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TMI Blog2020 (7) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... premises and no proper accounts of the same has also been done. The appellants have taken the plea that import, export, re-processing and re-export is a continuous exercise and that the re-imported goods were in the work in progress. This argument is not acceptable. It is not the case of the appellants they have maintained records showing the receipt, utilization and disposal of re-imported goods. Under the circumstances, it is found that the appellants have violated the conditions of the Notification and in terms of the Bond they have submitted at the time of import, they are liable to pay duty along with applicable interest. Penalty u/s 114A of the Customs Act, 1962 - HELD THAT:- There is merit in the argument of the appellants to the extent that the Revenue is free to demand and collect duty along with interest, in terms of the Bonds submitted by the appellants at the time of import in terms of Notification No. 52/03. The Bond submitted in terms of the Notification binds the appellants to pay back the duty and interest in the event of any violation. The said Notification does not provide for imposition of any interest and therefore, we set aside the penalty imposed. Also, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Managing Director and Manager Imports-Exports; a perusal of their statements would clearly establish that the appellant has given due explanation; in their letters dated 18.03.2006 to SBI and letter dated 13.06.2006 to Canara Bank, the appellant has categorically stated that the shortages were not real shortage but included clerical errors. He explains different shortages with reference to the allegations as follows. (i). Alleged shortage of 134 kg of Dupion yarn is based on 40% weighment; work-in-progress yarn in weaving section was not considered; actual shortage, if all stock is taken, is well within 0.1%; (ii). Alleged shortage of 2153 Mtr of imported fabrics, though based on 100% input stock verification, the stock of fabrics under work in process category was not considered. (iii). Alleged shortage of 21903 Mtr of raw fabrics is based on 74% check only and was worked out by applying average fabric weight to meterage; 101 varieties of fabrics could not have been measured within 2 days; excess noticed in some cases was not considered; in his statement dated 23.11.2007, the Manager Imports-Exports has explained that there was no shortage; (iv). It was alleged aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been paid on them; in respect of Sl. No. 3, duty is of export and hence, confirmation of duty is premature; in respect of Sl. Nos. 4 and 7, the goods are available within the bonded premises duly covered by a bond; hence no duty was required to be paid till de-bonding; other ways of disposal like clearance in DTA, destruction with the permission of the authorities etc exist; in respect of SI.No.4, 13315.15 Mtr exportable seconds and 9416.65 Mtr rejects; major quantity is export goods and re-export goods are less; Sl.No.7 are samples and are kept for reference to secure repeat orders; FTP allows retention of samples up to 3% of FOB value; hence, duty liability does not arise. 4. Learned Counsel further submits that Commissioner has traversed beyond the scope of SCN: Commissioner s finding (paragraph 62) that these goods had outlived the warehousing period; this charge is beyond the scope of SCN, which, at paragraph 18(f) and 19 of the notice, charges only failure to account for the shortage; Commissioner has stated, in paragraphs 65, 78, 82 and 83 of the order, that re-import of goods partially rejected by the foreign buyer after taking delivery do not fall under a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciated the evidence in proper perspective. Out of 12 shipping bills, 4 pertained to exports from the re-imported stock; commissioner observed that the quantity exported vide these 4 SBs is less compared to the re-imports; Commissioner attempted one to one correlation which is not at all required. Learned Counsel submits that an order passed traversing the contours of the SCN has been found not sustainable by the judicial forums; for example, in 2016 (334) ELT 689 and 2006 (206) ELT 529. 5. Learned Counsel submits that assessment in bills of entry not reviewed; goods being warehoused duty ought to have been confirmed under Section 72, and not under section 28; Section 28(1) covers only, collusion, or willful mis-statement or suppression of facts and not mis-declaration; imposition of penalty under section 114A is also wrong; since the shortages were duly explained, without admitting the same, there was no question of retraction from the statements; commissioner is wrong in concluding that the shortages were admitted and the statements were not retracted. 6. Learned Counsel further submits that these notifications allow extension of warehousing period of the re-imported go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 114A is not attracted as the duty has not been levied on account of collusion or any willful mis-statement or suppression of facts; shortages were alleged without 100% physical stock taking; looking at the volume handled by appellants, shortage may not be even 1%; Commissioner s finding that that the appellant had the knowledge of the shortages but still not informed the department is incorrect; commissioner himself has stated that there is no allegation of clandestine removal; as there was no mis-declaration at the time of import, ingredients for invoking penalty under section 114A are absent; Penalty under section 114 A is not imposable, as held in CCE Vs Chemiphar Drugs and liniments 1989 (40) ELT 276 (SC) and CCE Jalandhar Vs Royal Enterprises 2016 (337) ELT 482 (SC); being warehoused goods, section 72 and not section 28(1), is the section for confirmation of the demand; Penalty under section 114A is not attracted for confirmation of duty under section. 9. Learned Counsel further submits, without prejudice to the above, that under the first proviso to section 114A, there is an option available to pay the penalty or interest @ 25%; this option was not extended to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07; statement of Shri Deepak Jagany Chief General Manager (Fin) was recorded on 15. 11.2007; stock verification was conducted on 22.11.2007 and 11.12.2007; statement of Shri Shyam Goenka, MD was recorded on 28.12.2007; appellants submitted data on 20.5.2008 and on 05.6.2008 and SCN was issued to appellant 27.8.2008; delay in issuance of the notice is due to the delay by the appellant from time to time and non-cooperation during the investigation; data was submitted by the appellant as late as 22.05.2008 and 05.06.2008; Learned Authorised Representative submits that delay in passing the order is also due to delayed submission of the reply to the SCN and time taken by the appellant in submitting the final reply and also in appearance for personal hearing; delay in issuance of Show Cause Notice is fatal to the charges leveled. 13. Learned Authorised Representative, refuting the charge that Bond period is co-terminus with the validity period of the EOU license and any demand of duty before expiry is premature, submits that duty has been demanded on the shortage of the stock and noncompliance of the notification No. 53/97 Cus dated 3.6.97 and 52/03 Cue date 31.3.2003; shortages were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... later verified by the officers of DRI. The officers of DRI have found in addition to the shortages detected by the auditors, shortages in respect of goods claimed to have been re-imported by the appellants in consequence to the rejection of the same by the foreign buyers. The details of shortages noticed by the auditors and the officers of DRI and on which duty has been demanded and confirmed are as follows: SI. No. Item Quantity Value Duty Liability (Rs) Audit Para Remarks 1. Dupion Yarn 134 Kgs 174164 49102 9.3.5.6 Shortage 2. Silk Fabric 2153 mtr 233505 59812 9.4.3.3. Shortage 3. Silk Fabric 2598 mtr 703242 286787 9.4.2.1.3 Warehousing period Extension not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also not considered by the adjudicating authority. They also submitted that the adjudicating authority himself has made a categorical observation that this is not a case of clandestine removal and therefore, they duty cannot be demanded. The appellants, moreover, pleaded that the demand cannot be made in terms of the warehousing provisions as the Bond period is not over. They also contested that demand cannot be under Section 28 as the goods were imported after duly filing the Bills of Entry and after due examination by the officers. They also submitted that penalty cannot be imposed under Section 114A of Customs Act,1962 and the goods cannot be confiscated. 17. Revenue contends that audit of annual accounts of a company is compulsory and is indispensable part of business; all companies registered under Company s Act 1956 are required to maintain proper books of accounts in terms of provisions of Sections 209, 224 224(1) of the Company s Act 1956. Revenue argues that in the instant case, audit was conducted, report was prepared, finalized and submitted by M/s Gnanoba Bhat, Chartered Accountants; further the Report on Audit of Inventory and Receivables have been prepared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod. Moreover, the appellants have claimed that they have informed the bankers on their own; they have written letters i.e. Letter dated 18.03.2006 to SBI and Letter dated 13.06.2006 to Canara Bank; letter written to SBI is before the officers visited the premises of the appellant. The contents of the letter, reply by Bankers etc. have not been verified and discussed in detail. Other contentions of the appellants regarding the non-accounting of stock of work in progress; physical impossibility of counting the stock within 2 days; shortage being within permissible limits; eligibility to retain samples in terms of FTP etc have not been investigation and answered. Officers have not taken physical stock. Therefore, we find that this extent, we hold that demand of duty in respect of SI No. 1 to 5 7 of the table given at Para 59.2 of the OIO are not sustainable. 19. Regarding the shortage of 36049 Mtr/1609 Pcs in respect of re-imported export goods, we find that the appellants submitted that no physical stock was carried; Manager, Import Export has stated that re-imported stock was not separately stored and they got mixed with regular stock and therefore, one-to-one co-relation was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod is not over, the demand is premature. Whereas, we find that Learned Commissioner has confirmed the demand in terms of the Notification No. 53/97 dated 03.06.1997 and 52/03 dated 31.03.2003 as the goods were neither utilized within the prescribed period nor any extension was sought. We find that among other conditions, Notification No. 52/2003 requires the appellants to maintain proper account of the receipt, storage and utilization of the goods. The investigation conducted by the Revenue shows that the so-called re-imported goods were not found in the factory premises and no proper accounts of the same has also been done. We find that the appellants have taken the plea that import, export, re-processing and re-export is a continuous exercise and that the re-imported goods were in the work in progress. We find that this argument is not acceptable. It is not the case of the appellants they have maintained records showing the receipt, utilization and disposal of re-imported goods. Under the circumstances, we find that the appellants have violated the conditions of the Notification and in terms of the Bond they have submitted at the time of import, they are liable to pay duty a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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