2008 (2) TMI 805 - AT - Central Excise

Issues Involved:
1. Jurisdiction and legality of the adjudication order.
2. Alleged contravention of Section 8(3) and 8(4) of FERA by over-invoicing imported goods.
3. Abetment of contravention by M/s. Adani Exports Ltd. and its director.
4. Validity of the sunset clause under Section 49(3) of FEMA.
5. Relevance and admissibility of evidence collected by customs authorities.
6. Determination of the actual value and quality of imported CD ROMs.
7. Procedural fairness and right to cross-examination.
8. Quantum of penalty imposed.

Detailed Analysis:

Jurisdiction and Legality of the Adjudication Order:
The appellant argued that the impugned order was without jurisdiction and illegal, claiming the imported goods conformed to the declaration in quality and quantity. However, the Tribunal found that the order was within jurisdiction, emphasizing that the proceedings were initiated based on investigations by customs authorities and the DRI, which were upheld by the CESTAT, Bangalore.

Alleged Contravention of Section 8(3) and 8(4) of FERA:
The Tribunal upheld the findings that the appellants misdeclared the quality and value of the imported CD ROMs, heavily over-invoicing them. The actual value was determined to be Rs. 62,39,834/- against the declared value of Rs. 7.5 crores. The goods were not in conformity with the description as to quality and value, thus violating Section 8(3) and 8(4) of FERA.

Abetment of Contravention by M/s. Adani Exports Ltd. and its Director:
The Tribunal found that M/s. Adani Exports Ltd. and its director, Rajesh Adani, abetted the contravention by facilitating the import of over-invoiced goods without obtaining any security. The evidence showed a deep nexus between M/s. AEL and M/s. VIL, with M/s. AEL acting far beyond a mere facilitator. The Tribunal cited various legal precedents to substantiate the charge of abetment.

Validity of the Sunset Clause under Section 49(3) of FEMA:
The Tribunal rejected the argument that the sunset clause barred jurisdiction, stating that the issuance of the Show Cause Notice (SCN) on 31-5-2002 was within the sunset period. The Tribunal relied on judgments from the Kerala and Madras High Courts and the Supreme Court to support this view.

Relevance and Admissibility of Evidence Collected by Customs Authorities:
The Tribunal emphasized that evidence collected by customs officials under Section 108 of the Customs Act was material and substantive. The investigation revealed that the address of the foreign supplier was fictitious, and there was a complex web of financial transactions indicating over-invoicing and misdeclaration.

Determination of the Actual Value and Quality of Imported CD ROMs:
The Tribunal upheld the determination of the actual value of the CD ROMs at US$ 1.11 per piece based on the export declaration by the foreign supplier and the reports from the National Informatics Centre (NIC) and Software Technology Parks (STP). The CD ROMs were found not to contain software as per the definition in the relevant customs notification.

Procedural Fairness and Right to Cross-Examination:
The Tribunal found that the appellants were given sufficient opportunities to be heard and that the refusal of cross-examination was justified. The Tribunal cited the Supreme Court's ruling in Surjit Singh Chhabra v. UOI, which held that denial of cross-examination under such circumstances did not violate principles of natural justice.

Quantum of Penalty Imposed:
The Tribunal concluded that the penalties imposed were commensurate with the violations and sufficient to deter future violations. The penalties were not deemed harsh or excessive, considering the severity of the contraventions and their impact on the national economy.

Conclusion:
The Tribunal dismissed the appeals, upholding the adjudication order and the penalties imposed. The appellants were directed to deposit the penalty within 45 days, failing which the respondent could recover the amount in accordance with the law. The judgment emphasized the importance of compliance with regulatory statutes and the serious implications of economic offences.

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