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CUSTOMS, EXCISE AND GOLD (CONTROL) APPELLATE TRIBUNAL, MADRAS
S.L. PEERAN, V.K. ASHTANA, JJ.
Well Knit Apparels (P.) Ltd. -Appellant
Versus
Commissioner of Customs, Madras -Respondent
Final Order Nos. 2249 to 2251/98 Appeal Nos. C/260 & 261/97 I/w C/261/91-A, 2249 of 1998, 2251 of 1998, 260 of 1997, 261 of 1997, 261 of 1991
Decided On : 23-10-1998
R. Sashidaran, Maithili,S. Sankaravadivelu
Per V.K. Ashtana:
These three appeals are against Order-in-Original No. S8/1/90-MEPZ/1306 dated 5.10.90 passed by Collector of Customs wherein 6,021 sets of Cotton knitted to shape sweater panels have been confiscated and allowed redemption on payment of fine of Rs. 1,25,000/-; penalty of Rs. 3,00,000/- has been totally imposed on the appellants; 16,472.205 Kgs of imported cotton yarn found in excess in the factory premises of the appellants valued at Rs. 13,62,575/- have been confiscated and allowed to be redeemed on fine of Rs. 1 lakh; and duty demand on the said quantity of cotton yarn has been ordered for payment which has not been computed in the said order.
2. The appellants raised three main issues:-
(i) misdeclaration in the 3 Shipping Bills in respect of quantity to be exported;
(ii) duty demand on 16,472.205 Kgs. of imported cotton yarn found in excess ' in the factory premises as also redemption fine thereon; and
(iii) penalty of Rs. 2 lakhs on the earlier shipping bill.
3. Heard Learned Advocate Shri R. Sashidaran and Mrs. Mythili, Learned advocate for appellants and Learned JDR Shri S. Sankara Vadivelu for Revenue.
4. Appellants' unit is located in the Madras Export Promotion Zone (MEPZ) and the import entitlement of raw material is covered by Customs Notification No. 263/85 as amended. Learned Advocates submitted that with respect to the excess cotton yarn found in stock, the said yarn was imported legally under the said notification. In terms of the scheme under which the unit operates, all the export obligations have been met and the stock of cotton yarn found in the factory are remnants of the quantity totally imported. He submitted that no offence has been committed in respect of remnants stock found in their factory premises for the following reasons:-
(a) the said notification does not prohibit the appellants from buying or using indigenous cotton yarn in the goods exported and keeping remnants stocks with them upto a period of one year which period is not over at the time of commencement of these proceedings.
(b) the export obligations were met vide Export on 31.3.90 and 2.5.90 whereas the said yarn was imported between 12.2.90 and 21.5.90 and the show cause notice was issued on 26.6.90. Thus the one year provided for under the said notification had not expired and they had the option to account for and to reexport of excess stock during this period. The question of any duty demand would have been arisen only thereafter;
(c) as far as the question of accounts not maintained regarding excess stock, he submitted that this requirement under clause-6 of the said notification is purely procedural; that there is no complaint from the Development Commissioner that the accounts have not been maintained (it is the Development Commissioner who is controlling this aspect in MEPZ); It is also not that no accounts were maintained because Annexure to Show Cause Notice gives the details which have been taken only from their accounts and in any case the entire goods are in stock, therefore it is not the department's case that the goods have been diverted illegally for sale in the local market; the presence of the goods within the factory premises speaks for itself and no penalty should be levied for honestly keeping these goods rather than surreptiously disposed them of particularly when one year period provided for by notification was still available.
(d) Learned advocate further submitted that page 15 of the impugned order deals with confiscation and duty liability of this excess stock and on page 16 records that there are two possibilities for this excess stock arising and further it goes to hold that the second possibility recorded therein is "Plausible". This shows that there is room for doubt. He submits that these findings are mere conjunctures and not based on any clear-cut findings.
5. With respect to second issue of confiscation of 6,02 II- numbers of goods being exported, Learned advocate submits that the findings in
