Khalik Chataiwala And Anr. vs CC, Ghaziabad

These appeals are filed against order in original dated 08/12/2009 in terms of which service tax demand of Rs.33,14,194/- was confirmed under

Section 28(1) read with Section 72 of the Customs act 1962 along with interest and penalties.

The facts of the case are as under

M/s Oriental Enterprises had a private bonded warehouse for storing duty-free goods. It showed clearance of 72.576 MTs of duty- free polyester

yarn to M/s Ganesh Overseas Inc., Ghaziabad (100% EOU) but subsequently the said clearance was shown to have been cancelled and after that it

was shown that 72.576 MTs polyester yarn was cleared duty-free to M/s Marvel Fashions. Investigations revealed that the said goods never reached

their destination and were diverted. This fact was established from statements of the proprietor of M/s Oriental Enterprises Mr. Khalik Chataiwala,

Mr Ramesh Khanavkar Manager of M/s Oriental Enterprises, the proprietor of M/s Ganesh Overseas and the transporter. Thus the duty-free goods

were not used for manufacture of export goods and were diverted and therefore the primary adjudicating authority passed the following order:

(i) the customs duty amounting to Rs.33,14,194/- (Rs. Thirty three lakhs fourteen thousand one hundred ninety four only) is confirmed

against M/s Ganesh Overseas Inc., 135-A, Prakash Industrial Area, Sahibabad, Ghaziabad under proviso to Section 28(1) read with

Section 72 of the Customs Act, 1962.

(ii) interest at appropriate rate is demanded on duty amounting to Rs.33,14,194/- from M/s Ganesh Overseas Inc., 135-A, Prakash

Industrial Area; Sahibabad, Ghaziabad under Section 28 and 28AB of the Customs Act, 1962.

(iii) I impose penalty of Rs.33,14,194/- (Rs. Thirty three lakh fourteen thousand one hundred ninety four only) on M/s Ganesh Overseas

Inc., 135-A, Prakash Industrial Area, Sahibabad, Ghaziabad under Section 114A of Customs Act, 1962 for violating various provisions of

Act, ibid.

(iv) I impose penalty of Rs.10,00,000/- (Rs. Ten lakh only) on Shri Bhagwan Tulsian, Proprietor of M/s Ganesh Overseas Inc., 135-A,

Prakash Industrial Area, Sahibabad, under Section 112 of the Customs Act, 1962;

(v) I impose penalty of Rs.5,00,000/- (Rs. Five lakh only) on Shri Khalik Chataiwala, Proprietor of M/s Oriental Enterprises, Village

Palaspe, Taluka Panvel, Raigad, Maharashtra, under Section 112 of the Customs Act, 1962.

(vi) The amount Rs.2,00,000/- (Rs. Two lakh only) deposited by Shri Khalik Chataiwala towards security deposit on 21.8.03 under challan

dated 21.8.2003, is hereby appropriated against the penalty imposed on him.

(vii) I impose penalty of Rs.2,00,000 /- (Rs. Two lakh only) on Shri Ramesh Khanavkar, Manager of M/s Ganesh Overseas Inc. 135-A,

Prakash Industrial Area, Sahibabad, under Section 112 of Customs Act, 1962"".

When the case was taken up for hearing, there was no representation on behalf of the appellants nor was there any request for adjournment.

Accordingly we proceed to decide the appeals on merit.

In the appeals the appellants have essentially contended that they are not concerned with M/s Ganesh Overseas nor did they clear any goods to

M/s Ganesh Overseas and that they have not done anything wrong.

The Ld. Department representative on the other hand stated that:

(a) It has been established by the statements of various persons that the impugned goods cleared duty-free did not reach the destination (which was a

100% EOU) and therefore Customs duty is rightly recoverable and the appellants are liable to penalty as they could not even produce proper transport

documents to show that the goods were indeed sent to M/s Marvel Fashions.

(b) The appellants did not even participate in the adjudication process at the primary level.

We have considered the contentions of Revenue and perused the facts on record. The appellants herein have filed these appeals against penalties

imposed upon them. The proprietor of M/s Oriental Enterprises has inter alia admitted that there was a discrepancy in the transport documents relating

to the supply of duty free goods to M/s Marvel Fashions. It is also established that the Manager of M/s Oriental Enterprises made incorrect entries in

the records at the instance of its proprietor and in his statement he (the Manager) clearly admitted that he made incorrect entries. As has been the

recorded by the primary adjudicating authority the statements of various persons and the verification done clearly establish that 72.576 MTs of duty-

free polyester yarn was not received by any EOU and was diverted into the domestic market. Thus the diverted goods became liable to confiscation

and as a result the appellants became liable to penalty under section 112 of the Customs Act. We find the penalties imposed are neither unreasonable

nor arbitrary and therefore we do not notice any such infirmity in the impugned order as to require appellate intervention. The appeals are therefore

dismissed