No Establishment of Physical Movement or Diversion: CESTAT quashes Customs Duty Demand [Read Order]

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), comprising of Ramesh Nair, Judicial Member and Raju, Technical Member quashed customs duty demand on the ground that physical movement or diversion was not established.

The appellant in the present matter is Siddhnath Shipping.

The goods were declared and described as ‘‘Fancy Scarves Made from Polyester Knitted Fabrics and Fancy Dupattas made from 100% Polyester Filament Yarn” with declared value of US $1.00 and $1.6 per piece respectively in the Shipping Bill and invoice. The net weight of the cargo declared was 19002 Kgs.

However on examination, the goods were found to be inferior quality and the net weight was only 1450 Kgs,, as against the declared net weight of 19002 Kgs, Thus it appeared to be a case of gross mis-declaration of the description as well as weight of the consignment.Accordingly, a show cause notice was issued demanding customs duty and proposing confiscation of the goods and penalties on the Appellants.

Thereafter, being aggrieved with the OIO the appellants again filed appeals before the CESTAT and CESTAT once again remanded the case to the original adjudicating authority to reconsider the issue after observing the principles of natural justice.In the denovo adjudication, the original authorityagain confirmed customs duty demand along with interest and imposed penalties. Aggrieved by such impugned order, the appellants are now before the Tribunal.

Devashish Trivedi, learned counsel appeared and argued on behalf of the appellants. The Counsel argued that the SIIB has failed to conduct proper investigation in the present matter and they have not made any efforts to find out whether the goods were actually clandestinely removed, whether or not the goods were diverted or not? The SIIB has also ignored the facts that the goods were not actually diverted or clandestinely removed.

The Counsel also submitted that it is settled law that if the department alleges clandestine removal of goods, then enquiry/ investigation must be conducted at the end of buyers of said clandestinely cleared goods, transporters, angadias, etc., No inquiry is conducted at the end of buyers or transporters.

The Bench observed that “In our view the present demand which has been confirmed against Appellant by the impugned order, is not based on evidence. Unless there is conclusive evidence that Appellant has clandestinely cleared the disputed goods without payment of duty, liability cannot be placed on Appellant on the basis of conjectures and surmises. Therefore, the demand based on assumption and presumption is not sustainable.”

“The entire case was based on the document but no physical movement or diversion could be established. In this fact, the demand of customs duty is not sustainable and consequently, the confiscation of goods is also incorrect and illegal” the Tribunal noted.

To Read the full text of the Order CLICK HERE

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