Customs, Excise and Gold Tribunal - Mumbai
Bhavya Apparels P. Ltd., Harish Kumar ... vs Commissioner Of Customs And Central ... on 14 January, 2004
ORDER Moheb Ali M., Member (T)
1. The stay application for waiver of predeposit of duty and penalties and stay of recovery thereof arose out of the impugned order of the Commissioner. The appellant is a 100% EOU manufacturing garments. They imported Polyester Fabrics under Notification No. 53/97 from time to time and also procured fabrics under CT3 without payment of duty. On a stock taking conducted by the officer of Central Excise, it was revealed that the appellant failed to account for 1026762.03 L. Mtrs. Of imported and fabrics procured under CT3. When asked to explain the shortage of the above quantity of fabrics the director of the Company Shri R.C. Agarwal who was present at the time of stock taking stated that the fabrics found short were disposed of to two persons at the rate of Rs. 51 Per L. Mtr. Later the two persons named by the Director denied, having purchased any fabrics from the appellant company. The person in charge of the day to day affairs of the factory and also a power of attorney holder, Shri H.R. Agarwal admitted that some of the non - duty paid fabrics were sold away to four persons, whose addresses he had furnished. Enquiries with the said persons seemed to have revealed that in fact they purchased certain quantities of fabrics from the appellant company.
2. The Department also alleged that further enquiries revealed that around 587196 L. Mtrs. Supposed to contain in the garments exported by the appellant company were not the ones that were imported duty free. Certain enquires made with the Custom House, through which the garments were exported, revealed that the appellant company exported 100% T-shirts, Polyester X viscose garments or other Polyester garments which did not contain imported duty free material. On the basis of these enquiries, the statement of the director and the power of attorney holder and the results of stock taking as reflected in the Panchanama it was alleged that the appellant company sold away 1818725 L Mtrs. Of imported fabrics cleared duty free under notification No. 53/97 without using the same in the manufacture of garments for export. It was alleged that they contravened the conditions of Notification No. 53/97 CUS read with the relevant Import & Export Policy and so import duty not levied at the time of import became payable. The total duty demand is for Rs. 18,11,79,230/-.
3. The Commissioner while adjudicating the case finally arrived at a figure of Rs. 16,97,31,833/- as the duty evaded, demanded it, under Section 28 of the Customs Act, imposed penalties on the company the director and the power of attorney holder.
4. The Ld. Advocate for the appellants argued that the Commissioner traversed beyond the show cause notice, inasmuch as he held that the appellants failed to account for the imported fabrics whereas the show cause notice states that the appellants sold away the fabrics in the DTA; that principles of natural justice were violated inasmuch as the Commissioner failed to produce the alleged buyers of the fabrics for cross examination and did not allow cross examination of certain officers; that he failed to appreciate the fact that the alleged shortages were in fact properly accounted for in RG.1; that the officers while taking stock failed to notice that a certain quantity of fabrics were in process and certain other quantity is in the form of unfinished garments, that the panchanama was drawn without properly taking the entire stock of fabrics available in the factory; that the statements of the director and the power of attorney holder were later retracted, that the department relied upon the letter of Additional Commissioner of Customs who seemed to have stated that the garments exported by the appellants did not contain the imported fabrics cleared duty free; that the Department failed to establish the case and that in view of an excellent. Prima facie case in their favour predeposit of duty and penalty should be waived and recovery thereof stayed.
5. The Ld. Jt. CDR for the Department took us through the Panchanama and the various statements and retractions made by the director and the power of attorney holder. He pointed out that the Panchanama clearly shows that all the stock of fabrics in the factory and the godown in whatever form they were available was taken into account while drawing the panchanama. He stated that the entries in the RG1 register do not establish the stock position. The actual stock taking does . The director who was present clearly admitted that the stock taking was done correctly. Even in person who was looking after the day to day affairs of the factory initially admitted that there was shortage. Referring to the contention that the Additional Commissioner letter was not in the list of relied upon documents the Ld. Jt. CDR said that it formed a part of the show cause notice and that the appellants had every opportunity to putforth their case vis-a-vis the findings of the Additional Commissioner. He also pointed out the difference between the quality of fabrics imported and the ones contained in the export garments. He asserted that the Department's case stands the initial scrutiny and therefore the appellants should be asked to deposit the entire duty demanded and penalties imposed.
6. The Ld. Advocate appearing for the director of the Company and the power of attorney holder reiterated the contention raised in the company's appeal and pleaded financial hardship fifed bank statements showing small amounts as balance in their bank accounts.
7. On the issue whether the Commissioner traveled beyond the show cause notice we observe that the Commissioner at page 18 of his order says "if such satisfactory accountal is not done by the unit, the presumption is that such raw material have been diverted to the open market". Thus while he holds that the appellants have failed to account for the goods he also holds that the appellants have disposed of the unaccounted fabrics in the open market. We notice that it is the appellant who have been claiming that they have sold away the imported fabrics. The later retraction notwithstanding the department is prima facie right in holding that the imported goods were not property accounted for. The order in original does not make any fresh case as contended by the: appellants. On the issue of cross examination we observe that the Commissioner made every effort to get the persons who admitted to have purchased the imported fabrics. He failed to do so. He therefore did not rely on their statements as well as the statement of the Power of Attorney Holder. He did not allow the cross examination of the officer giving reasons as to why he did so. On the contention that the goods were properly accounted for in RG 1 and the officer while doing the stock taking did not take into account the stock of fabrics is unfinished form, we observe that the contention of the Panchanama, as rightly pointed by Jt. CDR, reflected that the entire stock of fabrics in whatsoever form they were available in the factory and the godown were taken into account. Prima facie the contents of the panchanama should hold water. On the issue whether the reliance kept on the Additional Collector of Customs letter was justified in coming to the conclusion that the export goods did not contain the duty free fabrics, we observe that this issue could be taken up in detail at a later stage while deciding the appeal. The major portion of the duty demanded in the impugned order pertained to the shortages found at the time of stock taking. Having regard to rival contention we decide that the appellants have not made out a strong prima facie case in their favour for total waiver of predeposit of duty and We accordingly order that the appellant company deposit Rs. 3 crores out of the total duty demand upon such deposit further deposit of duty and penalty imposed on the company is waived and recovery thereof stayed. We further order that the director of the company Shri R.C. Agarwal deposit Rs. 20 lakhs and the Power of Attorney holder of the Company Shri H.R. Agarwal deposit Rs. 10 lakhs towards within 12 weeks of the date of the order. Compliance on 26.4.2004. Appeal is liable to be rejected for non-compliance without further notice.
(Pronounced in Court)