ORDER
K.C. Mamgain, Member (T)
1. This appeal is filed by M/s. Harshvardhan Exports Private Limited against Order-in-Original No. 05/NP/2004 dated 31-3-2004 passed by the Commissioner of Central Excise & Customs, Surat-1. On receipt of specific information that M/s. Riya Fashions are procuring and selling, illicitly diverted duty free imported polyester fabrics by certain 100% EOU’s, the officers of Directorate of Revenue Intelligence visited their godown premises and during verification of the goods lying in the said premises noticed certain rolls of polyester fabrics of foreign origin duly packed in bundles lying there. Shri Kirti Kumar Ottamchand Doshi, proprietor said that the fabrics lying in the said godown premises were imported duty free by certain 100% EOU units and the same were diverted into local market, without payment of customs duty leviable thereon. He admitted that he had not received any duty payment documents i.e. invoices, delivery challans, bill of entry, etc. along with goods. On physical verification, the officers found 31,990 yards of imported polyester fabrics valued at Rs. 28,62,650/- which was seized under panchnama-dated 19/20-3-2003 for further investigation. During investigation, statement of Shri Kirti Kumar Ottamchand Doshi was recorded wherein he has staled that 6,914 yards of imported polyester fabrics were received from M/s. Tabrez Impex, an SEZ unit. Some velvette fabrics was received from M/s. Bhavya Garments after being cleared illicitly and mercury suiting fabrics was received from M/s. Khan Textiles. The goods were received from M/s. Tabrez Impex, an SEZ unit were first in-bonded in M/s. Manoj Processors from where the goods were cleared illegally without payment of duty. Shri Ramesh Chandra Chunillal Agarwal, Director of M/s. Bhavya Apparels in his statement dated 20-3-2003 stated that he agreed with the statement dated 20-3-2003 of Shri Kirti Kumar Ottamchand Doshi. The imported polyester fabrics received from M/s. Bhavya Garments were not cleared by M/s. Bhavya Apparels. These were cleared by M/s. Harshvardhan Exports without cover of any duty paying documents and without payment of duty leviable thereon. Out of total seized quantity of imported polyester fabrics measuring 31,990 yards, he sold to Shri Kirti Kumar Doshi, only 17, 171 yards of imported polyester fabrics which were cleared without payment of duty and without any statutory documents and he is willing to pay duty leviable thereon. The said fabrics were imported by his unit and after clearance of 17,171 yards of imported polyester fabrics, they had adjusted the same in the statutory records by showing deemed export. During investigation, statements of other persons were recorded and further statement of Shri Ramesh Chandra Chunillai Agarwal, Director of M/s. Harshvardhan Exports was also recorded on 18-6-2003. After investigation, show cause notices were issued to various notices including the present appellants. The present appellants were asked to show cause why imported polyester fabrics measuring 17,171 yards should not be held liable for confiscation under Section 111(j) and Section 111(o) of the Customs Act, 1962 and why Customs duty foregone should not be recovered from them along with interest under Section 72 of the Customs Act and why penalty should not be imposed under Section 112 of the Customs Act. Charges were also framed against the various noticees to whom show cause notice was issued.
2. The case was decided by the Commissioner of Central Excise & Customs, Surat-1 under the impugned order in which he confiscated imported polyester fabrics measuring 17,171 yards besides other fabrics seized from M/s. Riya Fashions and gave an option to redeem the confiscated fabrics on payment of fine of Rs. 15 lakhs. He demanded duty of Rs. 7,04,338/- foregone on 17,171 yards of imported polyester fabrics payable by M/s. Harshvardhan Exports alongwith the interest under Section 72 of the Customs Act. He imposed penalty of Rs. 1 lakh on Shri Ramesh Chander Chunnilal Agarwal, Director of M/s. Harshvardhan Exports and penalty of Rs. 5 lakhs on M/s. Harshvardhan Exports besides imposition of penalty on other concerned persons.
3. It was argued by the learned Counsel for the appellants that the principle of Natural justice has been violated by the adjudicating authority as relevant documents as asked by them were not supplied to them. They have written 2 letters to DRI and 2 letters to the adjudicating authority but these letters were ignored, as they had not received the reply either from the DRI or from the Commissioner. He also pleaded that they were handicap due to non-availability of the documents and could not file reply to the show cause notice. However, the Commissioner decided the show cause notice without receiving their reply and without hearing them.
4. It was also argued the goods were seized from Shri Kirti Kumar Ottamchand Doshi who is the owner of the goods. An option of redemption fine has been given to him, if any duty is required to be paid it has to be paid by the owner of the goods. They are not required to pay any Customs duty under Section 72 of the Customs Act as they had accounted for the goods. Duty under Section 72 of the Customs Act can only be charged when the goods were cleared without payment of duty. Since they have already explained that the goods are accounted for by them in the records of M/s. Harshvardhan Exports, therefore, they are not liable for any penalty.
5. On behalf of Shri Ramesh Chander Chunnilal Agarwal, it was argued that he has retracted his statement on 20-3-2003 before notary public. However the said affidavit has been produced now with the appeal petition as they could not get any opportunity to produce the same before the adjudicating authority. Since they had not replied to the show cause notice in the absence of documents, therefore reliance cannot be placed on the retracted the statement of Shri Ramesh Chander Chunnilal Agarwal for imposition of penalty on him.
6. On behalf of the Revenue, it was argued that after seizure of the goods from the premises of Shri Kirti Kumar Ottamchand Doshi, his statement was recorded and he had stated the seized goods recovered from his premises which are received by him from the various 100% EOU units by diversion without payment of any duty. 17,171 yards of imported polyester fabrics were received by him from M/s. Bhavya Garments, Surat which is 100% EOU. When the officers made inquiries from M/s. Bhavya Garments, Shri Ramesh Chander Chunillal Agarwal in his statement dated 20-3-2003 stated that he is the Director of M/s. Harshvardhan Exports and also the Director of M/s. Bhavya Apparels. M/s. Harshvardhan Exports is also a 100% EOU and what has been stated by Shri Kirti Kumar Ottamchand Doshi is true. The only fact is that the imported polyester fabrics were cleared from M/s. Harshvardhan Exports instead of M/s. Bhavya Apparels without payment of duty and without any statutory documents. It was argued that relied upon documents were given to Shri Ramesh Chander Chunillal Agarwal, Directorr of M/s. Harshvardhan Exports alongwith show cause notice and his dated acknowledged dated 8-9-2003 was produced in support of this fact that Shri Ramesh Chander Chunillal Agarwal had received show cause notice alongwith copies of relied upon documents as mentioned in Annexure B to the show cause notice. It was also stated that 17,171 yards of polyester fabrics which were recovered from Shri Kirti Kumar Ottamchand Doshi were imported by M/s. Harshvardhan Exports under Bill of entry No. 1639 dated 11-12-2000, Bill of entry No. 3963 dated 27-2-2001 and Bill of Entry No. 2997 dated 18-1-2000. These bills of entry were mentioned in the show cause notice and in the findings of the Commissioner. Shri Ramesh Chander Chunillal Agarwal in his statement had admitted that these goods were imported from Dubai and Dubai being a transaction point of imported goods, the country of origin is shown as UAE though the goods were of Korean and Taiwan origin only. Shri Ramesh Chander Chunillal Agarwal had clearly admitted that these goods were sold by him to Shri Kirti Kumar Ottamchand Doshi and this sales to Shri Kirti Kumar Ottamchand Doshi was adjusted in their records by showing deemed export, however, no goods were sent under deemed export but only papers were sent. It was argued that since these facts were in the knowledge of Shri Ramesh Chander Chunillal Agarwal, therefore, these facts cannot be denied nor further evidence is required to establish these facts. The retraction of the statement dated 20-3-2003 by Shri Ramesh Chander Chunillal Agarwal was not correct as in his next statement dated 18-6-2003 he has stated that his statement dated 20-3-2003 was voluntary. It was, therefore, stated that since the facts which were in the knowledge of the Shri Ramesh Chander Chunillal Agarwal and has been accepted as correct, no further evidence is required to prove those facts. The opportunity of personal hearing was given to Shri Ramesh Chander Chunillal Agarwal on 17-2-2004, 19-2-2004, 3-3-2004 and 4-3-2004 he neither appeared for hearing nor he submitted any reply. In these circumstances he failed to avail these opportunities to put forth his claim of nonreceipt of the documents although he has received documents and his dated acknowledgement of 8-9-2003 is available. Thus it is his failure of not submitting his defence. It was, therefore, submitted that the appeals of Shri Ramesh Chander Chunillal Agarwal and M/s. Harshvardhan Exports may be rejected.
7. We have considered the submissions made by both the sides. From the records, it is clear that on 20-3-2003 on the basis of information by the Officers of DRI, imported polyester fabrics were seized from the godown of Shri Kirti Kumar Ottamchand Doshi. In respect of imported polyester fabrics measuring 17,171 yards, he stated that these were purchased from M/s. Bhavya Garments, a 100% EOU. When Shri Ramesh Chander Chunillal Agarwal, Director of M/s. Bhavya Garments was asked about these fabrics, he stated that these goods were not cleared from M/s. Bhavya Garments but were cleared from M/s. Harshavardhan Exports Private Limited. He is a Director of M/s. Harshvardhan Exports also. In his statement dated 20-3-2003, Shri Ramesh Chander Chunillal Agarwal has accepted that whatever has been stated by Shri Kirti Kumar Ottamchand Doshi is correct and is ready to pay Customs duty. He also explained that these polyester fabrics measuring 17,171 yards which were cleared without payment of duty were adjusted as deemed export in their registers. However, only papers of deemed exports were sent without goods. In his further statement dated 18-6-2003, Shri Ramesh Chander Chunillal Agarwal, Director of M/s. Harshvardhan Exports Private Limited stated that the concern is working under 100% EOU scheme. They had imported the goods shown at Sl. Nos. 1, 5, 10 and 12 of Annexure “A” to the Panchnama dated 19/20-3-2002 under Bill of Entry No. 3963 dated 27-2-2001. The goods measuring 1552 yards shown at Sl. No. 6 of Annexure to Panchnama were imported under Bill of Entry No. 1639 dated 11-12-2000, the goods measuring 27771 yards shown at Sl. Nos. 8 and 9 of Annexure “A” to the Panchnama dated 19/20-3-2002 were imported vide bill of entry 2997 dated 18-12-2000. He produced the copies of said bill of entry. He stated that these goods were Korean and Taiwan origin and further stated that these goods sold by him to Shri Kirti Kumar Ottamchand Doshi. He had stock of imported fabrics since last 2-3 years. From the statement of Shri Ramesh Chander Chunillal Agarwal, it is clear that the seized quantity of 17,171 yards of fabrics were imported by M/s. Harshvardhan Exports Private Limited for which Shri Ramesh Chander Chunillal Agarwal produced bill of entry before the officers as per his statement dated 18-6-2003 and he has clearly stated that these goods were sold by him to Shri Kirti Kumar Ottamchand Doshi. He also made it clear that they have adjusted these goods in their book of accounts by showing deemed export but only papers were sent for deemed export and the goods were sold to Shri Kirti Kumar Ottamchand Doshi without payment of Customs duty. From his statement, it is clear that the goods were cleared without payment of Customs duty from a warehouse of 100% EOU. Therefore, they were required to pay duty before clearance of the goods under Section 72 of the Customs Act. M/s. Harshavardhan Exports were liable to pay duty on the goods which were cleared from the premises of M/s. Harshvardhan Exports Private Limited without payment of duty under the provisions of Section 72 of the Customs Act and M/s. Harshvardhan Exports Private Limited are liable for penalty.
8. The claim of the appellants in their defence that the documents were not given to them for replying the show cause notice and they had written letters dated 5-1-2004 and 20-2-2004 to Senior Intelligence Officer of DRI for supplying the documents and also letters dated 18-2-2004 and 1-3-2004 to the Commissioner that they have requested to DRI to make available some documents and then they will submit reply to the show cause notice is contrary to the receipt given by Shri Ramesh Chander Chunillal Agarwal dated 8-9-2003 wherein he has acknowledged the show cause notice along with copies of the relied upon documents as mentioned in Annexure “B” to the show cause notice. In the letter dated 5-1-2004 written to the Senior Intelligence Officer of DRI, it is mentioned that on going through the list of relied upon the documents in Annexure “B” it is seen that the statement dated 20-3-2003 of Shri Ramesh Chander Chunillal Agarwal and the statement dated 20-3-2003 of Shri Kirti Kumar Ottamchand Doshi have not been received. We find that this very claim of the appellants is false, as they themselves have submitted copy the statement-dated 20-3-2003 and 18-6-2003 of Shri Ramesh Chander Chunillal Agarwal in their appeal petition. In their letter dated 20-2-2004 of M/s. Harshvardhan Exports Private Limited has written to the Senior Intelligence Officer of DRI that some documents, packing list, details of seized goods are not available with them. This letter itself shows that these are not relied upon documents. List of seized goods is in the panchnama and also mentioned in the show cause notice. Thus it is clear that they were unnecessarily delaying the adjudication proceedings without any reason. Therefore, the principles of natural justice have not been violated. The appellants themselves failed to avail the opportunity of submitting reply to the show cause notice or attending hearing when opportunities were given to them.
9. Since M/s. Harshvardhan Exports Private Limited have sold the polyester fabrics without payment of duty to Shri Kirti Kumar Ottamchand Doshi by manipulation of their records by showing these goods cleared as deemed export to 100% EOU without sending the goods and this fact has been admitted by Shri Ramesh Chander Chunillal Agarwal in his statement dated 18-6-2003, therefore, duty has been correctly demanded under Section 72 of Customs Act and penalty has been correctly imposed on M/s. Harshvardhan Exports Private Limited and Shri Ramesh Chander Chunillal Agarwal, Director of M/s. Harshvardhan Exports Private Limited under the provisions of Section 72 of the Customs Act.
10. We, therefore, do not find any merit in both the appeals. The appeals are accordingly rejected.
(Dictated and pronounced in the open court)