Customs, Excise and Gold Tribunal - Mumbai
Shabnam Synthetics And Shri Rafiq ... vs Commissioner Of Central Excise And ... on 11 May, 2006
ORDER Archana Wadhwa, Member (J)
1. The appellant is a 100% EOU engaged in the manufacture of Texturised/Crimped Yarn & Knitted grey fabrics. Their factory (Unit No. 3) was visited by the Central Excise (P) Officers on 24.6.03 stock of 20325.000 Kgs of imported Polyester Oriented Yarn (POY), in excess of the stock record in statutory records was found lying in Unit No. 3. Shri Rafiq Ibrahim Memon deposed that the said goods were purchased by him at the rate of Rs. 61 per kg. totally valued at Rs. 12,39,825/-, (Rupees twelve lakhs thirty nine thousand eight hundred twenty five only) through brokers, on cash basis, without any duty paying documents etc. The said goods were seized on the reasonable belief that the same were smuggled. Statement of Shri Memon were recorded wherein he admitted certain shortages of the final product in Unit No.1 and clarifying that the same were sold through brokers in the open market on cash basis without making entry in statutory records and without payment of Central Excise duty leviable thereon. As regards, the excess quantity of POY, he reiterated the stand of having bought the same from the open market. In his subsequent statement recorded on 10.12.2002, he again admitted the above facts.
2. On the above basis show cause notice dt. 22.12.2003 was issued to the appellant alleging smuggled nature of 20325.00 Kgs. of imported POY, proposing confiscation of the same and demanding duty of Rs. 11,67,484/- (Rupees eleven lakhs sixty seven thousand four hundred eighty four only) in respect of the said yarn under the provisions of Section 28(1) of the Customs Act 1962. Notice also proposed imposition of penalty upon the appellant under the provisions of Section 112(b) read with Section 114A of the Customs Act, 1962.
3. During the course of adjudication appellant denied all the charges and submitted that their being a 100% EOU, there could be no motive for them to purchase the non duty paid goods from the market inasmuch as, they were entitled to import POY without payment of duty. They further clarified that on the same day their unit No. 2 was also searched by the officers and shortage of around 28028 Kgs. of imported POY was recorded. They submitted that the said excess goods found in Unit No. 3 are in fact goods noticed as short goods in Unit No. 2. The same were covered by Bills of Entries and in fact by mistake the newly appointed Supervisor, instead of taking the delivery of the goods in Unit No. 2, took the delivery in Unit No. 3. As such, it was their prime contention that the goods found in excess in Unit No. 2 were, in fact, goods found short in their Unit No. 2 and duly covered by three bills of entry for the said purposes. They also produced on record the said bills of entry, packing list of the supplier and their invoice etc. As regards, the confessional statement, they submitted that the same should be treated as a lightweight document requiring independent corroboration, and inasmuch as, there is no other evidence on record to show the smuggle nature of the goods in question, they should be released. In any case the appellants have discharged their onus to show that the said imported POY was brought to India under the cover of three bills of entries.
4. The said contentions were not found favour with by the adjudicating authority, who confiscated the same with an option to the appellant to redeem the goods on payment of redemption fine of Rs. 2.50 lakhs (Rupees two lakhs fifty thousand only) and on payment of appropriate Customs duties Rs. 11,67,848/-. He also confirmed the said amount of duty against the appellant on the confiscated goods under the provisions of Section 28(2) of the Customs Act, along with confirmation of interest. Penalty of Rs. 11,68,000/- (Rupees eleven lakhs sixty eight thousand only) was imposed upon M/s. Shabnam Synthetics along with imposition of personal penalty of Rs. 50,000/- (Rupees fifty thousand only) under Section 112 of the Customs Act, 1962. The said order is impugned before us.
5. We have heard Shri Mayur Shroff the Ld. Advocate and Shri P.K. Katiyar the Ld. SDR. Drawing our attention to the bills of entries appearing at pages 94 to 96 of the Paper Book, Shri Mayur Shorff has contended that the goods covered Under the said Bill of Entry are of the same country of origin, same linear and same denier. As such, it is clearly that the goods are covered by the bills of entry in question. The appellant had explained that the goods which were meant for delivery in Unit No. 2 were actually delivered to Unit No. 3 on account of the newly appointed supervisor's in experience and that is how there is a shortage of the same goods in Unit No. 2 and excess in Unit No. 3. Drawing our attention to the statement of Shri Rafiqbhai Memon he submits that it is recorded therein that imported raw material was bought at Rs. 61/- Per Kg. and the final products were sold at Rs. 47/- Per Kg. in the open market, he submits that a reasonable prudent businessman would not sell the goods at rate lower than the brought out rate. This fact is sufficient enough not to inspire confidence in the correctness of the statements.
6. After considering the submissions made by both the sides, we find that the entire case of the Revenue is based upon the excess found POY in the appellants Unit No. 3. Admittedly, appellant is a 100% EOU and are entitled for duty free imported POY in terms of Notification No. 53/97-Cus. In such a scenario, the motive on the part of the appellant to buy the goods from the open market gets clouded. On me other hand, we find that shortage to almost identical extent was detected in Unit No. 2. The appellants have strongly contended that if such shortages and excess are naturalized, there would not be much difference. Unit No. 2 and Unit No. 3 which belong to the same appellant. We find that there can be a chance of wrong delivery of goods imported by Unit No. 2 at unit No. 3 and the said plea cannot be rejected at the outset itself. The Bills of Entries along with packing list have been produced before us and it has been contended that the detailed description of the goods as given in the said bills of entries fully tally with the description of the goods under seizure, in which case the appellant's contention is liable to be accepted. As such, we would like the Commissioner to consider the said bills of entries and to compare the Same with the goods under seizure and to re-decide the matter thereafter. If the goods tally to the full extent, the said contention of the appellant cannot be discarded as an after thought. It is well settled that documentary evidence are to be given preferences over the initial statements and if such documentary evidence produced by the appellant covered the goods in question, they cannot be thrown out as lightweight evidence.
7. We also find force in the appellants contention that the adjudicating authority having accepted their stand that the said POY was purchased by them from the open market and they themselves were not the importer of the goods, he cannot demand duty under the provisions of Section 28(2) of the Customs Act, 1962.
8. For all the above reasons, we set aside the impugned order and remand the matter to the original adjudicating authority for de novo decision in the sight of the observations made by us in the proceedings paragraphs. The question of imposition of penalty is left open. Both the appeals are disposed of in above terms.
(Pronounced in Court on 11/05/2006)