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TMI Blog2016 (8) TMI 1283X X X X Extracts X X X X X X X X Extracts X X X X ..... erms of Notification No.20/99-cus dated 20.02.99, 16/2000-cus dated 01.03.2000 and 17/2001-cus dated 01.03.2001 and were transported to the factory of the appellant at Cuddapah in Andhra Pradesh. However before transportation the goods cleared from the port were first stored in the godown of Shri Shantilal Kothari at Thondiarpet. Thereafter the goods were transported to the factory of the appellant and used in the manufacture for which end use certificates were issued by the Dy. Commissioner Mrs. Parvathi kailasam and those were accepted in the excise proceeding for grant of cenvat credit of additional duty of Customs of Rs. 73,53,294/- paid on the imported scrap. 1.3 The goods imported were purchased by appellant in high seas from Shri Shantilal Kothari and Pradeep Kabra. Although Shri Shantilal Kothari and Shri Pradeep Kabra were party in the show cause notice (SCN) dated 31.07.2003, Customs adjudication proceeding against them were dropped. Revenue alleged that the goods imported were not transported from the godown of Shantilal kothari to the factory of the appellant. Accordingly the allegation is that such scraps were not used in the manufacture, but were diverted elsewhere. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were received in the factory of the appellant and were not diverted elsewhere. Revenue's allegation of diversion of imported scrap is therefore without any evidence. 2.1 Learned Counsel further submitted that the appellant having succeeded in the excise proceeding (Ref: page 119 to 130 of the appeal folder) accepting the end use certificates issued by the Dy.Commissioner, Smt. Parvathi Kailasam, that proves receipt of the imported scrap in the factory of the appellant and use thereof in the manufacture. Accordingly there is no scope to hold otherwise in the customs proceeding. The adjudicating authority extracted the Dy. Commissioner's statement recorded on 28.06.2002 in para 11 of the adjudication order dated 27.01.2011 passed in the excise proceeding. 2.2 The excise Commissioner was of the opinion that the certificates issued by the Dy. Commissioner were based on the records produced by the appellant. The dy. Commissioner in one or two occasions had physically inspected the factory. The Excise Commissioner relied on the decision of the Bangalore Bench of the Tribunal in the case of Thriven Steels Pvt. Ltd Vs. CC, Cochin, in appeal No.C/18-19/2006 disposed vide Final ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lated the conditions stipulated in the Customs Notification No.70/99, 16/2000 and 17/2001" and "whether the goods imported by the appellant are liable for confiscation under Section 111 (I) of the Customs Act, 1962" and "that whether the noticees individually are liable to penalty under Section 112 (a) of the said Act". But he proceeded to decide these issues against appellant. (b) So far as para-II of the re-adjudication order is concerned there was no defense led. (c) So far as para-12 is concerned, the re-adjudication order simply relied on the previous adjudication order which was set aside by the Tribunal vide Final Order No.1440-1442/2007 dated 03.12.2007 and irrelevant considerations were made to drop the charge against Pradeep Kabra of M/s. Time Enterprises, and Shri shantilal Kothari of M/s. Kothari group of Companies as well as Smt. Parvathi Kailasam, Dy. Commissioner. When Shri Shantilal Kothari and Shri Pradeep Kabra were issued SCNs, they should have been made party in the fresh readjudication proceedings consequent upon set aside of the previous adjudication by the above order of the Tribunal. For no good reason, they were baselessly exonerated from charges by the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order, it was pleaded by the appellant that truthfulness of the end use certificate cannot be doubted being relied by the excise commissioner and there was no incriminating evidence brought by Revenue on record to discard her certificates. Those certificates were not yet cancelled. 2.8 Defending on para-18 of the readjudication order, Id. Counsel submitted that the imported pipes through Cochin Port was made by same appellant and evidence in both Cases are same. But the Customs commissioner distinguished that without assigning any reason. Order of Bangalore Bench of Tribunal in respect of the above import having reached to finality due to dismissal of Civil appeal of Revenue by Apex Court as reported in - 2015 (315) ELT A256 (S.C.), the authority has no reason to differ with the principle laid down in the order of Tribunal. In that Cochin import case, the same end-use certificates issued by the same Dy. Commissioner was relevant evidences and were subject matter of scrutiny by CESTAT, Bangalore Bench. Therefore there is nothing to differ with that in the present proceeding. 3.1 Learned Counsel reiterated his stand that end use certificate being genuine and accepted by the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... godown of Shri Kothari. That was an undisputed fact. Despite cogent evidence on record imputing Shri Kothari and Shri Kabra, transporter as well as CHA, they were all exonerated from charge unreasonably. 3.5 Analysing the contents of para-21 of the re-adjudication order, it was submitted by the Id. Counsel that the said para dealt with the analysis of law and no argument is required thereon because proposition of law shall apply to the facts and circumstances of the case. 3.6 Placing the statement recorded from Shri Subba Reddy, M.D. of appellant on 9.9.2002 copy of which is available at page 85 to 97 of the appeal folder, Id. Counsel summarized that the factory of the appellant had under gone industrial and financial sickness. Raising unsecured loan and earning agricultural income, he remitted money for deposit in Union Bank of India in Chennai securing assistance of employees of M/s. Kothari Group of Companies. Such money were utilized for different payments in Chennai. Factory of the appellant was under compounded levy scheme from 1997 to 2000 and due to industrial sickness, statutory records were not available for production before investigating authority. Those were maintain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were available to the appellant to transport the goods to factory. Department did not make any enquiry as to transit of goods from the godown of M/s. Kothari Group of Companies to the factory of the appellant although appellant stated the name of the transporter in reply to question No.59 in his statement at page 93 of the appeal folder. Therefore, transport of imported scrap to factory of appellant is free from doubt. (g) transport of goods from the godown of M/s. Kothari Group of Companies was not examined by the investigating team to allege diversion of imported scarp to elsewhere. Accordingly there is no scope to make allegation that the goods did not reach at the factory of the appellant in Cuddappah, in Andhra Pradesh. (h) When the Customs Commissioner exonerated Sri Kothari and Sri Kabra that proves that there was no diversion of goods. Those were reached in the factory of the appellant in Cudappah in A.P. and used in manufacture. (i) Tribunal when made open remand of the case by its order dated: 3/12/2007, it was open on all issues against all the parties in the SCN, for which the Commissioner of customs should have re-examined all the parties and evidence to ascertain t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charge of her regular official duties in absence of any proof on record of the jurisdictional commissionerate in that behalf. The Dy. Commissioner had confessed that only when certain records were produced before her, she issued the end use certificates without physically verifying use of the imported scrap in reality. (f) When the end use certificates were not issued in the normal course of discharge of official duty and without any order of higher authority to issue such certificate, that is no evidence in the eyes of law. Public record not containing such evidence, does not lend support to the case of appellant company. (g) Investigation into the factory premises of the appellant on 5.3.2002 revealed that there was closing stock of imported scrap of 3489 MTs on that date. But that was not available physically for verification. Nothing was proved by the attendant Shri Ramana Reddy at the time of search to demonstrate that 3489 MTs of imported scrap was really existing. Two heaps of scrap were shown by him to search party. One of the heaps consisted locally procured scrap without payment of duty as well as unaccounted and the other heap was found to be not consisting imported sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lic Revenue, deliberately caused by the appellants. Revenue relied on the decision of the Tribunal in the case of CCE, Chandigarh Vs. Kisco Castings - 2010 (261) ELT 90 (Tri.-Del.) to support its contention that non-receipt of raw materials in the premises of manufacture disentitles it to the benefits granted by law. (m) Appellant failed to prove the transportation of the imported scrap from the godown of Kothari Group of Companies. Burden of proof was not discharged by the appellant. Therefore, it is dis-entitled to duty concession. To support his argument, Id. DR relied on the decision of the Hon'ble Supreme Court in the case of Kanungo & Co. Vs. CC, Calcutta - 1983 (13) ELT 1486 (Sac.) (n) Ld. DR submitted that in absence of transport documents demonstrating the place of origin and destination of goods as well as the mode of transport, appellant's defence plea that the imported scraps received in the factory of the appellant and use thereof in manufacture is baseless. It fabricated documents and engineered the end use certificate to defraud Revenuer (o) When the appellant refused to reply to the relevant question in respect of transport of imported scrap from the godo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n reality that it was not so in absence of chain of evidence from the stage of transport of goods to factory till clearance of finished goods established by statutory record. Money of Shri Kothari and Shri Kabra were only routed through the union bank of India account to deceive Revenue. They coloured the transaction as if that was sent by Mr. Reddy, the M.D. of the appellant company to deposit in the bank account with the assistance of employees of Shri Kothari. (t) Bank transactions made in Union Bank were under forged signature of Shri Reddy on different cheques as stated by him to investigation on 9.9.2002 Had it been a genuine transaction made by him, he would not have stated so in his deposition. He was member of evasion racket and did not proceed against bank for honouring forged signature cheques. Nor he made any police complaint for investigation. This establishes he was beneficiary of the fraud kept silence. There were no records available in the searched premises as to the bank deposit made by the appellant in Union Bank. None of the transactions stated in the deposition of Sh. Reddy were proved with basis. Oblique motive of the racket came to broad day light and their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been relied. Department did not make any enquiry from the Redhills transporter, although that was informed to them. Preponderance of probability is in favour of appellants and they are covered by the judgment of the Apex Court in the case of Bhoormal Premchand Vs. CC, Madras - 2000 (125) ELT 118 (Mad.). 6. While arguing the appeals on penalty imposed on the other two appellants, it is the submission of the Id. Advocate on their behalf that they did not act malafide and when the main appellant succeeds on merits, they being neither actively nor consciously involved to cause loss to revenue, should not be penalised. Such submission of the appellants is denied by the Revenue on the ground that they were found to be Conduits for levy of proper penalty under law. 7. Heard the rival submissions and perused the records. 8. The main argument which has repeatedly been adduced by the learned Advocate is that the end use certificate issued by the Deputy Commissioner, Srimati Parvathi Kailasam proves the receipt of the imported scrap in the factory of the appellant and its use in the manufacturer. It was contended that the said certificate had been accepted in the excise proceedings re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd of burden of proof is different in the case of cenvat credit and in the case of availing exemption notification. It is settled law that the conditions for availing the exemption notification have to be strictly interpreted, Further, acceptance of certificate given by Deputy Commissioner Smt. Kailasam in the import of pipes cannot validate the end-use certificate for other imports. The circumstances of the issuance of this certificate being abnormal and contrary to established procedures with no physical examination of goods raises serious question about its admissibility. In view of these facts, the argument that the certificate should be accepted is not tenable, particularly given dubious methodology of issuance of certificate writ large on the circumstances. Hence, we conclude that the certificate of the Deputy Commissioner Mrs. Parvathi Kailasam is not an admissible piece of evidence. 9. It was argued at one stage that exoneration of Smt. Kailasam from penalty proceedings by the Tribunal Bench in Bangalore proves that end use certificate issued by her can be accepted. We find that the main basis of examination was whether there was mens rea in her action or not. Any finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh alternate routes, which were economic for them. We find that the appellant have failed to substantiate transport of the imported scrap from godown of Kothari Group of Companies. While the bills of entry had destination as Cuddapah in Andhra Pradesh, imported scrap after clearance appears to have been unloaded in godown at Thondiarpet and M/s. Kamachi Steels in Chennai, which belonged to Kothari group of Companies. Transport from those premises to the factory of the appellant has not been proved or documented by them. Since it was a question of availment of exemption notification, burden of proof was squarely on the appellant, which was not discharged. Although they have been at great pains to point out alternate routes where commercial tax may not be payable, the appellant failed to produce even a single piece of document to show as to how such a massive quantity of 15000 tons was transported from godown of Kothari Group of Companies to their factory. In their statement, they assured the Central excise authorities that they would submit these documents but nothing has been submitted to substantiate their claim. Absence of even a scintilla of evidence to corroborate the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hakkan Oil Mills-2004 (168) ELT 234 (Tri.-Del.), this tribunal has held that when a person in possession refuses or fails to produce the best evidence in support of a claim, conclusion to be drawn is that claim is unfounded or false. 13. As for cross examination of the Commercial tax officer, no prejudice has been caused to the appellants as their own claim is that they transported entire 15,000 tons via alternate routes. Further, in the case of Kanungo & Co. Vs. Collector of Customs, Calcutta - 1983 (13) ELT 1486 (SC), Hon'ble Supreme Court has held as below: 12. We may first deal with the question of breach of natural justice. On the material on record, in our opinion, there has been no such breach. In the show cause notice issued on August 21, 1961, all the materials on which the Customs Authorities have relied was set out and it was then for the appellant to give a suitable explanation. The complaint of the appellant now is that all the persons from whom enquiries were alleged to have been made by the authorities should have been produced to enable it to cross-examine them. In our opinion, the principles of natural justice do not require that in matters like this the pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... replenishment was investigated. In this regard, we find that the present case is about availment of duty exemption for the basic customs duty. In the case of availment of exemption the burden is on the importer to improve that the goods have actually been received in the factory and used for manufacture. We find that the appellants have failed to discharge that burden. 16. We also find that the bank transactions in the (Union Bank of India UBI) account were made under forged signature of Shri Subba Reddy on different cheques as informed by him in his statement dated 9.9.2002. The said account was opened with the help of Shri Shantilal Kothari and appears to have been a ploy to show that the sale proceeds of manufactured goods using imported scrap were deposited there. Mr. Subba Reddy claimed that the cash deposited was unsecured loan obtained from friends and money from agricultural income. But the names and details of the said friends were never submitted and this account was never submitted to the income authorities, Besides, operation of account of UBI was not reflected in the balance sheet. Shri Subba Reddy claimed that the amount deposited in UBI was used for raw material an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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