M/S Alpha Synthetics vs Commissioner Of Central Excise

[ Arising out of OIO-15/MP/2006 dtd 22/11/2006 Passed by Commissioner of Central Excise, CUSTOMS (Adjudication)-SURAT-II ]

1. M/s Alpha Synthetics ]

2. Shri Ilyas Kapadia ]

3. M/s Cosmic Textiles ] Appellant(s)

4. Shri Govindbhai D Patel ]

Vs

Commissioner of Central Excise, ] CUSTOMS (Adjudication)-SURAT-II ] Respondent (s)

Represented by :

For Assessee : Shri Mukund Chouhan, Chartered Accountant For Revenue : Shri L Patra, Authorised Representative

For approval and signature :

Mr. P.K. Das, Hon'ble Member (Judicial) Mr. H.K. Thakur, Honble Member (Technical)

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

No 3 Whether their Lordships wish to see the fair copy of the Order?

Seen 4 Whether Order is to be circulated to the Departmental authorities?

Yes

CORAM :

Mr. P.K. Das, Hon'ble Member (Judicial) Mr. H.K. Thakur, Honble Member (Technical)

Date of Hearing / Decision : 13/5/2015

ORDER No. A/10732-10735/2015 dtd 13/5/2015

Per : Mr.P.K. Das,

These appeals are arising out of a common order and therefore, all are taken up for disposal.

2. The relevant facts of the case, in brief, are that M/s Alpha Synthetics (i.e., M/s Alpha) were engaged in the manufacture of Texturised Yarn classified under Chapter 54 of the Schedule of the Central Excise Tariff Act 1985. On 15.12.2002 the Central Excise Officers (Preventive), Customs Division, Surat, visited the factory premises of M/s Alpha and found 27,100 kgs of imported Polyester Yarn (POY) without covering of any duty paying documents. Shri Ilyas Kapadia, partner of M/s Alpha in his statement stated that they had bought 14399.438 kgs of imported POY, made in Indonesia from M/s Cosmic Textile, Surat, without any documents like invoice, Bill of Entry etc., and without payment of any customs duty. He further stated that the balance quantity of 12700.562 kgs of imported POY, made in Thailand, was purchased from a broker Shri Rafiqbhai Mohmmedbhai of Bhiwandi, Mumbai without any documents. Shri Rafiq Mohmmed, broker, in his statement admitted that he has procured the goods without payment of duty and without covering of any valid documents. The Customs Officers seized the goods.

3. In follow up action, during the search of the premise of M/s Cosmic Textile (ie., M/s Cosmic) the officer found shortage of 14399.438 kgs of imported POY which was seized by the officers at the premises of M/s Alpha. Shri Govindbhai D Patel, partner of M/s Cosmic admitted that they had sold the said quantity of imported POY to M/s Alpha without cover of any documents. The seized goods were released provisionally to both the firms on execution of Bond backed by bank guarantee. Both the firms paid duty involved on these seized goods.

4. A show cause notice dated 5.5.2003 was issued to both the firms and its partners. The Adjudicating Authority confiscated the seized imported POY 14399.438 kgs provisionally released to M/s Cosmic and imposed redemption fine of Rs 3,00,000/- and also confirmed the demand of duty of Rs 5,79,310/- alongwith interest and imposed penalty under Section 112 of the Customs Act. It has also appropriated duty as paid by them during the investigation. The Adjudicating authority confiscated the seized imported POY weighing 12,700.562 kgs provisionally released to M/s Alpha and imposed redemption fine of Rs 2,50,000/- and confirmed demand of duty alongwith interest and imposed penalty on M/s Alpha. It has also appropriated the amount of duty as deposited by them. Penalties were imposed on the partners of both the firms.

5. Learned Counsel on behalf of the appellants had not disputed the demand of duty. He submits that the confiscation of the seized goods under Section 111(d) of the Customs Act 1962 is not sustainable as the goods are not prohibited item. He relied upon the decision of the Honble Gujarat High Court in the case of Rutu Auto Gas Pvt Ltd Vs UOI  2002.149.ELT.10 (Guj.) and Avlon Syntex Pvt Ltd vs. CCE, Rajkot  2007.213.ELT.706 (Tri Ahmd).

6. He further submits that the imposition of penalties on the partners are not sustainable, as per the decision of the Honble Gujarat High Court in the case of Pravin N Shah Vs CESTAT  2014.305.ELT.480 (Guj) and CCE vs Jai Prakash Motwani  2010.258.ELT.204 (Guj.) . He further submits that the duty was demanded under Section 125 of the Customs Act and the recovery of interest under Section 28AB of the customs Act 1962 cannot be sustained. He further submits that as the confiscation of goods is not sustainable, the imposition of penalty on both the firms are to be set aside.

7. The Learned Authorised Representative for the Revenue reiterates the findings of the Commissioner. He submits that the appellant received the imported goods, which are notified under Section 123 of the Customs Act, without cover of any documents and the appellant are liable to pay the duty. Hence, the confiscation of the goods, received without any valid documents, is justified. He further submits that the appellant and its partners knowingly received the goods without the cover of the documents and the imposition of penalty are warranted.

8. After hearing both the sides and on perusal of the records, we find that the goods in question are notified items under Section 123 of the Customs Act 1965. The appellants had not disputed the receipt of imported POY without any documents. The appellant did not dispute the demand of duty under Section 28(1) read with Section 125(2) of the Customs Act, 1962 and Notification No. 53/97-Cus dated 3.6.1997 as amended. Hence, the demand of interest under Section 28AB of the Act is justified. Admittedly, the appellants received the imported POY a notified item, without any documents in violation of the various provisions under Import/Export Exim Policy and the Customs Act relating to import only on filing of declaration and documents for clearance and after payment of duty and therefore confiscation of goods is justified. The case laws as relied upon by the Learned Counsel is not applicable in the present circumstance of the case.

9. We find force in the submission of the Learned Counsel of the appellants, regarding the imposition of penalty on the partners of the firms. The Honble Gujarat High Court in various decisions held that once the partnership firm is penalized, the imposition of penalty on the partner is not warranted. In the present, we find that the partnership firm has already paid duty during the investigation and there is no sufficient materials available on record for imposition of penalty on the partners of both firms.

10. In view of the above discussions, we modify the impugned order in so far as the demand of duty alongwith interest upheld, penalty imposed on the M/s Alpha and M/s Cosmic are reduced to Rs 1,00,000/- each. The redemption fine is reduced to Rs 1,25,000/- and Rs 1,75,000/- on M/s Alpha and M/s Cosmic respectively. Both the appeals of M/s Alpha and M/s Cosmic are disposed of on the above terms.

11. The penalties imposed on the partners of both the firms are set aside and the appeals are allowed.

(Dictated and pronounced in the Court)

(H.K. Thakur) (P.K. Das) Member (Technical) Member (Judicial)

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