Umaji Overseas vs Union of India

This Appeal is directed against an order passed by the Customs, Excise and Service Tax Appellate Tribunal calling upon the Appellant to deposit an amount of Rs. 9.5 crores within a period of four weeks. The order was passed on an application for waiver of pre-deposit.

The Commissioner of Central Excise made a demand for duty of Central Excise to the extent of Rs. 37.42 crores from the Appellant. The Appellant is a 100% export oriented unit and had procured raw material indigenously without the payment of Central Excise duty between April 2001 and August 2002. The primary condition of Notification 1/95-C.E. was that indigenously procured raw material has to be used in the manufacture of finished goods for export. The allegation against the Appellant, found to have been established by the Commissioner, was that there was a breach of the conditions attached to the notification and that the raw material was diverted to the local market.

The contention of the Appellant before the Tribunal and before this Court is that the Appellant had supplied finished goods to certain export oriented units situated at Hyderabad. Among five named EOUs at Hyderabad was a unit by the name of Asharani Garments. According to counsel for the Appellant, the Department had issued a notice to show cause to Asharani Garments as would be evident from paragraph 12.3 of the notice issued to the Appellant on 16 May 2008 (Exhibit ''A''). During the course of the hearing of these proceedings, copies of the notices to show cause that were issued to Asharani Garments have been furnished to counsel for the Appellant together inter alia with a letter dated 15 June 2010, addressed by the Commissioner of Customs and Central Excise, Hyderabad to the Additional Director General, DGCEI, Zonal Unit, Mumbai.

At this stage, it would be necessary for the Court, while evaluating as to whether a prima facie case has been made out, to advert to the findings that were recorded by the Commissioner in his order dated 5 October 2009 while confirming the demand of duty in the amount of Rs. 37.42 crores :-

Coming to the findings of the investigations against M/s. Umaji and the evidences on records with regard to their procurements, it is seen that M/s. Umaji during the period under demand has shown procurement of their raw materials i.e. partially oriented yarn; POY, mainly from two units viz. M/s. jay Bharat Fabrics (JBF) Mills Ltd., Chhatral and M/s. Arya Fibres (P) Ltd.; a 100% EOU. The search and statement of the transporter claimed for such procurement from the first party, M/s. Mahadev Transport Corporation, Ahmedabad, has revealed that the consignments from the supplier were in fact unloaded at the premises of one other local transporter of Bhiwandi, M/s. Suhel Roadlines and therefrom was diverted into the local market. Similarly, the statement of M/s. Suhel Transport, claimed transporter also has indicated that the goods cleared for M/s. Umaji were unloaded at some other premises at the instance of M/s. Umaji. Investigation into the claimed supplies from M/s. Arya Fibres (P) Ltd., also a 100%

EOU has revealed that they had cleared the goods through M/s. Suhel Transport. Shri Riyaz Nizammuddin Siddique, Proprietor of M/s. Suhel Transport in his statement dated 20-12-2002 has admitted that the consignment was off-loaded at some other premises at Bhiwandi and not at the premises of M/s. Umaji as per the directions of M/s. Arya Fibres (P) Ltd., Daman, the supplier. The director of M/s. Arya Fibres (P) Ltd., has also, in his statement stated that documents were in the name of M/s. Umaji and M/s. Umaji may have diverted the duty free goods without using the same. Thus, specific cases have been proven by investigation where at the instance of M/s. Umaji the duty free procurements were offloaded at some other premises.

The Tribunal has, while considering the application for waiver of pre-deposit, arrived at a finding that the Appellant has not prima facie established that goods were cleared to Asharani Garments. The Tribunal noted that the Appellant had pleaded that some of the raw materials procured indigenously were sent to job workers and the finished goods procured by the job workers were duly received in the EOU and were subsequently exported. The Tribunal has adverted to the fact that the investigating agency had visited the premises of the job workers and found that no manufacturing activities were carried on therein. Coupled with the finding of fact is a prima facie finding of the Tribunal that the Appellant did not obtain export obligation discharge certificates from the Development Commissioner and had failed to establish compliance with the primary requirement that indigenously procured raw material be used in the manufacture of the finished goods for export. In quantifying the amount which should be directed to be deposited, the Tribunal has placed reliance on an alleged transaction with only one of five units based in Hyderabad and has come to the conclusion that the Appellant has not been able to establish that the raw material which was procured indigenously without the payment of duty was used in the manufacture of export goods cleared to Asharani Garments.

Counsel appearing on behalf of the Respondents, has besides supporting the findings of the Tribunal, also adverted to the letter of the Commissioner at Hyderabad dated 15 June 2010 which inter alia states that a show cause notice was issued to Asharani Garments in respect of raw material received from sources other than the Appellant. Be that as it may, and in view of the prima facie evaluation of facts by the Tribunal, which we do not find to suffer from any error, no substantial question of law would arise in this Appeal. We do not find any substance in the only submission which has been urged before this Court, for the reasons indicated hereinabove. No other submission on merits has been urged at the hearing and no case of financial hardship has been urged at the hearing.

The Appeal does not raise any substantial question of law and shall accordingly stand dismissed. There shall be no order as to costs.