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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 ..... Notification No.21/2002- Cus dated 01st March, 2002 on imports of Polyester lining material through Kolkata Port worth Rs.11,54,806/- but had diverted the same to the local market instead of using the same for manufacture of export garments. (b) The officers of D.R.I, Jaipur searched the office-cum-factory premises of the appellant, PalliwalonKaBagh, Sanganer, Jaipur under Panchanama dated 25th June, 2003, which revealed that a consignment of Polyester lining material had been imported through the Kolkata Port in 2003. (c) The D.R.I. recorded the statement of one Kunj Bihari, one of the five partners of the Appellant firm on 25th June, 2003 under Section 108 of the Customs Act. In the said statement, Mr. Bihari stated that the appellant had obtained an import certificate No.028000011 dated 12th March, 2003 from the Apparel Export Promotion Council (in short 'A.P.E.C.') for duty free import of lining material. The appellant had then imported the lining material that is the subject-matter of these proceedings via the Kolkata Port, which was then transported to the appellant's factory, after Customs clearance, in two trucks, bearing Nos. HR 38E 2545 and HR 38P 2525, by M/s. Shree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said carrier was being managed by one Vishnu Shankar Pandey and Inder Shankar Pandey, who were the brothers of Uday Shankar Pandey, and who claimed in their voluntary statement recorded u/s. 108 on 16th July, 2022 that they were not aware of the transport of the imported goods. It was also found that Mr. I.P. Pandey was also the proprietor of M/s. Geetanjali Transport and Mr. V.P. Pandey was also the proprietor of M/s. Shree Balaji Cargo Movers. (i) Mr. Uday Shankar Pandey of M/s. Vishnu Freight sent a letter dated 24th November, 2003 to the D.R.I., stating that the imported goods were taken from Delhi to Jaipur in two trucks, bearing Nos.HR 38C 6024 and HR 51G A1619, of M/s. Sunny Transport. Mr. U.S. Pandey also submitted G.R. Nos.3533 and 3534, both dated 25th April, 2003 of M/s. Sunny Transport which bore the rubber stamp of the Rajasthan Commercial Tax Dept. evidencing entry of the said two trucks through the Shahjahanpur check post. Mr. U.S. Pandey claimed in the said letter that Rs.39,320/- was collected by M/s. Sunny Transport from the appellant and that Rs.33,320/- was remitted to Vishnu Freight after deducting freight of Rs.6,000/-. (j) In his statement recorded un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Marg, PalliwalonkaBagh, Sanganer, Jaipur.And since the factory being searched on 25th March, 2003 was situated in Palliwal Garden, Sanganer, Jaipur, which had no lining leftover, he had insisted that there was no lining lying in his factory. (n) The D.R.I. sought to verify the L.R.s. of M/s. Sunny Transportto ascertain whether the goods were actually transported to Jaipur from Delhi in the two trucks, bearing Nos.HR 38C 6024 and HR 51G A1619, and whether the said trucks had actually crossed the check post at Shahjahanpur. (o) The Commercial Tax Officer, Shahjahanpur vide letter dated 11th March, 2004 to the D.R.I. certified that the said two trucks that were claimed to have transported the imported material from Delhi to Jaipur had not been found to be entered in the records maintained at the check post at Shahjahanpur. (p) The Commercial Tax Headquarters, Jaipur, the nodal authority in respect of computer data inputs also stated to the D.R.I. vide its letter dated 09th March, 2004 that the said two trucks that were claimed to have transported the imported material from Delhi to Jaipur had not been found to be entered in the records maintained at the check post. (q) From ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the respondent as to why, in essence, the appellant should not be held liable for confiscation u/s. 111 (d) and (o) or for payment of fine u/s. 125, and/or why penalty should not be imposed on the appellant u/ss. 112(a) and 114 of the Customs Act. 3. The Appellant replied to the said show-cause notice by a reply dated 21st March, 2005 (as also revealed from their written notes of arguments dated 01st June, 2005) before the respondent, which, so far as relevant, was as follows:- (a) The appellant had been registered member of the A.P.E.C. with a factory at 4-5, Shiv Bihar Colony, PalliwalonKaBagh, Sanganer, Jaipur. (b) The imported goods were cleared after filing bill of entry No.101831 dated 04th March, 2003 on 04th March, 2003 at the Kolkata Port under notification No.21/2002-Cus dated 01st March, 2002. By a letter dated 14th April, 2003, the clearing agent of the Appellant was instructed to dispatch the full consignment through M/s. Shree Vishnu to the address of the appellant. A copy of the said letter was also given to Shree Vishnu. (c) M/s. Shree Vishnu dispatched the imported material via two trucks, bearing Nos. HR 38E 2545 and HR 38P 2525, under consignment note No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ituated near Palliwal Garden, Sanganer, Jaipur, where the lining material was not in stock since it was kept in the other factory. Mr. Bihari protested and stated that he had not been allowed to state the correct facts on 16th March, 2004. (g) The Appellant asserted that the entire investigation had been conducted in a haphazard manner and was based on the allegation that the imported material never reached the Appellant. However, there was no evidence to support this allegation and no evidence to support diversion of material to the local market. In contrast, the case of the appellant divulged through the comprehensive documentation of the transporters left no doubt of the delivery of goods on 26th April, 2003 to the factory of the Appellant in Jaipur. The D.R.I. had failed to verify the fact that the stock of the imported material was still lying with the Appellant in their factory despite various communications informing them of the same. (h) The appellant submitted a chart of the utilization of the imported material between 26th April, 2003 and 27th January, 2005 along with export invoices and shipping bills. (i) The statement of Mr. Bihari of 26th June, 2003 was a weak p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial shown to be consumed is much greater than the weight of the exported goods. This was found to be impossible since the weight of the exported goods would increase due to added buttons, tags, basic fabric, etc. The respondent found from the said chart 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. The respondent stated that this was not possible for the same reason. Hence, the respondent held that this utilization chart was unreliable. 8. The respondent, therefore, held that there was diversion of the imported material to the local market after claiming exemption on Customs Duty in respect of the same. The respondent stated that there was a cover-up of this fact using fabricated documents and that the appellant had misled D.R.I. Hence, verification of the stock was not necessary. The factum of the second factory not being disclosed to the D.R.I. was itself another sure indicator of fraud by the appellant to cover-up the evasion of Customs Duty. The respondent held that the suppression and willful misstatements of the appellant meant that the invocation of the proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trength of the A.P.E.C. certificated dated 25th August, 1999. (c) The office address of the Appellant is at BoharonKaMohalla, Sanganer, Jaipur whereas the factory address is 4-5, Shiv Vihar Colony, Palliwalon Ka Bagh, Sanganer. The A.E.P.C. certificate contains both addresses. The former address is the correspondence address of the appellant. The factory address was never suppressed. In the letter of the appellant dated 28th July, 2003, the factory address was disclosed and the stocks of the imported material were stated to be lying there. The material seized by the D.R.I. contains both addresses. (d) The D.R.I. never visited the factory. The respondent's holding that they did not need to do so was wrong, since the Panchanama dated 25th June, 2003 shows that the factory of the appellant at Palliwal Garden, Sanganer was visited. The authorities were fully aware of the factory. (e) In any event, presence of undisclosed factory does not justify the finding that the imported goods were diverted to Delhi. The Commissioner holding as such and stating that the stock position was manipulated is perverse, arbitrary and unfounded. (f) The contention that no trucks passed throug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of lining material in finished garments. But no such drawal of samples was carried out here by the Appraising Officer or Commissioner at the time of the export of the finished goods by the Appellant. There was no allegation regarding the weight of the material in the show-cause notice. No opportunity was afforded to the Appellant to make submissions in this regard or to respond to the comments of the D.R.I. claiming that the utilization chart was hypothetical. The respondent has lifted his findings in this regard directly from the submissions of the D.R.I. and has travelled outside the scope of the show-cause notice. (k)The allegation of diversion of goods is a serious one, it cannot be based on presumptions and mere assumptions. Reliance was placed on judgments reported in (2014) 309 E.L.T. 411 (All.) at paragraph 12 and (2019) 367 E.L.T. 916 (Mad.) at paragraph 10. (l) Statements and documents obtained from witnesses including the statements of Mr. Bihari dated 25th June, 2003, of Mr. U.S. Pandey, proprietor of Shree Vishnu Freight, dated 1st July and 23rd July, 2003, of Sukhdev Singh, proprietor of New Faridabad Road Lines, dated 02nd September, 2003 would firmly indicate tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Discussion and Findings 11. Having heard the parties and having perused the record, the following issues fall for consideration and decision: I. Whether there was an inordinate delay in completion of proceedings by the respondent and the passing of the impugned order. II. Whether there actually was a transshipment of the imported material to the Appellant's factory in Jaipur. III. Whether the Appellant had received the imported material and utilized the same for manufacturing export goods. Alternatively, whether there was diversion of the imported goods. IV. Whether the Appellant had disclosed the second factory to the D.R.I. where it claimed to have received the imported material and whether the A.P.E.C. registration certificate in respect of the second factory was issued after the initiation of the investigation by the D.R.I. V. Whether the impugned order deserves to be set aside. Issue I 12. In regards the first issue, it is found that show-cause notice was issued on 09th November, 2004 and the reply was submitted on 21st March, 2005. Five personal hearings were conducted on 01st June, 2005, 17th October, 2006, 03rd December, 2014, 11th October, 2017 and 09th May, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no transshipment of the imported material from Delhi to Jaipur. 15. On the other hand, as contended by the Appellant and as borne out by the record, a certificate was issued by the said Addl. Commr. on 29th January, 2005 which verified the fact that two trucks, bearing Nos. HR 38C 6024 and HR 51 GA 1619, under G.R. Nos.3533 and 3543 dated 25th April, 2003, had crossed the Shahjahanpur check post on 29th April, 2003. Thus, there is satisfactory proof of the goods being transshipped. Moreover, other documentary proof submitted by U.S. Pandey, the proprietor of M/s. Vishnu Freight, under the cover of his letter dated 24th November, 2003 to the D.R.I. which includes G.R. Nos.3533 and 3543 both dated 25th April, 2003 which has been rubber stamped by the C.T.D., Rajasthan also evidences the transportation of the goods to Jaipur. Furthermore, under the cover of the same letter, U.S. Pandey had submitted receipts in respect of the goods issued by the Appellant; the Appellant also produced the cash vouchers dated 26thApril, 2003 confirming payment to the transporters before the respondent on 1st June, 2005 and 17th October, 2006. The Department has not been able to advance any counter to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ports have been carried out here without any objection whatsoever by the Appraising Officer or the Commr. of Customs. 19. The allegation that goods were diverted and did not reach the factory of the appellant is simply not made out here. There is no evidence whatsoever positively indicating diversion of the imported goods to Delhi. There is no evidence of where these allegedly diverted goods were sold locally. On the contrary, it is a finding of this tribunal that goods did arrive at the factory of the appellant and were utilized by him. The certificate issued by the Addl. Commr. dated 27th January, 2005 would indicate firmly that goods were transshipped to Jaipur and received at the factory of the appellant and so would the vouchers dated 26th April, 2003 when combined with all other evidence referred to in paragraph 16 herein. 20. In view of all these, there are mere assumptions and presumptions based on little to no evidence to buttress the allegation that the goods were diverted. This is simply not enough for the Tribunal to hold as such, following the decision of the Allahabad High Court in Continental Cement Co. v. U.o.I., (2014) 309 E.L.T. 411 at paragraph 12 and Honeywell ..... X X X X Extracts X X X X X X X X Extracts X X X X
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