9911796707
TMI Blog2003 (1) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... Leela Lace International Ltd. (hereinafter referred to as "LLIL", the second appellant), an Export Processing Zone Unit (hereinafter referred to as 'EPZ Unit') at Cochin. The Readymade garments in these three Shipping Bills were manufactured in the EPZ premises and removed from there and exported through Tuticorin Port. 3. A Show Cause Notice was issued alleging that : - (a) the export goods manufactured in any 100% EOU/ EPZ Units are not entitled to drawback under the provisions of Customs and Central Excise Drawback Rules, 1995. In the instant case, the goods exported by M/s. LSLL under 7 Shipping bills referred to above which were manufactured by 100% EOUs viz., M/s. Tropicate Textiles Ltd., Bangalore, and M/s. LLIL, Cochin an EPZ Unit, who had undertaken the jobwork for the DTA Unit viz., M/s. LSLL without obtaining permission from the Customs authorities for utilizing the spare capacity of 100% EOUs. (b) Therefore it appeared that M/s. LSLL have fraudulently claimed duty drawback to the tune of Rs. 3,72,947/- on the FOB value Rs. 23,28,105/- without mentioning the fact in the Shipping Bills to the effect that the export goods were manufactured in their 100% EOUs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e question of goods which were got fabricated in an EOU by a DTA Unit who owned and supplied the raw material, the following findings had been arrived at in Final Order No. F/2/2003, dated 2-1-2003 in M/s. LSLL own case : - "(i) 'Garments' falling under Chapter 61 or 62 of the tariff, are a commodity sui generis and for production thereof, the Raw Material Supplier is considered to be a manufacturer under the Central Excise Act, 1944 vide Rule 4(3) of the Central Excise Rules, 2002, which reads as under :- "Notwithstanding anything contained in sub-rule (1), every person who gets the goods, falling under Chapter 61 or 62 of the first Schedule to the Tariff Act, produced or manufactured on his account in jobwork, shall pay the duty leviable on such goods, at such time and in such manner as may be specified under these rules. Whether the payment of such duty be secured by bond or otherwise, as if such goods have been manufactured by such person." Law enacted as above, considering the special milieu and condition in the Ready-made Garment Market and Industry, accept the Raw Material Supplier as a manufacturer. Then, for the purpose of this case, there is no reason, not to consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's finding to upset that grant made as per this promise made to EOUs and others by the very Commissioner, Bangalore. (iii) Considering General Note No. 2(a) of Notfn. No. 67/98-Cus. (N.T.), dated 1-9-98 which reads as under : - "manufactured partly or wholly in a warehouse under Section 65 of the Customs Act, 1962 (52 of 1962)" and the Commissioner's findings thereon, it is found that Section 65 of the Customs Act, provides for manufacture of the goods in a warehouse licenced under Section 58 of the Customs Act, 1962. This section reads as under : - "65. Manufactured and other operations in relation to goods in a warehouse. - (1) With the sanction of the Assistant Collector of Customs and subject to such conditions and on payment of such fees, as may be prescribed, the owner of any warehoused goods may carry on any manufacturing process or other operations in the warehouse in relation to such goods."(Underlining supplied) The term 'warehoused goods' used in this Section 65 is defined under Section 2(44) of the Customs Act, as 'warehoused goods' means goods deposited in a warehouse. Goods deposited in a warehouse, are only such goods, which would be permitted under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any such counting of such exports of an EOU. The Readymade Garments, in this case, have been found to be understood as having been manufactured by M/s. LSLL and are owned and exported on a Drawback Shipping Bills allowed to be filed by the proper officer of Customs. They are not fabricated/manufactured in a warehouse under Section 65 as arrived at herein above, after considering the provisions of the said Section 65 of the Customs Act, 1962. In that view of the matter, the Readymade Garments in this case cannot be considered to be manufactured and/or exported by an EOU. Admittedly, after removal from the EOU on transshipment shipping bills, the proper officers have allowed M/s. LSLL to file the shipping bills as an exporter and drawback has been granted not on the transshipment shipping bills but on the substituted Drawback Shipping Bills permitted to be filed by M/s. LSLL. Therefore, these readymade garment exports are not found to be manufacture or an export by an EOU under the policy to be hit by the exclusion clause 2(c) of Notfn. No. 67/98. (v) When it is found that goods are not manufactured and/or exported by an EOU, but can be considered to be manufactured and are allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecords of the case that M/s. Leela Scottish Lace Ltd., Mumbai - DTA Unit have not mentioned that the "goods" are manufactured on jobwork basis by the 100% EOU/EPZs Unit while filing the above 7 drawback Shipping Bills. In view of the above fact, it is clearly established that M/s. Leela Scottish Lace Ltd., Mumbai have fraudulently claimed duty drawback to the extent of Rs. 3,27,497/- on the FOB value of Rs. 23,28,105/- without mentioning the fact in the Shipping Bills alongwith enclosures to the effect that the exported "goods" were manufactured in their 100% EOU and EPZ Unit at the time of filing the above Shipping Bills and have suppressed the facts from the Customs Department and thereby they have violated the provisions of sub-section (2) of Section 50 of the Customs Act, 1962 as they are required to subscribe a declaration as to the truth of the contents. Thus the "goods" exported under the above said 7 Shipping Bills are liable for confiscation under Section 113(i) of the Customs Act, 1962. In as much as the "goods" have already been allowed for export and not available physically, they are deemed to be liable for confiscation under Section 113(i) of the Customs Act, 1962 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uantity of the goods under export, the penal clause under Section 114(iii) as invoked and applied on the exporter and the other appellant viz., M/s. LLIL cannot be upheld. (d) The Commissioner has denied cross-examination, in finding arrived at in Para 74 of the Order, which reads as under : - "74. M/s. Leela Scottish Lace Ltd., have in their reply file to the Show Cause Notice requested for cross-examination of the deponents who had deposed that the seals had been tampered with at the directions of M/s. Leela Scottish Lace Ltd., Mumbai. The request of the noticee was not considered as copies of all the statements were provided to them. Further for recovering the drawback and for imposing penalty this is not the only ground and I have discussed in detail in the preceding paragraphs the reasons for recovering the drawback and for imposing the penalty. Further at the time of personal hearing no such request has been made by the Advocate." For denying cross-examination of the deponents, whose statements on tampering of seals has been relied upon, is not upheld on the ground that statements had been supplied. (e) As regards penalty on M/s. LSLL, the Commissioner has als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not liable for penalty as there is no contumacious or deliberate defiance of law on our part. The only allegation of the department against us is that we have failed to take necessary permission from the Customs Authorities before undertaking jobwork of conversion of ladies/gents garments belonging to M/s. LSLL. This allegation is not true and is not substantiated by any evidence. Infact we have obtained permission from the Jurisdictional Assistant Commissioner vide letter dated 8-9-99 granted us permission to undertake manufacture of readymade garments on jobwork basis within our bonded premises. In such circumstances, we submit that there is no warrant or justification in imposing penalty against us." There is no finding that such permission was not granted, as claimed, vide the letter dated 8-9-99 by the Assistant Commissioner. Therefore, Commissioner's order as not considering the reply of the LLIL and such orders cannot be upheld. 7. In view of our findings, the order of recovery of drawback with interest as paid erroneously cannot be upheld and or the penalties as imposed on the two appellants herein are held to be uncalled for. The entire order needs to be set aside an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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