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TMI Blog2022 (7) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... DELHI HIGH COURT] . Appellant respectfully relies on the judgement of Hon ble Supreme Court in the matter of OUDH SUGAR MILLS LTD. VERSUS UNION OF INDIA [ 1962 (3) TMI 75 - SUPREME COURT] , holding that duty demand cannot be based on inferences involving unwarranted assumptions. In terms of the law propounded by Hon ble Supreme court in the case of Canon India Pvt. Ltd., only the officer who was authorized to assess the goods cleared from SEZ, during the relevant period or his successor in the same post can issue demand of additional / differential customs duty which escaped levy for any reason, under section 28 of the Customs Act 1962, and no other officer can issue Show cause notice. Thus, the SCN is wholly without jurisdiction. The goods under dispute are not the specified goods under Section 123 of the Customs Act. In such facts and circumstances, when admittedly it is a case of town seizure, the onus lies on Revenue to prove that the goods/ pipes lying in the premises of this appellant have been received by him in a clandestine manner from SEZ unit, on which Custom duty have not been paid. The General Rule is that the goods which are available in the open market, are pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakhs. 2. Brief facts of the case are that M/s New Tech Pipe Limited (NTPL in short) is a SEZ unit, Pithampur engaged in manufacture of M.S. Pipes. On the basis of intelligence that the said NTPL was engaged in evasion of duty by resorting to clandestine removal of finished goods, simultaneous searches were carried out by the Officer of DGCEI at eight places as follows:- i) Factory of M/s New Tech Pipe Ltd., situated at F-21, 22, 23 SEZ, Pithampur. ii) Factory premises of M/s New Tech Abrasive Ltd., situated at F-59, 60, 61, SEZ, Pithampur. iii) Office of M/s Swastik Udyog Ltd., and residence of Sh. Hemant Sharma, Director at 84, Siddhipuram, Indore. iv) Residence premises of Sh. Dinesh Sharma, Director, 2, Mahaveer Nagar, Dewas. v) M/s Vipul Trading Co. 38, Kothi Road, Dewas. vi) M/s Srikrishna Food Beverages Ltd., E-99, Industrial Area, Dewas vii) Residential premises of Sh. Ganpat, Machine Operator of M/s NTPL, 11, Kaanch Building, Jeevan Vihar colony, Pithampur. viii) Business premises of M/s Fakhri Steel Iron, Indore 3. During the search some incriminating documents were recovered. In the search at the residential premises of Sh. Ganpat, Mach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andestine manufacture and clearance thereof without payment of customs duty. 6. Enquiry made with the respective supplier (as per records of M/s NTPL) also confirmed the supplies as detailed in the records of M/s NTPL. In his statements dated 06.04.2010 recorded during investigation, Sh. Dinesh Sharma, Director of M/s NTPL also admitted that they had received 7005.519 MT of raw materials (CR/HR Strips/ CRCA) in the unit and the total production during period March, 2009 to October, 2009 was 7284.11 MT. 7. M/s NTPL have procured term loan and cash credit limit from State Bank of India and therefore they were required to file periodical stork statement of their transactions to the bank authorities. As per these statements during period March, 2009 to Oct. 2009, M/s NTPL had received total raw material of 7157.238 MT valued at Rs. 22,03,66,150/-. The total pipes manufactured was CR Pipe 3081.64 MT valued Rs. 11,75,00,595+H.R. Pipe 3764.64 MT valued Rs. 13,01,90,349/- and clearances were CR Pipe 2698.13 MT valued Rs. 10,69,40,603/- H.R. Pipe 3415.97 MT valued Rs. 12,17,01,904/- 8. As per information received from the Appraiser, during period 27.03.2009 to 23.11.2009 M/s NTPL h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Fakhri Steel Iron were receiving pipes from NTPL on which no custom duty was discharged. In the course of search in the premises of M/s Fakhri Steel Iron on 23.11.2009, 1,46,723 kgs. of pipes valued at Rs. 50,62,013/- were found stored in their premises. It appeared to Revenue that these were cleared to them by M/s NTPL both under invoice on payment of customs duty and also without invoice being without payment of duty. Under the belief that the goods/ pipes found in the premises of the appellant are liable to confiscation and same were detained by the officers under panchnama dated 23.11.2009 and were subsequently placed under seizure vide panchnama dated 15.12.2009. A separate show cause notice was issued with regard to the seized goods of M/s Fakhri Steel Iron being show cause notice No. IV(6)INV/RUI/09-15591 dt. 19.05.2010. 13. Based on the aforementioned facts and circumstances, Revenue issued show cause notice dated 07.08.2013 to M/s NTPL, its directors and others, including this appellant, alleging inter alia that M/s NTPL, a SEZ unit was engaged in clandestine clearance of part of their production and accordingly duty was demanded from them and penalty was prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant. Further, Sh. Abbas Ali, the authorised representative of the appellant has clearly deposed on 23.04.2010 under Section 108 that the goods might have come to their premises as they were placing orders to the agents, who in turn purchased goods from the manufacturers. (c) That Sh. Dhanram Chadokar, Director of M/s Chamunda Iron Steel Pvt. Ltd., in his voluntary statement dt. 30.04.2010 has deposed that the invoices of clandestine removal was issued in their name but the goods were actually sent to M/s Fakhri Steel Iron. (d) That during search in the appellant s premises certain incriminating documents like handwritten kachhi diaries were recovered, which appeared showing the details of sale of goods by the appellants without raising bills. Opportunities were given to the appellants to explain the same, however, they did not submit any information in this regard. (e) As per the amended Section 28 of the Customs Act, 1962 show cause notices issued prior to 06.07.2011 by officers of Customs, which would include officers of Commissionerates of Directorate General of Central Excise Intelligence and similarly placed officers stand validated since these officers are r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teel Iron is concerned penalty of Rs. 20 lakhs have been imposed under Section 112(ii) of the Act. Penalty was also imposed on other co-noticee under Section 114(ii) and 114AA of the Act. 20. Being aggrieved, this appellant is in appeal before this Tribunal inter alia on the following grounds:- A. learned Commissioner has erred in relying on the statements of Dinesh Sharma Director of NTPL, Nikhil Tiwari and Vikas Atre, and some transporters, recorded at the back of the Appellant, to support the allegation that the appellant aided and abetted in clandestine removal of goods from the factory of NTPL, without first examining and giving opportunity to cross examine these witnesses. This is contrary to the provisions contained under section 138B of the Customs Act1962 (which is pari pasu of Section 9D of CEA 1944) and the law is settled through various judgements of higher judiciary. Appellant respectfully relies on the following case laws ;- I) 2002(143) ELT 25(SC) Arya Abhushan Bhandar vs Union of India II) 2016(340) ELT 67(P H)- Jindal Drugs Pvt Ltd versus Union of India III) 2016(334) ELT 302(Guj) Manek Chemicals Pvt Ltd versus Union of India B. Because learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase and sales invoices. The order in original passed by Ld Commissioner, without giving any finding for rejecting the cogent evidence, being sub- silentio is liable to be set aside. 22. Section 124 of the Customs Act stipulates that No order Confiscating any goods or imposing any penalty on any person shall be made under this chapter, unless the owner of the goods or such person is given a notice in writing with the prior approval of the officer not below the rank of Assistant Commissioner, informing him of the grounds on which it is proposed to confiscate the goods or to impose penalty. Appellant having purchased the goods using in stock, stored in his shop premises at the time of search, being the lawful owner ought to have been served a notice asking him to explain as to why the goods should not be confiscated. However the department without comparing the stock in trade as per his books of account at the time of seizure, and without serving him any notice proposing confiscation of the goods, has subsequently confiscated the goods, which in respectful submission of the appellant is liable to be set aside as being contrary to the provisions of section 124 of the customs A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10.2009, and 28.10.2009 the consignments transported by his vehicle are cleared on payment of duty (COPOD), same truck on dated 24.09.2009, though mentioned in the bilty of Sai transport, but the clearances are on payment of duty. Therefore the allegation that in this vehicle the goods were sent by NTPL to appellant without payment of duty are unsubstantiated and contrary to facts on record. The order passed relying on the wrong facts is liable to be rejected. 26. Similarly it is mentioned in para 9.1.1 of SCN, that one Sh. Govind Mittal said to be the owner of vehicle No. MP09K C -5170 in his statement dated 19.02.2010 allegedly stated that he transported steel pipes from NTPL to Fakhri Steel on 01.05.2009, 06.05.2009 and 09.06.2009, and at the time of transportation no document except bilty was given to him. However, the chart under para 8 of the SCN, compiled on the basis of the data of duty paid clearances from SEZ, and entries in outward register recovered during search at NTPL shows that on 01.05.2009 as well as on 09.06.2009 the same vehicle transported goods which were cleared on payment of duty (COPOD). When as per the relied upon record, the goods are duty paid, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by Hon ble Supreme court in the case of Canon India Pvt. Ltd., only the officer who was authorized to assess the goods cleared from SEZ, during the relevant period or his successor in the same post can issue demand of additional / differential customs duty which escaped levy for any reason, under section 28 of the Customs Act 1962, and no other officer can issue Show cause notice. Thus, the SCN is wholly without jurisdiction. 30. Hon ble Delhi High Court in the W. P. (CRL) 821/2021CRL MISC 5945/2021of Gopal Gupta Vs. Principal Additional Director General, DRI, issued notice to the Department and stayed proceedings initiated vide SCN dated 26.09.2019 in view of the petitioners challenge to the authority of DRI officers under section 104, 100/102,105,110 and 124 of the Customs Act 1962, following the judicial precedent of the verdict of Hon ble Supreme Court in the matter of M/s Canon India Pvt. Limited. Accordingly, he prays for allowing the appeal with consequential relief. 31. Having considered the rival contentions, I find that the goods under dispute are not the specified goods under Section 123 of the Customs Act. In such facts and circumstances, when admittedly it is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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