2019 (10) TMI 457 - AT - Customs

Fraudulent imports - 224 MT of HDPE of Korean Origin goods - High Seas Sale - it was alleged that the Licence and Deec book against which the goods had been cleared was not issued by the ADGFT Jaipur and was fraudulently manipulated by the appellants - cross-examination of witnesses - Confiscation - redemption fine - HELD THAT - Admittedly the matter has been readjudicated by the Commissioner in remand proceedings. While remanding the matter CESTAT has directed for cross examination of three persons who had given the statements under Section 108. Commissioner has in impugned order as directed allowed the cross examination of the persons as directed. However Shri Jayesh Tanna refused to appear for cross examination and submitted through the counsel that since he was co-noticee in the matter he should not be cross examined and asked to give evidence against himself. The Commissioner had limited scope in the remand proceedings and could not have put the appellants in more precarious position then what was held against them in the earlier proceedings specifically when revenue had not filed any appeal against the earlier order. The penalty imposed under section 112 (a) reduced to ₹ 20 lakhs and 10 lakhs respectively - other part of demand upheld - appeal allowed in part.

Issues Involved:
1. Liability for duty and interest.
2. Confiscation of goods under Section 111(o) of the Customs Act, 1962.
3. Imposition of penalties under Section 112(a) of the Customs Act, 1962.
4. Validity of statements recorded under Section 108 of the Customs Act, 1962.
5. Enhancement of penalties during remand proceedings.

Detailed Analysis:

1. Liability for Duty and Interest:
The Commissioner held that M/s PIL were the importers, confirming a duty of ?47,62,720 along with applicable interest. The goods were imported and sold on high seas to M/s Taneja Exports, who cleared the goods duty-free using a fraudulently manipulated license and DEEC book. The Commissioner found that M/s PIL, despite claiming a high seas sale, were intricately involved in the clearance and subsequent reclamation of the goods, thereby making them liable for the duty.

2. Confiscation of Goods Under Section 111(o) of the Customs Act, 1962:
The Commissioner confiscated the goods valued at ?36,80,016 under Section 111(o) and imposed a redemption fine of ?15 lakhs under Section 125. The goods were cleared duty-free under a fraudulent license, and M/s PIL reclaimed part of the goods post-clearance, violating the actual use condition of the notification 204/92-Cus. This led to the conclusion that the goods were liable for confiscation.

3. Imposition of Penalties Under Section 112(a) of the Customs Act, 1962:
Penalties of ?50 lakhs on M/s PIL and ?25 lakhs on Shri Daud A Dawood were imposed. The Commissioner justified the penalties based on the involvement of M/s PIL and Shri Dawood in the fraudulent clearance and reclamation of the goods. The Tribunal, however, noted that in the initial proceedings, penalties were ?20 lakhs and ?10 lakhs respectively, and enhanced penalties in remand proceedings were not permissible as per precedents set in Goenka Impex Pvt Ltd and Maestro Motors Ltd. Thus, the penalties were reduced to the original amounts.

4. Validity of Statements Recorded Under Section 108 of the Customs Act, 1962:
The appellants argued that statements from individuals who were not cross-examined should not be relied upon. The Commissioner, however, found that the statements recorded under Section 108 of the Customs Act had evidentiary value and were not retracted. The Tribunal upheld this view, citing the Supreme Court's rulings in cases like Surjeet Singh Chabbra and K I Pavunny, which affirmed the admissibility of such statements as substantive evidence.

5. Enhancement of Penalties During Remand Proceedings:
The Tribunal found that the Commissioner erred in enhancing the penalties during remand proceedings, as it placed the appellants in a more precarious position than in the original adjudication. This was contrary to the principles laid down in the cases of Goenka Impex Pvt Ltd and Maestro Motors Ltd. Consequently, the penalties were reduced to ?20 lakhs for M/s PIL and ?10 lakhs for Shri Daud A Dawood, aligning with the penalties imposed in the initial proceedings.

Conclusion:
The appeals were partly allowed, with penalties reduced to the amounts imposed in the initial proceedings. The Tribunal emphasized the holistic examination of evidence and upheld the confiscation and duty liability while correcting the procedural error regarding penalty enhancement. The order was pronounced in open court on 10.10.2019.

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