Custom, Excise & Service Tax Tribunal
Royal Industries Ltd vs C. Ludhiana on 30 June, 2025
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHANDIGARH
REGIONAL BENCH - COURT NO. I
Customs Appeal No. 483 of 2009
[Arising out of Order-in-Original No. 39/LDH/08 dated 27.03.2009 passed by the
Commissioner of Central Excise, Ludhiana]
M/s Royal Industries Ltd. ......Appellant
Chandigarh road, Uchhi Mangli,
Ludhiana, Punjab
VERSUS
Commissioner of Customs, Ludhiana ......Respondent
ICD GRFL, G.T. Road, Sahnewal
Ludhiana, Punjab 141001
WITH
Customs Appeal No. 106 of 2010
[Arising out of Order-in-Original No. 10/LDH/09 dated 25.06.2009 passed by the
Commissioner of Central Excise, Ludhiana]
M/s Royal Industries Ltd ......Appellant
Chandigarh road, Uchhi Mangli,
Ludhiana, Punjab
VERSUS
Commissioner of Customs, Ludhiana ......Respondent
ICD GRFL, G.T. Road, Sahnewal
Ludhiana, Punjab 141001
APPEARANCE:
Shri Sudhir Malhotra, Shri A.S. Hasija and Ms. Kanika Malhotra, Advocates
for the Appellant
Shri Anurag Kumar, Authorized Representative for the Respondent
CORAM: HON'BLE MR. SOMESH ARORA, MEMBER (JUDICIAL)
HON'BLE MR. P. ANJANI KUMAR, MEMBER (TECHNICAL)
2 C/483/2009 & C/106/2010
FINAL ORDER NO.60744-60745/2025
DATE OF HEARING: 21.03.2025
DATE OF DECISION: 30.06.2025
P. ANJANI KUMAR:
M/s Royal Industries Ltd., the appellants, assail the impugned
orders i.e dated 27.03.2009 and 25.06.2009 both passed by
Commissioner of Central Excise, Ludhiana.
2. Brief facts of the case are that the appellant was registered as
100% Export Oriented Unit, holding LOP No. PER/561/95/EOA/61/95
dt. 18.10.1995 which was further extended for five years from
01.04.2002; the appellant obtained warehousing license No.
01/PBWH/96 dated 18.01.1996 under section 58 of Customs Act for
purpose of warehousing of duty-free imported goods and for in-bond
manufacturing of their export products; the appellant executed B-17
Bond dt. 11.07.2000 before Assistant Commissioner of Central Excise
Division-II, Ludhiana for import/procurement of raw material
indigenously without payment of duty as per Notification No.
53/1997-Cus dated 03.06.1997and Notification No. 1/95-
CE04.01.1995; the appellant imported raw material Le. polyester
yarn, polyester fabric. woollen yarn, synthetic waste, acrylic fiber,
acrylic tow etc and procured raw material i.e. polyester yarn,
polyester - Cotton / cotton yarn, acrylic yarn, polyester - cotton dyed
fabric etc. indigenously, for manufacture of acrylic /woollen
garments, polyester - cotton/cotton garments, polyester fabric,
3 C/483/2009 & C/106/2010
cotton/ cotton viscose fabric, woollen / acrylic fabric, polyester grey
fabrics, acrylic blanket and acrylic top etc.
(Appeal No. C/106/2010)
2.1. The Anti-Smuggling Staff of Customs Commissioner, Amritsar
searched the factory premises of the appellant and residential
premises of Shri Harbhajan Singh Sandhu, Managing Director, on
27/28.03.2002 and conducted physical verification of stock of raw
materials and finished goods lying at factory premises by an eye
estimation. Statements of employees were recorded, which were
retracted subsequently. On conclusion of the investigation, it
appeared to the officers that the appellants had been diverting the
duty-free imported goods into the local market; were fabricating
records to show clearance of goods for exports/deemed exports/ job-
work, without any actual movement of the goods. A Show cause
notice dated 03.07.2003 (Appeal No. C/106/2010) was issued, by
Commissioner of Customs, Amritsar,seeking to recover customs duty
of Rs. 1,22,49,448 on imported raw material diverted; Customs duty
of Rs. 84,50,492 on imported material not entered in records;
Customs duty amounting to Rs. 15,90,03,872 (excluding duty
amounting to Rs. 2,32,66,802/ in respect of imports made through
Nhava Sheva) along with interest; seeking to confiscate goods valued
at Rs. 26,73,04,727; seeking to impose penalty, on the appellants
and Shri Harbhajan Singh Sandhu Managing Director, under Section
112(a) & (b) and section 114A of Customs Act, 1962; proposing to
appropriate Rs. 20,00,000 deposited by appellant; seeking to impose
4 C/483/2009 & C/106/2010
penalty on proposed under section 112(a) and (b) and section 114A
of Customs Act, 1962; proposing to impose penalty on Shri Sushil
Kumar Sharma, Authorised Signatory and others.
2.2. The show cause notice was decided vide order-in-original no.
76/CE/2004 dated 25.10.2004, by Commissioner of Central Excise,
Chandigarh-I, whereby duty of Rs. 15,90,03,872/- was confirmed
along with interest besides imposing penalty on the appellant and
others; on an appeal filed by the appellant, Tribunal, vide stay order
No. 5/632-642/2005-Cus and final order No. 842 to 852/2005-Cus
dated 30.08.2005 directed the appellants to deposit Rs. 5 Cr., M/s
Punjab Exports to deposit Rs. 2.5 Cr. and Shri Harbhajan Singh
Sandhu Rs. 2 Cr; Tribunal also observed that the claim of appellant
under Notification No. 2/95 CE has not been considered while passing
impugned order, cross examination was not allowed and remanding
the case back to Adjudicating Authority after setting aside impugned
order for deciding the case afresh; it was also ordered that in case
above mentioned amount are not deposited within 8 weeks, the
appeal shall stand dismissed. Aggrieved by the same, the appellant
filed CWP No. 16845/2005 before Hon'ble Punjab & Haryana High
Court, who vide order dated 04.07.2006 2006 (204) ELT 564 (P & H),
remanded the matter to Tribunal for fresh decision; Tribunal, New
Delhi, vide stay order No. 465-469/2006-Cus and final order No. 316-
320/2006-Cus dated 24.08.2006, dispensed the condition of pre-
deposit, set aside the impugned order and remanded the matter to
the Adjudicating Authority with a direction to decide the case afresh
5 C/483/2009 & C/106/2010
after affording an opportunity of cross examination of witnesses. In
remand proceedings, Commissioner of Central Excise, Ludhiana,
passed Order-in-Original No. 10/LDH/09, dated 25.06.2009, which is
impugned in appeal No Appeal No. C/106/2010. Commissioner, vide
this order,
(i). confirmed custom duty amounting to Rs. 7,75,95,025 along with
interest @20%; appropriated 20,00,000 already deposited
(ii). Confiscated goods valued at Rs. 16,97,76,071 and as the goods
are not available / traceable, imposed a fine of Rs. 40,00,000 in lieu
of confiscation.
(iv). imposed penalty of Rs. 7,71,95,025 on the appellant and Rs.
20,00,000 on Shri Harbhajan Singh Sandhu, Managing Director of the
appellant.
(v). imposed a penalty of Rs 10,00,000 on M/s Harman Fashioners
Pvt Ltd; Rs. 15,00,000 on Shri Vinod Kumar Garg, Proprietor, M/s
Anchal Exports; Rs. 10,00,000 M/s Adinath Textiles Ltd.
(Appeal No. C/483/2009)
3. On the expiry of the extended period of license on 31.03.2007,
the officers of the Range visited the premises on 10.09.2007 and
found it locked; they made enquiries as to what happened to the
inputs lying in balance as on 27.03.2002; it was revealed that the
raw material was partly destroyed due to natural reasons and partly
shifted to other warehouses and the capital goods were sold as scrap
as export obligation was completed. Alleging that the appellants have
diverted, the raw materials, capital goods etc. imported or procured
6 C/483/2009 & C/106/2010
duty free, in violation of the conditions of Notification No.53/97-Cus
dated 03.06.1997 and the Exim Policy 1997 to 2002, a show cause
notice, dated 28.09.2007, was issued to the appellants, by
Commissioner, Central Excise, Ludhiana, demanding Customs Duty,
of Rs.1,76,20,020/- on the raw material; Rs.10,69,737/- on the
finished goods and Rs.26,51,083/- on the capital goods, along with
interest and penalty; Shri Harbhajan Singh Sandhu, Managing
Director of the Company was also asked to show cause as to why
penalty should not be imposed on him. Learned Commissioner of
Central Excise, Ludhiana, vide order No. 39/LDH/08, dated
27.03.2009 confirmed customs duty of Rs.1,47,55,230/-; imposed a
fine of Rs.50,00,000/- in lieu of confiscation of raw material, finished
goods and capital goods; imposed equal penalty under Section 114A
on the appellant. Penalty of Rs. 1,47,55,230/- was also imposed on
Shri Harbhajan Singh Sandhu, Managing Director of the Company.
Accordingly, M/s Royal Industries filed the instant appeal i.e No.
C/483/2009 and Shri Harbhajan Singh Sandhu, Managing Director
filed Appeal No. C/484/2009. This Bench vide Interim Order in Stay
dated 02.07.2010 directed the appellant to deposit Rs.50 Lakhs
within six weeks. As the appellant failed to deposit the amount, this
Bench vide Order dated 15.09.2010 dismissed the appeals. On an
appeal preferred by the appellant, Hon'ble High Court of Punjab &
Haryana, vide Order dated 28.10.2020 in CEA No.59/2011, on the
appellant (petitioner therein) depositing Rs. 1 Crore, directed the
Tribunal to hear the appeals on merits. As Shri Harbhajan Singh
Sandhu expired on 24.04.2020, this Bench vide Final Order No.
7 C/483/2009 & C/106/2010
60069/2023 dated 24.02.2023 disposed of the appeal No.
C/484/2009 as abated.
Common Submissions by the Counsel for the appellants for
Appeal No. C/106/2010 and C/483/2009
4. Shri Sudhir Malhotra, learned Counsel for the appellants takes us
through provisions of law and different Notifications issued in this
regard. He submits that Commissioner of Customs, Amritsar not
competent to issue show cause notice dated 03.07.2003, as
Notification No. 30/1997-Cus (NT) dated 07.07.1997 as amended,
only Commissioner of Central Excise, within their respective
jurisdiction, as specified under Rule 2 of the Central Excise Rules,
1944 appointed as Commissioner of Customs; the Central Excise
Commissionerate, Ludhiana was notified vide Notification No.
14/2002 CE (NT) dated 08.03.2002; it came into operation w.e.f.
25.10.2002 vide Notification No. 34/2002 CE (NT) dt. 01.10.2002. he
would submit that in the instant case has been issued by
Commissioner of Customs, Amritsar, who was not competent to issue
show cause notice (to appellant 100% EOU) as per Notification No.
30/1997 Cus-(NT) dt. 07.07.1997 as amended vide Notification No.
18/2002 Cus- (NT) dt. 07.03.2002. It was the Commissioner of
Central Excise, Ludhiana, the jurisdictional Commissioner of Central
Excise as Commissioner of Customs as per ibid Notification No.
30/1997 Cus (NT) as amended; the show cause notice dt. 03.07.2003
issued by Commissioner of Customs, Amritsar is devoid of
8 C/483/2009 & C/106/2010
jurisdiction; consequently, proceedings thereto are bad in law and
required to be set aside.
5. Learned Counsel for the appellants submits that Commissioner of
Central Excise, Ludhiana, though competent to issue show cause
notice to 100% EOU as per Notification No. 30/1997-Cus (NT) dt.
07.07.1997, is not competent to pass impugned order-in-original dt.
25.06.2009, as he demanded customs Duty under Section 28 (1) and
72 (1) of Custom Act read with Notification No. 53/1997-Cus dt.
03.06.1997 and B-17 bond No. B-17/05/Ldh-11/2000 dt. 11.07.2000.
He submits that Notification No. 53/1997-cus is a self-contained
Notification; condition No. 6 to the Notification prescribes that the
Assistant Commissioner of Customs would demand duty if the
material imported duty free is not utilised for designated purposes as
per the Bond. Learned Counsel for the appellants submits that it is
settled law that if the manner of doing a particular act is prescribed
under any statute, the act must be done in that manner or not at all.
He relies on Chief Information Commissioner Vs. State of Manipur
2012 (286) ELT 485 (SC); Babu Varghese Vs. Bar Council of Kerala
AIR 1999 SC 1281.
6. Learned Counsel for the appellants submits that Commissioner,
Central Excise, Ludhiana, who demanded and confirmed the duty
under Section 28(1) of the Customs Act, 1962, was not the proper
officer under Customs Act, 1962, in terms of Section 2(34) of
Customs Act, cannot issue the show cause notice dated 28.09.2007,
9 C/483/2009 & C/106/2010
as the importer submitted a Bond, in terms of Notification No.53/97-
Cus dated 03.06.1997, to the Assistant Commissioner of Customs. He
submits that there is nothing on record that any notification was
issued under Section 6 of the Customs Act, 1962 appointing the
Commissioner of Central Excise as the Customs Officer and he has
not also been assigned the function of assessment of customs duty.
7. Learned Counsel submits that Hon'ble Supreme Court in the
case of Syed Ali - 2011 (265) ELT 17 (SC) held that Customs Officers
assigned with specific functions of assessment and re-assessment in
jurisdictional area where goods are imported is competent to issue
show cause notice under Section 28 of the Customs Act as "Proper
Officer". Government brought in a retrospective amendment by
inserting sub-section 11 to Section 28 of the Customs Act. Hon'ble
Delhi High Court in the case of Mangli Impex - 2016 (335) ELT 605
(Del.) held that the newly inserted sub-Section 28(11) does not
empower officers of DRI and DGCEI to adjudicate show cause notices
already issued by them prior to 08th April, 2011. While deciding the
Special Leave Petition, Hon'ble Supreme Court - 2016 (339) ELT A49
(SC) stayed the decision of the Hon'ble Delhi High Court in the case
of Mangli Impex. Learned Counsel further submits that Hon'ble
Supreme Court in the case of Cannon India - 2021 (376) ELT 3 (SC)
held that ADG, DRI was not a proper officer to issue show cause
notice under Section 28 ibid.
10 C/483/2009 & C/106/2010
8. Learned Counsel further submits that there is no notification under
Section 2,3,4,5 & 6 of the Customs Act, authorizing Central Excise
Officers as Customs Officers; further Section 151A of the Customs
Act, which empowers the Board to issue orders, instructions and
directions, as it existed before 08.04.2011, did not empower the
CBEC to issue orders, instructions and directions on the issues other
than the classification of goods or with respect to levy of duty;
therefore, the circulars issued by the Board, giving administrative
control over 100% EOUs to jurisdictional Commissioners of Central
Excise, were beyond the scope of legislation and without authority of
law. Learned Counsel further submits that Notification No.53/97-Cus
had an inbuilt provision that the bond should be submitted by the
importer to the satisfaction of Assistant Commissioner of Customs. He
submits that CBEC has issued Notification No.40/2012-Cus (NT)
dated 02.05.2012 and Notification No.26/2022-Cus (NT) dated
31.03.2022 stipulate the proper officer for the specific purposes
mentioned therein. There was no such notification when the
impugned proceedings took place. He relies on Nathalal Manganlal
Chauhan - 2020 (35) GSTL 145 (Guj.) and Chief Information
Commissioner - 2012 (286) ELT 485 (SC).
9. Reverting to the objection raised by the Learned Authorised
Representative, that the issue of Jurisdiction was not raised with the
commissioner and as such the same cannot be raised at this juncture,
Learned Counsel submits that it is settled law that law point can be
raised at any stage of litigation; he relies on Tribunal decisions in the
11 C/483/2009 & C/106/2010
cases of Hotline CPT Ltd. 2005 (179) ELT 313 (T); Saji International
Vs CC 2015 (316) ELT 495 (1).
Submissions in Appeal No. C/483/2009
10. Learned Counsel for the appellants submits, without prejudice
to the above, that he reiterates the grounds of appeal, which are
summarized as below:
The impugned order was patently against law, contrary to the
facts, unjust and erroneous passed in complete non-application
of mind.
The impugned order wrongly confirms the demand on the
grounds that the appellant has not de-bonded the warehouse
after expiry of the LOP; validity of LOP cannot be a ground for
confirming the liability on the appellant.
The learned Commissioner erred in confirming the duty on the
grounds that appellant failed to utilize the imported goods
within two years or as may be extended; the appellant's
contention on the destruction/ loss due to natural causes and
transfer to other warehouses was not examined; learned
Commissioner failed to appreciate that intimation to the
concerned authorities was only procedural.
The adjudicating authority failed to take note of the number of
requests made for revocation of IEC so that the appellants
could export the material; appellant's intimation to the
Commissioner of Central Excise that the machinery got jammed
has been ignored warehouse license was suspended on
12 C/483/2009 & C/106/2010
20.12.2002 without supplying any reasons; even after the
suspension of the IEC was revoked by Development
Commissioner, warehousing license was not revoked despite
several requests.
Department did not conduct proper enquiries and no physical
stock was taken, stock recorded as on 27.03.2002 was only and
eye estimate.
The show cause notice is time barred; whereas the imports
were in the period November 2001 to March 2002 show cause
notice was issued on 07.07.2006 beyond the period prescribed
under Section 28; no proof of willful suppression etc. with
intent to evade payment of duty has been brought.
Accordingly, the confiscation proposed and imposition of
penalties are not warranted.
11. Learned Counsel further submits that the show cause notice has
been issued on the basis of assumptions and presumptions; though,
it is alleged that raw material imported in terms of Notification
No.53/97 were not utilized for the purposes for which it was imported
but was diverted or sold in the domestic market; however, the show
cause notice does not mention or refer to any particular bill of entry;
therefore, the show cause notice cannot be sustained. He submits
that prior to instant show cause notice dt. 28.09.2007, another show
cause notice dt 03.07.2003 issued to appellant and was decided vide
Order-in-Original dated 25.06.2009, where in duty has been
13 C/483/2009 & C/106/2010
confirmed on all the imports made by the appellant; it is incorrect to
demand duty again.
Submissions in Appeal No. C/106/2010
12. Learned Counsel for the appellants submits that the core issue is
of non-fulfilment of conditions of exemption notification 53/1997 CUS
dated 03.06.1997 and Notification No. 1/1995 CE, in respect of goods
imported and procured indigenously without payment of duty; duty
forgone on imports has been demanded under Sections 28(1) and 72
of the Customs act, 1962 read with Notification 53/1997 Cus dated
03.06.1997 and Bond B-17 Bond dated 11.07.2000; the basic
document in the case is the Bills of entry (BoEs), on the strength of
which imports were made; however, the Show Cause Notice does not
mention details BoEs of BOEs; the said 26 bills of entry mentioned in
SCN are not relevant to the demand raised in this case, as goods
imported against these 26 bill of entries were through port of Nhava
Shiva; no demand can sustain without basic documents; the Show
Cause Notice without reference to and details of the BOEs in respect
of which duty has been demanded therein, is bad in law and cannot
withstand judicial scrutiny; it makes the case based upon
assumptions and presumptions, which is bad in law and not
sustainable.
13. Learned Counsel for the appellants submits that no physical
verification of stock done on 27/28.03.2002; the alleged shortage of
raw material/ finished goods was made by an eye estimation; no
14 C/483/2009 & C/106/2010
worksheet evidencing physical verification of stock was brought on
record; the statement of the employee was recorded and same was
retracted subsequently; cross examination, on 14.03.2008, of
investigating officer Shri Narinder Bains, Inspector and Shri Chote Lal
panch to panchnama dated 28.03.2002, proves that no physical
verification of stock carried out; demand of Rs. 1,22,49,448/ on
alleged shortage of raw material cannot be sustained.
14. Learned Counsel for the appellants submits that the Order-in-
Original is beyond the SCN, non-reasoned and incoherent as shown
below.
duty of Rs. 5,44,660/- proposed to be been demanded in para
1(A)(b) of show cause notice whereas duty of Rs. 9,03,999/-
has been confirmed;
Commissioner finds that the Show Cause Notice works out duty
forgone on a quantity of 1984415.900 Kg. Of acrylic fibre/ tow/
tops, which is a misplaced demand. He records that the
appellant submits that they have imported 1601779.700 Kg. of
acrylic fibre/tow/tops during the financial year 1997-98, 2000-
01 & 2001-02; demand cannot exceed duty on this quantity;
appellants submit that 226586 Kg had already been
consumed/accounted for prior to the visit of the Customs
officers; noticee had to justify the disposal of 1601779.700 Kg.
Commissioner finds that the custom duty amounting to Rs.
3,58,54,192, interest @20% per annum, as against Rs.
15 C/483/2009 & C/106/2010
5,23,98,469 proposed, is now demandable on 1375193.700 kg
of raw material;
Adjudicating Authority finds that custom duty evaded is Rs.
9,81,42,025 (para 3.60), whereas in the operative part
confirms duty of Rs 7,71,95,025/-.
15. Learned Counsel for the appellants submits that interest has been
incorrectly demanded under section 28AB and penalty incorrectly
imposed under section 114A of Customs Act, on element of duties
other than basic custom duty. He submits that Hon'ble Bombay High
Court in the case of Mahindra & Mahindra Limited Vs. UOI 2022-TIOL-
1319-HC-MUM-CUS held that demanding interest and imposition of
penalty under Customs Act on portion of demand of duty other than
basic custom duty is incorrect and without authority of law; the
Special Leave Petition (Civil) Diary No. 18824/2023 filed by revenue
was dismissed by the Hon'ble Supreme Court on 28.07.2023.
Department subsequently amended section 3 of Customs Tariff Act
1975; said amendment is prospective and not retrospective in nature
and therefore, not applicable to impugned case.
16. Shri Anurag Kumar, learned Authorized Representative for the
Department, submits that the ground of jurisdiction has been taken
now and the same was not agitated before the Commissioner;
therefore, it cannot be permitted as held by Hon'ble Supreme Court
in the case of Warner Hindustan - 1999 (113) ELT 24 (SC). He
submits that Notifications viz 30/1997-Cus (NT) dated 07.07.1997
16 C/483/2009 & C/106/2010
and 83/2004-Cus (NT) dated 30.06.2004, issued from time to time
authorized the officers of Central Excise as officers of Customs and
accordingly, Commissioner of Central Excise was authorized to
administer 100% EOUs and as proper officer for issuance of SCN;
reliance by the appellant on the decision in Cannon India (supra) is
not acceptable as amendments were made in the Finance Act, 2022
giving retrospective effect.
17. Learned Authorized Representative further submits that
Notifications, No. 83/2004 dated 30.06.2004 read with Notification
No.40/2002 dated 08.03.2002 conferred the geographical jurisdiction
of the area in which the appellant's unit is located, to the
Commissioner of Central Excise, Ludhiana and as such he is the
proper officer to issue SCN and adjudicate the same in respect of
100% EOUs in his jurisdiction; ; the show cause notice issued under
Section 28 of the Customs Act falls under Chapter V of the Customs
Act, 1962 is deemed to have been validated in view of Section 97(1)
of the Finance Act, 2022. He relies on the decision of Hon'ble Madras
High Court in the case of N C Alexender - 2022 (381) ELT 148
(Mad.). He submits that CESTAT being a creature of the Statute
requires to follow the amendments carried out by the Finance Act,
2022. He relies on Bharat Fabric Mills Ltd. - 2004 (178) ELT 728 (Tri.
Del.).
18. Learned Authorised Representative requested during the hearing
that he may be permitted to submit written submissions on the
17 C/483/2009 & C/106/2010
grounds of appeal. Accordingly, permission was granted. Learned
Authorised Representative in his written reply submitted comments
on the grounds of appeal no. 106/2010, extracting paras from the
impugned order, denying all the allegations levelled against the
impugned order. He submits that the Adjudicating authority has
analyzed all the evidence properly and gave allowance to whatever
was due to the appellants correctly; the appellants could not produce
evidence to substantiate their claims on various points; averments of
the appellants are after thought and misleading. He submits as
summarized in the forthcoming Paras.
19. Learned Authorised Representative submits that the appellant
had not produced any record/data regarding quantity lying as work in
progress during search as well as before the adjudicating authority;
submissions made by appellants are only after thought, to mislead
the proceedings before appellate authority. He submits, regarding Job
work & Evidence of Diversion of Raw Materials/goods, shown as
removed to M/s Adinath Textiles, that the adjudicating authority
observed that it is evident the entries of receipt back of the goods in
respect of 66372 Kg of Acrylic Fibre made by the Appellant were
fake/forged and that goods manufactured out of 66372 Kg of Acrylic
Fibre had been sold by M/s Adinath Textiles Ltd, Ludhiana; as
observed by the Adjudicating Authority the appellants have failed to
discharge their responsibility for proper accounting of duty free
imported goods removed for job work under bond; the appellants
have not used goods for the desired purpose as specified in the
18 C/483/2009 & C/106/2010
Notification; since Central Excise duty equal to CVD has been paid by
M/s Adinath Textiles, Adjudicating Authority held that the appellants
are liable to pay Customs duty amounting to Rs. 12,86,213.
20. Learned Authorised Representative submits, also, as regards
removal of Polyester fabrics to M/s A. S. Enterprises, that the
Adjudicating Authority observed that the warehousing license of the
Appellant was suspended during the period this stock was transferred
by the appellant to another EOU at Parwanoo; the appellant was
required to inform the jurisdictional Range regarding removal of
inputs from the bonded warehouse; the appellant had removed the
inputs without following the proper procedure; Hence, the
Adjudicating Authority was not inclined to accept this transfer of stock
as legal and justified; he concluded that Customs duty amounting to
Rs. 44,03,344/- is recoverable from the appellant along with interest.
21. Learned Authorised Representative submits, further, as regards
removal of goods on Deemed Exports to M/s Devyani Processors Pvt
Ltd, that the appellants themselves submitted that they had produced
evidence of 138 consignments out of total 281 consignments;
Adjudicating Authority had also passed on the benefit of 10 re-
warehousing certificates produced further for 10 consignments; the
appellants could not produce satisfactory evidence in respect of
remaining 143 consignments. Learned Authorised Representative
submits, as regards removals to M/s Philtex Prints, that the
adjudicating authority had already given due benefits in respect of
19 C/483/2009 & C/106/2010
27 consignments out of total 106 consignments in view of re-
warehousing certificates submitted by the appellant; appellant is
trying to mislead the appellant authority by twisting the facts such as
investigation report provided by the Assistant Commissioner (AE),
Hyderabad-1 vide his letter HQAE No 46/2002 dated 29.05.2003,
wherein, it is specifically mentioned that vehicles mentioned in the
transport documents proved to be two wheelers, three wheelers, non-
transport vehicles; it is evident that the appellant could not produce
satisfactory evidence in respect of remaining consignments.
22. Learned Authorised Representative submits, in addition, that
Show Cause Notice dated 03.07.2003 and further corrigendum dt
20.11.2003 were issued by the Commissioner of Customs, Amritsar,
making the appellants answerable to the Commissioner of Central
Excise, Central Excise Commissionerate, Rishi Nagar, Ludhiana, in
compliance to CBEC letter dated 13.10.2003 issued under F. No.
305/138/2003-FTT; It is evident that proper officer (Commissioner
Central Excise, being a jurisdictional Custom Officer as per
Notification No. 30/1997 Cus (NT) dt. 07.07.1997 as amended vide
Notification No. 18/2002 Cus (NT) dt. 07.03.2002). Commissioner,
Central Excise-Chandigarh-I adjudicated the demand notice dt
03.07.2003 vide Order-in- Original No. 76/CE/2004 dated
25.10.2004, as assigned by CBEC vide Order No 07/2004-CE dated
25.03.2004 issued under F. No. 208/8/2004-CX.6 in exercise of
powers conferred by Notification No. 39/2001-Central Excise (N.T.)
dated 26.06.2001. Tribunal vide FO No 316-320/2006-CUS dated
20 C/483/2009 & C/106/2010
24.08.2006 remanded the matter back to Original Adjudicating
Authority. CBEC vide Order No. 05/2006 dated 03.03.2006 issued
under F. No. 208/8/2004-CX.6 in exercise of powers conferred by
Notification No. 39/2001-Central Excise (N.T.) dated 26.06.2001
assigned Commissioner of Central Excise, Ludhiana for the purpose of
de novo adjudication. Commissioner of Central Excise, Ludhiana
(being a jurisdictional Commissioner of Customs) had adjudicated
SCN dt 03.07.2003 vide OIO dated 10/LDH/09 dated 25.06.2009. He
submits that the issue of Jurisdiction is thus, a settled proposition.
23. Learned Authorised Representative submits that as per the
Investigation report given by Additional Commissioner of Customs
Jawahar Lal Nehru Customs House- Mumbai-II, vide his letter dt
18.02.2003, no exports have taken place vide Shipping Bills No.
314291, 314292, 314293 and 314294 all dated 09.01.2002,
purportedly filed by M/s Anchal Exports. He submits that the
Adjudicating Authority thus observed that Shri Vinod Kumar Garg
Proprietor of M/s Anchal Exports, K-3/4 Textile Colony, Ludhiana had
connived with and abetted M/s Royal Industries Ltd, Ludhiana in
evading Customs duty of Rs. 46,55.122; He had diverted bonded
goods into domestic market, which he was supposed to export on
behalf of M/s Royal Industries, Ltd. Ludhiana; to show export of
goods, he submitted bogus documents like Bills of lading, shipment
certificates, remittance certificates from the banks; he deliberately
tried to mislead inquiry by giving false statements.
Submissions in rejoinder in appeal No C/106/2010
21 C/483/2009 & C/106/2010
24. Learned counsel for the appellants in re-joinder, to the
submissions of the learned authorised representative, submits that it
was incorrect on the part of the learned authorised representative to
say that the stock verification was done physically; it is pertinent to
note that during the cross examination on 14.03.2008 Shri Narinder
Bains, inspector stated that loose material lying was not weighed. He
also submits that the stock was arrived at by approximation; some
bundles which were not uniform were assumed to be of uniform
weight; therefore, the physical verification was not carried out
properly and no conclusion can be drawn from the same.
25. The appellant submits that consequent to the remand order by
the Bench, learned Commissioner has given substantial relief by
extending the benefit of the Notifications No.02/95-CE dated
04.01.1995 and 08/97-CE dated 01.03.1997; however, he has
seriously erred in dealing with the submission made by the appellants
and concluded that the appellants have evaded duty by diverting the
goods into domestic market without bringing in an iota of evidence.
Learned Commissioner relied upon the statements of various persons
viz. Shri P.R. Chovatia of M/s Devyani Processors, Shri Ramesh
Kumar of M/s Jai Bhawani Cargo, Shri A.K. Kapoor of M/s Adinath
Textiles etc. Learned Commissioner committed a serious error in not
taking into account clearances made to M/s A.S. Enterprises holding
that the warehousing license was not in operation being suspended;
learned Commissioner relied on the statements of the persons like
Shri P.R. Chovatia of M/s Devyani Processors, Shri Majhabella Khan,
22 C/483/2009 & C/106/2010
Proprietor of M/s Philtex Prints and Shri Vinod Kumar Garg of M/s
Anchal Exports even when they failed to turnup for the cross-
examination and relied upon contradictory statements of Shri Ramesh
Kumar, which were denied during cross-examination; learned
Commissioner relied on the report given by Central Excise,
Hyderabad even though the same was not relied upon by the show
cause notice; learned Commissioner ignored the directions given by
CBIC vide Circular No.10/94 dated 01.06.1994 and Circular No.27/96
dated 10.09.1996 to the effect that no show cause should be given to
EOU units without approval from Development Commissioner;
learned Commissioner erred in holding that the exports made by the
appellants through the merchant exporter M/s Anchal Exports relying
on report from Nhava Sheva; the appellants have produced the proof
of export also; learned Commissioner erred in confirming the duty
demand on consignments sent to M/s Arora Fabrics whereas the
goods were received back by the appellant and used in the
consignments sent to M/s Devyani Processors. Learned Commissioner
ignored the statements of Shri Harbhajan Singh Sandhu, managing
Director, of the appellants that they have, in fact, sent all the
consignments in question to different parties and have realised the
sale/ export proceeds; learned Commissioner has not examined the
persons whose statements were relied upon in contravention of
Section 9D of Central Excise Rules, 1994.
26. Regarding the demand in respect of 66,372 kg of imported acrylic
fibre, he submits that the facts not denied are that the quantity of
23 C/483/2009 & C/106/2010
yarn was duly accounted for in the form for register maintained by
the appellant and that the quantity was shown in the accounts of M/s
Adinath Textiles, job worker. Learned counsel submits that though
the adjudicating authority has relied upon the statement of Shri A.K.
Kapoor of Adinath Textile Limited, who is a co-noticee, did not allow
the cross examination of the same. In view of the decision in the case
of Mohtesham Mohd. Ismail Vs. Special Director, Enforcement
Directorate 2007 (220) ELT 3 (SC). He further submits that no
evidence to establish the diversion of the impugned goods has been
brought on record. Regarding the duty demanded on the material
supplied free of duty to M/s AS Enterprises, learned counsel for the
appellants submits that the appellant transfer the imported material
to another EOU; it is the case of the Department that proper
procedure was not followed, however, the fact that the appellant
submitted proper re-warehousing certificate has been ignored;
demand of duty for procedural mistakes is incorrect.
27. Learned counsel submits that they have supplied 281
consignments of Grey fabric to M/s Devyani Processors Pvt Ltd;
learned adjudicating authority relies on the statement of Shri P.P.
Chovatia, Director of Devyani Process Pvt Ltd; Shri Chovatia did not
appear for cross examination; Shri Ramesh Kumar Jain of M/s J
Bhawani Cargo Carriers, the transporter stated that they transported
all the consignments to M/s Devyani Process; Department does not
adduced any evidence to counter the statement of Shri Ramesh
24 C/483/2009 & C/106/2010
Kumar Jain; therefore the adjudicating authority incorrectly confirmed
the demand of duty thereto without reference to any bill of entry.
28. In respect of supplies to M/s Philtex Prints, learned authorised
representative submits that re-warehousing certificates were
available for only 27 consignments out of 106 consignments, whereas
learned adjudicating authority has given a finding that the appellants
had re-warehousing certificates for 62 consignments. He submits that
as the matte is very old, the appellant cannot show any documents
now to substantiate 17 consignments dispatched to M/s Philtex
Prints; he states that the appellants undertake to make good the
applicable duty forgone on these 17 consignments.
29. Heard both sides and perused the records of the case. Brief
issues that require consideration in the impugned case are that
(i). Whether the Central Excise Officers have Jurisdiction to issue
Show Cause Notice to recover Customs Duty in respect of an EOU
(ii). Whether in the facts and Circumstances of the case the
department has made out a case for issue of Show Cause Notice
(iii). Whether The Show Cause Notice is barred by Limitation.
(iv). Whether the demand of Customs duty on various Counts on the
appellant, in respect of Appeal No. 106/2010 is maintainable?
30. Coming to the first issue we find that learned Counsel for the
appellants submits that learned Commissioner, Central Excise,
Ludhiana, who demanded and confirmed the duty under Section
25 C/483/2009 & C/106/2010
28(1) of the Customs Act, 1962, was not the proper officer under
Customs Act, 1962, in terms of Section 2(34) of Customs Act; Bond,
in terms of Notification No.53/97-Cus dated 03.06.1997, to the
Assistant Commissioner of Customs; no notification was issued under
Section 6 of the Customs Act, 1962 appointing the Commissioner of
Central Excise as the Customs Officer; Hon'ble Supreme Court in the
case of Syed Ali - 2011 (265) ELT 17 (SC) held that Customs Officers
assigned with specific functions of assessment and re-assessment in
jurisdictional area where goods are imported is competent to issue
show cause notice under Section 28 of the Customs Act as "Proper
Officer"; Hon'ble Delhi High Court in the case of Mangli Impex -
2016 (335) ELT 605 (Del.) held that the newly inserted sub-Section
28(11) does not empower officers of DRI and DGCEI to adjudicate
show cause notices already issued by them prior to 08th April, 2011;
While deciding the Special Leave Petition, Hon'ble Supreme Court -
2016 (339) ELT A49 (SC) stayed the decision of the Hon'ble Delhi
High Court in the case of Mangli Impex; Hon'ble Supreme Court in
the case of Cannon India - 2021 (376) ELT 3 (SC) held that ADG,
DRI was not a proper officer to issue show cause notice under Section
28 ibid; there is no notification under Section 2,3,4,5 & 6 of the
Customs Act, authorizing Central Excise Officers as Customs Officers;
further Section 151A of the Customs Act, which empowers the Board
to issue orders, instructions and directions, as it existed before
08.04.2011. He relies on Nathalal Manganlal Chauhan - 2020 (35)
GSTL 145 (Guj.) and Chief Information Commissioner - 2012 (286)
ELT 485 (SC).
26 C/483/2009 & C/106/2010
31. We find that the Learned Counsel for the appellants heavily relies
on the cases of Canon India and Mangli Impex. We find that the issue
as to whether officers of DRI/DGCEI are competent to issue a
demand Notice under Section 28 of the Customs Act,1962. The
dispute is set to rest by the Hon'ble Apex Courts decision in Review in
the case of M/s Canon India and the retrospective amendment carried
out in 2022. Moreover, as the issue in the instant case is not the
subject matter of the cases cited by the Learned Counsel, we are not
inclined to analyse the issue vis a vis the above cases in details.
Learned Authorized Representative for the Department, submits that
the ground of jurisdiction has been taken for the first time before
CESTAT; it was not agitated before the Commissioner and therefore,
in view of Hon'ble Supreme Court in the case of Warner Hindustan -
1999 (113) ELT 24 (SC), the same cannot be permitted. We find that
the argument of the Learned Authorised Representative cannot be
accepted as the issue raised is a legal one and thus, can be raised at
any point of time during the proceedings, subject to the rider that
both sides are afforded opportunity to rebut, which has been done in
the instant case.
32. We find that Central Government has issued Notifications viz
30/1997-Cus (NT) dated 07.07.1997; 83/2004-Cus (NT) dated
30.06.2004 from time to time authorizing the officers of Central
Excise as officers of Customs; Vide Circular No. 16/2004-Cus. dated
16-2-2004, it was clarified that the proper officer for investigation,
27 C/483/2009 & C/106/2010
issue of show cause notice and adjudication is the officer having
administrative control over EOU. and accordingly, Commissioner of
Central Excise was authorized to administer 100% EOUs and as
proper officer for issuance of SCN. We find that Tribunal has gone
into this issue and decided that Central Excise authorities have
jurisdiction over the EOUs under their administrative control to issue
show cause notices demanding customs/ excise duties. Tribunal in
the case of Commissioner of Central Excise, Jaipur-I VS Paras Fab
International 2009 (237) E.L.T. 711 (Tri. - Del.) held as follows.
5.1 We have carefully considered the submissions from
both sides. One of the issues relates to the jurisdiction of
the officer to issue show cause notice in respect of goods
imported by 100% EOU through a Customs Port. That is
whether the Officers of Customs in charge of the port of
importation will issue the issue or whether the officers in
whose jurisdiction the 100% EOU is situated will issue the
notice.
5.2 We find that the goods have been imported through
Kandla Port. The goods have been assessed under bill of
entry meant for warehousing the goods. When the goods
are to be warehoused, warehousing is permissible
irrespective of availability of any exemption. In fact, if the
goods are otherwise fully exempted the question of moving
them under a warehousing bond does not arise. In this
case, the import was by a 100% EOU and the goods have
been cleared under a warehousing bill of entry. At the time
of assessment at the Port, the duty is not required to be
paid whether the good are eligible for exemption under
Notification No. 52/03 or not. Since the goods have already
been admittedly, received in the warehouse of the 100%
EOU, the jurisdiction for raising demand for short-levy, if
any, is with the proper officer having jurisdiction over
28 C/483/2009 & C/106/2010
export-oriented unit and not Customs House where goods
are assessed by into bond bill of entry for the purpose of
being warehoused. This is supported by the decision of the
five Member Bench in the case of Ferro Alloys Corporation
Ltd. v. C.C. (Appeals), Bhubaneswar - 1995 (77) E.L.T.
310. The relevant portion of the order are reproduced
below:
"The Tribunal has held in these two decisions
that in a situation of clearance of warehoused goods,
the jurisdiction for raising demand for short levy or
refund on reassessment will be with the proper
officer granting ex-bond clearance. This view of the
Tribunal finds support in the Madras High Court
decision in the case of Collector of Customs, Madras
v. Tungabhadra Fibres Ltd., reported in 1994 (71)
E.L.T. 655 (Mad.). The High Court had held that the
assessment of goods into bond on a warehousing Bill
of Entry is only tentative and such assessment being
made only for the purpose of execution of
warehousing bond, is not conclusive. Para 6 of the
Madras High Court decision reads as follows:
********
Therefore, the reservations expressed by the referring Bench in the present case, about the aptness of the Ferro Alloys Corporation Ltd. decision as regards the jurisdiction in a situation under the warehousing provisions of the Customs Act, 1962, are well-founded. For the reasons discussed above, it has to be held that in the circumstances of this case the jurisdiction for raising demand for short levy will be with the proper officer having jurisdiction over the E.O.U. and not the Custom House where the goods were assessed on an into bond Bill of Entry for the purpose of being warehoused." 4. Therefore, the proper officer to issue a show cause notice in the case of clandestine removal of goods from the EOU 29 C/483/2009 & C/106/2010 is the Central Excise Officer under whose administrative control the said EOU falls.
Further, for issues arising the FTDR Act, 1992 qua EOUs, the proper officer for issuing show cause notice is the Development Commissioner.
33. In view of the above, we find that central excise officers have jurisdiction over the EOUs under their administrative control to issue show cause notices demanding customs/ excise duty. We find that the argument and the cases laws relied upon by the learned Counsel for the appellants are not acceptable in view of the foregoing discussion. We are in agreement with the argument of the learned Authorized Representative for the Revenue that the impugned show cause notice is not without jurisdiction. Therefore, the issue No. (i) framed at Para 24, as above is answered in affirmation.
34. Coming to the merits of the case, we find that learned Counsel for the appellants submits that the impugned show cause notice was issued without any basis and was adjudicated without application of mind. The adjudicating authority appears to have confirmed the demand of customs duty on the ground that the appellants had failed to de-bond the warehouse on the expiry of the bond on 31.03.2007. As submitted by the learned Counsel for the appellants, we find that this alone cannot be a ground for confirming duty assuming that the raw materials, capital goods and the final products were cleared without payment of duty. We also find that the impugned show cause notice and the order, though alleges that raw material and capital goods procured duty free have been cleared without payment of duty 30 C/483/2009 & C/106/2010 and without appropriate permission, does not refer to any bill of entry under which the impugned raw material was imported availing Notification No.53/97. We find that the Bill of Entry is the basic document vide which the quantity imported and warehoused and the duty foregone etc. can be ascertained. Demanding of any duty without reference to any authentic documents, more so, demanding customs duty on the imported raw material is not only without any basis but also is not permissible. On the single point alone, the show cause notice falls flat.
35. We further find that in a rare kind of show cause notice; Revenue issued a show cause notice dated 28.09.2007 on the basis of the stock ascertained on 27.03.2002. We find that Revenue has not made out any efforts to find out relevant factors such as whether the bond period was liable to be extended and was applied and as to whether the Development Commissioner has not extended the bond period; whether the export obligation has been fulfilled by the appellants and what was the actual stock remaining at the time of issuance of show cause notice. We further find that no steps appeared to have been taken to ascertain whether the unit was de-bonded. The only premise on which the impugned show cause notice and the order appeared to have proceeded is the fact that the bond period was over. Further, we find that the stock taking, that too on 27.03.2002 was not an accurate one as no physical weighment was done and the stock was not even ascertained as per scientific norms acceptable in the trade. We find that the officer who has conducted the stock taking accepted 31 C/483/2009 & C/106/2010 the fact that the stock taking was not accurate during the course of cross-examination. Excerpts from the cross-examination are as follows:
Q.6 How did you arrive at figures mentioned in Column-4 of Annexure-A to Panchnama dated 28.3.2002?
Ans: The Quantity was arrived at by multiplying the carton/bales/thans with the weight mentioned thereon.
Q.7 Was any worksheet prepared for arriving at the quantity by multiplying cartons/bales/thans etc?
Ans: No. Q.8 Whether bales/cartons thans were of uniform weight?
Ans: Only cartons were of uniform weight and the weight of bales/thans was not uniform Q.9. Is it correct that only weight/verification of imported material was carried out and no weighment/verification of indigenous were carried out?
Ans: Yes
Q.11 Is it correct that so called
weighment/verification exercise were
completed in Four hours?
Ans: Yes
Q.12 Whether some inputs etc were lying in
loose condition also?
Ans: Yes, loose material was lying and it was
not weighed.
36. We find from the above that Revenue not only relied on the stock that was taken more than five years ago but also the stock taking was done in a very casual and lackluster manner. Out of the material estimated, only cartons were of uniform weight and bales were not of uniform weight. The officer who ascertained the stock did not specify as to how the total weight of the bales were taken.
Moreover, the officer accepts that the stock of goods lying lose was
32 C/483/2009 & C/106/2010 not taken. We find that show cause notice demanding duty cannot proceed on such inaccurate and incorrect figures. Learned Authorized Representative for the Revenue submits that the appellants have not raised any objection during the drawl of Panchnama on stock taking. We find that it is for the Revenue to arrive at the actual weight and non-raising of an objection by the appellant on the stock taking cannot be a justification for issuance of show cause notice on such ascertained stock after a lapse of more than five years. We find that such a show cause notice and the impugned order based on the same cannot be sustained.
37. We find that the appellants submitted that the appellants have made several requests to the Deputy Commissioner of Customs to revoke the suspension of IEC; the Development Commissioner revoked the suspension on 08.04.2003; in spite of the repeated requests by the appellant, suspended warehouse license was not revoked. We find that it is not forthcoming as to any action was taken by the Department on these applications. We find from the records of the case that Revenue kept silent for all the years and issued a show cause notice on one fine day alleging clandestine removal on the basis of the stock improperly ascertained five years ago. Further, we find that the appellant submits that due to the long inaction on the part of the Revenue, the machines got jammed; the raw materials work in progress and capital goods were damaged/ destroyed due to natural conditions over the years, were not considered. We find that a reasonable opportunity should have been given by verifying the 33 C/483/2009 & C/106/2010 claims of the appellants without doing so, it is not open for the Department to confirm the duty liability. Thus, the issue No.(ii), framed above at Para 24, is answered in the negative in favour of the appellant.
38. The appellants submit that the imports have taken place from November 2001 to March 2002 and the show cause notice was issued on 28.09.2007 and therefore, it is hit by limitation and some period is even beyond the extended period of five years. The Authorized Representative for the Revenue submits that the appellants have executed a B-17 Bond as per Notification No.53/97 and the demand was raised in terms of the bond executed and therefore, the limitation will not apply. We find that this issue has come before the Tribunal in a few cases and it was continuously held that the limitation provided under Section 28 of the Customs Act applies in spite of the conditions of the B-17 Bond.
39. We find that the Tribunal, in the case of Emcure Pharmaceuticals Ltd 2014 (307) E.L.T. 180 (Tri. -Bom), held that limitation provisions are applicable even when assessee (100% EOUs) executes B-17 bonds.
"5. We have carefully considered the submissions made by both the sides. From the records it is clearly seen that the respondent had declared to the department that they would be availing the benefit of Notification 23/2003 in respect of advance DTA sales to be effected by them in terms of the permission granted by the Development Commissioner as 34 C/483/2009 & C/106/2010 early as in 2004 itself. Therefore, the respondent cannot be, said to have withheld any information from the department. The respondent's plea that they were entitled for the benefit of exemption under Notification 23/2003 under the belief that they were entitled for benefit of such Notification cannot be said to be a mis-declaration as held by the Hon'ble Apex Court in Northern Plastics Ltd. v. Collector of Customs & Central Excise - AIR 1998 SC 2371 = 1998 (101). 549 (S.C.). If the department felt that the respondent was not entitled to such exemption, they should have issued the show cause notice within the period stipulated under Section 11A. Revenue's reliance on the decision of the Tribunal in the case of Endress + Hauser Flowtec (I) Pvt Ltd. (supra) does not come to their rescue for the reason that B-17 bonds are executed not only by the 100% EOUs but also units in the DTA. If Section 11A is applicable in respect of units in DTA who have executed B-17 bonds before the department, the same logic would apply in respect of 100% EOUs as well. Therefore, the argument that merely because the respondent has executed a B-17 bond they would fall outside the purview of Section 11A is illogical and irrational. One cannot interpret the law in such a way so as to make the provisions of law redundant."
40. We find that Hon'ble High Court of Bombay, on an appeal filed by the Revenue against the above decision, upheld the decision of the Tribunal as above.
"4. These very facts were, therefore, appreciated by the Tribunal and in arriving at the conclusion that the show cause notice and the proceedings in pursuance thereof were barred by limitation. It may be that the Tribunal dealt with an incidental contention of the Revenue. Merely because that incidental 35 C/483/2009 & C/106/2010 question has been dealt with, we cannot loose sight and shift the focus from the main question. The main question was the applicability of Section 11A and invocation of the extended period thereunder. The extended period could not have been invoked in the absence of the requisite ingredients and to be found in Clauses (a) to (e) of sub-section (4) of Section 11A of the Central Excise Act, 1944. This is clearly a finding of fact and reached in the backdrop of the assessee's peculiar case. We do not think that such findings raise any substantial question of law. The Tribunal's view cannot be said to be perverse. It is a possible view of the matter. The appeal is devoid of merits and is dismissed."
41. We find that Tribunal Ahmedabad has followed the above decision in the case of Surya Life Science Limited - 2019 (368) ELT 148 (Tri. - Ahmd). Therefore, we find that the appellants have a strong case in their favour on limitation. Thus, issue No.(iii) framed at Para 24 above, is answered in the affirmative and in favour of the appellants. Thus, we find that the impugned show cause notice (in respect of appeal No. C/483/2009) is barred by limitation. Further, we find that Learned Counsel for the appellants submits that prior to instant show cause notice dated 28.09.2007, another show cause notice dated 03.07.2003, was issued to appellant and was decided vide Order-in- Original dated 25.06.2009, where in duty has been confirmed on all the imports made by the appellant. We find that in the vide Order-in- Original dated 25.06.2009 (passed on Show Cause Notice dated 03.07.2003), duty on the total imports made by the appellant was demanded (except the 26 bills of entry pertaining to imports at Nhava Sheva); in the impugned Show Cause Notice or order it is not clear as 36 C/483/2009 & C/106/2010 to which bills of entry are covered in the impugned case. Therefore, we hold that, it is incorrect to demand duty again. For this reason, too the demand of duty is liable to be set aside.
42. In view of the above discussion, in respect of Appeal No. C/483/2009 though we are not in agreement with the appellant's contention on jurisdiction of Central Excise officers to issue show cause notices in the cases involving evasion of customs duty in respect of EOUs, we are of the considered opinion that the appellants succeed on merits and limitation. In view of the appellants succeeding on merits and limitation, we find that no case is made for confiscation of goods or imposition of fine in lieu of confiscation and imposition of penalty on M/s Royal Industries Ltd. Accordingly, we are of the considered opinion that the impugned order is liable to be set aside. We find that co-ordinate Bench of the Tribunal at Ahmedabad held in the case of Siddhnath Shipping (2024) 20 Centax 295 (Tri- Ahmd) that charge of clandestine removal from a SEZ unit can not be alleged without evidence of the disposal of the said goods. We hold that the same analogy, in this case too, clandestine removal cannot be alleged for the reason of shortages, without presenting any evidence for clandestine removal/disposal of the goods in domestic market.
Appeal No. 106/2010
43. Now Coming to the question no (iv), framed at Para 29 above, as to whether the demand of Customs duty, on various Counts, 37 C/483/2009 & C/106/2010 confirmed on the appellant, in respect of Appeal No. 106/2010 is maintainable, We find that most of the arguments made in respect of Appeal No C/483/2009, as far as the Show Cause Notice being vague; not giving the details of imports of bill of entry wise and dependence on the stock taking done in a cursory and unscientific manner are concerned, are also squarely applicable to Appeal No. C/106/2010. Further, we find that there is merit in the argument of the appellants that the physical verification of stock was not carried out properly and no conclusion can be drawn from the same. The Revenue alleged that on the day of search/stock taking by the officers on 28/03/2002, 67640.470 Kg of polyester yarn, 35127.300 Kg of synthetic waste, 27030.400 Kg of polyester fabrics, 78413 Kg of acrylic yarn and 107724.100 Kg of acrylic fibre were found short. Total customs duty involved in shortages was estimated Rs.1,22,49,448/-. It was alleged that customs duty of Rs Rs.15,90,03,872 was also evaded by the appellants on account of various clearances for job work, export, export through Merchant exporter, deemed export etc and the same is recoverable from all of them under Sections 28(1) and 72(1) of the Customs Act read with B-17 Bond submitted on 11/07/2002 along with interest and penalty.
(i). in the respect of deemed sales to M/s Devyani Processors Pvt Ltd, Jethpur, 281 consignments were shown to have been dispatched by the appellants; but only 128 consignments were received by M/s Devyani Processors Pvt Ltd as per the statement of Shri Chovatia on 19/04/2002.; customs duty evaded on the deemed exports to M/s Devyani Processors is Rs.4,45,45,412;
38 C/483/2009 & C/106/2010
(ii). in respect of deemed export to M/s Phil Tex Prints, Patancheru, 106 consignments were claimed to have been sent but, re- warehousing certificates were received only in respect of 27 consignments, as confirmed by the Deputy Commissioner of Central Excise, Hyderabad-I; resultant evasion is of Rs.3,13,41,211;
(iii). in respect of the export claimed through the merchant exporters i.e. M/s Harnam Fabrics (25 consignments of Blankets through Port of Tuticorin) and M/s Anchal Exports (4 consignments of Blankets through Nhava Sheva), the transaction shown was only on papers and no real exports have taken place as reported by Nhava Sheva Customs; evasion of customs duty is of Rs.77,10,473 and Rs.46,55,122 respectively. alleged.
(iv). in respect of direct export, claimed by the appellants to Supreme Garments Trading LLC Dubai, no real export has been made and only papers manipulation was taken place resulting in duty evasion of Rs.99,19,388;
(v).in respect of clearances of 2,51,760 Kg of dyed acrylic yarn to job workers namely M/s Narang Enterprises, M/s Radheshyam Industries, M/s Gopal Woolen Fabrics, M/s Hariom Enterprises, M/s GR Fabrics and M/s Nav Bharat Special Fabrics, it was alleged that no yarn was sent but only paper transactions have been shown resulting in evasion of customs duty of Rs.1,07,42,599;
(vi). in respect of claim of clearance of 72000 Kg acrylic fibre to M/s Arora Fibre Pvt Ltd and 66372 Kg of acrylic fibre to M/s Adinath Textiles Ltd, appellants have only created papers to show clearance 39 C/483/2009 & C/106/2010 and have diverted the same in local market and thus, evaded customs duty of Rs.15,48,000 and Rs.24,85,967 respectively.
44. We find that the appellants also submit that the imported material has been duly utilized in the manufacture of finished goods and were duly exported; even if it is assumed that the appellants have diverted the same in the domestic market, they are liable to pay duty under Section 3 of Central Excise Act and not under proviso to Section 3 as held in M/s Sam Spintex - 2004 (163) ELT 212 and M/s Himalaya International - 2003 (154) ELT 680 (LB) and M/s Panchsheel Soap Factory - 2003 (156) ELT A382 (SC) and demand of customs duty is not sustainable; they also submit that majority of their raw material were from DTA/ 100% EO Units and therefore, benefit of Notification No.08/97 is available to the appellants. Now, we proceed to evaluate as to how Learned Commissioner has dealt with the allegations, defence of the appellant and the law.
Findings on shortages; Removal for Job-wok/Export
45. As far as the demand of duty on various shortages, removal for job work/ export is concerned, Commissioner relies on the stock taking and the statement of Shri Sushil Kumar Sharma, Authorized Signatory of the appellant, who is stated to have accepted the shortages and that the appellant was indulging in selling/ diverting goods imported duty free in the domestic market. Commissioner takes in to account the contention of the appellant that they have also procured 216567.710 Kg of polyester yarn duty free from 100% 40 C/483/2009 & C/106/2010 EOUs i.e Gunjan Exports, Angana Textiles, Goyal Industries Ltd, Goyal Synthetics Pvt Ltd and 1292601.243 Kg of polyester yarn from domestic units like M/s Kansal Texo-Tube Pvt Ltd and M/s Geeta Yarn; polyester yarn imported/ domestically procured by the appellants shall be in the ratio 55.31: 44.69 and that total demand of duty in the show cause notice cannot exceed that of the procurement in respect of acrylic Fibre/ tow/ tops. Commissioner arrives at the quantity of the shortages and the duty liability of the appellant on various removals as discussed above, as under
Material Quantity Referred Bill of Duty in Kg entry and date In Rs Polyester Yarn 41640.470 4876/ Cus 8,52,674 02.06.2000 C.Ex. 3,11,440 Synthetic Waste 35127.500 514217 5,44,660 02.07.2001 do 58303.230 9,03,989 Acrylic Staple 66372.000 12,86,213 Fibre (A/c Adinath Textiles) Acrylic 13,75,193.700 1423 3,58,54,192 Fibre/Tow/Top 17.08.2000 Polyester Fabrics 21738.400 536339 44,03, 344 (after expiry of 15.12.2001 License) Woolen Yarn 15894 003133 19,78,088 (contained in 30.04.2001 Blankets exported) Woolen Yarn 4,67,922 (contained in supply to Arora Fabrics)) Polyester Yarn 12,32,908.685 4876 Cus (Devyani 1,46,46,608 26.9.2000 processors) C.Ex 86,77,368 Polyester Yarn 3,93,798 34,84,795 ( Phil Tex Prints)
41 C/483/2009 & C/106/2010
46. The above conclusions are based on the stock-taking; available records of the company and the submissions of the appellant and others. However, the commissioner loses sight of the fact that the stock was not physically verified; it was only an estimation; it was not humanly possible to check the stock, in a day or two, as the weighing machines available in the factory were of a capacity of 350 & 150 Kg; the officer who conducted the stock-taking accepted during the cross-examination that the stock-taking was not conducted physically and was only an eye-estimation. He compares the shortages with the figures available in the input register and form-IV, accepts a few contentions of the appellant and discards others without any evidence and without any justifiable reason. However, as requested by the appellant and as directed in the remand order, commissioner extends the benefit of the notifications 2/95 and 8/97.
47. We find that the Commissioner accepts the contention of the appellant that imported of polyester yarn of 5000 kg and 21000 kg was recorded twice in the register; he accepts that the entries are on different dates 5000 Kg on 30.04.2001 & 7.5.2001 and 21000 Kg on 30.01.2002 and 3.3.2002 as provided by the appellant. In respect of synthetic waste, sent on Job-work basis to M/s Gambhir Textiles and Spinning Mills and to M/s Adinath Textiles, he accepts the version of the appellants but in other respects he does not accept; though he obtains and accepts a report dated 21.01.2009 from the Assistant Commissioner of Customs, Amritsar to the effect that the shortages 42 C/483/2009 & C/106/2010 arrived at were correct, learned Commissioner accepts the contention of the appellant that M/s Adinath Textiles have paid the central excise duty on the acrylic fibre and holds that only customs duty is to be recovered from the appellant. Regarding the polyester fabrics, he accepts the contention of the appellants drawn from the cross-examination of Shri Narender Bains that the goods sold to M/s A.S Enterprises were there in the factory and later were sold to M/s A.S Enterprises; however, he finds that as the goods were removed during the currency of suspension of warehousing license, the same cannot be reduced from the shortage found. In respect of 06 bills of entry vide which the appellants claimed export, Commissioner finds that though the description is not matching, the same can be accepted on the basis of Form-IV Register.
48. In respect of the allegation that the appellants diverted 15894 Kg of woolen yarn into domestic market that the appellants have diverted the material and have not used the same for manufacture and export of woolen blankets; however, he accepts the contention of the appellants that they have used scoured Mohair wool and not the imported woolen yarn for making of the blankets and arrives at the customs duty. It appears that there is no basis for accepting the contention of the appellant as per records.
49. We find that in respect of 66,372 kg of imported acrylic fibre, adjudicating authority relied upon the statement of Shri A.K. Kapoor of Adinath Textile Limited, who is a co-noticee, however, he did not 43 C/483/2009 & C/106/2010 allow the cross examination of the same. We find that the statement not corroborated by any evidence brought on record to establish the diversion of the impugned goods, cannot be relied upon more so, when the commissioner did not examine the person tendering the statement, in term of Section 9(D) of the Central Excise Act, 1944 and not permitted the cross examination. We are of the considered opinion that the same vitiates the proceedings.
50. Regarding the duty demanded on the material supplied free of duty to M/s AS Enterprises, we find that the appellants claim that they submitted re-warehousing certificates; the fact is neither denied nor examined by the adjudicating authority. We find that in case the authority felt that the re-warehousing certificates were not correct, it was open to him to get the same verified from the jurisdictional authorities. The duty confirmed by the adjudicating authority, is on the basis of bald unsubstantiated allegations in the Show cause Notice. Moreover, in this case also diversion is not proved with any evidence is placed on record. Therefore, the demand of duty is not sustainable.
51. We find in respect of the supplies to M/s Anchal Exports, Merchant exporter, the adjudicating authority relies on the report sent by Nhava Sheva Customs House that exports claimed to have been made by M/s Anchal Exports, vide Shipping Bills No. 314291, 314292, 314293 and 314294 all dated 09.01.2002, were bogus. We find that the Adjudicating Authority observes that Shri Vinod Kumar 44 C/483/2009 & C/106/2010 Garg Proprietor of M/s Anchal Exports, K-3/4 Textile Colony, Ludhiana had connived with and abetted M/s Royal Industries Ltd, Ludhiana in evading Customs duty of Rs. 46,55.122; he had diverted bonded goods into domestic market, which he was supposed to export on behalf of M/s Royal Industries, Ltd. Ludhiana; to show export of goods, he submitted bogus documents like Bills of lading, shipment certificates, remittance certificates from the banks; he deliberately tried to mislead inquiry by giving false statements. We fail to understand as to how the demand can be confirmed against the appellants for failure on the part of the Merchant exporters, when the authority himself finds that it was the merchant exporter who diverted the goods. Except saying that Shri Vinod Kumar Garg Proprietor of M/s Anchal Exports has connived with the appellant, it has not been brought out as to whether the exported material was not received by M/s Anchal Exports and has been diverted by the appellants. We find that in the absence of corroborating evidence duty cannot be fastened against the appellant.
52. Regarding the duty demanded on the material supplied free of duty to M/s AS Enterprises, we find that the Adjudicating Authority observed that the warehousing license of the Appellant was suspended during the period when this stock was transferred to another EOU at Parwanoo; the appellant was required to inform the jurisdictional Range regarding removal of inputs from the bonded warehouse; the appellant had removed the inputs without following the proper procedure; Hence, he was not inclined to accept this 45 C/483/2009 & C/106/2010 transfer of stock as legal and justified; he concluded that Customs duty amounting to Rs 44,03,344/- is recoverable from the appellant along with interest. We find that it is not the case of the department that the goods were not accounted by the other EOU; the only allegation appears to be that at the time of the transfer, the warehousing License has expired. When the re-warehousing of the goods is not disputed, we have to consider the lapse of the appellant as a procedural lapse and this would in no case be a reason or evidence to demand duty from the appellants.
53. On the allegation that the appellants that they did not receive back the polyester/ cotton yarn sent to M/s Arora Fabrics, Commissioner records that the appellants submit that they have received 71327 Kg sent on job-work to M/s Arora Fabrics and the same is reflected in their registers and Form-IV; Commissioner gives allowance to the quantity claimed and finds that the appellants have not accounted for 21671 Kg of polyester yarn.
54. in view of the above discussion, we find that the confirmation of demand on account of shortages found, clearances for job-work and export, the impugned order is erroneous and legally not sustainable for the following reasons.
(i). Duty was confirmed largely based on the shortages arrived on 27/28.03.2002. stock-taking was done in an unscientific and haphazard manner; it was only an eye estimation; work in progress 46 C/483/2009 & C/106/2010 was not taken in to consideration. The officer accepted during Cross examination that it was an eye-estimation.
(ii). Statement of Shri Sushil Kumar Sharma was relied upon but the same was retracted. Learned Commissioner has not examined Shri Sharma under the provisions of Section 9(D) of the Central Excise Act,1944.
(iii). The shortages alleged and discussed in the impugned order are not consistent. While the Commissioner concludes at Para 3.60 that the duty evaded by the appellants was Rs.9,81,42,025/- in the order portion he confirms duty of only Rs.7,71,95,025/-.
(iv). The investigations conducted did not provide any evidence to prove that the appellants have diverted the goods in to local market. No enquiries were conducted in that direction. Therefore, clandestine removal can not be alleged on the basis of stock-taking which was done only on eye estimation.
(v). Learned Commissioner has passed the order accepting certain contentions of the appellants on shortages in some cases and rejecting the same on other cases, as discussed above, without giving any commensurate reason and analysis.
(vi). The Adjudicating Authority relies on the proposition that the appellants could not substantiate their submissions with evidence. We find that such an argument is not acceptable as held in a plethora of judgements. Revenue has levelled the allegations and it is incumbent upon the one who alleges to prove the allegations on the basis of irrefutable evidence and legal provisions.
47 C/483/2009 & C/106/2010
55. Moreover, we find that the Learned Adjudicating Authority finds that various submissions of the appellant are misleading and after thought and that as the appellants did not submit any evidence in their favour, the demands were confirmed by the Adjudicating Authority. We find that any case cannot be decided on the basis of absence of evidence in favour of the appellants. If the Revenue, does not bring about enough evidence to substantiate the allegations, the demand cannot be sustained.
56. We find that the Principal Bench, in the case of M/s Surya Wires Pvt Ltd, vide final Order No. 50453-50454/2025 dated has gone through various judgments issued in this regard by Tribunal and high Courts held that
21. It would be seen section 14 of the Central Excise Act and section 108 of the Customs Act enable the concerned Officers to summon any person whose attendance they consider necessary to give evidence in any inquiry which such Officers are making. The statements of the persons so summoned are then recorded under these provisions. It is these statements which are referred to either in section 9D of the Central Excise Act or in section 138B of the Customs Act. A bare perusal of sub-section (1) of these two sections makes it evident that the statement recorded before the concerned Officer during the course of any inquiry or proceeding shall be relevant for the purpose of proving the truth of the facts which it contains only when the person who made the statement is examined as a witness before the Court and such Court is of the opinion that having regard to the circumstances of the case, the statement should be admitted in evidence, in the interests of justice, 48 C/483/2009 & C/106/2010 except where the person who tendered the statement is dead or cannot be found. In view of the provisions Sub- Section (2) of section 9D of the Central Excise Act or sub- section (2) of section 138B of the Customs Act, the provisions of sub-section (1) of these two Acts shall apply to any proceedings under the Central Excise Act or the Customs Act as they apply in relation to proceedings before a Court. What, therefore, follows is that a person who makes a statement during the course of an inquiry has to be first examined as a witness before the adjudicating authority and thereafter the adjudicating authority has to form an opinion whether having regard to the circumstances of the case the statement should be admitted in evidence, in the interests of justice. Once this determination regarding admissibility of the statement of a witness is made by the adjudicating authority, the statement will be admitted as evidence and an opportunity of cross-examination of the witness is then required to be given to the person against whom such statement has been made. It is only when this procedure is followed that the statements of the persons making them would be of relevance for the purpose of proving the facts which they contain.
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28. It, therefore, transpires from the aforesaid decisions that both section 9D(1)(b) of the Central Excise Act and section 138B(1)(b) of the Customs Act contemplate that when the provisions of clause (a) of these two sections are not applicable, then the statements made under section 14 of the Central Excise Act or under section 108 of the Customs Act during the course of an inquiry under the Acts shall be relevant for the purpose of proving the truth of the facts contained in them only when such persons are examined as witnesses before the adjudicating authority and the adjudicating authority forms an opinion that the 49 C/483/2009 & C/106/2010 statements should be admitted n evidence. It is thereafter that an opportunity has to be provided for cross- examination of such persons. The provisions of section 9D of the Central Excise Act and section 138B(1)(b) of the Customs Act have been held to be mandatory and failure to comply with the procedure would mean that no reliance can be placed on the statements recorded either under section 14D of the Central Excise Act or under section 108 of the Customs Act. The Courts have also explained the rationale behind the precautions contained in the two sections. It has been observed that the statements recorded during inquiry/investigation by officers has every chance of being recorded under coercion or compulsion and it is in order to neutralize this possibility that statements of the witnesses have to be recorded before the adjudicating authority, after which such statements can be admitted in evidence. Deemed Exports
57. Now we turn our attention to the duty demanded on the deemed exports claimed by the appellants. The appellants claimed that they have supplied goods to M/s Devyani Processors Limited, Jethpur under 281 consignments and to M/s Philtex Prints, Patancheru under 140 consignments. We find that the demand raised under these deemed exports are on a different footing from the demands raised on the basis of shortages, as these are based on the claim of the appellants themselves.
58. We find that in respect of the 281 consignments of grey fabric to M/s Devyani Processors Pvt Ltd, adjudicating authority relies on submission of the appellants and accepts that re-warehousing 50 C/483/2009 & C/106/2010 certificates have been received in respect of 128 consignments out of 281 consignments were received and therefore, the appellants are liable to pay duty on the balance 153 consignments; after giving allowance to 10 consignments on the basis of the appellant's submission confirmed by the Deputy Commissioner of Central Excise, Rajkot vide his report dated 19/04/2002, Commissioner concludes that customs duty of Rs.2,53,23,976/- is recoverable from the appellants. Commissioner relies on the statement of Shri P.P. Chovatia, Director of Devyani Process Pvt Ltd. However, Shri Chovatia did not appear for cross examination. Shri Ramesh Kumar Jain of M/s J Bhawani Cargo Carriers, the transporter stated that they transported all the consignments to M/s Devyani Process. It is seen that the statements of Shri P.P. Chovatia, Director of Devyani Process Pvt Ltd and Shri Ramesh Kumar Jain of M/s J Bhawani Cargo Carriers, the transporter are contradictory to each other. The adjudicating authority did not specify the reasons as to why among the two contradictory statements, one has to be accepted and the other to be discarded. This becomes more important as the adjudicating authority relies did not examine Shri P.P. Chovatia, Director of Devyani Process Pvt Ltd and Shri Ramesh Kumar Jain of M/s J Bhawani Cargo Carriers.
59. We find further that the appellants contend that they have received payments for all the consignments. It was also alleged that some of amounts paid by Shri Chovatia to appellants were towards advances as confirmed by Shri Sushil Kumar Sharma, employee of 51 C/483/2009 & C/106/2010 the appellants; however, the appellants' contention is that Shri Sushil Kumar Sharma is not authorized to conduct any financial transaction and therefore, his statement cannot be relied upon. The appellants also submit that the enquiry conducted by the Customs authorities indicated that some of the vehicles mentioned in GRs were not fit for transporting the goods because the numbers pertain to scooter, motorcycle, three-wheeler, auto-rickshaw etc; they had used around 400 trucks and the discrepancies were found in about 10 vehicles; scrutiny of the records indicated that numbers of two trucks were mentioned wrongly whereas the actual number of the trucks were PB 07B-9445 and PB 13C-3671 instead of PB 7G 9445 and PB 13E 3671 and that they have received the re-warehousing certificate in respect of above and submitted the same; they also submit that at times, there was wrong mentioning of the vehicle numbers on the GR. The appellants further submit that while calculating the duty on the basis of re-warehousing certificates, Revenue has not given allowance to wastage occurring in the processing of goods; they generated around 1.33% of wastage in the production of grey fabrics; therefore, the loss of the quantity of 11668 Kg should be accounted for the wastage. We find that the learned adjudicating authority has not examined these contentions of the appellant and has not given any findings on the same.
60. In respect of 140 consignments cleared to M/s Philtex Prints, learned Commissioner accepts the supply under 27 consignments No. 208 to 217 all dated 08.12.2001; 218 to 227 all dated 52 C/483/2009 & C/106/2010 10.12.2001 and 228 to 234 all dated 15.12.2001 relying on the confirmation dated 25.05.2003 by Central Excise, Hyderabad-I Commissionerate to Assistant Commissioner, Customs, Amritsar and demands duty on the balance customs duty. We find that the appellants submit that they have received 62 re-warehousing certificates from them; the investigation did not consider 27 re- warehousing certificates which were duly signed by the Range Officer; Central Excise, Hyderabad vide letter dated 29.05.2003 confirmed receipt of 78 consignments at M/s Philtex; the report received from Central Excise, Hyderabad stating that the consignments stated to have been dispatched to M/s Philtex may not have reached them as the verification from the RTO has shown that some of the vehicles mentioned in the documents are non-transport vehicles such as two-wheelers, three-wheelers etc; the report was obtained without mentioning the actual numbers of the vehicles; it is not specifically in respect of the supplies made by the appellants; the numbers of the vehicles referred to the RTO were different from those mentioned in the documents showing removal of consignments by the appellants to M/s Philtex; moreover, the report is also not relied upon by the show cause notice. We find that the learned authorised representative submits that re-warehousing certificates were available for only 27 consignments out of 106 consignments, whereas learned adjudicating authority himself has given a finding that the appellants had re-warehousing certificates for 62 consignments. We find that the learned Counsel for the appellants fairly submits that, as the records are very old, they are not in a 53 C/483/2009 & C/106/2010 position to submit the re-warehousing Certificates in respect of 17 consignments and as such they undertake to pay duty on those 17 consignments. Interestingly, Commissioner calls for a report from Customs Amritsar, who reported that no consignments appear to have been received by M/s Philtex. However, he proceeds to confirm the duty partly accepting part of the submissions of the appellant.
61. We find that learned adjudicating authority has confirmed part of the demand in respect of deemed clearances to M/s Devyani Processors and M/s Philtex Prints based on the absence of re- warehousing certificates and the investigation reports received. The confirmation has been mainly on the basis of re-warehousing certificates, without going in to other evidences put forth by the appellants. No findings were given as to whether the removals at the appellants end and the receipts at the processors end were supervised by the officers. we find that the submissions of the appellants have not been considered and contradicted. In respect of clearances to M/s Devyani Processors, the submissions that the enquiry was conducted with transport department mentioning wrong numbers of the vehicles; some vehicle numbers were wrongly written in GRs that the payments for all consignments were received, were not considered. In respect of clearances to M/s Philtex Prints, an investigation report which was not relied upon by the Show Cause Notice was taken in to consideration. Shri P.R. Chovatia, Director of M/s Devyani Processors and Shri Majhabella Khan, Proprietor of M/s Philtex Prints did not appear for cross-examination and the 54 C/483/2009 & C/106/2010 Adjudication Authority did not himself examine these persons along with Shri Sushil Kumar Sharma of the appellants and Shri Ramesh Kumar Jain of M/s J Bhawani Cargo Carriers. Considering these circumstances and the submissions of the appellant that they are not in a position to submit all the re-warehousing certificates, we find that though the impugned order is liable to be set aside, the issue needs to go back to the adjudicating authority to re-quantify the demand on the deemed exports claimed by the appellants to M/s Devyani Processors Limited, Jethpur and M/s Philtex Prints, Patancheru.
62. In view of the above discussion and analysis Appeal No. C/483/2009 is allowed. Appeal No. C/106/2010 is partially allowed in following terms:
(i). All demands confirmed and penalties imposed, except the demand of duty on deemed exports claimed to have been made to M/s Devyani Processors Limited, Jethpur and M/s Philtex Prints, Patancheru, are set aside.
(ii). The issue of duty on deemed exports claimed to have been made to M/s Devyani Processors Limited, Jethpur and M/s Philtex Prints, Patancheru is remanded to the adjudicating authority for a fresh-consideration and quantification.
55 C/483/2009 & C/106/2010
(iii). It is directed that the adjudicating authority shall decide the issue afresh and quantify the duty, as at (ii) above, considering all the evidence on record, submissions of the appellants and our observations. Needless to reiterate that due opportunity shall be accorded to the appellants to represent themselves and the principles of natural justice are adhered to.
(Order pronounced in the open court on 30/06/2025) (SOMESH ARORA) MEMBER (JUDICIAL) (P. ANJANI KUMAR) MEMBER (TECHNICAL) Kailash