CHEMCROWN (INDIA) LTD. Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) The appellants are aggrieved with Order -in -Appeal No. 65/98 (TRY), dated 22 -6 -1998 by which the Commissioner (Appeals) has confirmed the Order -in -Original confirming duty amount of Rs. 8,21,951/ - and penalty of Rs. 82,000/ -. Besides there is imposition of interest on customs duty on the goods which were housed in September 1993. The appellants have already paid duty but are contesting the imposition of penalty.

(2.) The appellant is a 100% Export Oriented Unit manufacturing Thermoplastic Shoe Sole components and Poly Urethane Shoe soles. They imported Polyol, Isocynates and Pupaint and these were warehoused in the private bonded house inside the factory premises under the provisions of Sections 60 and 65 of the Customs Act, 1962 without payment of duty in terms of Notification No. 13/81 -Cus., dated 9 -2 -81. The above raw material had been imported under the 100% EOU scheme duty free to utilize the same for the export product as per the undertaking given to the Development Commissioner and to the Central Excise Department of its jurisdiction.

(3.) The officers of the Preventive Group, Pondicherry Division visited the said factory on 24 -4 -96 and on verification of the stock of the raw material, they detected shortages in the imported raw materials and noticed that 68 drums which were supposed to contain the imported raw materials were filled with water to make the impression that the above raw materials were intact. In view of this contravention, the appellants was show caused to explain as to why duty should not be demanded and penalty and interest imposed on them. During the investigation, the statement of Shri S. Balasubramanian, Materials Manager was taken into consideration who had submitted that the keys of the bonded warehouse were in the custody of the former Vice -President, Shri M.L. Kankaria during the period April, 1995 to September 1995 and with effect from October 1995, the keys were handed over to the Range Superintendent who used to depute their officers as and when the raw materials were required for production. He had also stated that Shri M.K. Kankaria was available in odd hours in the factory and stated that he might have removed the raw material during his absence. The statement of Shri M. Rajeswaran was also taken including the statement of one Shri Probir Banerjee, Production Manager in the matter. On detailed examination, it was found that the appellants clandestinely removed the goods from 68 drums and, therefore, they were liable to pay duty.