Substantial evidence needed to prove allegation of non-re-warehousing of goods

Faizan Texturising Vs C.C.E. Bharuch (CESTAT Ahmedabad)

Facts-The appellant is a 100% EOU engaged in the manufacture of Polyester Texturised Yarn and Polyester Twisted Yarn. Their factory was visited by the officers on 21.04.2003, who conducted various checks and verifications. As a result, shortage of 7618 kg. imported raw material viz. “Bright Polyester Spin Draw Yarn” was detected. Shri Altaf Aman Bagad Partner of the appellant unit, in his statement recorded on 21-04-2003 confessed that short found goods stand cleared by them without payment of duty to M/s H N Textiles, Surat.

On the basis of various investigation and statements, proceedings were initiated against the appellants by way of issuance of show cause notices on 7-4-2008, which stands culminated into an order dated 10.03.14 passed by Commissioner, Central Excise & Customs, Surat- confirming the demand of duty. Aggrieved with the Order dated 10.03.14 Appellant had preferred appeal before the CESTAT, The CESTAT, vide Final Order dated. 07.07.2015 remanded the matter back for fresh adjudication. Thereafter, vide the OIO dated 29-12-2016 the adjudicating authority confirmed the Custom duties amounting to Rs. 4,13,519/- on 9618Kg. of Polyester Spin Draw yarn along with interest and penalty and confirmed the demand of central excise duty equal to aggregate of Customs duties amounting to Rs. 30,41,820/- leviable on 284060 Sq. Mtrs. of Polyester Knitted Grey Fabrics cleared under the guise of deemed exports along with interest and penalty. In addition, confirmed the demand of customs duties amounting to Rs. 46,65,539/- on 677750.650 Kgs. of imported Bright Polyester Spin Draw Yarn procured duty free but not utilized for the intended purpose along with interest and penalty. He also imposed the penalty of Rs 10 Lakhs on Shri Altaf Aman Bagad u/s 112 (b) of the Customs Act 1962 and separate penalty of Rs. 10 lakhs u/r 26 of Central Excise Rules, 2002. He also imposed redemption fine of Rs. 6 Lakhs in respect of Polyester Knitted Grey Fabrics and redemption fine of Rs. 70,000/- in respect of Polyester Spin Draw yarn. Hence, the appellants filed the present appeals before this Tribunal.

Conclusion- We find that once the CT-3 certificate was issued the duty liability if at all arises stands shifted to the recipient who has issued the CT-3 certificate and the appellant’s clearances are covered by CT-3 is not chargeable to duty.
The Revenue has to show from their own records or from the investigation at the consignee’s end that the goods did not reach the consignee. Since the department has made the allegation of non-re-warehousing of the goods at the consignee’s factory, it has to prove the same by substantial evidence and it cannot be made on assumption.

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