CX - Every time when matter came on board, both sides were on rivalry argument - If such argument goes on, reference Bench cannot solve such a problem - it is better to hear appeal by agreeing with Member(T) who is of view sum deposited should be adequate to hear appeal: Tribunal by Majority
By TIOL News Service
NEW DELHI, JAN 13, 2014: THIS is a case booked by the DGCEI and the allegation is that the appellant has cleared processed fabrics under the guise of processed embroidered fabrics which do not attract Central Excise duty. Statements of 24 buyers were recorded wherein many of them deposed that the grey material sent by them was not actually processed embroidered fabrics but was ‘other processed fabrics' though they received the invoices from the appellants reflecting the processed embroidered fabrics.
Suffice to say that duty of Rs.1.73 crores has been confirmed against the appellant along with imposition of mandatory penalty and penalty of Rs.1 Crore against the Managing Director of the appellant firm and against this order the appellant is before the CESTAT. An amount of Rs.19.08 lakhs has been deposited by the appellant.
The appellants have submitted that all the papers were not given to them and their buyers whose statements are being relied upon by the Revenue, were not produced for cross examination. As such the statements of the buyers cannot be relied upon without testing the veracity. The computing of the duty liability in the SCN is also being questioned.
The Revenue representative submitted that all the relied upon documents were given to the appellants in terms of earlier remand order of the Tribunal as also in terms of the High Court decision. As regards cross examination, it is submitted that the statements of around 24 buyers have been recorded by the Revenue which are corroborative of each other; it is not only the buyers' statements which stands relied upon but the said statements are further corroborated by the documents seized from their premises and even the appellants' authorized representative has tendered inculpatory statements admitting all the facts, which have not been immediately retracted by them.
The Member (Judicial) took the view that that almost all the documents stands supplied to the appellants as recorded in the impugned order of the Commissioner; most of the buyers of the appellants were exporters and were ultimately exporting fabric processed by the appellants either as such or after converting the same into apparel and the declarations made by them to the customs authorities for the purposes of export would establish the fact as regard the identity of the fabric. However, the appellants have not tried to procure the above evidence so as to support their plea that the fabric processed by them was actually embroidered fabric; apart from some quantification mistakes, the appellants do not have a good primafacie case so as to ask for the dispensation of pre-deposit of duty in its entirety. In fine, the Member (J) held that to safeguard the Revenue interest appellant should make a pre-deposit of Rs.50 lakhs & the amount already paid is to be adjusted against this pre-deposit amount.
The Member (Technical) had a differing view.
He observed -
+ during the search DGCEI would have been looking for material to confirm this intelligence but no such mis-declared fabrics were detected on the date of the search at any of these 5 locations. Further searches at two other locations on 22-01-99 and 24-06-99 also did not show such material evidence. This shows a lack of credibility in the intelligence of DGCEI. It is to be noted that the SCN issued in respect of the goods seized on the date of such surprise check was dropped.
+ These evidences also appear to be very weak and the demand appears to be highly exaggerated.
+ If the goods were for export there was no reason for the applicants to evade excise duty in any clandestine manner because there are legal means by which relief from such excise duty can be got on goods exported. There is no investigation done to find out how much of these goods were cleared to exporters and how much to dealers clearing goods to local market. The duty liability is critically dependent on this factor.
+ Annexure-F shows duty evasion of Rs.1,17,20,245/-. Annexure-E shows duty evasion of Rs.1,73,36,275/-. The reason why the higher amount is confirmed is not explained in the impugned order in spite of the fact that this issue was raised by the applicants during adjudication proceeding.
+ duty demand is worked out adopting the rate of 12% BED and 8% AED uniformly for all disputed fabric which rates are highest of the possible rates. The rates during the relevant time varied depending on the material of make of the fabric. There is no attention paid to this aspect while determining the duty demanded.
+ Prima facie it appears to be a case of wrong intelligence input received by DGCEI which is puffed up by the statements of third parties who just wanted to get rid of the officers by stating whatever the officers wanted so long as it is harmless to them. The calculation adopted and the documents relied upon in the SCN were hidden from the appellants for many years and when disclosed it turned out to be sketchy and bald.
In conclusion the Member (Technical) opined that in his assessment asking for any further pre-deposit based on sketchy calculation and no reliable evidence will cause serious prejudice to the appellant. He held that the amount already deposited is adequate to hear the appeal filed and hence further pre-deposit should be waived for admission of appeal.
In view of the difference in opinion, the matter, therefore, came to be heard by the third Member.
The Third Member (J) held -
“Every time when the matter came on board, both sides were on rivalry argument on the principles of natural justice. While appellant says that documents were not given for which appellant was prevented to lead defence, Revenue says all documents were given. If such argument goes on, reference Bench cannot solve such a problem. Therefore, it would be preferable to hear the appeal agreeing with ld. Technical Member who was of the view that appellant has already deposited Rs.19,08,321/- and considered to be a measure protecting Revenue.”
And so, the Majority order was passed holding that the deposit of Rs.19,08,321/- already made by the appellant is held to be sufficient for the purpose of Section 35F of CEA, 1944 and the pre-deposit of balance amount of duty and penalty is dispensed with and its recovery stayed during the pendency of the appeal.
(See 2014-TIOL-64-CESTAT-DEL)
