2016 (7) TMI 980 - AT - Customs

Pre-deposit of 1% of the total penalty - allegation of illegal export of Muriate of Potash (MOP) Fertilizer grade, without a valid license - Held that - At this stage, the penalties imposed on the applicants may look very harsh, but, if the gravity of allegation/offence is considered, against the backdrop of evidences and at the stage of final hearing of these appeals, if it could be established by the Revenue that the goods exported was not Industrial Salt but MOP and the said act was possible by diversion of the MOP imported at concessional rate of duty and meant to be used as fertilizer by the Indian farmers, then the case would tilt in favour of Revenue, in as much as smuggling of MOP out of the Country could be a reason for socio economic plight of farmers who are driven to end their life facing insurmountable hurdles like deficit of rain, shortage of fertilizers etc. We have carefully considered the financial hardships pleaded by other applicants. Considering overall circumstances of the case, the financial hardship expressed and also keeping in view the interest of Revenue, and considering the fact that the Hon ble Gujrat High Court has remanded the matter for reconsideration, we are of the considered opinion that it would be appropriate to direct each of the applicants to make the specified pre-deposit against the penalty imposed as per the table. Partial relief granted - Stay order modified.

Summary

Issues Involved:
1. Non-compliance with pre-deposit order.
2. Alleged illegal export of Muriate of Potash (MOP).
3. Mis-declaration of exported goods and undervaluation.
4. Role of various parties in the illegal export.
5. Jurisdiction of DRI to issue Show Cause Notice.
6. Financial hardship and pre-deposit requirements.

Detailed Analysis:

1. Non-compliance with pre-deposit order:
The Tribunal had earlier directed the appellants to make a pre-deposit of 1% of the total penalty imposed. Due to non-compliance, their appeals were dismissed. The Gujarat High Court remanded the matter to the Tribunal to decide in accordance with the law.

2. Alleged illegal export of Muriate of Potash (MOP):
The investigation revealed that M/s Saraf Impex Pvt. Ltd. exported MOP without a valid license, mis-declaring it as industrial salt, and undervaluing the total quantity exported. The Adjudicating authority analyzed various evidences, including test reports, statements, and bank documents, to conclude that the export was mis-declared and undervalued.

3. Mis-declaration of exported goods and undervaluation:
The investigation showed that M/s Saraf Impex Pvt. Ltd. exported MOP, a restricted item, by declaring it as industrial salt, feldspar powder, quartz powder, and talc powder. This mis-declaration was corroborated by statements from involved parties, bank statements, and overseas buyers' admissions. The company also submitted different sets of documents to customs and banks, indicating forgery and fraud.

4. Role of various parties in the illegal export:
The Adjudicating authority detailed the involvement of various individuals and entities in the illegal export. Statements from Shri Pravin Saraf and other parties revealed the procurement, repacking, and export processes. The evidence established the chain of events, from procurement to export, involving several intermediaries and overseas buyers.

5. Jurisdiction of DRI to issue Show Cause Notice:
The appellants argued that the DRI had no jurisdiction to issue the Show Cause Notice for the period before 08.04.2011. The Tribunal noted conflicting judgments from the Delhi and Bombay High Courts on this issue. The Tribunal decided to consider the applicability of these judgments at the time of final appeal disposal.

6. Financial hardship and pre-deposit requirements:
The appellants argued financial hardship and requested a reduction in the pre-deposit amount. The Tribunal reviewed the financial documents and concluded that the appellants did not make a prima facie case for a total waiver of pre-deposit. However, considering the overall circumstances and the remand order, the Tribunal directed the appellants to make specific pre-deposits against the penalties imposed.

Pre-deposit Orders:
- M/s Saraf Impex Pvt. Ltd.: Rs. 2 Crores
- Shri Pravin Saraf: Rs. 25 lakhs
- Shri Vijay Singh Gohil: Rs. 10 lakhs
- Shri Sharadbhai Morarjibhai Kakkad Pravin Thakkar: Rs. 15 lakhs
- Shri Sumerpuri Goswami: Rs. 5 lakhs
- Shri Ashok Babulal Agarwal: Rs. 15 lakhs

The pre-deposits must be made within eight weeks, and failure to do so will result in the dismissal of the respective appeals. Compliance is to be reported on 19.09.2016.