2007 (10) TMI 26 - Commission - Central Excise

Application of COFEPOSA absconder/detenue should be entertained by Settlement Commission as both are independent authority Diversion of high value export goods to local market and low value, prohibited goods exported Confiscation upheld Full immunity from interest and penalty not granted

Issues Involved:
1. Misdeclaration of goods and fraudulent exports.
2. Duty evasion and liability of Rs. 79,02,897/-.
3. Admissibility of Settlement Commission application.
4. Immunity from interest, fine, penalty, and prosecution.

Detailed Analysis:

1. Misdeclaration of Goods and Fraudulent Exports:
Investigations by the Directorate of Revenue Intelligence (DRI) revealed that M/s. Sana International (SI) and M/s. Universal Exports (UE) were involved in fraudulent exports under the DEPB/DEEC schemes. The goods exported were low-value fertilizers, prohibited for export, instead of the declared high-value dye intermediates. The goods manufactured by M/s. Shree Pushkar Petro Products Ltd. (SPPL) for export were diverted to the local market for profit.

2. Duty Evasion and Liability of Rs. 79,02,897/-:
A Show Cause Notice (SCN) dated 21-2-2003 was issued alleging that the applicants conspired to evade duty amounting to Rs. 79,02,897/-. Rs. 56,11,000/- of this amount was already paid, leaving a balance of Rs. 22,91,897/-, which was subsequently paid by M/s. Sana International.

3. Admissibility of Settlement Commission Application:
The Revenue argued that the application for settlement was not admissible under Section 127B of the Customs Act because the case had already been adjudicated by the Commissioner of Customs on 30-4-2007. The applicants contended that since the adjudication order was issued on 27-7-2007, after the application date (23-5-2007), the application should be considered valid. The Commission found that on the date of filing the application, the adjudication order had not been communicated to the applicants, thus fulfilling the criteria for admission.

4. Immunity from Interest, Fine, Penalty, and Prosecution:
The applicants sought immunity from interest, citing various court judgments. The Commission, bound by the Bombay High Court's judgment in Tanu Health Care, granted partial waiver of interest, requiring payment at 10%. Full immunity from penalty was granted to co-applicants, except for specific penalties imposed on the main applicants. Immunity from prosecution was granted, subject to conditions, particularly for Shri Sarfaraz Dhanani, who was required to avoid prejudicial activities for one year.

Final Orders:
1. Customs Duty: Settled at Rs. 79,02,897/-, already paid.
2. Interest: 10% interest to be paid within 30 days.
3. Fine: No redemption fine imposed as goods were not available for confiscation.
4. Penalties:
- Shri Sarfaraz Dhanani: Rs. 1,50,000/-
- Shri Yusuf Dhanani: Rs. 5,00,000/-
- Shri Shakil Ahmad Fakih: Rs. 50,000/-
- M/s. Shree Pushkar Petro Products Ltd.: Rs. 50,000/-
- Full immunity from penalty granted to other co-applicants.
5. Prosecution: Immunity granted under conditions, particularly for Shri Sarfaraz Dhanani.

The Settlement Commission emphasized that the order would be void if obtained by fraud or misrepresentation of facts, as per Section 127C(9) of the Customs Act.

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