2004 (97) ECC 591 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

South Zonal Bench : Bangalore

Dr. S.L. Peeran, Member (J) and Shri K.C. Mamgain, Member (T)

Jindal Vijayanagar Steel Ltd.

Versus

Commissioner of Customs, Mangalore

Appeal No. C/197/2004

[Arising out of Order-in-Original No. 2/2003 dtd. 9.5.2003 passed by the Commissioner of Customs, Mangalore]

Final Order No. 1295/2004, dt. 27.7.2004, Certified on 3.8.2004

Words & Phrases

"Clandestine Removal" -- Effective date -- Department was not required to prove its case with mathematical precision, but what was required was the establishment of such a degree of probability that a prudent man may on its basis believe in the existence of the facts in issue. "Clandestine Removal" it is not always possible to establish the exact date of clearance but if the period during which clearance have taken place is established, then it is sufficient to say that the goods have been removed within that period -- Sec. 11A of CEA and Sec. 28 of Customs Act.

Demand & Penalty (Customs)

"Clandestine Removal" -- Statements and Documents -- The clearances under ex-bond bill of entry on which assessees have relied become fraudulent once it has been established that goods were cleared much before filing the ex-bond bill of entry -- It is proved beyond doubt that assessee had cleared the impugned goods clandestinely from the Govt. bonded warehouse without a valid EPCG and without filing proper ex-bond bill of entry. Assessee had contravened the provisions of the Customs Act and they are liable for penalty and also liable to pay duty and the goods are liable for confiscation -- Secs. 72, 71, 28 of Customs Act r/w Secs. 11A, 11AC of CEA.

PRESENT :

Shri Habibulla Basha, Sr. Adv., Smt. Rukmini Menon, Adv. for the appellants.

Shri L. Narasimha Murthy, Adv. for the respondent.

Cases Cited :

1. Commissioner of Central Excise Gurgaon v. Machino Montell (I) Ltd., 2004 (168) ELT 466 [Paras 4, 14]

2. Philips Fernandes v. Commissioner of Customs, Mumbai, 2002 (140) ELT 180... [Para 4]

3. R.P. Industries v. CC, Ahmedabad, 1996 (82) ELT 129.............................. [Paras 4, 12]

4. Shipping Corporation of India Ltd. v. C.L. Jain Woollen Mills, 2001 (75) ECC 225 (SC) [Para 4]

5. Union of India v. Jain Sudh Vanaspati Ltd., 1996 (86) ELT 460 (SC)................. [Para 11]

Per : K.C. Mamgain

This appeal is filed against Order-in-Original No. 2/03 dated 9.5.2003 passed by the Commissioner of Customs, Bangalore.

2. Shri Habibulla Bash Senior Advocate and Smt. Rukmini Menon appeared for the appellants and Shri L. Narasimha Murthy learned SDR appeared for the revenue.

3. The appellants have a public bonded warehouse in their premises operated by Central Warehousing Corporation where machinery and spares imported are warehoused pending clearance. On following up intelligence of irregularities, officers of DRI Bangalore visited their premises took stock of material in the warehouse verified all the records of import under EPCG scheme by the appellants and noticed that bearing covered by Bond No. 10/95-96 and No. 2/96-97 had been used in machinery erected before the month of November 96. Shri K. Sarover, Chief General Manager of the appellant Company identified the bearings and the machinery on which they had been mounted. He gave details of bearings mounted on the main equipment and stated that the bearings covered by the above-said two bonds had been utilized in implementation of project before they were debonded from the CWC warehouse. The warehoused goods were removed clandestinely and the bills of entry were subsequently filed to regularize the clearances after removing the goods clandestinely. Accordingly show cause notice was issued on 21.5.98 to the appellants and their officers. The case was adjudicated by Commissioner of Customs Bangalore under his Order No. 7/99-Cus. dated 5/7.5.99 confiscating the goods valued at Rs. 15,88,375 but allowed these goods to be redeemed on a fine of Rs. 12 lakhs.

He also demanded duty of Rs. 43,18,783 alongwith interest of Rs. 14,12,988 and imposed a penalty of Rs. 60 lakhs on the appellants. This Order of the Commissioner was challenged before the Tribunal and the Tribunal in its Order No. 2250/99 dated 31.8.99 remanded the case for readjudication. After considering the appellants arguments and the observations of the Tribunal in its Order No 1/01 dated 30.3.2001, Commissioner of Customs Mangalore found that the statement and letter of Shri Sarogar contain clear and categorical admission of the allegations. The warehouse was not under double lock operated both by CWC and Customs and it was possible for the appellants to regularize the clandestine clearance due to carelessness or connivance of departmental officers and he finally passed Order-in-Original demanding dues and duty and penalty as was confirmed by the Commissioner of Customs Bangalore under his Order No. 7/99-Cus. dated 5/7.5.99. Appeal against this order of Commissioner of Customs Mangalore dated 30.3.2001 was disposed of by the Tribunal under Order No. 419/2002 dated 23.2.2002. The Tribunal remanded the case for de novo adjudications with certain directions. Against this order of the Tribunal and Order-in-Original No. 01/2001 dated 30.3.2001, the appellants approached the High Court of Karnataka. The High Court in W.P. Nos. 22391-22392/2002 vide order dated 18.2.2003 had set aside the Order No. 1/2001 dated 30.3.2001 of Commissioner Mangalore and Order 419/2002 dated 22.3.2002 of Tribunal. The Commissioner was directed to follow the direction of the Tribunal contained in Para 6 of the Order dated 31.8.1999 passed by the Tribunal and to complete the proceeding by 30.6.2003. Accordingly Commissioner of Customs Mangalore passed the impugned order which was again challenged by the appellant in the High Court of Karnataka. The High Court in their order dated 22.3.2004 in W.P. No. 32291/2003 (T-TAR) directed the appellants to file appeal before the Tribunal within 4 weeks and Tribunal was directed to consider appeal without insisting on limitation. The Tribunal was further directed to consider legality/validity of the impugned order passed by Commissioner in the light of specific finding and specific direction in terms of para 6 of the Tribunal's earlier order dated 31.8.1999 and to complete the proceedings within four months from the date of filing the appeal.

4. Shri Habibulla Basha Senior advocate pleaded that the appellants have set up a steel plant at Toranagallu Bellary. They were importing items required for setting up the steel plant in 1997 and used to warehouse imported goods in the Central Warehousing Corporation located in their factory premises. Bearings were among various items imported by the appellants which were required to be mounted on various machineries. These bearings were bonded under bond Nos. 10/95-96 dated 7.3.96 and 2/96-97 dated 19.4.96. He pleaded that these bearings were removed from the warehouse under cover of 2 ex-bond bill of entries both dated 22.11.96. The said ex-bond bill of entries were duly countersigned by custom authorities and `pass out of customs charge' was given. He pleaded that the Hon'ble High Court had directed the Commissioner to decide the case as per the direction given by the Tribunal in para 6 of the CEGAT order dated 31.8.99. He stated that the order of the Commissioner is not legal and correct on the following grounds:

(i) Commissioner has gone contrary to the directions of the High Court as well as Tribunal.

(ii) The Commissioner has analysed the statement of Shri Sarovar to prove that it substantiates the allegation of clandestine removal of bearings. This is contrary to the direction of CEGAT dated 31.8.99 wherein in no uncertain terms the CEGAT has held that statements of Mr. Sarovar does not in any way substantiate the claim of clandestine removal.

(iii) Reliance placed on Shri Sarovar's statement is without jurisdiction as it is not inculpatory and there is nothing to indicate that the goods were removed clandestinely before the ex-bond bill of entries were filed. Tribunal in it's order dated 31.8.99 had clearly held that statement of Shri Sarovar does not directly admit that specified number of bearings were cleared prior to date of ex-bond bill of entry because the dates mentioned therein were the dates with regard to com