2024 (6) TMI 5 - AT - Customs

Export of goods - Mis-declaration in terms of quantity as well as quality and overvaluation - seizure -export import policy for import of input items - Non-compliance with Advance Authorization requirements - Allegations of concealment and suppression of facts - Procedural irregularities in sample drawl and examination - Responsibility for export obligations and penalties - Delay in provisional release of goods and financial losses - HELD THAT - There is nothing on record produced by the appellant to support the contention that the extension of said advance authorization was applied for and was pending consideration on the date of filing of impugned shipping bills. It is also apparent from the said order of 02.06.2017 that M/s Kwality Overseas Private Limited also did not appear before the investigating authority despite repeated summons. Thus it stands proved that appellant have declared and utilized an already lapsed authorization while importing the goods under the impugned shipping bills. Concealment and suppression of facts - The copies of advance authorization as well as IEC Codes were obtained by the department from the office of DGFT, Ludhiana. The documents have sufficiently revealed that both the companies were controlled by Shri R. K. Goyal who had attempted to export the goods under export obligation of such authorization, the Export obligation period whereof had already expired. Not only this, the authorization itself had already lapsed and the penalty on the Director had already been imposed, who is none but Shri R. K. Goyal himself. In the light of this apparent conduct of the appellant, we do not find any infirmity in the findings in order under challenge where misrepresentation, concealment and suppression of facts have been alleged against the appellant. Mis-declaration in terms of quantity as well as quality​​​​​​​ - The variation in the GSM not only supports the allegation of mis-declaration about the quality of the fabric. This also proves that the goods which were attempted to be exported as export obligation of an advance authorization were not manufactured from the fabric which was imported as fabric/raw material imported as exempted under said advance authorization license. These observations, therefore, falsify the claim of the appellant that the readymade garments (ladies dresses) i.e. the goods which were to be exported vide impugned five shipping bills have been made out of raw-material imported against authorization dated 19.03.2012. The said observation has been made the basis for order of confiscation of the impugned goods and imposition of penalty on the appellant by the adjudicating authority below. Since the appellant has not produced on record anything contrary thereto, we find no reason to differ from those findings. Procedural irregularities in sample drawl and examination - The Reports specifically clarified that the composition of fabric declared in the said three shipping bills is different from the composition found in the lab test of the imported sample fabrics. Similar were the subsequent reports with respect to the goods of remaining two shipping bills. Nothing has been produced by the appellant to prove that the export obligation had been properly discharged by the appellant, it was incumbent for appellant to show that the impugned goods have manufactured out of the imported/exempted fabric. Apparently and admittedly, the goods were old and torn ladies garments in bad condition. No evidence is produced on record about the circumstances due to which the newly manufactured garments could have been ruined to the extent of those getting old and torn. Financial losses - We do not find anything on record which may support the appellant s contention that the goods were not provisionally released on account of department faults and that he suffered financial losses due to department s fault. We rather hold contrary that the appellant had throughout been non-cooperating and has been concealing and manipulating the facts. He failed to take the provisional release of the goods despite the order in that respect. The department rather vide their letter dated 22.03.2018 had requested CONCOR to waive of all demurrage charges against the goods under impugned these shipping bills dated 06.02.2018. Hence, we do not find any fault on the department. Merchant exporter/third party exporter - No such shipping bill has been produced by the appellant which may indicate the proposed export to be a third party export. Rather the shipping bills were filed jointly being signed by the advance license holder as well as the export order holder. This fact is sufficient to confirm the noticed fraud played upon by Shri R. K. Goyal while using the IEC of two of its companies to defraud the Government exchequer. In addition the goods since were found to be of poor quality as contrary to the declaration of those being newly manufactured goods. This declaration has rightly been held basis for order of confiscation of these goods. The entire above observed facts are sufficient for us to hold that the exempted raw-material as was imported by M/s Kwality Overseas Private limited under the advance authorization license dated 19.03.2012 was not at all used for manufacture of the goods as were attempted to be exported by the appellants. The test reports corroborate the same. No evidence is produced by the appellants to falsify those reports. Nothing is produced to falsify the findings of order-in-original dated 02.06.2017. Hence, we do not find infirmity in the order under challenge passed based on those reports and the other facts as investigation by the department. We hereby uphold the same. As a result thereto both the appeals are hereby dismissed.

Summary

Issues Involved:
1. Mis-declaration and overvaluation of exported goods.
2. Utilization of expired advance authorization.
3. Alleged concealment and suppression of facts.
4. Improper drawl and examination of samples.
5. Responsibility for financial losses due to detention of goods.
6. Role of the Director in the alleged offenses.

Summary:

1. Mis-declaration and Overvaluation of Exported Goods:
The department received intelligence that M/s Candex Filament Private Limited was exporting readymade garments by mis-declaring and overvaluing them. Upon examination, the goods were found to be of bad quality, old, and torn, with quantities less than declared. The goods were seized u/s 110 of the Customs Act, 1962, and proposed for confiscation u/s 113 of the Customs Act, 1962.

2. Utilization of Expired Advance Authorization:
The goods were claimed to be made from fabric imported under an advance authorization which had expired. The GSM of the exported goods did not match the GSM of the imported fabric, indicating no correlation. The department confirmed that the advance authorization had expired and was non-transferable. The appellant attempted to export goods utilizing this expired authorization.

3. Alleged Concealment and Suppression of Facts:
The Director of the exporting firm, despite repeated summons, did not appear before the investigating authorities. The department found that the appellant concealed the fact that the advance authorization had expired and misrepresented the export obligation. The order under challenge confirmed the penalties imposed on both the company and its Director.

4. Improper Drawl and Examination of Samples:
The appellant contested the drawl of samples, claiming it was improper and disproportionate. However, the department offered a second option for re-examination, which the appellant failed to attend. The Textile Committee's test reports corroborated the initial findings that the GSM of the sample fabrics was much less than the imported fabric, confirming mis-declaration.

5. Responsibility for Financial Losses Due to Detention of Goods:
The appellant claimed financial losses due to extended detention of goods. However, the department provided provisional release orders promptly, and the delay was attributed to the appellant's inaction. The department even requested CONCOR to waive demurrage charges, showing no fault on the department's part.

6. Role of the Director in the Alleged Offenses:
The Director, Shri R. K. Goyal, was found to be the common Director of both M/s Kwality Overseas Private Limited and M/s Candex Filament Private Limited. The appellant failed to provide any documentary evidence to support their claims or to refute the findings of misrepresentation and concealment.

Conclusion:
The Tribunal upheld the findings of the adjudicating authority, confirming the mis-declaration, misuse of expired advance authorization, and the penalties imposed on the appellants. The appeals were dismissed.