CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL CHANDIGARH REGIONAL BENCH - COURT NO. I Customs Appeal No. 483 of 2009 [Arising out of Order-in-Original No. 39/LDH/08 dated 27.03.2009 passed by the Commissioner of Central Excise, Ludhiana]

M/s Royal Industries Ltd. ……Appellant Chandigarh road, Uchhi Mangli, Ludhiana, Punjab VERSUS Commissioner of Customs, Ludhiana ……Respondent ICD GRFL, G.T. Road, Sahnewal Ludhiana, Punjab 141001 WITH Customs Appeal No. 106 of 2010 [Arising out of Order-in-Original No. 10/LDH/09 dated 25.06.2009 passed by the Commissioner of Central Excise, Ludhiana]

M/s Royal Industries Ltd ……Appellant Chandigarh road, Uchhi Mangli, Ludhiana, Punjab VERSUS Commissioner of Customs, Ludhiana ……Respondent ICD GRFL, G.T. Road, Sahnewal Ludhiana, Punjab 141001 APPEARANCE:

Shri Sudhir Malhotra, Shri A.S. Hasija and Ms. Kanika Malhotra, Advocates for the Appellant Shri Anurag Kumar, Authorized Representative for the Respondent CORAM: HON’BLE MR. SOMESH ARORA, MEMBER (JUDICIAL)

HON’BLE MR. P. ANJANI KUMAR, MEMBER (TECHNICAL)

FINAL ORDER NO.60744-60745/2025 DATE OF HEARING: 21.03.2025 DATE OF DECISION: 30.06.2025 P. ANJANI KUMAR:

M/s Royal Industries Ltd., the appellants, assail the impugned orders i.e dated 27.03.2009 and 25.06.2009 both passed by Commissioner of Central Excise, Ludhiana.

2. Brief facts of the case are that the appellant was registered as 100% Export Oriented Unit, holding LOP No. PER/561/95/EOA/61/95 dt. 18.10.1995 which was further extended for five years from 01.04.2002; the appellant obtained warehousing license No. 01/PBWH/96 dated 18.01.1996 under section 58 of Customs Act for purpose of warehousing of duty-free imported goods and for in-bond manufacturing of their export products; the appellant executed B-17 Bond dt. 11.07.2000 before Assistant Commissioner of Central Excise Division-II, Ludhiana for import/procurement of raw material indigenously without payment of duty as per Notification No. 53/1997-Cus dated 03.06.1997and Notification No. 1/95- CE04.01.1995; the appellant imported raw material Le. polyester yarn, polyester fabric. woollen yarn, synthetic waste, acrylic fiber, acrylic tow etc and procured raw material i.e. polyester yarn, polyester - Cotton / cotton yarn, acrylic yarn, polyester - cotton dyed fabric etc. indigenously, for manufacture of acrylic /woollen garments, polyester - cotton/cotton garments, polyester fabric, cotton/ cotton viscose fabric, woollen / acrylic fabric, polyester grey fabrics, acrylic blanket and acrylic top etc.

(Appeal No. C/106/2010)

2.1. The Anti-Smuggling Staff of Customs Commissioner, Amritsar searched the factory premises of the appellant and residential premises of Shri Harbhajan Singh Sandhu, Managing Director, on 27/28.03.2002 and conducted physical verification of stock of raw materials and finished goods lying at factory premises by an eye estimation. Statements of employees were recorded, which were retracted subsequently. On conclusion of the investigation, it appeared to the officers that the appellants had been diverting the duty-free imported goods into the local market; were fabricating records to show clearance of goods for exports/deemed exports/ job- work, without any actual movement of the goods. A Show cause notice dated 03.07.2003 (Appeal No. C/106/2010) was issued, by Commissioner of Customs, Amritsar,seeking to recover customs duty of Rs. 1,22,49,448 on imported raw material diverted; Customs duty of Rs. 84,50,492 on imported material not entered in records; Customs duty amounting to Rs. 15,90,03,872 (excluding duty amounting to Rs. 2,32,66,802/ in respect of imports made through Nhava Sheva) along with interest; seeking to confiscate goods valued at Rs. 26,73,04,727; seeking to impose penalty, on the appellants and Shri Harbhajan Singh Sandhu Managing Director, under Section 112(a) & (b) and section 114A of Customs Act, 1962; proposing to appropriate Rs. 20,00,000 deposited by appellant; seeking to impose penalty on proposed under s