C. W. P. No. 19769 of 2008 1
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.
Case No. : C. W. P. No. 19769 of 2008
Date of Decision : November 20, 2008.
M/s Singh Overseas and another .... Petitioners
Vs.
Commissioner of Central Excise
and another .... Respondents
CORAM : HON’BLE MR. JUSTICE ADARSH KUMAR GOEL
HON’BLE MR. JUSTICE L. N. MITTAL
* * *
Present : Mr. O. P. Goyal, Senior Advocate
with Ms. Priya Khurana, Advocate
for the petitioners.
* * *
ADARSH KUMAR GOEL, J. (Oral) :
1. This petition seeks quashing of order dated 18.09.2008
(Annexure P-8) passed by the Customs, Excise and Service Tax Appellate
Tribunal (in short, the Tribunal) requiring the petitioners to deposit a sum of
Rs.1 crore towards duty and a sum of Rs.10 lacs towards penalty within
eight weeks, failing which the appeal shall stand dismissed.
2. Even though against the impugned order, statutory appeal is
provided under Section 130 of the Customs Act 1962, on a substantial
question of law, we have heard learned for the petitioners on merits.
3. The petitioner no.1 is a proprietorship concern of petitioner
no.2 and is a 100% Export Oriented Unit (EOU). It imported 18
consignments of polyster knitted fabrics and also procured 04 consignments
C. W. P. No. 19769 of 2008 2
of the same material duty free from units in Domestic Tariff Area under
CT-3 certificate. The duty free material so imported was required to be
used for manufacture and export as per the Scheme framed under the
provisions of the Customs Act. However, on inspection by the Officers of
the department, it was found that imported stock/locally procured materials
were diverted to the market and were used in the market, thus resulting in
the evasion of duty. After issuing show cause notice and considering the
interim reply of the petitioners, the adjudicating authority recorded findings
against the petitioners and confirmed the demand of duty of Rs.2.5 crores
and also imposed penalty. The petitioners preferred appeal to the Tribunal
and inter alia submitted that no opportunity of personal hearing was given
and there was denial of principles of natural justice. It was also submitted
that the incriminating statements of the petitioners made before the officers
of the department, on various dates, were immediately retracted and hence,
could not be acted upon.
4. The petitioners failed to make the mandatory deposit under
Section 129-E of the Act and sought waiver thereof. The Tribunal rejected
the said prayer except to the extent already mentioned.
5. The findings of the Tribunal are as under :-
“5. We have carefully considered the
submissions from both sides. We are not able to
appreciate the undue delay in submitting even an
interim reply by M/s Singh Overseas. Having
received a show cause notice proposing a demand
of a sum of over Rs.2.5 crores, the fact that they
did not file even an interim reply for such a long
time looks rather strange. We have also been
shown evidence to the effect that the personal
hearing intimations were, in fact, dispatched from
the office of the adjudicating authority. The claim
C. W. P. No. 19769 of 2008 3of the learned advocate that on earlier occasions
the communications have been personally served
on the appellant and the personal hearing
intimations were not served personally may not
deserve to be accepted. Intimations have been sent
as provided for in the law. Taking totality of the
circumstances, we are not, prima facie convinced
of the violation of principles of natural justice. On
merits of the case, prima facie, we find that on the
date of visit by the officers, there was no evidence
for any manufacturing activity; that there was
admission by the proprietor of M/s Singh Overseas
regarding diversion of the duty free materials
procured by the 100% EOU; that the export
consignments appears to be of very poor quality
going by the wide variation in grammage recorded
by the Commissioner. The admission by the
proprietor of M/s Singh Overseas is further
corroborated by very nominal value declared for
the consignment for clearance at Dubai.
6. On going through the records and the
submissions, we find, prima facie, that Shri
Krishan Kumar had knowingly and intentionally
involved himself in illegal diversion of duty free
materials imported by M/s Singh Overseas and in
exporting sub-standard items towards meeting the
export obligations.
7. The nature of allegations and findings
are, prima facie, serious and involve fraudulent
activities. Under these circumstances, the claim of
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poor financial status by the applicants have to be
viewed with lot of reservations. The only evidence
produced is the income tax returns filed by them
and no assessed copies have been produced. In
addition, no evidence relating to receipt of export
sale proceeds by M/s Singh Overseas and further
disposal thereof have been indicated. The claim
that Shri Krishan Kumar returned Rs.15 lacs to
M/s Singh Overseas is not corroborated as the
same has not been reflected in the bank statements
of M/s Singh Overseas: there is no plausible
explanation for Rs.10 lacs said to have been
received by the firm of Mr. Krishan Kumar.”
6. We have heard learned counsel for the petitioners and perused
the record.
7. Learned counsel for the petitioners submitted that the Tribunal
could not direct the appeal to be dismissed for non-deposit under the
provisions of Section 129-E of the Customs Act.
8. We do not find any merit in the submission. Section 129-E of
the Customs Act specifically mandates deposit. If deposit is not made,
unless the same is waived, dismissal is the only consequence.
9. It is also submitted that the finding of the Tribunal that there
was no violation of principles of natural justice, was perverse. We are
unable to accept this submission. Inspite of service, the petitioners
submitted their interim reply after a long time. The Tribunal, after
examining the record, found that intimation for personal hearing was duly
dispatched from the office of the adjudicating authority, which was
sufficient compliance of the statutory procedure. The Tribunal also found
sufficient material to sustain the findings of the adjudicating authority,
prima facie.
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10 The scope of appeal to this Court is limited to substantial
questions of law, which fact cannot be ignored even if the petitioners have
chosen to file a writ petition.
11. We do not find any ground to interfere.
12. The petition is dismissed.
(ADARSH KUMAR GOEL)
JUDGE
November 20, 2008 ( L. N. MITTAL )
monika JUDGE