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TMI Blog2024 (9) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... (1685). ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1. Heard learned advocate Mr. Sudhanshu Bissa with learned advocate Mr. Paresh M. Dave for the appellant and learned advocate Mr. C.B. Gupta for the respondent no. 1. 2. This Tax Appeal is filed under Section 130 of the Customs Act, 1962 arising out of the order dated 18.10.2006 passed by the Custom Excise and Service Tax Tribunal Ahmedabad (for short CESTAT ) in Appeal no. C/377 of 2002. This Court by order 07.09.2007 Admitted the Appeal on the following questions: Whether the order of the Appellate Tribunal demanding Customs duties from the appellant on yarns seized from Jay Krishna Sizers and Carewell Rayons Pvt. Ltd. and imposing penalty on the appellant is correct and legal in the facts of this case? 3. The brief facts giving rise to this appeal are that appellant is a 100% expert oriented undertaking (for short EOU ) was engaged in business of manufacturing twisted yarns and polyester filament yarns (hereinafter referred to as PFY ). 3.1. The appellant was allowed to import PFY free of duty being 100% EOU for utilizing such inputs in or in relation to the manufacture of permitted goods meant for exports. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -noticees. The appellant being aggrieved along with the Director preferred an appeal before the CESTAT. The CESTAT after considering the facts of the case as well as findings arrived at by the Adjudicating Authority upheld the same by observing as under: We have heard both sides. The perusal of the records shows that the 100% EOU imported PFY without payment of duty. They were, therefore, required to maintain proper accounts for receipt, issue and consumption of the same in their factory. Evidence on record shows that they clandestinely removed the goods received by them duty free under Notification No. 59/98 for manufacture of export goods by diverting the same in connivance with the brokers and their buyers and obtained sale proceeds in cash. Such diversion clearly amounts to violation of the provisions of the Notification. Therefore, duty not paid at the time of imports becomes recoverable from them. The appellants have not been able to rebut the charge and finding of diversion which is clearly based upon statement of the Director of the 100% EOU. The only argument raised before us that the 100% EOU was not the importer and therefore, could not be held liable to duty, and that d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed upon the appellant. 4.2. Learned advocate Mr. Sudhanshu Bissa for the appellant further submitted that in the statement of the Director of the appellant, it is not stated that the appellant imported the PFY which was found from the premises of M/s. Jay Krishna Sizers and M/s. Carewell Rayons Pvt. Ltd. Learned advocate invited the attention of the Court to the relevant observations of the Adjudicating Authority in the order-in-original to submit that the Director of the appellant only stated that the goods imported i.e. PFY was clandestinely removed by the group of companies of the appellant and not by the appellant company and therefore, in absence of any evidence to show that the goods in questions were imported by the appellant, no duty and penalty could have been fastened upon the appellant. 4.3. It was further submitted that the appellant was never given an option to redeem the goods which were seized from M/s. Jay Krishna Sizers and M/s. Carewell Rayons Pvt. Ltd. and the Tribunal has therefore, committed an error by observing that the option to redeem the goods was given to the appellant. It was therefore submitted that on both the counts, the order-in-original and the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the owner, opts to redeem it under Section 25, there is an obligation to pay the duty and fine imposed. 10. In the present case, the redemption fine was imposed at Rs. 6,00,000/- and short levy of duty was collected at Rs. 17,92,847/- The subsequent bona fide purchaser may not have any liability to duty. However, by confiscation, the State gets the authority to recover the entire market value of the goods, which would definitely be more than the duty, if redemption is not made then the person from whose possession the goods are seized merely loses the property in goods and there could be no further levy of duty on the bona fide purchaser. The Department, despite such confiscation could proceed for recovery of duty too, but only from the importer. 5. On the other hand learned advocate Mr. C.B. Gupta supported the impugned orders passed by the Adjudicating Authority and the Tribunal. 6. Having heard the learned advocates for the respective parties and considering the concurrent findings of the fact recorded by the Adjudicating Authority as well as the Tribunal, it is not in dispute that the appellant company, which is part of the concerned group of company was involved in clandesti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... records before me as to how much and why there was difference in the stock of the goods under seizure. On the contrary, the panchanama drawn at factory of the noticee unit merely narrates that the records were not available. Though the SCN speaks about variation in the stock but there are no details and reasons as to why the physical stock was not tallying. It is otherwise mentioned in para 7 of SCN that the records considered relevant to the investigation were seized under panchanama dated 30.11.99. This fact clearly shows that the unit maintained their statutory records, but it was kept in their office premises. 48. As regards proposal for confiscation of 1800 kgs of FDY valued at Rs. 1,53,000/- under Section 111 (J) of Customs Act, 1962 and/or erstwhile Rule 209(d) of Central Excise Rules, 1944, 1 note from the panchanama dated 30.11.99 that the same is typed one. Further the officers who visited M/s Jay Krishna Sizers, GIDC, Sachin on 30.11.99 itself and searched the premises of the said unit, recovered certain documents. The officers also found imported yarn manufactured by M/s Hualon for which Shri D.L. Boghra partner could not produce any valid purchase documents. The office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of M/s Carewell Rayons Pvt. Ltd. had very categorically admitted that the said PFY was imported one and illicitly received/ purchased without any valid document and without payment of customs duty. Accordingly, their retraction during the proceedings is nothing but an after thought just to save themselves from the consequences which may result into confiscation of the goods and imposition of penalty. Accordingly I do not accept that plea and hold that the imported PFY weighing 4824 kgs valued at Rs. 4,10,040/ was liable to confiscation under Section 111 (J) of Customs Act, 1962. As the goods were released provisionally on execution of bond with Bank Guarantee of Rs.1,02,510/- and are not available for actual confiscation, an order for appropriation of adequate amount will be passed. 53. As discussed above the PFY seized from M/s Jay Krishna Sizers and M/s Carewell Rayons Pvt. Ltd. was imported PFY removed by M/s Kansal Texo Tube Pvt. Ltd. clandestinely without obtaining any permission from proper authority of Development Commissioner and/or from the Central Excise department and without payment of customs duty due thereon. Since M/s Kansal Texo Tube Pvt.Ltd were 100% EOU working ..... X X X X Extracts X X X X X X X X Extracts X X X X
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