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2014 (6) TMI 379 - AT - CustomsViolation of principle of natural justice - No opportunity for cross examination - Whether there is violation of principles of natural justice by not allowing cross-examination of the members of the Expert Panel - Held that - only when the denial of cross-examination prejudicially affects the right of defence, can it be said that the principle of natural justice has been violated. In the present case, the copy of the expert panel s report has been given to the appellant. In fact, the appellant s representative Shri R.R. Dhar was part of the expert panel, which examined the goods and submitted the report. Shri R.R. Dhar had exressed his reservations on the observation and conclusions drawn by the expert panel and had submitted detailed comments vide letter dated 8-3-2004. Thus, sufficient opportunity has been given to the appellant to make submissions against the findings of the expert panel. Therefore, it cannot be said that denial of cross-examination of the members of the expert panel has caused prejudice to the appellant in making their defence. Whether the counter given by Shri Dhar is sustainable and whether there is any other corroborative evidence sustaining the expert panel s observations - Held that - goods were never been in use in Belgium and the goods were refurbished before it was sent to the appellant-importer. If the goods were refurbished, the question of excessive wear and tear would not arise nor there could not be any rust due to exposure to open atmospheric condition. Further the foreign supplier himself says he is not sure whether some of the parts used for refurbishing is older or younger than 10 years. When the goods were refurbished and he is unsure to the age of the machine, how can the importer-appellant be sure of its age. Similarly, when old parts are refurbished, it is reasonable to presume that the parts used in refurbishing would be contemporaneous to refurbishing. If the year of the manufacture of crane is 1995 as claimed by the appellant and refurbished before shipping in 2003, the parts used for refurbishing would be of the later years. Denial of duty exemption contained in Notification No. 55/2003-Cus., dated 1-4-2003 - Mis declaration of goods - Held that - order of the adjudicating authority denying the benefit of exemption is correct in law. Since the year of make of the machine has been misdeclared and also the provisions of EXIM Policy has been violated, the goods become liable for confiscation under Sections 111(d) & (m) of the Customs Act, 1962. Consequently, the confiscation of the imported goods with an option to redeem the same is sustainable in law and we hold accordingly. Once the goods are liable for confiscation, penal consequences automatically follow and, therefore, the imposition of fine on the goods and penalty on the appellant-importer is clearly sustainable. Whether the quantum of fine imposed is excessive or not - Held that - The machinery is valued at Rs. 2.06 crore approximately and the fine imposed is only Rs. 40 lakhs. As per the guidelines contained in the Appraising Manual of the department, the fine shall be to the extent of 25% if the import of article is not banned. In the present case, the fine imposed is about 20% of the value of the goods, therefore, it cannot be said that the fine imposed is excessive. Further the appellant had claimed a concessional rate of 5% adv. as against the merit rate of 50.8%, the difference being about 45% of the value of the goods Whether the CHA is liable to penalty under Section 112(a) of the Act - Held that - The CHA knew that the age of the machine has been misdeclared and a bogus certificate was obtained. In fact, it was the CHA who arranged for the false certificate. Therefore, he was party to the misdeclaration made by the appellant-importer which rendered the goods liable to confiscation. Accordingly, we hold that penalty on the CHA is warranted. However, considering the facts and circumstances of the case and also noting that the CHA s role is relatively minor, the penalty on Mr. Rakesh Handa, Proprietor of the CHA firm M/s. Shobha Prompt Services is reduced from Rs. 3 lakhs to Rs. Fifty thousand only - Decided partly in favour of appellants.
Issues Involved:
1. Violation of principles of natural justice by denying cross-examination. 2. Legitimacy of redemption fine and penalties imposed. 3. Eligibility for duty exemption under Notification No. 55/2003. 4. Penalty on foreign entities and their representatives. 5. Penalty on the CHA and other individuals involved. Detailed Analysis: 1. Violation of Principles of Natural Justice: The appellant argued that the denial of cross-examination of the Expert Panel members violated principles of natural justice. The court referenced the Bombay High Court decision in Kellogg India Pvt. Ltd. and the Supreme Court decision in Kanungo & Co. to conclude that cross-examination is not an absolute right and is dependent on the case's facts. Since the appellant's representative was part of the Expert Panel and had the opportunity to submit objections, the court found no prejudice against the appellant, thus rejecting the claim of natural justice violation. 2. Legitimacy of Redemption Fine and Penalties: The appellant contested the imposition of a Rs. 40 lakh redemption fine and various penalties. The court upheld the fine, noting it was within the permissible limit (20% of the value of the goods). The penalty of Rs. 10 lakhs on the appellant-firm was also upheld due to the misdeclaration and violation of EXIM Policy. However, penalties on individual officials of the appellant-firm were set aside, as they did not personally gain from the exemption. 3. Eligibility for Duty Exemption: The court examined whether the appellant was eligible for the duty exemption under Notification No. 55/2003. It found that the imported cranes were more than 10 years old, contrary to the EPCG licence conditions. Evidence, including a bogus Chartered Engineer's certificate and tampered name plates, supported the conclusion that the goods were not eligible for the concessional rate of duty. Consequently, the goods were to be assessed on merit, and the appellant was liable to pay differential duty and interest. 4. Penalty on Foreign Entities and Their Representatives: The court considered the penalties imposed on M/s. Liebherr Export AG India office and its Manager, Shri Pulok Gupta. It concluded that the misdeclaration occurred abroad, and there was no positive evidence against the India office or its Manager. Therefore, penalties on these entities were set aside. 5. Penalty on the CHA and Other Individuals: The court upheld the penalty on the CHA, Shri Rakesh Handa, but reduced it from Rs. 3 lakhs to Rs. 50,000, acknowledging his role in arranging the bogus certificate. The penalty on the now-deceased Chartered Engineer, Shri D.M. Pradhan, was abated. Conclusion: The court upheld the confiscation of goods under Sections 111(d) & (m) of the Customs Act, 1962, and the imposition of a Rs. 40 lakh fine. The penalty of Rs. 10 lakhs on the appellant-firm was also upheld. The appellant was deemed ineligible for the concessional duty rate under Notification No. 55/2003, and liable for differential duty and interest. Penalties on individual officials of the appellant-firm and the foreign supplier's India office were set aside, while the penalty on the CHA was reduced. The appeals were disposed of accordingly.
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