Rajhans Impex Pvt Ltd Vs C.C.- Mundra (CESTAT Ahmedabad)
Charges of clandestine removal cannot be sustained as the evidences brought into the record by the department are incomplete, inconsistent and not a reliable piece of evidence.
Facts-
The appellant is engaged in the manufacture of Brass Rods. The scrutiny of the documents revealed that the appellant cleared Brass and Copper Alloys Rods to 100% EOUs and SEZ and availed the benefit of Deemed Exports and subsequently claimed Advance
Authorization from the DGFT, for duty-free import of raw materials i.e., Brass/ Copper Scrap/ Zinc Scrap.
It was contended that Appellant is not eligible for advance authorization for duty free imports of Brass/Copper/Zinc Scraps against the deemed export clearances shown to the 100% EOUs namely M/s Shrijkrupa Exports, M/s Apple International, M/s Jakap Metind Pvt. Ltd. and M/s Srijan Exports. Appellant showed deemed export clearance of total 248204 Kgs. of Brass Rods /Brass Hollow Rods /Copper Alloys Ingots to said four 100% EOUs which were fictitious and only on records. By doing this Appellant have grossly misused the provisions of the Advance Authorization scheme effective in the instant case under Notification No. 98/2009-Customs dated 11.09.2009 ibid read with provisions of para 4.1.5, 4.2.1 & 4.2.2 of the FTP 2009-14. By above acts Appellant showed the fictitious clearance of 248204 Kgs. of Brass Rods/ Brass Hollow Rods/ Copper Alloys Ingots on records i.e. ARE-3 and invoices, however actually cleared the same into open market clandestinely. Against these fictitious clearances not only Appellant secured 11 nos. of Advance Authorisation from the DGFT but they have also wrongfully availed Refund of Rs. 90,59,957/ – as TED from DGFT.
Appellants were issued show cause notice proposing confiscation of goods u/s. 111(o) of the Customs Act, 1962 and u/r. 25 of the Central Excise Rules, 2002, in addition to the recovery of custom duty on imported material as also Central Excise Duty on the material cleared with payment of duty under valid duty paying documents to the tune of Rs. 1,26,99,092/- and Rs. 90,59,957/- along with interest and penalty.
Conclusion- Held that the entire case of the Revenue is based upon the surmises and conjectures. No concrete, positive and tangible evidence appears on record. The evidences brought into the record by the department are incomplete, inconsistent and not a reliable piece of evidence to prove charges of clandestine removal. We hold that the charges of clandestine removal of the alleged goods not sustainable in the present matter.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
All these appeals have been filed by the appellants against impugned common Order-In-Original No. MUM-CUSTM-000-COM-030-16-17 dated 31.03.2017 passed by the Principal Commissioner of Customs, Mundra. The impugned order has demanded Customs duty in respect of the imported raw materials and Central Excise Duty in respect of the finished goods.
1.2 Briefly stated facts of the case are that the appellant are engaged in the manufacture of Brass Rods. Based on the intelligence that Appellant had indulged in gross misuse of Advance Authorisation scheme, the factory premises of Appellant was searched by the officers of DRI, Jamnagar and documents were recovered. The scrutiny of the documents revealed that, besides physical exports, Appellant also cleared Brass and Copper Alloys Rods to 100% EOUs and SEZ and availed the benefit of Deemed Exports thereon and subsequently they claimed Advance Authorization from the DGFT, Rajkot for duty free import of raw materials i.e. Brass/Copper Scrap/Zinc Scrap; that they had done physical exports under claim of Rebate and also clearances were made to 100%EOU and SEZs on payment of Central Excise Duty which was later claimed back through refund from the DGFT (in case of EOU units) and their Jurisdictional Central Excise Division (in case of SEZ units); that they have availed the Cenvat Credit of CVD and SAD on imports of Brass scrap after payment of duty and same was later shown as utilized for payment of duty on clearances made for domestic sales as well as exports and deemed exports; that the clearances were mostly done to 100% EOUs without any CT-3 and on payment Central Excise Duty which was later claimed back through refund of Terminal Excise Duty (TED) from the DGFT, Rajkot and in a few cases the clearances were made to 100% EOUs under CT-3 and similarly where clearances of Brass Rods and Copper Alloys Ingot were shown to have made to 100% EOUs on payment of duty without cover of any CT-3, they post of such clearances claimed Advance Authorisation from DGFT Rajkot and also refund of TED from DGFT. Investigation were carried out in cases where Appellant had shown the deemed export clearances to the various 100% EOUs in terms of Para 8.3 of the FTP incorporating verification of these clearances and also recording of the statements of the concerned persons of the recipient EOUs. Letters were also written to the Jurisdictional Central Excise officers of recipient EOUs to ascertain the facts with regard to actual clearance of the Brass Rods and Copper Alloys Ingots. The investigation also include statements of some of the vehicle owners which were also recorded to ascertain the actual transportation whether made or not as shown by Appellant. Investigation revealed the fact that, the deemed exports clearances shown to the 100% EOUs were not genuine and were on paper only. It appear that Appellant is not eligible for advance authorization for duty free imports of Brass/Copper/Zinc Scraps against the deemed export clearances shown to the 100% EOUs namely M/s Shrijkrupa Exports, M/s Apple International, M/s Jakap Metind Pvt. Ltd. and M/s Srijan Exports. Appellant showed deemed export clearance of total 248204 Kgs. of Brass Rods /Brass Hollow Rods /Copper Alloys Ingots to said four 100% EOUs which were fictitious and only on records. By doing this Appellant have grossly misused the provisions of the Advance Authorization scheme effective in the instant case under Notification No. 98/2009-Customs dated 11.09.2009 ibid read with provisions of para 4.1.5, 4.2.1 & 4.2.2 of the FTP 2009-14. By above acts Appellant showed the fictitious clearance of 248204 Kgs. of Brass Rods/ Brass Hollow Rods/ Copper Alloys Ingots on records i.e. ARE-3 and invoices, however actually cleared the same into open market clandestinely. Against these fictitious clearances not only Appellant secured 11 nos. of Advance Authorisation from the DGFT Rajkot but they have also wrongfully availed Refund of Rs. 90,59,957/ – as TED from DGFT.
1.3 On the basis of above investigation, Appellants were issued show cause notice dated 10.04.2015 proposing confiscation of goods under Section 111(o) of the Customs Act, 1962 and under Rule 25 of the Central Excise Rules, 2002, in addition to the recovery of custom duty on imported material as also Central Excise Duty on the material cleared with payment of duty under valid duty paying documents to the tune of Rs. 1,26,99,092/- and Rs. 90,59,957/- along with interest and penalty. The said show cause notice was also proposed penalty on the Director as well as respective EOUs. The show cause notice was adjudicated by the Principal Commissioner vide impugned order dated 31.03.3017, wherein he passed order as under:
(i) Hold that goods of 261009 Kgs. of Brass Scrap imported is liable for confiscation under the provision of Section 111(o) of the Customs Act, 1962. Since the goods are not available either physically or released after seizure through bonds, refrain from the imposing any redemption fines under the provisions of 125 of the customs Act, 1962.
(ii) confirmed the demand of Customs duty amounting to Rs. 1,26,99,092/- leviable on import of total 261009 Kgs. of Brass Scrap imported under the provisions of Section 28(4) of the Customs Act, 1962.
(iii) recover interest at the appropriate rate on above amount of Custom Duty under the provisions of Section 28AA of the Customs Act, 1962.
(iv) Impose penalty of Rs. 1,26,99,092/- and an amount equivalent to interest payable under Section 114A of the Customs Act, 1962.
(v) Impose penalty of Rs. 50,00,000/- under Section 112(a) of the Customs Act, 1962.
(vi) Hold that the goods of 248204 Kgs. Brass Roads /Brass Hollow Rods/ Copper Alloys Ingots is liable for confiscation under Rule 25 of the Central Excise Rules 25 of the Central Excise Rules, 2002. Since the goods are not available either physically or released under bonds, refrain from the imposing any redemption fines under the provisions of Section 34 of the Central Excise Act, 1944.
(vii) Confirmed the demand of Central Excise Duty amounting to Rs.90,59,957/- payable on 248204 Kgs. of Brass Rods/Brass Hollow Rods/ Copper Alloys Ingots under Section 11A(4) of Central Excise Act, 1944.
(viii) recover interest at the appropriate rate, in respect of above Central Excise Duty under Section 11AA of the Central Excise Act, 1944.
(xi) Impose penalty of Rs. 90,59,957/- under Section 11AC of the Central Excise Act, 1944.
(x) Impose penalty of Rs. 10,00,000/- under Rule 26 of the Central Excise Rules,2002
In addition, he also imposed the penalties on co-notices under Section 112 (a) of the Customs Act 1962 and separate penalties under Rule 26 of Central Excise Rules, 2002. Hence, the appellants filed the present appeals before this Tribunal.
2.1 Shri Paresh Sheth and Shri Amal Dave, Learned Counsel appearing on behalf of the appellant submits that Appellant supplied materials to 100% EOUs against CT-3 form issued by the said EUOs, without payment of duty as also with payment of duty without cover of CT-3 certificate, under cover of invoices and form ARE-3 prescribed under the provisions of Central Excise Rules. Appellant claimed the deemed export benefits in terms of chapter 8 of Foreign Trade Policy 2009-15 and claimed TED refund from DGFT. Appellant was clearing duty paid goods to all the EOUs against the application for advance license filed before Director General of Foreign Trade. Most of the Advance licenses were obtained after completion of obligation as determined under the advance license, and on receipt of Export Obligation Discharge Certificate. Appellant after procuring Export Obligation Discharge Certificate imported material without payment of duty by claiming exemption under Notification No. 96/2009. After importation of material in terms of para 4.1.5 of the policy, utilized such materials in manufacturing of final products and cleared the same in domestic market with payment of duty. In view of para 4.12 of HBP Exporters are allowed to export material in anticipation of authorization.
2.2 He submits that Appellant transported materials to M/s Jakap Metind Pvt. Ltd. and M/s Apple International in his own vehicle and to M/s Shrijikrupa Exports through either M/s Haresh Transport or M/s Shree Laxmi Transport Co and to M/s Srijan Exports through M/s Jaipur Golden Transport Co. Pvt. Ltd., which is an admitted facts and the department has questioned transportation of materials only to M/s Srijan Exports and M/s Shrijikrupa Exports. The explanation for transportation of goods by the owner of the transport agency was not questioned. On the contrary the statement of authorized person of such transportation agency were conveniently ignored and proves beyond doubt that material has been transported to M/s Srijan Exports and M/s Shrijikrupa Exports.
2.3 He further submits that on 5-9-2013, the officers visited the factory premises and impounded certain documents including statutory record, copy of ARE-3 etc. That officers recorded statement of authorized persons of the aforesaid 100% EOU as well as Director. The EOUs have accepted the fact of receipt of material in their factory premises and recorded that the said material is duly accounted for in their statutory record. The transporters and the truck owners have also supported the same. Officers had also requested jurisdictional Assistant Commissioner’s to certify whether the material covered under the respective ARE-3 were physically verified by the Range Officer or not. On such inquiry, all the concerned officers have certified that the respective EOUs have received the materials from Appellant.
2.4 He also submits that Appellant has produced certificate of Chartered Accountant, certifying there in the use of materials imported as per the requirement of Policy. All the clearances are with payment of duty and therefore cannot be treated as clandestine removal. Further central excise duty demanded is equal to refund claimed from DGFT and since the refund is sanctioned by the DGFT, cannot be recovered by the Customs Department and therefore the show cause notice is beyond the scope of Jurisdiction. Further, the Assistant Commissioner of Jamnagar has also certified that no refund/ rebate of duty paid on supplies to EOUs has been granted by them.
2.5 He also submits that the adjudicating authority while making an observation on the supplies made to M/s Shrijikrupa Export has observed that Appellant has shown 23 Nos. of clearance to M/s Shrijikrupa Export through vehicle No. GJ-10X-5021 and the capacity of such vehicle is 4550 Kg and therefore Appellant could not have transported the goods. While making such observation has ignored the facts that Shri Siraj Mamadbhai owner of Truck No. GJ-10X-5021 is his statement dated 30.12.2013 recorded before the officer under Section 108 of the Customs Act, 1962 has clarified beyond doubt that the capacity of his truck is about 7 ton. This fact proves beyond doubt that the adjudicating authority has not only misrepresented the facts but has demonstrated wrong facts. Shri Siraj while giving statement on cross-examination has also agreed to the list of transportation of goods produced by Shri Jaswantlal authorized person of M/s. Shri Laxmi transport and have agreed to have consigned 31 consignments.
2.6 He submits that the adjudicating authority referred to notification No. 98/2009-CUS dated 11.09.2009 and Para 4.1.5 of FTP for the year 20092014 and has observed that Appellant has not fulfilled the condition prescribed under the said notification i.e. has not produced certificate issued by the Jurisdictional Central Excise Officers certifying the use of materials within 6 months from the date of clearance. However, he has overlooked the facts that Appellant have not availed the exemption under notification No. 98/2009-CUS dated 11.09.2009 but have availed the exemption under Notification No. 96/2009 -CUS dated 11.09.2009 and have obtained certificate from Chartered Accountant certifying the fact that the material imported is used in manufacturing of final product. In terms of Notification No. 96/2009 clause (v) the importer is required to obtain the certificate either form Jurisdictional Central Excise Officer or from the Chartered Accountant.
2.7 He argued that for the charges of clandestine removal positive evidence required. He placed reliance on the following decisions:
