2015 (2) TMI 825 - AT - Customs

Export of graphite blocks - graphite of nuclear grade - Confiscation of goods - Penalty under section 114 (Penalty for attempt to export goods improperly, etc.) - Prohibited goods - Prohibition may be complete or partial - License from the dept. of Atomic Energy - Export of nuclear grade graphite blocks of cetain specification - Held that - In the documents available on record, a list of customers to whom the appellant had supplied graphite items is given. Two of the customers listed therein are M/s BARC, Mumbai and M/s Nuclear Fuel Complex, Hyderabad which are well known institutions dealing with nuclear materials in India. Therefore, the appellant cannot take the plea that they did not know what nuclear grade graphite is. Further as per the product brochure of Nickunj Group available in the file, they are dealers/distributors for Carbonne Lorraine group who are world-wide leaders in manufacture of graphite products including specific components for nuclear and aerospace industries. It is also on record that till 2006, the appellant had represented Carbonne Lorraine/Carbone of America who are manufacturers and exporters of graphite products world-wide, and were their exclusive agents for India. It is also on record that when they represented the said company, the said company used to apply for licences in respective countries and apst records of the purchasers were relevant criteria in getting licences for graphite exports. From these documents available on record, it is clear that the appellant had the knowledge about the procedures to be undertaken for export of nuclear grade material and therefore, the appellant cannot take the plea of ignorance to escape the consequences of their actions. From the evidences available on record, the malafide conduct of the appellant is clearly established. As regards the contention that the customs had allowed export of similar consignments earlier, this argument is not tenable for the following reason. First of all, there is no estoppels in a customs transaction. Merely because the Customs committed an error in allowing a transaction, that cannot be a reason for repeating the error. In Bel Pharma Ltd. case 2010 (9) TMI 307 - SUPREME COURT OF INDIA the Hon ble apex Court had held that in a tax matter, the doctrine of promissory estoppels as such may not be applicable and the revenue can be permitted to take a position different from its earlier stand provided it is able to demonstrate the distinguishable features of the case. In the present case, in our considered view, the Revenue has discharged this responsibility by obtaining the test report from BARC that the goods are nuclear grade which needs a specific permission/licence for its export. In the present case, we find that the goods were brought to the customs area for the purposes of export and the shipping bills had been filed. Further, the goods needed a specific licence for the purposes of export which the appellant exporter herein did not have. In these circumstances, the attempt to export prohibited goods is clearly established and the provisions of Section 113(d) are clearly attracted. Therefore, absolute confiscation of the prohibited goods under Section 113(d) by the adjudicating authority cannot be faulted at all as the discretion to absolutely confiscate or allow redemption lies with the adjudicating authority under the provisions of Section 125(1) of the Customs Act. In the present case, the adjudicating authority has exercised his discretion to absolutely confiscate the goods as the goods are prohibited/restricted for export in terms of an international resolution to which India is a party. Therefore, the offence committed assumes significant dimension in the context of nuclear terrorism. The next issue for consideration is imposition of penalty of ₹ 30 lakhs each on the appellant firm and its Director Mr. Nickunj Shah. Considering the value or ₹ 62 lakhs of the export goods, the penalty of ₹ 30 lakhs imposed on the appellant exporter cannot be faulted at all as it is much below the limit of three times the value of the goods as declared by the exporter in the case of prohibited goods. As regards the penalty imposed on Mr. Piyush N. Sanghvi, there is no direct involvement on his part in the attempt to export nuclear grade graphite. He has only assisted Mr. Nickunj Shah in procuring fictitious bills showing purchase of graphite blocks. Therefore, it cannot be said that any of his action/omission to act made the goods liable to confiscation. Therefore, the provisions of Section 114 are not attracted in his case and accordingly we set aside the penalty imposed on Mr. Piyush N Sanghvi, Partner of M/s Parth Enterprises. Decided against the appellant.

Summary

Issues Involved:
1. Confiscation of nuclear grade graphite blocks.
2. Imposition of penalties on the appellant firm and its director.
3. Requirement of export license for nuclear grade graphite.
4. Applicability of Section 113(d) and Section 114 of the Customs Act.
5. Validity of appellant's claims of bona fide belief and previous exports.
6. Legality of absolute confiscation versus conditional release.

Detailed Analysis:

1. Confiscation of Nuclear Grade Graphite Blocks:
The appellant, M/s Nickunj Eximp Enterprises Pvt. Ltd., attempted to export nuclear grade graphite blocks to Iran and Dubai without the requisite export license, leading to their confiscation under Section 113(d) of the Customs Act, 1962. The graphite blocks were confirmed as nuclear grade by BARC, having purity levels and density meeting the criteria for nuclear grade materials. The export of such materials to Iran is prohibited as per the Foreign Trade Policy and various notifications and guidelines issued by the Department of Atomic Energy and DGFT.

2. Imposition of Penalties on the Appellant Firm and Its Director:
Penalties of Rs. 30 lakhs each were imposed on the appellant firm and its director, Mr. Nickunj Shah, under Section 114 of the Customs Act. The adjudicating authority justified the penalties based on the value of the goods and the deliberate attempt to export prohibited items. The Tribunal upheld these penalties, noting the significant implications of exporting nuclear grade materials without proper authorization, especially in the context of nuclear terrorism.

3. Requirement of Export License for Nuclear Grade Graphite:
The Tribunal emphasized that the export of nuclear grade graphite requires a specific license from the Department of Atomic Energy, as stipulated in various public domain documents, including notifications and resolutions. The appellant's argument that they were unaware of this requirement was dismissed, given their previous dealings with nuclear materials and their knowledge of the procedures for exporting such items.

4. Applicability of Section 113(d) and Section 114 of the Customs Act:
The Tribunal held that the provisions of Section 113(d) were applicable as the goods were brought to the customs area for export without the necessary license, constituting an attempt to export prohibited goods. The penalties under Section 114 were deemed appropriate given the deliberate and malafide conduct of the appellant in attempting to export the goods and creating a web of fictitious transactions to conceal the source of the graphite blocks.

5. Validity of Appellant's Claims of Bona Fide Belief and Previous Exports:
The appellant's claim of bona fide belief based on previous exports was rejected. The Tribunal noted that there is no estoppel in customs transactions, and previous errors by customs authorities do not justify repeating the same mistakes. The appellant's knowledge of the restrictions and their deliberate attempt to mislead authorities further undermined their claims of bona fide belief.

6. Legality of Absolute Confiscation Versus Conditional Release:
The Tribunal upheld the absolute confiscation of the goods, emphasizing the adjudicating authority's discretion under Section 125(1) of the Customs Act. Given the prohibited nature of the goods and the international implications, absolute confiscation was deemed appropriate. The Tribunal also noted that the appellant's attempt to export the goods without the necessary license constituted a significant offense.

Conclusion:
The Tribunal upheld the confiscation of the nuclear grade graphite blocks and the penalties imposed on the appellant firm and its director, Mr. Nickunj Shah, while setting aside the penalty on Mr. Piyush N. Sanghvi, Partner of M/s Parth Enterprises, due to lack of direct involvement in the export attempt. The order emphasized the importance of adhering to export regulations, especially concerning sensitive materials like nuclear grade graphite.