T.K. Jayaraman, Member (T) - (1.)THIS appeal arises from Order -in -original No. 29/2002 (ACC) dated 7.5.2002 passed by the Commissioner of Customs, Chennai.
(2.)THE appellants are the manufacturers of bulk drugs. They import the required raw materials through various ports. They utilized the services of M/s. Farport International, Customs House Agent (CHA). During the period from June 1995 to November 1995, they imported raw materials and warehoused the same using the services of the above mentioned CHA. The details of the bonds are as follows: SI. No. Bond No. & Date Into Bond Bill of Entry & Date 1. 3784/22.6.95 33715/5.6.95 2. 4197/10.7.95 37396/1.7.95
(3.)5747/19.9.95 52646/14.9.95
13.11.95 65243/10.11.95 The Special Intelligence Investigation Branch (SUB), ACC, Chennai conducted certain investigations in the matter of misuse of warehousing facility and misappropriation of customs duty by M/s. Farport International, CHA, Chennai. On the basis of the above investigations, Show Cause Notice was issued to the appellants. The main allegations are as follows: (a) The goods warehoused under Bond Nos. 7085 and 5747 were tested and found substituted with the material other than the imported raw materials. (b) The goods warehoused under bonds No. 3784 and 4197 were tested and found to be the original imported material but the goods have stayed in the warehouse beyond the stipulated period under Section 61 of the Customs Act 1962. (c) The appellants have connived with the CHA with the substitution of the raw materials covered under bond Nos. 7085 and 5747 and misappropriation on the payment of Customs duties to the Government. The Commissioner of Customs adjudicated the matter and passed the impugned order demanding duty and imposing various penalties. Interest was also demanded. The appellants strongly challenge the impugned order. 3. Shri B. Venugopal, learned advocate appeared for the appellants and Shri Ganesh Havanur, learned SDR for the Revenue. 4. The learned advocate urged the following points. (i) Inspite of several requests, the appellants had not been given the copies of the seized documents. This amounts to gross violation of the principles of natural justice. (ii) The appellants requested the Commissioner to provide them with the copy of the video tape said to have been sent by Mr. D. Ramesh of M/s. Farport International to the Investigating Officer, CBI wherein he is said to have confessed about his illegal activities. The Commissioner passed the impugned order without supplying the video tape in violation of principles of natural justice. (iii) Since the CBI was investigating on the illegal activities of M/s. Farport International, the appellants requested the Commissioner to keep the matter in abeyance till the investigation is received from the CBI as the same would have a bearing on the present case. But the Commissioner passed the order prematurely. The following case laws were relied on: a. Kedia Overseas Ltd., v. CC, Visakhapatnam b. Sanghi Textiles Processors (P) Ltd. v. CCE 1993 (65) ELT 357 (SC) c. Tribhuvandas Bhimji Zaveri v. CCE d. M.S. Naina v. CC 2000 (123) ELT 39 (Cal.) e. PGO Processors Pvt Ltd. v. CCE f. Sunder Ispat Ltd. v. CCE (iv) In respect of the goods under bond 7085, the same have been cleared by the appellants on payment of Customs duty to the tune of Rs. 12,98,052/ -. The copies of cheques/demand drafts under which the said duty has been paid by them in the favour of The Commissioner of Customs, A/c Plant Organics' and The Commissioner of Customs, A/c Farport International' are enclosed, therefore the demand of duty on the goods covered under Bond 7085 under Section 28 read with Section 147 is not sustainable in law. As the appellants have correctly discharged the duty of Customs, the misappropriation of the said duties by the CHA after the same was credited into the account of the Government would not make them liable for payment of the said duty once again, as the appellants have not colluded or have no motive/mens rea for malfeasance. (v) No evidence has been mentioned either in the Show Cause Notice or in the impugned order to show that the appellants have colluded with CHA. In the absence of such evidence, the customs duty already paid in respect of the gods covered by bond 7085 cannot be collected once again from them, as the non -payment of duty has arisen on account of the guilty act of the CHA and therefore, the CHA alone would be liable to pay duty under Section 147(3) of the Customs Act, 1962. The following case laws were relied on: a. Hetero Drugs Ltd. v. CC, Chennai b. ITW India Limited v. CC, Chennai Final Order No. 1819/2005 in Appeal No. C/72/2005. (vi) As regards the goods covered under Bond 5747, the same have been cleared without the permission or consent or knowledge of the appellants by the CHA or someone else. In other words, the goods covered under the above bond have been stolen from the warehouse and substituted the other materials. Since the appellants have not removed them, no duty can be demanded from them. They relied on the following case laws: a. Interface Connectronics Pvt. Ltd, v. CC, Bangalore b. Sushil Kumar Kayan v. ACC c. West Bengal State Warehousing Corporation v. Asst. Collector 2002 (145) ELT A61. In the case of Mount Shivalik Breweries Ltd. UOI , it was held that the importer is entitled for remission of duty paid on the goods lost or destroyed at any time before physical clearance of the goods for home consumption. (vii) As regards the goods covered under bonds 3784 and 4197, duty liability has been accepted and paid. (viii) In the absence of malafide act on the part of the appellants, imposition of penalty of Rs. 26,89,912/ - under Section 114A is not sustainable. In that case demand of interest can also not be made. (ix) The appellants filed miscellaneous application for admitting additional evidence. The miscellaneous application was allowed. In the course of personal hearing, they produced additional evidence in support of their contentions that they had taken demand drafts in favour of The Commissioner of Customs' for payment of duty. They got a confirmation letter dated 17.3.2006 to the effect that the amount in the three demand drafts had been paid. A letter from Allahabad Bank was also produced to the effect that the demand draft for an amount of Rs. 5,19,221/ - was issued in favour of The Commissioner of Customs, A/c Plant Organics Ltd.'