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2005 (7) TMI 664 - AT - CustomsWrongly declared the value of the goods - liability of confiscation of the imported waste oil - barrels of 44 gallons each - advance licences - evasion of duty - DEEC Scheme for duty free imports - time-barred demand - Penalty - violation of instructions of the RBI Manual - Notification No. 204/92 - misstatement and suppression of facts in the invoices - HELD THAT- After taking into account of exports, we find that still the appellants were not able to fulfil the export obligation for each of the advance licences. The figures of short fall worked out in annexure T3 to T7 to show cause notice were accepted by the appellants during hearing of appeals. Therefore, Shri J.M. Sharma counsel for the appellants stated that they are liable to pay duty of ₹ 4,40,539/- for import of the waste oil at Jaipur for which the export obligation was not fulfilled on adopting unit of British gallon. He also accepted that on adoption of British gallon, the appellants were not able to fulfil the export obligation for imports at Mumbai and they are liable to pay duty of ₹ 3,95,761/-. Thus, the appellants are liable to pay customs duty of ₹ 4,40,539/- at Jaipur and ₹ 3,95,761/- at Mumbai, in respect of imports made against advance licences no. 2277827 dated 5-11-92 and 1535022 to 1535025 all dated 26-2-93. There was a clear misstatement and suppression of facts in the invoices. They had given false declaration of quantity in para (e) of declaration submitted along with the shipping bills for use of waste oil in manufacture of refined lube oil exported. They have made false declaration in shipping bill before the customs that entire quantity of raw material has been utilized for meeting export obligation under the relevant licences. This attempt on the part of the appellant is with intention to defraud the Revenue by misstating the facts and by suppressing the real facts from the department. Therefore, we are convinced that extended period for demanding duty was applicable. We find that none of the demand is beyond the period of 5 years and this position was conceded by Shri J.M. Sharma, the learned counsel for appellants. liability of confiscation of the imported waste oil - The Commissioner of Customs, Mumbai has given finding that he is not confiscating the oil imported through Mumbai Port, as it is not available for confiscation, we are not interfering with this findings as it is not challenged before us. We find that the Commissioner of Customs, Jaipur has given finding that the imported goods (waste oil) valued at ₹ 11,23,891/- are liable for confiscation under Sections 111(o) and 113(d) of the Customs Act corresponding to show cause notice dated 23-7-98 and he ordered these goods to be redeemed on the redemption fine of ₹ 3,00,000/-. We find that that the appellants have not been able to export the refined lubricating oil manufactured out of imported waste oil corresponding to the quantity of 12490 gallon in respect of licence no. 1535024 (Annexure T-6 of show cause notice) and 40957 gallon in respect of licence no. 1535025 (annexure T-7 of show cause notice), the value of these two quantities which were imported but corresponding export was not made works out to (Rs. 1,35,915/- plus ₹ 4,45,553/-) ₹ 5,83,468/-. Therefore, the redemption fine imposed by the Commissioner, Jaipur amounting to ₹ 3,00,000/- is reduced to ₹ 1,50,000/-. We find that charge of violation of condition no. (v) of Notification No. 204/92 dated 19-5-92 is established against M/s. Vibhuti Exports, as discussed above. We also find that they have imported waste oil and had not exported the goods to the full extent as discussed above and thus made the imported goods liable for confiscation as they have not met the export obligation. Therefore, M/s. Vibhuti Exports are liable for penalty under Section 112(a) of the Customs Act. For non-recovery of the value of the goods exported during the extended period allowed by the DGFT, any action for violation law relating to non-recovery of Foreign Exchange or for violation of instructions of the RBI Manual, the competent authorities under the respective law has to take action. The customs authority has no role in deciding this issue. Therefore, on this account, no penalty can be imposed. Penalty imposed under Section 114 of the Customs Act by Commissioner of Customs, Jaipur is set aside as no final order passed by any competent authority regarding the violation of the Foreign Exchange or RBI Manual was referred to by the Commissioner which would have rendered the goods liable for confiscation for violating of condition (vii) of Notification 204/92. Regarding penalty of ₹ 6,00,000/- imposed by the Commissioner of Customs, Jaipur, we find that it is imposed for the evasion of duty on imported waste oil used in exported goods during the extended period allowed by the licensing authority for meeting the export obligation. These goods have been taken as used in export production. Therefore, the imported waste oil used in refined lube oil exported during the extended period has to be considered as duly used for fulfilment of export obligation. Such exports are also entered in the DEEC Book. Therefore, this penalty can not sustain. In view of above, we modify the order of the Commissioner of Customs, Jaipur and orders of the Commissioner of Customs, Mumbai in the following manner - (1) Order of the Commissioner of Customs, Jaipur (C/681 and 682/02) - (i) The demand of ₹ 16,40,941/- is reduced to ₹ 4,40,539/-. (ii) Penalty of ₹ 12,00,000/- imposed on M/s. Vibhuti Exports under Section 114 of the Customs Act, is set aside. (iii) Redemption fine is reduced from ₹ 3,00,000/- to ₹ 1,50,000/-. (iv) Penalty of ₹ 8,00,000/- imposed on Shri Gulab Chand Jagetia is reduced to ₹ 2,00,000/-. Rest of the order is upheld - Order passed by the Commissioner of Customs, Mumbai is set aside. All the eight appeals are disposed of in the above manner.
Issues Involved:
1. Misuse of DEEC Scheme by inflating export quantities. 2. Incorrect unit of measurement (British vs. American gallon). 3. Fulfillment of export obligations during the extended period. 4. Non-realization of foreign exchange for exports made during the extended period. 5. Time-barred demands and misstatement/suppression of facts. 6. Liability for confiscation of imported waste oil and exported refined lube oil. 7. Imposition of penalties on involved parties. Issue-wise Detailed Analysis: 1. Misuse of DEEC Scheme by inflating export quantities: The appellants, M/s. Vibhuti Exports, were found to have inflated the quantity of reclaimed lube oil exported under two advance licenses (No. 2277817 and 2277826) by showing 300 barrels in shipping bills, although a 20 feet container could not contain such quantity. This led to the evasion of duty amounting to Rs. 14,26,557/-. The appellants admitted the shortfall and agreed to pay the duty. 2. Incorrect unit of measurement (British vs. American gallon): The appellants claimed that they used American gallons (3.785 liters per gallon) for imports and exports, while the Commissioner determined that British gallons (4.546 liters per gallon) were used based on import documents. The Commissioner's detailed analysis, including specific gravity calculations, supported the use of British gallons. The Tribunal upheld this finding, rejecting the appellants' claim. 3. Fulfillment of export obligations during the extended period: DGFT extended the period for fulfilling export obligations up to 31-1-96 for five advance licenses. The Tribunal agreed that exports made during the extended period should be considered for fulfilling export obligations as per DGFT's extension. However, even after considering these exports, the appellants failed to meet the export obligations for all five licenses. 4. Non-realization of foreign exchange for exports made during the extended period: The appellants did not realize foreign exchange for exports made during the extended period, violating condition (vii) of Notification No. 204/92. The Tribunal noted that the appellants did not submit GR forms to their bankers, and the revised bank realization certificates were obtained by misrepresentation. This non-realization justified the duty demand of Rs. 37,34,796/-. 5. Time-barred demands and misstatement/suppression of facts: The Tribunal found that the demands were not time-barred as the appellants had made false declarations in shipping bills and invoices, misrepresenting the quantity of exports. The extended period for demanding duty under Section 28 of the Customs Act was applicable due to the appellants' misstatements and suppression of facts. 6. Liability for confiscation of imported waste oil and exported refined lube oil: The imported waste oil not used for export production under the advance licenses was liable for confiscation under Section 111(o) of the Customs Act. The Commissioner of Customs, Mumbai, did not confiscate the goods as they were not available. The Commissioner of Customs, Jaipur, imposed a redemption fine of Rs. 3,00,000/-, which the Tribunal reduced to Rs. 1,50,000/-. 7. Imposition of penalties on involved parties: - M/s. Vibhuti Exports: The Tribunal upheld the penalty of Rs. 4,00,000/- imposed by the Commissioner of Customs, Jaipur. The penalty of Rs. 25,00,000/- imposed by the Commissioner of Customs, Mumbai, was set aside. The penalty of Rs. 18,22,318/- was reduced to Rs. 5,00,000/-. - Shri Gulab Chand Jagetia: The penalty of Rs. 3,00,000/- imposed by the Commissioner of Customs, Mumbai, was upheld. The penalty of Rs. 8,00,000/- imposed by the Commissioner of Customs, Jaipur, was reduced to Rs. 2,00,000/-. - Ms. Anjana Jagetia: The penalty of Rs. 2,00,000/- imposed by the Commissioner of Customs, Mumbai, was upheld. Conclusion: The Tribunal modified the orders of the Commissioners of Customs, reducing the penalties and duty demands where applicable, and upheld the findings of misrepresentation and non-fulfillment of export obligations. The appeals were disposed of accordingly.
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