ORDER
Jyoti Balasundaram, Vice President
1. By the impugned order, the Commissioner of Customs, Mumbai has confirmed duty demand of Rs. 4,41,36,757/- on Polyvinyl Alcohol (PVA) imported duty free under Advance Licence and not used in the manufacture of export goods but diverted in the local market, and imposed penalties of Rs. Two crores on the importer M/s. Shreenath Dyechem Industries and its Proprietor Smt. Protima Buta, penalty of Rs. One crore on Shri Jayant Buta, husband of the proprietor and Rs. Fifty lakhs on M/s. Prekoll for aiding and abetting the importer
2. The brief facts of the case are that M/s. Prekoll was manufacturing chemical of which Shri Jayant Buta was a partner and also Power of Attorney holder of M/s. Shreenath Dyechem Industries. Certain exports were made by M/s. Shreenath Dyechem Industries of substance which was not of the same quality as they were claimed to be, on the concerned export documents, and they were of extremely low commercial value. The exports were called as qualifying exports for obtaining advance licence. The goods imported in terms of such advance licence without payment of duty were not utilized by the importer thereof or by supporting manufacturer in the production of goods for further export but was sold in the market in spite of expressed prohibition in the relevant ITC Policy as well as in the relevant Customs Notification under which the duty free imports were permitted. The statements of the concerned persons were recorded. Shri Jayant Buta admitted the irregularities made in the export goods and diversion of the imported materials. Smt. Geeta Desai, employee of M/s. Prekoll confirmed that goods exported were not as per the description in export documents, but were inferior in quality. Shri Bipin Dalal also claimed that the exports were bogus. The statement of one Shri Amarlal Kukreja was to the same effect Both Shri Rasiklal (one of the buyers of the imported goods) and CHA Shri Mukesh Gupta furnished details as to how the samples were procured and how opinion of the Customs laboratory was obtained. The CHA was also aware of the fact that the consignments exported were of worthless goods. It is on this basis, proceedings for recovery of duty and imposition of penalties were initiated and culminated in the impugned order.
2. We have heard both sides. The Adjudicating authority has, interalia, relied upon the two documents, one being memorandum of M/s. Halpern & Woolf and the other report of M/s. Zaiwalla & Co. regarding Letap fraud investigation without offering the appellants opportunity of cross examination of the persons alleged to have prepared/submitted these documents, in spite of the appellants’ request for cross examination and contrary to the Bombay High Court order dated 1.8.94 in W.P. 1375 of 1994, wherein the High Court directed the Commissioner to give adequate opportunity of rebutting the contents of these two documents, if necessary, by allowing cross examination of the concerned persons. Further, the appellants had drawn the attention of the Commissioner to the fact that the consignee accepted the consignments of the goods in question after due inspection and also made payment amounting to US$ 500,000 approximately and the Commissioner has noted this fact and have stated in the impugned order that he would deal with the appellants’ plea that receipt of payment is proved that the consignments exported were as per the order placed and therefore, no case has been made out against them, but has not recorded any finding on this aspect. In these circumstances, we see force in the plea of the appellants that the matter should be sent back for fresh decision after extending opportunity of cross examination of the authors of the above mentioned two documents. We, therefore, set aside the impugned order and remit the case to the jurisdictional Commissioner for fresh decision in accordance with law after permitting cross examination of the above persons. Fresh orders shall be passed after granting appellants reasonable opportunity of being heard in their defence.
3. The appeals are thus allowed by remand.