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TMI Blog1987 (5) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... nt that the appellants M/s. Raj Mohan Cashews Ltd., presented two Shipping Bills Nos. 1646 and 1647 dated 17.1.1980, through Customs House Agents, M/s. P. K. Mohammed Pyt-lJid- for export J^ 1000 cartons of cashew kernels, (750 cartons and 250 cartons respectively) 320 grade to M/s. 20th Century Foods Pvt. Ltd., Singapore. The goods were brought to the wharf inside the Customs Area for the purpose of being exported. These shipments were against Contract No. TCP -1086 dated 6th July, 1979, said to have been entered into between M/s. Janso Exports Pvt. Ltd., appellant herein, and M/s. 20th Century Foods Pvt Ltd., Singapore, the consignee In the instant case. The said Shipping Bills, were .accompanied-by a letter of authority from M/s. Jariso Exports Pvt. Ltd., authorising M/s, Ra] Mohan Cashews Ltd., appellants herein, to make the shipments against the said Contract on their, behalf. The prices declared In these Shipping Bills were at the rate of U.S. $ 1.90/lb on C F New York basis. The total declared value for the said 1000 cartons containing 50,000 Ibs of cashew kernels was U.S:-$95,000/- C P equivalent to Indian Rs.7,60,000/- and Rs. 7,07,0661-FOB. The consignee declared the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 6th July, 1979 was received at the office of appellant M/s. Janso Exports Pvt. Ltd. on 3.12.1979 as against the date of 6th July, 1979, shown in the contract and that the cashew kernels attempted to be exported vide the said Shipping Bills under the cover of the said Contract No. TCF -1086 have been sold by one Shri Morris Mathiais, Managing Director of M/s. 20th Century Foods Pvt. Ltd., to some buyer In Sydney at the rate of U.S. $2.50/lb as instructed by the appellant Shri Janardhanan Pillai, Director of appellants M/s. Raj Mohan Cashews Ltd., and M/s. Janso Exports Pvt. Ltd., and his son J;M. Rajan Pillai. During investigation, statements of various persons were recorded. It further appears that originally the said Shipping Bills were produced and Were passed on 14.1.1980, and the appellants, M/s. Raj Mohan Cashews Ltd., moved the said consignment to Cochin Port wharf for shipment as per steamer AUSTRALIAN STAR , and thereafter space was booked in S.S. Viswanan-dini. It further appears that after the presentation and passing of these Shipping Bids as stated above, on 24.1.1980, the goods were never shipped-and that clearing agents put the saki shipping bills for clearance t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issions, he submitted that the Shipping Bills in question dated 17.1.1980, were presented and cesses, were paid on 17.1.1980 and 24.1.1980. The said Shipping Bills were passed on24.1.1980 and the appellant M/s. Raj Mohan Cashews Ltd., moved the said consignment to Cochin Port wharf for shipment of the consignment as per AUSTRALIAN STAR . He also submitted that the samples were taken by the Customs on 19.1.1980, and thereafter the space was booked. On this premises he contended that the Shipping Bills in question having been passed after observing customs formalities and collecting the cesses imposed, the Collector, Customs, had absolutely no authority to recall or revise the previous order permitting export and hence the interception, seizure and confiscation of the goods or the execution of. the bond in lieu of goods is wholly illegal and without any authority. To substantiate his contention, he cited the following authorities: ..... (1) Jain Sbudh VanaspatI Ltd. v. Union of India. 1982 ELT 43 (Del.) (2) Industrial Cables v. Union of India, 1986 (25) ELT 33 H) (3) Ajay Exports v. Collector, 1986 (26) ELT 873 (Tribunal) (4) Pakcar Leather Export Co. v. Collector, 1987 (29) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stoms Act. Agreeing with the contention, the Division Bench held that Considering Section 47 of the Customs Act In the light of the legislative history.... the Section attaches finality to the satisfaction of the officer that the goods are not prohibited. The finality cannot be disturbed unless the Department successfully shows that there was fraud or deliberate suppression. (underlining ours). 7. In the case of Industrial Cables v. Union of India, supra, a Single Judge of the Punjab Haryana High Court held that the clearance of the goods by the Proper Officer under Section 47 must be presumed to be after due adjudication, firstly with regard to the fact whether or not the Import of the goods is prohibited by the Act, or any other law for the time being in force within the meaning of sub-section (33) of Section 2 of the Customs Act and the Proper Officer was Adjudicating Authority within the meaning of sub-section (1) thereof, and therefore, the order passed under Section 47 of the Customs Act Is binding on the authorities under the Import (Control) Order. 8. Following the view expressed by the Division Bench of Delhi High Court In the case of Jain Shudh Vanaspati Ltd. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in their rights to act accordance with Sections 50 and 51 of the Customs Act since admittedly, at this stage order permitting clearance and loading of the goods for exportation as per the [S.S. iwanandni] vessel was ever passed by the proper officer, therefore, at that stage the arception, seizure and confiscation of the goods cannot be said to be without jurisdiction or illegal. Under these circumstances. Issuance of the Show Cause Notices In question cannot be said to be without jurisdiction and in our considered opinion, it does not suffer from any legal Infirmity. 11. Even otherwise, the Show Cause Notices were legal and within jurisdiction. I Instant case, Show Cause Notices were Issued to the appellants calling upon them cause at to why the goods be not confiscated under Section 113(d) of the Customs Act read with Section 67 of the FERA, 1973, on the ground that they have violated ^he provisions of Section 18(1) of the FERA, 1973, by not giving a true statement of the {till export value of the goods In the G.R. Form and the Shipping Bills presented by them for shipment. They were also called upon to show cause as to why penalty be not Imposed under Section 114 of the Custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods to be exported in a vessel or aircraft, a shipping bill, and in the case of goods to be exported by land, a Bill of export in the prescribed form. (2) The exporter of any goods, while presenting a shipping bill or bill of export, shall at the foot thereof make and subscribe to a declaration as to the truth of its contents." 51. Clearance of goods for exportation. - Where the proper officer is. satisfied that any goods entered for export are not prohibited goods and the exporter has paid the duty, any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance, and loading of the goods for exportation. A close reading of the said Sections would make it clear that sub-section (2) of Section 50 makes it obligatory on the part of the exporter of any goods, while presenting shipping bill or bill of export, to make and subscribe to a declaration as to the truth contents at the foot of the shipping bill and the proper officer under Section 51 is only to satisfy himself that any goods entered for export are - (i) not prohibited goods; and (ii) the exporter has paid the duty, if any, assessed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d earlier, but the goods were not loaded or exported, that would not affect the validity of the Show Cause Notices issued in the instant case, when the new facts and circumstances relating to the fictitious nature of the contract and deliberate suppression of full export value was detected subsequently as laid down in Jain Shudh Vanspati s case, supra. 14. Shri K. Narayanan, learned Counsel for the appellant also raised few other legal points before us. To begin with, he submitted that the failure to declare the full export value of the goods under Section 18(1)(a)(i) is not a restriction deemed to have been imposed under Section 11 of the Customs Act as provided in Section 67 of the FERA. In our considered opinion, this contention is to be stated only to be rejected. It is true that in the case of Union of India v. Shreeram Durga Prasad (P) Ltd., AIR 1970 S.C. 1597, by a majority. The Hon. Supreme Court decided that an untrue or an incorrect statement contained in the declaration which was required to be made under erstwhile Section 12(1) of the Foreign Exchange Regulation Act, 1947, does not amount to a violation so as to attract Section 11 of the Customs Act by virtue of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of FERA as amended and the infraction of 12(1) of the FERA will, by virtue of the provisions contained In Section 23A of the said Act resulting contravention of the prohibition for restriction containing in Section 11 of the Customs Act. 15. The other argument of the learned Counsel for the appellants that Section 114 of the Customs Act is not attracted for the simple reason that the cashew kernels in question were not dutiable goods within the meaning of sub-section (2) of Section 114 of the Customs Act, has also no force. Because, this ignores the facts that the provisions of Section 67 of the FERA, 1973, as stated above have clearly laid down that the restrictions imposed under Section 18(1)(a) of the FERA shall be deemed to be imposed under Section 11 of the Customs Act, and by virtue of this invocation of the provisions of the Customs Act, the liability to confiscation under Section 113(d) and liability to penalty under Section 114 logically follows. 16. Shri K. Narayanan, learned Counsel for the appellants further contended that the goods were not seized or detained under a reasonable belief that the same were liable to confiscation under the Customs Act. We are afraid t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whose statements were recorded under Section 108 by the said Shri Sasidharan, were cross-examined by the counsel for the appellants during the adjudication proceedings. But it appears from the impugned order that no grievance was made at the time of personal hearing regarding the non-production of N. Sasidharan for cross-examination. It is settled law that the principles of natural justice do not require that the persons who have given information should be examined in the presence of persons concerned or should be allowed to be cross-examined by them on the statements he has made before the Customs Authorities. In the case of Kanungo Go. v. Collector, Customs, Calcutta, AIR 1972 SC 2136, 1983 ELT 1486 (S.C.) their Lordships have observed as follows: 12. We may first deal with the question of breach of natural justice. On the material on record, in our opinion, there has been no such breach. In the show-cause notice issued on August 21, 1961, all the material on which the Customs Authorities have relied was set out and it was then for the appellant to give a suitable explanation. The complaint of the appellant now is that all the persons from whom enquiries were alleged to have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t violated nor it was necessary to produce the said witnesses for cross-examination by the appellants. 18. On merits, Shri K. Narayanan, learned Counsel for the appellants contended that the charges leveled against the appellants in the Show Cause Notice are not proved. In other words, he submitted that the findings of the Collector of Customs that the contract produced for shipment was not a genuine one and that the value declared in the shipping documents was under-valued and did not represent the full export value of the goods as required under Section 18(1)(a) of FERA, 1973, are not tenable. In reply, Shri Bhatia, supported the order and adopted the same reasonings which are recorded in the Impugned order. Before we proceed to consider the respective contentions of the parties, it would be useful to state that under Section 18(1)(a) of FERA, 1973, read with Government of India Notification G.S.R. 78 dated 1-1-1974, and the Rules made thereunder it was obligatory for the appellants to declare the full export value of the goods tendered for export in the shipping documents. The main purpose and object of the said Section 18(1) is to get a declaration from the exporter that he h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the impugned order Shri K. Narayanan, challenged the aforesaid incriminating circumstances against the appellants. Before we proceed to deal with the respective contentions of the parties, it would be useful to state the following admitted facts - (i) that appellant, K. Janardhanan Pillai is the Director of the exporter M/s. Raj Mohan Cashews Ltd., and M/s. Janso Exports Pvt. Ltd., appellants herein, and that Shri R. Gopinathan Nair is the Managing Director of M/s Raj Mohan Cashews Ltd., and is son-in-law of the appellant K. Janardhanan Pillai and that J.M. Rajan Pillai is the son of appellant, K. Janardhanan Pillai, and is settled in Singapore and is the Chairman of M/s. 20th Century Foods Pvt. Ltd., Singapore - that is to say, the purchaser of the cashew kernels in the instant case (see statement of the appellant, K. Janardhanan Pillai) (ii) that no correspondence whatsoever relating to the alleged Contract in Question No. TCF -1086 of the alleged date 6th July, 1979, was ever produced by the appellants as is evident from the letter dated 19-1-1980, written by the appellants, M/s. Raj Mohan Cashews Ltd., to the Assistant Collector of Customs. In that letter they have clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jumbling of serial numbers of contracts were detailed out in paragraph (vii) of the Show Cause Notice as follows, and ultimately was found as a fact. (vii) M/s. 20th Century Foods, Singapore sends every year a series of signed contracts to all the sister concerns in India, for huge quantities of cashew kernels having purchased by them at the rates prevailing on the dates shown in the contracts. The date of purchase will be invariable for a period when the market is dull and the prices have touched the nearest minimum irrespective of the date of sending the contracts. All these contracts also incorporate a provision for payment of 2-1/2 commission to be deducted from the invoice. Several such utilised and un-utilised contracts are available in file Nos. X, XII, XX, XVII and II listed in the Annexure A. The contract No. TCF-1086 is one among them. Contract Nos. 1071, dated 4th July, 1979 and 1084, dated 2nd July, 1979 are clear indication of the series of contracts issued for July, 1979 when the prices were at the lowest level. The date of contract No. 1084 is earlier to that of contract No. 1071. ALSO DATED OF CONTRACT No. 1024, dated 15th December, 1978 is earlier to that of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppukuttan Pillai also stated about the same practice in these words : In the normal course telex messages or telegrams/telephone discussions are exchanged between 20th Century Foods at Singapore M/s. Janso Exports/Raj Mohan Cashew before concluding a contract. The quantity and grade and the rate are agreed upon in these correspondences. The appellant, Shri Janardhanan Pillai in his statement also admitted that when such contracts are concluded on phone, they use to record it on a paper and give it to the Clerk concerned. When specifically asked whether in such record maintained on paper relating to the telephonic contract, do you indicate the contract number and date, the appellant, Shri Janardhanan Pillai came flat and stated that the record indicates only the quantity, grade, prices and shipment periods. When further asked, how do you co-relate this record maintained on a piece of paper when you receive the actual signed contract, he came with an interesting reply that when the sale contract is received, they check up the price, quantity, etc., with the relevant paper kept with the clerk, - a reply which does not stand to commonsense in export business where numerous cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts, at the instructions of the appellant Shri Janardhanan Pillai, but without any valid authority, it is further interesting to note that the said contract was not signed by the seller. Shri K.R. Appukuttan Pillai, a Clerk in the office of the appellants, M/s. Raj Mohan Cashews Ltd., and also of the appellants, M/s. Janso Exports Pvt. Ltd., clearly stated in his statement recorded under Section 108 of the Customs Act that the contract in question was received by post from Trivandrum office around second week of January, 1980, in their Quilon office. He further stated that at that time the contract was signed only by the buyer and sellers part was not yet signed. I do not know the details of concluding of these sales resulting in this contract. 25. Regarding the circumstance No. (iv) that the contract in question was received at the office of the appellants M/s. Janso Exports Pvt. Ltd., only on 3rd December, 1979 as per inward register, the counsel for the appellants contended that the contract was signed by the Bombay Office of the appellants, M/s. Janso Exports Pvt. Ltd., and copy was retained by them till the commencement of the shipment in order to avoid leakage of the form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was erased is not disputed. It is settled law that where a deed or a document produced is in apparently altered and suspicious state, the party presenting the same as essential part of his case must fail unless he can satisfactorily explain the present state of deed or document. In the instant case, to a charge that the appellants have not declared the full export value in the Shipping Bills under Section 18(1) (a) of FERA, 1973, the appellants have set up the Contract No. TCF -1086 in defence stating that the value was declared in the Shipping Bills on the basis of the price shown in the contract. Under these circumstances, when the very existence of the contract and the date of its execution were in issue, and when admittedly where the date of the receipt of the original contract was erased, it was necessary for the appellants to explain satisfactorily the said erasion and the altered and suspicious circumstances appearing in the alleged contract in question. From the record, we find that no explanation for such material alteration or the erasion of the date is forthcoming, even though specially asked for. To wit, during his examination under Section 108 of the Customs Act, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ree. QN What is so crucial about this date? AN I do not know. Shri N. Chandrasekharan Nair, Inward and Outward clerk in the office of M/s Janso Exports Pvt. Ltd., also pleaded ignorance about the said material alteration and eraslon. Relevant part of his statement may be reproduced as follows: QN Showing the contract No. TCF-1086 at page 78 (of file No. 3 - Janso Contract file 1979), is it the same letter that you have registered with inward No. 4424? AN Yes, it is the same letter. QN The date below the inward No. on this letter appears to have been erased. Do you know anything about it? AN I have given the date 3-12-1979 on this letter below the inward No. but I do not know who has erased it. QN There is somebody s initials on this letter in red ink which has been subsequently erased. Whose initials Is this? AN I cannot make out. It must be of somebody in our Quilon office. QN What you have done after registering this letter in the inward register? AN All incoming letters are opened by Shri K. Janardhanan Pillai and then handed over to me for registering them. After registration all these letters will be given back to Shri Janardhanan Pillai who use to distribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t know. QN You have stated that signed contracts are received after two weeks of the conclusion of the sales over telex. In the case of contract No. TCF -1086 the same was received by you in the first week of Jan. 1980 - Does it mean that the sale in respect of this contract was concluded only two weeks back, i.e. around the third week of December, 1979? Instead of giving a direct reply, he evaded the answer and stated as follows: AN This contract was sent to the Quilon office from the TVM office by the first week of Jan. 80 and I am not aware of the exact date of receipt of this contract in TVM office. Also I do not know the date by which this sale was concluded over telex/telephone." The fact remains that the appellants failed to explain the said alteration and erasion and they also failed to show when the same were made. 28. Regarding last circumstance No. (vii) that there was jumbling of serial numbers of contracts, that is to say, later numbers coming for earlier dates and previous numbers assigned later dates, the learned Counsel for the appellants contended that it was due to the fact that different serial numbers were assigned by the buyer for the different region ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original copy of the telex messages it can be reasonably assumed that the above messages have originated from him only. Moreover the wordings in the telex messages like giving directions and seeking approval on the other side would clearly indicate that these messages are given by nobody else that Shri K. Janardhanan Pillai himself." Shri K. Narayanan Pillai, learned Counsel for the appellants could not pursue us to take a contrary view. We also do not find any cogent evidence for taking a contrary view. Thus, from a resume of the facts and circumstances of the case as stated above, it is clear that the Department has succeeded in proving that the contract was fictitious and antedated and the appellants have miserably failed to establish or explain the alleged contract and the alleged date of contract. The burden to establish those facts was on the appellants being in their special knowledge. On this point law laid down by the Supreme Court in the case of Collector of Customs v. D. Bhoormull, AIR 1974 SC 859, 1983 ELT 1546 (S.C.) may be quoted with advantage. 30....... Department is not required to prove its case with mathematical precision to a demonstrable degree; for, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Adjudicating authority where pre-ponderance of probability would be a guiding factor and proof beyond reasonable doubt relevant in criminal prosecution before a Criminal Court cannot be bodily lifted and transplanted in adjudication proceedings where consideration of probabilities would be the guiding factor. Be that as it may, on consideration of the entire evidence available on record, we are clearly satisfied that the Contract TCF-1086, in question was a fictitious and also antedated contract to suit the convenience of the appellants, and there was a motive on the part of the appellants to earn the Foreign Exchange illegally by not declaring the full export value of the goods in question In the Shipping Bills and in the G.R. Form as required under Section 18(1) of FERA, 1973. 29. On the question of under-valuation in the Shipping Bills, Shri K. Narayanan, counsel for the appellants contended that it is not proved that the appellants failed to give the true statements of the full export value in their G.R. 1 Form and the Shipping Bills presented by them for shipment as required under Section 18(1) (a) of FERA, 1973. In the process, he submitted that the full export value was d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it should have been U.S. $ 2.50/tb. Shri K. Narayaxan, in the process also submitted that the telex messages exchanged between the appellant K. Janardhanan Pillai and Morris Mathais of M/s. 20th Century Foods Pvt. Ltd., have been wrongly construed. From the records we observe that in the telex messages Morris Mathais has stated that he has sold 1000 cartons at the-rate of U.S. $ 2.50/lb as desired by Shri Rajan, who is the son of the appellant K. Janardhanan Pillai and also is the Chairman of the purchaser, M/s. 20th Century Foods Pvt. Ltd., Singapore, in question. As quoted above, the Collector of Customs has held that these 1000 cartons are the same as presented for shipment under the cover of the Shipping Bills No. 1646 and 1647 dated 17-1-1980 by quoting a price of U.S. $ 1.90/lb. In the telex message, the query by Shri Morris Mathais, would you like us to try for further 1000 320s at the rate of U.S. $ 2.55 clearly indicates that the sales done by Shri Morris Mathais was on behalf of shipper in India and this can be treated as in terms of the agency agreement between the seller and M/s. 20th Century Foods Pvt. Ltd., (the agency agreement was not disputed before us). Thus, un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xports Pvt. Ltd. Apart, it is admitted to the appellants that M/s. Raj Mohan and Janso Exports Pvt. Ltd., are the selling parties in the contract produced for shipment. It is also on record as stated above, that all the appellants have mutual interest in the business of each other. It is true that M/s. Janso Exports Pvt. Ltd., have admitted in their reply to the Show Cause Notice that they are the exporters. It is also true that the name of M/s. Janso Exports Pvt. Ltd., is shown in the Shipping Bills and G.R.1 Form below the name of the Exporter M/s. Raj Mohan Cashew Ltd., as On account , but the fact remains that M/s. Raj Mohan Cashew Ltd. and M/s. Janso Exports Pvt. Ltd., are the selling parties in the contract produced for shipment. Thus, the conclusion is inescapable that M/s. Janso Exports Pvt. Ltd., is liable as an exporter and M/s. Raj Mohan Cashews Ltd., as an abettor, if not as an exporter on account M/s. Janso Exports Pvt. Ltd. From the evidence discussed above, it is clear that M/s. Raj Mohan Cashews Ltd., is guilty of abetment by conspiracy and therefore liable to penalty under Section 114 of the Customs Act. As regards the appellant, Shri K. Janardhanan Pillai, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistered as inward No. 4424 must have been sent by Shri K. Janardhanan Filial, appellant. Shri M. Karunakaran Nair has stated that in respect of these firm dtrections are given by the appellant, Shri K. Janardhanan Pillai. In fact, the appellant is having overall supervision of all the firms owned by himself or his relatives and his directions are always carried out without any alteration. Shri V. Paramu Pillai, who has signed the contract No. TCF-1086 in question has stated that he has signed the contract as a buyer at the instructions of the appellant, Shri K. Janardhanan Pillai. On consideration of the entire evidence both direct and circumstantial, we are clearly satisfied that all the appellants were privy to the attempted illegal export and have played a very vital role in relation thereto, and therefore, the circumstances appearing in evidence are so overwhelming in nature as would clearly establish their complicity. We, therefore, find that the charges found proved against the appellants under the impugned order, are clearly sustainable in law and we therefore, confirm the same. 31. The only other contention of the learned Counsel for the appellants is that the imposi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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