. C.L Gupta Exports Limited) have earned the foreign exchange, during the last five years as under : Year Outflow Inflow (On acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The noticee has stated that the inward gate passes resumed by the department have not been correlated with the outward gate passes. They laid emphasis on the argument that any document should be considered in its entirety, and if demand has been raised on the basis of outward registers and gate passes, then the inward gate passes showing return of processed goods also had to be taken into account. I do not find any reason to disagree with this argument and hence I found it appropriate and essential in the interest of justice to get the reconciliation/verification in respect of return of processed goods from M/s. CLG to M/s. JSG. Accordingly, the jurisdictional Assistant Commissioner, Central Excise was directed to get the necessary verification conducted. 11.14 A detailed verification regarding receipt back of processed materials out of duty free imported material from the sister concern - M/s. C.L. Gupta Sons, which was sent for job work by the EOU - M/s. J.S. Gupta Sons was got conducted through the jurisdictional Range - Amroha/Division Hapur under the supervision and active participation of officers deputed from the Commissionerate Headquarters. Under letter C. No. 20-C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich duty demand has been confirmed by the Commissioner. But they did not argue in detail on the demand confirmed by the Commissioner because they are not in appeal against the impugned order. It is their contention that the type of minor infractions of procedures involved cannot be reason to confirm duty on all goods imported by them for three years when the entire operations of the unit was under close supervision of officers posted in their factory by recovering their salaries from the Appellant. They contend that the officers were duty bound to point out omissions on their part and correct the procedural mistakes. 12. They also give a background of facts that resulted in the contraventions involved. These are recorded as their submissions before the adjudicating authority in paras 8.8 to 8.14 in the adjudication order which are reproduced below : 8.8 M/s. JSG came into existence in 2000 and was established as a 100% EOU under LOP dated 15-12-2000 issued by the Development Commissioner, NSEZ and on creation of JSG, a part of the CLG-II factory at Jiwai was transferred to JSG which was later appointed as a private bonded warehouse and manufacturing unit under Section 58 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rk contractors and salaried employees of JSG were deployed at CLG (HQ) premises who carried out the manufacturing operations for JSG from the material supplied by JSG. Besides two senior employees of JSG were also stationed at the aforesaid premises for the supervision of receipt, dispatch and manufacturing, inventory control and accounting of payments made to the employees/job workers of JSG stationed at CLG premises. 8.13 The manufacturing space and equipments to JSG s contractual job workers also known as Karkhanedars were provided at both the premises by the JSG so also the power connections. The material for job working was issued to them through Lal Bahi and the material received from them was also entered into the same. The payments to job workers were thereafter made after deduction of TDS. 8.14 The manufacturing of brass artware and the allied products is basically a labour intensive manufacturing process carried out by individual artisans having expertise in various aspects of manufacturing such as casting, carving, polishing, art work etc. which are basically handicrafts. Due to this peculiar nature of operations, an inventory control system and issue, receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficers. Further the returns filed by the unit also were to be scrutinized. The department did not point out any contraventions. So issuing a demand in the year 2005 for non-compliance with procedural rules for the years 2001-02 to 2003-04 is not justified. In such a situation the verification got done by the adjudicating authority based on records has to be respected. In the facts of the case such as that the officers were supervising the clearances and the Respondent had documents showing satisfactory accounting of the goods and that they had exported goods earning sufficient foreign exchange, the case made out by Revenue cannot be sustained in the absence of evidence showing sale of the imported goods in the local market. No such evidence has been produced by Revenue. 16. The decision of the Apex Court in the case of Hari Chand Shri Gopal (supra) is with reference to the facts of that case where there were no mitigating factors as pointed out by us above and therefore we cannot apply the decision in that case to the facts of this case. 17. In the facts and circumstances of this case we do not see any merit in the appeal filed by Revenue and we approve of the very detailed and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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