The Customs Excise & Service Tax Applellate Tribunal ( CESTAT ) upheld the Confiscation and Penalties Imposed Under Customs Act, 1962 as the imported fabrics under advance authorisation were diverted for sale in open market.
M/s Himachal Fashion Pvt Ltd. ( M/s. Candex Chemical Fibres Company Pvt. Ltd., the appellant ) against the Order-in-Original wherein benefit of Customs Notification No. 99/2009 dated 11.09.2009 was denied along with confiscation of fabrics imported and imposition of penalties. The other three appeals are also filed by the co noticees against the same impugned order and hence are being taken up together for disposal.
The appellant obtained an Advance Authorisation for export of garments under the category of textile general and was entitled to import raw materials which was to be used in the manufacture of the export products. On specific intelligence that fabrics imported under the above Advance Authorisation were being diverted by the importer for sale in the open market, a search was conducted by DRI officials on 15.10.2013, and imported goods were seized, on the reasonable belief that there was a violation of condition no. 14 of the Advance Authorisation No. 3010093690 dated 07.05.2013 which indicated the factory address for the processing of the imported raw material as Baddi, HP. Subsequently, investigations were conducted and statements were recorded.
In conclusion, a show cause notice was issued, and thereafter a corrigendum was issued. A second show cause notice dated 06.06.2018 was issued. Both the notices were adjudicated by the impugned order.
The Authorized Representative submitted that the imported goods were diverted into the open market, without using the same in export goods, as has been confirmed by the Joint Excise & Taxation Commissioner ( IT & Enf ), Himachal Pradesh, who stated that no trucks loaded with the imported fabrics has ever crossed the border and never reached their declared manufacturing site at Plot No. 62, EPIP, Jharmajri, Baddi as per the condition sheet attached to the said Advance Authorization issued to the importer during the period 01-05-2013 to 31-12-2014.
A two-member bench of Ms Binu Tamta, Member ( Judicial ) and Ms Hemambika R Priya, Member( Technical ) viewed that the benefit of Notification 99/2009-Cus dt 11.09.2009 cannot be extended to the appellant because of the overwhelming evidence of the diversion of imported raw material to the open market.
It was observed that the mensrea of the appellant and Shri Rakesh Goyal is established by the fact that raw material imported duty-free by the appellant under Advance Authorization to be used in the manufacture of RMGs and exported, was, in fact, diverted to the open market. The contention of the appellant that the export obligation against the Advance authorisation was completed stands negated by the letter issued by DGFT wherein it was stated that for the advance authorization no. 3010093690 dated 07.05.2013, the show cause notice was issued to the party on 29.06.2015
The CESTAT dismissed the petition. Shri Ajay Kumar Goyal and Shri Pawan Kumar Seth and the Authorised Representatives for the department.
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