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TMI Blog2022 (8) TMI 337X X X X Extracts X X X X X X X X Extracts X X X X ..... MPANY LIMITED VERSUS DEPUTY COMMISSIONER OF CGST CX, DIV-IX, MUMBAI CENTRAL GST COMMISSIONER [ 2022 (2) TMI 783 - BOMBAY HIGH COURT] to be violative of natural justice. Further, the Gujarat High Court in SUNRISE REMEDIES PVT. LTD. VERSUS UNION OF INDIA [ 2019 (8) TMI 1397 - GUJARAT HIGH COURT] has remarked at paragraph 6 that proceedings cannot be a hanging sword on an assessee without justifiable cause. If proceedings do not culminate within a reasonable period of time then they stand vitiated. Thus, the delay of over a decade here, especially when genuine efforts have been made by the Appellant to participate in them, truly violates the Appellant s right to natural justice and vitiates the entire proceeding. Whether there actually was a transshipment of the imported material to the Appellant s factory in Jaipur? - HELD THAT:- The Department has not been able to advance any counter to the implications of thesedocuments except the refrain of these documents being fake and forged. The respondent has not dealt with these documents at all. Finally, the statements of U.S. Pandey, of Gurpreet Singh, the proprietor of M/s. Sunny Transport, which are to the effect that trucks, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 17th March, 2004. Hence, there was no attempt by the appellant to make the D.R.I. miss the wood for the trees and invent a new factory belatedly. In fact, material seized by the D.R.I. under the Panchanama dated 25th June, 2003 shows that the said factory at the said address was visited. Material seized on that date also contained both the office address and the factory address of the Appellant. Appeal allowed. - Customs Appeal No.78534 of 2018 - FINAL ORDER NO. 75438/2022 - Dated:- 5-8-2022 - SHRI P.K. CHOUDHARY, MEMBER (JUDICIAL) AND SHRI RAJU, MEMBER (TECHNICAL) Shri Arnab Chakraborty Shri Hasmukh Kundalia, both Advocates for the Appellant (s) Shri M.P.Toppo, Authorized Representative for the Respondent (s) ORDER 1. The instant appeal challenges Order-in-Original dated 29th June, 2018, being No.KOL/CUS/Commissioner/Port/53/2018, whereby the respondent has confirmed a demand of Customs Duty of Rs.52,98,495/- with interest thereon under Section 28(8) and 28AB of the Customs Act, 1962 upon the appellant. The respondent has also imposed a penalty of the self-same amount by virtue of the impugned order under Section 114A of the said Act on the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 108 of the Customs Act stated that he was instructed by one Mr. Sharma of the appellant firm, over the telephone, on the transportation of the imported lining material. Mr. Pandey submitted two consignment notes, bearing Nos. 1301 and 1302, both dated 19th April, 2003 along with two bills dated 09th May, 2003 as proof of transportation of the imported material. Mr. Pandey also stated that the goods were transported by two trucks, Nos. HR 38E 2545 and HR 38P 2525, and that he was yet to receive payment for them. (f) D.R.I. traced the owner and manager of the said two trucks, i.e., one Sukhdev Singh, who was the manager of M/s. New Faridabad Road Lines, Faridabad. Mr. Singh, in his statement recorded under Section 108 on 02nd September, 2003, stated that on 19th April, 2003, he offloaded the imported material under the consignment note Nos.1301 and 1302 at Delhi on the instructions of M/s. Vishnu Freight. Mr. Singh submitted photocopies of the bills and ledger register along with sales tax permits, which indicated the transport of the imported goods from Kolkata to Delhi. (g) Statement of one Sujit Chakraborthy, manager of M/s. S. Goutam was recorded under Section 108 on 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rting the goods from Delhi to Jaipur. (l) Further voluntary statements of Mr. Bihari of the appellant were recorded on 16th March, 2004. Mr. Bihari stated that his factory was located at A-4-5, Shiv Vihar Colony, Palliwal Garden, Sanganer, where the imported goods were transported to from Delhi by the said two trucks by Sunny Transportand received on 26th April, 2003. Mr. Bihari claimed that the freight of M/s. Vishnu Exports was paid in cash to the drivers of the said two trucks. When asked as to why in his earlier statement, Mr. Bihari had given different truck numbers and the name of M/s. Vishnu Freights as the transporter, Mr. Bihari replied that his initially thought that the transporter was M/s. Vishnu Freights until he later found out that it was not after perusing the records. Mr. Bihari claimed to have personally received the goods, paid the freight, and issued a receipt on 26th April, 2003. Mr. Bihari claimed that the appellant had a balance of 17,089.80 sq. yds. of lining material lying in their factory. When queried about his earlier claim of having nil lining material, Mr. Bihari claimed to have had no lining material on 25th June, 2003 in his offices and factory. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, Mr. Pandey did ask for payment of freight via letters dated 09th May, 2003 and 30th May, 2003 from the appellant. This would show that M/s. Sunny Transport never transported the goods from Delhi to Jaipur, and the other documents were a fabrication. (r) The consignment note Nos.1301 and 1302 existed only in theL.R.s of M/s. Vishnu Freight but not M/s. Sunny Transports. The appellant did not receive the consignee s copy of the G.R.s (when they should have received the same), but received an extra copy , and the receipt of the goods was shown on the driver s copy . The original of the G.R.s under which the goods were transported from Delhi to Jaipur, produced by the appellant, showed that freight was TO BE PAID , while the office copies of the same showed that the freight was PAID . (s) In light of all this evidence, it was clear that there was never any transportation of the imported material from Delhi. The appellant had, it was wholly apparent, diverted the Polyester lining imported by it to the local market in Delhi whilst claiming exemption on Customs Duty for the same for manufacturing of exported garments. The appellant had, inter alia, acted in contraventi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2003 to 17th July, 2003 was disclosed in regards the imported material was disclosed, which showed that 66,237.80 yds. of the same was lying stored at 4-5, Shiv Vihar Colony, Ganesh Marg, PalliwalonkaBagh, Jaipur. However, the D.R.I. did not seek to verify this at all. (e) In the second statement of Mr. Bihari recorded on 16 th March, 2004, i.e., after eight months, he stated that the Customs agent of the appellant dispatched the goods via consignment note Nos.1301 and 1302 dated 19th March, 2003, which were received on 26th April, 2003 by the appellant at Jaipur. The goods were carried by M/s. Sunny Transport under G.R. Nos.3533 and 3534 dated 25th April, 2003 by two trucks, bearing Nos.HR 38C 6024 and HR 51 GA 1619. Mr. Bihari claimed that he paid the freight charges as per the G.R.s of M/s. Shree Vishnu to the truck drivers in cash and also issued a receipt. The goods were used in the manufacture of readymade export garments and a balance of 17089.80 yds. was still stored with the appellant. (f) Mr. Bihari then sent a letter dated 17th March, 2004 to the D.R.I. clarifying that the stock of the imported Polyester lining material was lying at the factory of the appellant s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Boharonka Mohalla, Jaipur. In regards point (b), the D.R.I. claimed that the imported material was not basic raw material for the manufacture of the exported goods. It claimed that in 11 entries of the chart submitted by the Appellant, the total weight of the lining material shown to be consumed is much greater than the weight of the exported goods. It further claimed that in eight entries of the chart, the total weight of the lining material shown to be consumed is only just lower than the total weight of the exported goods, which is simply impossible. Hence, the D.R.I. asserted that this chart was forged and no lining material was received in Jaipur by the Appellant. 6. The respondent found that the A.E.P.C. registration certificate was issued on 17th March, 2004 based on information given on 23 rd February, 2004, i.e., after the initiation of investigation by the D.R.I. on 26th June, 2003. The respondent held that this was done to coverup the diversion of goods which were claimed to have been received at 4-5, Shiv Vihar Colony, Ganesh Marg, Palliwalon Ka Bagh, Sanganer, Jaipur. The respondent held that the existence of the said factory had not been disclosed in the statem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned order and the completion of proceedings. The Appellant has not contributed to delay and sent a letter dated 05th May, 2015 requesting expeditious disposal. This violates natural justice and vitiates the order. Reliance is placed on decisions reported in 2022 (2) T.M.I. 783 (Bom.), (2019) 366 E.L.T. 994 (Guj.), 2018 (8) G.S.T.L. 361 (Guj.), 2018 (13) G.S.T.L.J. 143, (2021) 376 E.L.T. 403 (Guj.), (2010) 254 E.L.T. 259 (Bom.), (2009) 246 E.L.T. 141 (Del.). (b) The A.E.P.C. certificate showing the address of 4-5, Shiv Vihar Colony, Palliwalon Ka Bagh, Sanganer issued on 17 th March, 2004 was merely issued afresh on that date. The original certificate dated 25th August, 1999 (found at page nos.99 and 99A of the Paper Book, Vol. 1) was issued much prior to the investigation and was renewed from time-to-time and issued afresh on 17th March, 2004. Sales Tax registration certificate dated 16th August, 1999 as well as factory licence dated 24th August, 1999 was issued in favour of the appellant with respect to the factory of the Appellant situated at 4-5, Shiv Vihar Colony, Palliwalon Ka Bagh, Sanganer (found at page nos.104 and 105 of the Paper Book, Vol. I). There was no cov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nslated copy of which was placed before the respondent (found at page no.74 of the Compilation of Precedents and Records dated 23rd March, 2002). However, the respondent has made no mention of that letter in the order. Cash vouchers dated 26th April, 2003 confirming payment to the transporters (found at page nos.456-458 of the Paper Book, Vol. I), which had been seized on 25th June, 2003, were placed before the respondent on 01st June, 2005 and 17th October, 2006 under the cover of the appellant s written notes of argument. But these vouchers found no consideration in the impugned order. (h) The respondent had failed to consider relevant records, thereby arriving at an erroneous finding that the goods were diverted to Delhi. There was also a violation of natural justice due to non-supply of the letter sent by the D.R.I. to the Addl. Commr. This made the impugned order illegal, invalid and bad ab initio. Reliance was placed on the decisions reported in 2009 (13) S.T.R. 225 (S.C.), (2021) 378 E.L.T. 193 (Tri.- Del.), (2021) 47 G.S.T.L. 20 (Bom.). (i) The respondent had failed to account for the wastage of lining material and damage to lining material in the manufacturing of exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viduals who actually transported the goods are found not to be culpable, then holding the Appellant responsible for the same is impossible. (n) There is absolutely no proof of the local sale of goods and nothing placed on record to indicate sales in Delhi, thus nullifying the entire story of the diversion of such goods. (o) With there being no diversion of goods and the proved usage of the same for manufacturing of goods, there has been no contravention of the notification dated 01st March, 2002. There is no basis for confiscation under Section 111(d) and (o) of the Customs Act. There is no case for recovery under Section 28(8) of the said Act and ground for recovery of interest under Section 28AB and/or for imposition of penalty under Section 114A. 10. The case of the Department, simply put, supports the findings and the impugned order of the Appellant. Counsel for the Department emphasizes the non-recovery of the imported material by the search on 25th June, 2003 and emphasizes the transport of the goods from Kolkata to Delhi by two trucks, bearing Nos.HR 38E 2545 and HR 38P 2525, with no subsequent transshipment to the factory of the Appellant in Jaipur. The contentions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing Manufacturing Co. Ltd. v. D.C., C.G.S.T. C.X., Mum., 2022 (2) TMI 783 at paragraph 9 to be violative of natural justice. Further, the Gujarat High Court in Sunrise Remedies Pvt. Ltd. v. U.o.I, (2019) 366 E.L.T. 994 (Guj.) has remarked at paragraph 6 that proceedings cannot be a hanging sword on an assessee without justifiable cause. If proceedings do not culminate within a reasonable period of time then they stand vitiated. Following these decisions, the answer to issue I should conclusively answer issue V and suffice for the admission of this appeal. The delay of over a decade here, especially when genuine efforts have been made by the Appellant to participate in them, truly violates the Appellant s right to natural justice and vitiates the entire proceeding. However, for the sake of completeness, the matter cannot, of course, be left there. Issue II 14. The Appellant would contend that the letter of the Additional Commissioner, C.T.D., Jaipur to the D.R.I. dated 09th March, 2004 which is purported by the Department to show that no trucks crossed the check point at Shajahanpur makes no reference to the truck Nos. The Tribunal is persuaded by this contention on a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufficient reason for this Tribunal to disbelieve the evidence of the said persons. Issue III 16. The discussion and conclusion arrived at in regards the previous issue should be a sufficient indicator of the finding of this Tribunal in regards this issue. The utilization chart submitted by the appellant before the respondent during the investigation and the chart submitted along with the letter of Mr. Bihari on 28th July, 2003, both of which show the closing stocks of the imported material in respect of various periods, has been deemed to be insufficient evidence on flimsy grounds. 17. Firstly, no opportunity was given to the Appellant to answer the allegation of the D.R.I. that the entries in the utilization chart had no bearing in reality. 18. Secondly, it is entirely likely and quite believable that the in the 11 entries of the chart submitted by the Appellant, the total weight of the lining material shown to be consumed is much greater than the weight of the exported goods. It is also far from shocking or unusual that in eight entries of the chart, the total weight of the lining material shown to be consumed is only just lower than the total weight of the exported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficate dated 09th April, 2001. The appellant got Customs exemption under the notification dated 01st March, 2002 on the strength of the A.P.E.C. certificated dated 25th August, 1999. Issue IV 22. It would seem that there should be no doubt that the substance of the charge against the appellant is a building without a plinth. But, of course, it is not an insignificant question as to whether the address of the appellant s factory where they claimed to have received the imported goods was suppressed or not. It is the view of this Tribunal that there was no suppression of this fact. First of all, the supposed original sin of the appellant s Mr. Bihari asserting that all of the stock of the imported material had been consumed in his statement dated 25th June, 2003 is insufficient to persuade us that the existence of the other factory was suppressed. In the Panchanama of 25th June, 2003, it is found that a search was carried out in and a sample was drawn from the factory of the appellant at Palliwal Garden Sanganer, Jaipur. Since the location of the factory is said to be PalliwalonkaBagh and not BoharonkaMohalla, Sanganer, viz. the office address of the appellant, it is clear t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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