Customs, Excise and Gold Tribunal - Tamil Nadu
Cce vs Shasun Chemicals And Drugs Ltd. on 17 January, 2006
Equivalent citations: 2006(107)ECC326, 2006ECR326(TRI.-CHENNAI), 2006(200)ELT419(TRI-CHENNAI)
ORDER T.V. Sairam, Member (T)
1. The Revenue has filed this appeal against the order in Appeal dated 31.10.03. The respondents Shashun Chemicals & Drugs Ltd, are manufacturers of bulk drugs. They exported 3000 Kgs of Ranitidine Base on 28.7.01. Out of that, 740 Kgs (in 37 drums) were rejected by the overseas consignee and hence the same was re-imported vide Bill of Entry dated 10.8.01 which were cleared by the Customs authorities on 13.8.01 at 16.05 hours. The respondent's case is that after detailed reprocessing overnight in their factory, the goods were re-exported on 14.8.2001 i.e. on the very next day.
2. Investigation conducted by the Department however, led the Department to believe that the re-exported goods were not the same as the re-imported one. The presumption (called later by the adjudicating authority as "preponderance of probability") was due to the fact that the inward register maintained by the respondents in their factory gate, which are not statutory in nature, showed two entries in respect of the same re-imported goods. There was an entry on 13.8.01 at 2 PM and another entry on 14.8.01 at 9.30 Hrs in the inward register, in respect of the very same consignment re-imported by the respondents. In addition, there was also an entry in the outward register on 14.8.01 and the timing indicated here was 11.15 hrs. In addition to the fudging in the Register, the departmental officers also came across some seven numbers of labels glued to 7 drums creating yet another Hitchcoekian dimension : the label contained the following wordings:
Retest Date - Oct 2001 This added fuel to the fire of suspicion raising "reasonable belief" that the respondents must have retested the re-imported goods only in "Oct 2001" and not on 10.8.01 before its re-export on 14.8.01 as per their declaration in the official documents like shipping bill etc. Therefore, the goods re-exported on 14.8.01, it was concluded, cannot be the same goods which were re-imported on 13.8.01. Based on this premises, the respondents were show-caused and the Deputy Commissioner, vide his order dated 18.8.03 came to observe :
6.5 In view of the foregoing, the preponderance of probability is that the defective consignment of 740 Kgs of Ranitidine base re-imported under Bill of Entry No. 16152 dated 10.8.2001 but cleared from Customs Port Chennai on 13.8.01 at 16.05 hours entered the Assessee's factory only on 14.8.01 after 09.30 hours. Accordingly, the defective consignment would not have been reprocessed in the Assessee's factory on the midnight of 13.8.2001/14.08.2001 as indicated in the Blending and packing record of the assessees' factory and consequently, the Ranitidine base in question weighing 740 Kgs which was originally cleared from the Assesseees' factory under ARE -1 No. 78/2001 dated 28.07.2001 for export but re-imported under Bill of Entry No. 16152 dated 10.8.2001 was not re-exported under Shipping Bill No. 2367770 dated 14.8.2001 and accordingly, the assessees are liable to pay duty of RS 1,98,181/- on the 740 Kgs of Ranitidine base cleared from the assessees factory under ARE - 1 No. 78/2001-2002 dated 28.7.2001 which was re-exported.
6.6 As regards the penalty it is stated by the assessees that mere indication of Section or the Rules contravened in the show cause notice will not be sufficient for imposition of penalty. In terms of Rule 19 of the Central Excise Rules (No. 2) any excisable goods can be exported without payment of duty from a factory. In the instant case, 740 Kg of Ranitidine Base has not been exported. Accordingly duty should have been discharged on the 740 Kg of Ranitidine base on its removal from the factory in terms of Rule 4 read with Rule 8 of Central Excise (No. 2) Rules, 2001. In not doing so, they have contravened Rule 4 read with Rule 8 ibid in removing the excisable goods and accordingly, they are liable for penal action under Rule 25(1) (a) of Central Excise (No. 2) Rules, 2001
3. Being aggrieved by the order of the original authority, the party went in appeal before the Commissioner (Appeals) who allowed their appeal with the following remarks:
No evidentiary value has been established by the lower authority, to prove clearances showing clandestine removal of fresh Ranitidine Base from the production stock, and no evidentiary value has been established as to how the returned and rejected Ranitidine Base 740 Kgs has been adjusted or disposed of:
4. Being aggrieved by the order-in-appeal, Revenue has filed the present appeal. The learned SDR representing the Revenue relied upon the Table of Notification No. 158/95 dated 14.11.1995. Contents of para 2 of the of the said Table is reproduced below :
Goods manufactured in India and reimported for -
(a) reprocessing; or (b) refining; or (c) re-making; or (d) subject to any process similar to to the processes referred to in Clauses (a) to (c) above.
1. Such reimportation takes place within one year from the date of exportation.
2. Goods are reexported within six months of the date of reimportation or such extended period not exceeding a further period of six months as the Commissioner of Customs may allow; 3. The Assistant Commissioner of Customs is satisfied as regards identity of the goods. 4. The importer executes a bond to the effect (a) that such reprocessing, refining or remaking or similar processes; shall be carried out in any factory under Central Excise control following the procedure laid down under Rule 173 MM of the Central Excise Rules, 1944 or in a Customs bond under provisions of Section 65 of the Customs Act, 1962 (52 of 1962); (b) that he shall maintain a due account of the use of the said reimported goods received in the premises specified in item (a) above and shall produce the said accounts duly certified by the officer of Central Excise or Customs, as the case may be, incharge of the factory or the bonded premises to the effect that the goods tendered for reimport are reprocessed, refined or remade or subjected to any process, as the case may be, from the said reimported goods; (c) that in case any waste or scrap arising during such operations and the importer agrees to destroy the same before the officer of Central Excise or Customs, as the case may be, or to pay on such waste or scrap the appropriate duties of customs as if such waste or scrap is imported; (d) that he shall pay, on demand, in the event of his failure to comply with any of the aforesaid conditions, an amount equal to the difference between the duty leviable on such goods at the time of importation but for the exemption contained herein : Provided that in case of reprocessing, refining or remaking or similar process, if any loss of imported goods is noticed during such operations, the quantity of such loss shall be exempted from the whole of the duties of customs (basic customs duty and additional customs duty etc.) subject to the satisfaction of the Assistant Commissioner of Customs that such loss has occurred during such operations.
5. The learned SDR contends that the respondents have failed to establish how the goods cleared by the Customs on 13.8.01 at 16.05 hours could have reached their premises on the same day after covering a distance of about 200 KMs. Another entry made by the respondents in their inward register on 14.8.01 in respect of the very same item at 9.30 hrs is the cause for such conclusion. When the officers visited in the month of May 2002 too, they also found seven numbers of labels on the drum which indicated the re-test date as "Oct. 2001" which adds support to their contention that the respondents had not re-exported the very same consignment which had come back to them from their foreign buyers. In view of this, they have obviously re-exported some other consignment which is not strictly permissible under Notification No. 158/95. Hence the duty demand here.
6. The learned Counsel for the respondents states that they have already explained before the authorities below that entries in their non-statutory register made on 13.8.01 and 14.8.01 were made by the semi-literate security staff incorrectly. He, therefore, submits that considering the overall evidence as available in documents which are statutory and which are authenticated by the authorities, the receipt of defective drugs and its dispatch on the next day by following every Customs formality cannot be questioned on mere suspicion, which was interpreted as "preponderance of probability". The process involved was removal of moisture which was neither complicated nor time-consuming - simply drying and blending for which they had sophisticated equipment with capacity for 3 Tons. As the consignment re-imported which was to be processed was just 740 Kgs., they were able to complete their task and dispatch the same quickly.
7. The learned Counsel further contends that original authority's order is bad in law since he has invoked the penal provisions against the respondents on the basis of what he himself has referred to in his order namely "preponderance of probability". This statement on his part itself clearly proves that there is hardly any evidence available with the department to initiate such penal provisions against the respondents especially when there is no proof of clandestine removal. He draws support for this argument from the order of the Tribunal in the case of Tijiya Steel Pvt Ltd. v. CCE, Halda reported in 2005 (185) 425 (Tri. Kolkata) wherein it is held that the allegation of clandestine removal is required to be proved by production of sufficient and tangible evidence.
8. In counter, the learned SDR interprets that when the adjudicating authority refers to preponderance of probabilities, he means that there is enough circumstantial evidence against the respondents that they had not cleared the same consignment re-imported by them after reprocessing.
9. I have gone through the case records and considered the rival contentions." There is no denial of the fact the respondents have re-imported the defective goods which they had exported earlier. It is also not denied that re-export of the processed goods has taken place the very next day. It is also not denied that the process undertaken was just removal of moisture to be followed by blending as there is ample evidence that the "defect" was due to wet conditions of the product which had to be dried up. The department has not proved the fact that the process involved in drying and blending was time-consuming or more elaborate which needs more than 24 hours. The department has also not questioned the fact that re-export formalities gone through by the respondents were all duly authenticated by the Departmental officers themselves by lending their stamps and signatures. The entire episode is based on doubts raised because of "double" entries made by the security staff who man the gate. All the other records which are statutory in nature being maintained by the respondents bear endorsement by the Customs which themselves should indicate that there is no mala fide. on the part of the respondents. The department has thus not proved it in clear terms how the goods re-exported on 14.8.01 was not the same goods as the one re-imported on 13.8.01. Even the adjudicating authority speaks of "preponderance of probability" rather than any solid evidence to show that there was clandestine removal. Even the finding of drums and lablels by the officers visited the premises after 7/10 months of the events indicate that the wordings on the labels "re-test date - Oct. 2001" which has been explained by the respondents that these were intended to be the instructions for the buyer so that in case the same goods were kept unutilized by them, they must go for a re-test in the month of October 2001 for ensuring quality. This explanation appears to be genuine and acceptable. Considering the facts and circumstances of the case, I do not find any reason to interfere with the order passed by the Commissioner (Appeals). The appeal fails and is accordingly dismissed.
(Dictated and pronounced in the open Court)