Customs, Excise and Gold Tribunal - Mumbai
Akai Impex vs Commissioner Of C. Ex. And Cus. on 26 March, 2000
Equivalent citations: 2000(118)ELT610(TRI-MUMBAI)
ORDER Gowri Shankar, Member (T)
1. We have heard the Counsel for the applicants on the stay applications and read the applications filed by Mohammed Shafi Haji A. Sattar and Abdul Hameed Abdul Roff. These two applicants are absent and unrepresented despite notice. We have also heard the departmental representative in reply.
2. Penalty has been imposed on M/s. Akai Impex under the Customs Act and Central Excise Act, and each of the applicants before us. In the impugned order, the Commissioner has found that M/s. Akai Impex was a 100% Export Oriented Unit (EOU) and entitled to the benefit of Notification 1/95. This notification exempts from excise duty goods intended to be exported. The exemption is also available to such goods despatched to another EOU for further processing and manufacturing by that unit. The Commissioner finds that four consignments of polyester yarn which was texturised by this applicant were purportedly shown to have delivered to M/s. Ratan Raj Texturising Pvt. Ltd., an 100% EOU, situated at Ankleshwar, but were actually intended to be sold in the domestic tariff area without payment of duty. He has therefore demanded excise duty on these goods. He also demands customs duty on the ground that the goods were manufactured out of the imported polyester yarn and the provisions of Chapter IVB of the Customs Act had not been followed. Penalties under the Customs and Central Excise Acts had been imposed on the company, S.K. Burman, its director; Moolsingh Shekhawat, excise clerk; Suresh Chotia, general manager and A.K. Choudhary, vice president.
3. The preliminary contentions of the common advocate for M/s. Akai Impex and its employees is that they had been deprived of benefit of hearing. He states that cross-examination was asked for in the reply to the notice. There was no specific answer from the Commissioner whether he intends or do not intend to permit cross-examination that has been asked for. The applicants were therefore waiting for their communication and therefore did not make their submissions on the hearing with regard to the charges against them. The order have been passed in contravention of principles of natural justice. He emphasises that the applicant wrote a letter on its own and on behalf of other applicants referred to, subsequent to the hearing reiterating the request for cross-examination.
4. The departmental representative contends that subsequent to the reply the company and its employees were represented at the hearing, by its administrative manager. He emphasises that there is no absolute right of cross-examination provided in the Customs Act, citing the judgment of the Calcutta High Court in Tapan Kumar Biswas v. Union of India -1996 (63) ECR 546, which holds that there is no such right granted. In that situation, he contends, the presumption is that cross-examination cannot be granted unless proper grounds are made out justifying such cross-examination. Commissioner has observed that such grounds are not being made out. He therefore opposed the grant of waiver on this count.
5. We are, prima facie, unable to accept the contention that there has been any failure of principles of natural justice. It is now settled that cross-examination of witness cannot be demanded as of right. Therefore it would not be incorrect to say that presumption would be that unless the noticee make out a case for cross-examination he will not be granted cross-examination. It is therefore difficult to say that the applicant could reasonably be expected to have waited for its reply from the Commissioner. Nothing prevented the applicant from making its submissions while reserving its right for cross-examination. We also note that none of the persons, on whose statements department has relied to the disadvantage of these applicants has resciled from their stand up to the stage of reply to the notice. The significance of cross-examination is therefore reduced considerably - we emphasise that this is our prima facie finding.
6. A contention was also raised of financial hardship on the ground that its creditor has filed a winding up petition under the Companies Act, 1956. This by itself is no evidence of hardship. The Act provides this facility to a creditor. Further the balance sheet for 1997-98 shows excellent financial condition. The reserves and surplus as on 30th June, 1998 are also more than 51 crores. Applicants cash and bank balance as on 30th June, 1998 is in excess of two crores. Capital work in progress accounted for Rs. 97 lakhs approximately. The contention that subsequent to this state, there has been further losses eroding its finance, has not been substantiated. On the contrary, in reply to a specific question, the advocate for the applicant stated that capital works for setting up a plant of the value of Rs. 100 crores is still going on.
7. We, however, find force in the contentions of the common advocate for the applicants that the Commissioner has not dealt with the submissions made before him that the yarn was texturised out indigenously produced polyester yarn and therefore customs duty will not be applicable. The Commissioner is silent on this aspect. Prima fade, therefore we find that a case for the applicant with regard to deposit of customs duty and penalties imposed under the Customs Act. In any event the excise duty demanded has been already paid.
8. We also accept the submission made that there is a prima facie case in respect of S.K. Burman, Director. Notice to show-cause did not call upon him, but upon the Director without naming anybody.
9. Taking all these aspects into account we consider it appropriate to ask for the following deposits.
Rs. 7 lakhs by the company M/s. Akai Impex.
Rs. 50,000/- by A.K. Choudhury Rs. 40,000/- by Suresh Chotia Rs. 20,000/- by Moolsingh R. Shekawat
10. The contention on behalf of Ashrafbhai Rajwani is that the notice proposing penalty under Rule 209A did not allege any specific acts on his part under which penalties has to be imposed. The alleged acts were attributed not to him, but to Rajwani Synthetics, of which he is a director, while the departmental representative relies upon the order.
11. If Rule 209A is invoked specific allegations with regard to the role of the person on whom penalty is proposed has to be made. Since, prima facie, it has not been done we find a case in favour of this applicant and waive deposit of the penalties imposed upon him.
12. Penalty has been imposed on Abdul Kadar Sattar Kapadia for the reason that he prepared the delivery challans showing Bosomi Enterprises as the consignor and consignee - self. It is very difficult to say, at this point, how this would have enabled M/s. Akai Impex to evade duty on the consignment. Taking these aspects into account we think a deposit of Rs. 5000/- would be appropriate.
13. The other two applicants, Abdul Hameed Abdul Rauf and Mohd. Shafi Haji A. Sattar are absent and unrepresented. We have read the contentions in the applications. They are the drivers of the trucks, which were carrying the goods. Prima facie, we have to see how the provisions of Rule 209A would apply to them. There is nothing to show their knowing involvement in duty evasion. We therefore waive deposit of penalty imposed upon them.
14. The deposits as indicated above are to be made within a month from the date of receipt of this order. There upon we waive deposit of the remaining amount of penalties and duty stay their recovery. Deposit of fine for redemption of plant and machinery of M/s. Akai Impex of Rs. 10 lakhs is also waived and recovery stayed.
15. Compliance to be reported on 21st March, 2000.