Order Date – 04 July 2022

Facts – 

• The Appellant, M/s Fakhri Steels and Iron, is a SEZ unit, engaged in manufacture of M.S. Pipes.
• On the basis of intelligence it was found that M/s New Tech Pipe Limited (NTPL) was engaged in evasion of duty by resorting to clandestine removal of finished goods, simultaneous searches were carried and relying on the statements of Dinesh Sharma (Director of NTPL), Nikhil Tiwari and Vikas Atre, a SCN dated 07.08.2013 was issued to M/s NTPL, the appellant and others.
• In this regard, the authorities imposed a penalty of Rs. 20 lakhs on the appellant under Section 112(ii) of the Customs Act.
• The appellant filed detailed reply stating that the goods found and seized from his premises have been purchased from the open market for which payment was made through banking channels attached with documentary evidence.
• Aggrieved the appellants filed an appeal.

Issue – 

• Whether the confiscation and redemption fine of Rs. 8 lakhs and penalty of Rs. 25 lakhs wholly based on the statements of several people is maintainable?

Order – 

• The Tribunal observed that the goods which are available in the open market are presumed to have suffered the duty. If it is alleged by Revenue that the goods lying or found in the premises of the assessee are not duty paid, it is the onus on Revenue to establish such allegation.
• The Tribunal also held that strong reliance has been placed on the statement of several persons, which have either been retracted and/or not tested by cross-examination. Thus the statements have no evidentiary value, for ignoring the mandate of Sec. 138B of the Act. The same view was taken in the apex court’s case of Oudh Sugars vs. Assistant Collector.
• Therefore the appeal was allowed, penalty was set aside, and the confiscated goods were being released.