SINGH OVERSEAS Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) This petition seeks quashing of order dated 18-9-2008 (Annexure P-8) passed by the Customs, Excise and Service Tax Appellate Tribunal (in short, the Tribunal) requiring the petitioners to deposit a sum of Rs. 1 crore towards duty and a sum of Rs. 10 lacs towards penalty within eight weeks, failing which the appeal shall stand dismissed.

(2.) Even though against the impugned order, statutory appeal is provided under Section 130 of the Customs Act, 1962, on a substantial question of law, we have heard learned for the petitioners on merits.

(3.) The petitioner no. 1 is a proprietorship concern of petitioner no. 2 and is a 100% Export Oriented Unit (EOU). It imported 18 consignments of polyester knitted fabrics and also procured 4 consignments of the same material duty free from units in Domestic Tariff Area under CT-3 certificate. The duty free material so imported was required to be used for manufacture and export as per the Scheme framed under the provisions of the Customs Act. However, on inspection by the Officers of the department, it was found that imported stock/locally procured materials were diverted to the market and were used in the market, thus resulting in the evasion of duty. After issuing show cause notice and considering the interim reply of the petitioners, the adjudicating authority recorded findings against the petitioners and confirmed the demand of duty of Rs. 2.5 crores and also imposed penalty. The petitioners preferred appeal to the Tribunal and inter alia submitted that no opportunity of personal hearing was given and there was denial of principles of natural justice. It was also submitted that the incriminating statements of the petitioners made before the officers of the department, on various dates, were immediately retracted and hence, could not be acted upon.