The Ahmedabad bench of Customs, Excise and Service Tax Appellate Tribunal has held that allegation of non-re-warehousing of the goods prove by substantial evidence but not on assumption.
The appellant M/s. FaizanTexturising is a 100% EOU engaged in the manufacture of Polyester Texturised Yarn and Polyester Twisted Yarn.On the basis of enquiry in connection to M/s Neeraj Exim Pvt., it appears that the appellant had sold 284060 Sq. meters of Polyester Knitted Grey Fabrics manufactured by them into the domestic market illicitly without payment of duty and to adjust the stock by showing clearance of Polyester Grey Fabrics / Grey Fabrics to M/s Neeraj Exim. On investigation, it appears that even the Polyester Grey Fabrics/Grey Fabrics cleared to M/s Neeraj Exim had not been received physically by M/s Neeraj Exim. The adjudicating authority confirmed the demand of central excise duty equal to aggregate of Customs duties leviableon 284060 Sq. Meters of Polyester Knitted Grey Fabrics cleared under the guise of deemed exports along with interest and penalty.
The appellant submitted thatthe sale for clearance under CT-3 Certificate was ex-factory and the goods were delivered to Neeraj Exim Pvt. Ltd. at the appellant’s factory gate, no duty can be demanded from the appellants and if the goods were not received in the factory of Neeraj Exim Pvt. Ltd. the duty has to be demanded from Neeraj Exim Pvt. Ltd.Further submitted by the appellant that, the description “Polyester Grey Fabric” is a generic description and is wide enough to cover “Polyester Knitted Grey Fabrics” also.
The Tribunal observed that Fabrics were illicitly cleared in domestic market and to adjust the stock, clearance of polyester Grey fabrics is shown to have been made against the CT3 to M/s Neeraj Exim Pvt. Ltd., totally misconceived. 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.
The Tribunal further observed 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 Tribunal by giving reliance to the decisionsof Tribunals in CCE, Cochin v. BPL Systems & Projects Ltd. – 2002 (144) E.L.T. 437 (Tribunal), CCE, Guntur v. Ferro AlloysCorpn. – 1994 (71) E.L.T. 931 andCCE, Madras v. Madras Radiators Pressing Ltd. – 1994 (69) E.L.T. 409 (Tribunal) holds that the duty liability cannot be fastened upon the appellant.
The Coram of Mr. Ramesh Nair, Member (Judicial) and Mr. Raju Member (Technical), while allowing the appeal has held that “demand of duty along with interest and imposition of penalties as well as confiscation and imposition of redemption fine on the raw materials and the finished goods are not sustainable”.
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