COMMISSIONER OF CUSTOMS (EXPORT) Vs. UNITY STEEL LTD.

JUDGEMENT

(1.) Intelligence was gathered by the Officer of Central Excise, Mumbai -III Commissionerate that M/s. Unity Steels Limited (hereinafter referred to as USL), a Baroda based company which had two manufacturing units, one at Halol at Panchmahal District and another at Bhavnagar both in Gujarat, which were closed for more than two years, had been importing chemicals such as Ferro Chrome, Ferro Silicon and Calcium Silicide duty free under Value Based Advance Licence (VABAL), and indulging in malpractice by selling the imported materials in the domestic market instead of utilising them in the manufacture of export goods as required under Notification No. 203/92 -Cus. in respect of VABALs. USL had applied for VABALs in February 93 and June 93 after the production had ceased at Halol plant. Stainless Steel Hot Rolled coils imported by USL and lying in the Customs Bonded Warehouse at CWC, Vashi were seized.

(2.) The statement of Shri A.S. Bhattar, Managing Director of USL was recorded. In his statement, he stated inter alia that electricity connection to Halol plant of USL was disconnected by the Gujarat State Electricity Board in September/October 1993 for non -payment of bills, that USL had account with Gulalwadi Branch of Bank of Baroda, which account was opened by him, that during the period August 1992 to December 1994, approximately Rs. 13.50 crores has been deposited in Gulalwadi Branch of Bank of Baroda and approximately Rs. 13.47 crores has been withdrawn from the account, that the money had been deposited into the account by Shri Jawahar P. Kanungo of M/s. Manek Metal Corporation, that he used to hand over blank cheques signed by him to Shri Jawahar P. Kanungo for withdrawal of amount from USL bank account, that DEEC licence dated 19 -3 -93 was issued in the name of USL, that the licence was utilised for import of raw materials such as Ferro Chrome, Ferro Silicon and Calcium Silicide etc., that he could not remember whether any record was maintained in respect of material under DEEC scheme for manufacture of export product at Halol, but he had seen the material after it had been received at Halol. He further stated that although in the Halol plant, the melting furnace had stopped functioning from January 1993 and other operations also came to a standstill from August 1993, USL did not inform DGFT regarding disconnection of electricity and Customs about non -fulfilment of export obligations.

(3.) The statement of Shri Jawahar Kanungo was recorded in which he admitted that money was paid to USL account by his firm and that he had associated himself with booking the material for import by USL. Statements of employees of Jawahar Kanungo and USL were also recorded