R.R. ENTERPRISES Vs. COMMISSIONER OF CUSTOMS, HYDERABAD

JUDGEMENT

(1.) ALL these appeals are directed against Order -in -original No. 04/2006 -Adjn. -Cus., dated 18 -1 -2006. The details are;

(2.) THE relevant facts that arise for consideration are that on 29 -11 -2000, search operation was conducted at the premises of RRE. As per RG 23A part -I register there was a stock balance of 19,290 kg. of raw material i.e. Copper Clad Laminates (CCL for short) as on 27 -11 -2000 which was recorded in RG 23A part -I as imported under Bill of Entry No. 473, dated 17 -7 -2000. The balance stock of CCL was seized under a panchanama on 29 -11 -2000 on a reasonable belief that prime quality material had been imported by RRE in the guise of C grade/rejects. Subsequently, upon weighing them, it was found to be 11821 kgs. in weight i.e. there was a shortage of 7469 kgs. of CCL. In order to determine the quality of CCL lying in the factory premises, M/s. Bakelite Hylam, Sanathanagar, Hyderabad who are pioneers in the manufacture of CCL were requested to ascertain the quality of the material, who in its test report dt. 17 -5 -2001 testified that on visual appearance of the sheets they can be regarded as sub -standard quality but on the basis of tested properties the samples conform to international standards (NEMA, MIL). Therefore, it appeared that the material imported and seized was of prime/standard quality. Various statements of many persons were recorded. On scrutiny of the documents which were recovered during the course of their investigation, the lower authorities found that the invoice connected to Bill of Entry No. 473 indicated three varieties of CCL. The conclusion reached by the investigating officers was that the appellant firm herein had mis -declared the goods. The investigating officers have also recorded the statements of various purchasers of the items manufactured and cleared from the appellant firm. Show -cause notice was issued for the purpose of confirmation of the demand of the duty on goods short found and also for confiscation of the said goods and also for demand of differential duty on the balance amount of CCL which were imported by Bill of Entry No. 473 and for the confiscation of the said goods. The appellant company contested the show -cause notice on merits and put forth various defences before the adjudicating authority. The adjudicating authority, after considering the submissions made, came to the conclusion that the charge of mis -declaration of the imported goods as rejects was not proved and coming to such conclusion dropped the proceedings for demand of the differential duty on the charge of misdeclaration. The adjudicating authority, however, confirmed the demand of duty on the quantity of CCL found short during the visit of the premises of the appellant -company and imposed a penalty of Rs. 50,000/ - on the partner of the company under provisions of Section 112(a) of the Customs Act, 1962 (the Act) but did not confiscate the goods found short as they were not physically available. Aggrieved by such an order, the assessee and the Managing Partner are before us in appeal. Revenue is also aggrieved by the said order as the adjudicating authority has dropped the proceedings for the demand of the differential duty on account of mis -declaration of the goods.

(3.) ASSAILING the order, the ld. Counsel for the assessee would submit that the adjudicating authority has erred in not considering the fact that the quantity found short were in fact brought in to the factory but were not able to locate when the officers visited the factory. It is his submission that there is no evidence to show that the shortage of 7469 kgs. was real shortage and has not gone into the factual matrix as to whether this shortage has arisen due to clandestine clearance of the goods. It is his submission that the adjudicating authority has confirmed the demand without recording any finding that the goods were not used. It is his submission that the adjudicating authority has erred in confirming the demand as they could have been given an opportunity to produce the records of accountal of the goods and demonstrated that the goods which were found were not actual short.