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TMI Blog1997 (2) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. 6560/17-3-1994 Polyester printed sarees (9,264 pcs) Rs. 10,05,293/- 8,847.6 kg. 2. 6561/17-3-1994 1. Polyester printed sarees (5,313 pcs) Rs. 6,13,293/- 6,437.2 kg. 2. Polyester salwar suits (252 pcs) 3. 6562/17-3-1994 Polyester printed dyed yarn (2,803 pcs) Rs. 3,63,711/- 3,216.1 kg. 4. 6563/17-3-1994 Polyester printed dyed saree (1,101 pcs) Rs. 5,85,606/- 3,216.1 kg. 5. 6564/17-3-1994 1. Man-made filament yarn sarees with zari border. (3,575 pcs) Rs. 7,60,631/- 5,003.6 kg. 2. Man-made filament yarn sarees and salwar suit (sets) (446 pcs) 3. Man-made filament yarn shirts (240 pcs) 6. 6565/17-3-1994 Polyester printed dyed sarees (4,652 pcs.) Rs. 6,07,907/- 5,349.8 kg. 3. In each of the above Shipping Bills, the exporters subscribed to a declaration as to the truth of the contents of the Shipping Bill in terms of Section 50(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der DEEC Scheme for every kg. of sarees made out of polyester filament yarn exported, an Advance Licence holder is eligible for import of 1.18 kgs. of polyester filament yarn. As regards exports of fabrics and hosiery made from 100% man-made filament yarn, the import entitlement is 1.100 kgs. of filament yarn against 1 kg of export product. This clearly indicated a blatant attempt to account for export of larger quantity of goods in terms of weight than what was actually sought to be exported, with an obvious intention to obtain larger quantity of duty-free import entitlement of the said yarn. 9. A search of the office-cum-godown premises of the exporter at Kodambakkam, Madras was conducted on 22-3-1994. The search brought to light certain vital documents relating to exports in question. The documents thus seized during the course of search comprised of certain ledgers showing the purchase of sarees and other items made by the exporters locally from dealers in Surat, Varansi, Bombay, Bangalore and certain proforma invoices pertaining to the shipments in question wherein material amendments in red ink were made of the weight and value originally typed out. The altered values in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstructed Shri Sharma that all help was to be extended to them. The goods, viz., Polyester sarees were purchased/procured by them and sent to Madras Office, and payments were made directly to the suppliers in Surat, Varanasi, Bombay etc., Shri Sharma added that the shipments in question were being effected for the first time and that the export was sought to be made of Polyester goods against the two Advance Licence in question. 12. Shri S.S. Shah, Managing Director, in a statement recorded under Section 108 of Customs Act, 1962 on 29-3-1994 stated that their company was basically engaged in the manufacture and sale of silk fabrics and staple fabrics made of staple fibre yarn. The company diversified their line of exports to cotton fabrics and made-ups garments during 1965 to 1970. Most of their exports were to buyers in U.S.A., Germany and other European countries and Australia. They exported to the Middle East for the first time in 1974 and the export items Iron and Steel Products. As they were looking forward for the development of their market abroad in new avenues, Shri Gopilath introduced to them Kuwaiti buyers in December, 1993. Shri Gopilath and Shri Pawanlath were brothe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e admitted that misdeclaration has been resorted to. 13. Shri Gopilath, in a statement recorded under Section 108 of the Customs Act, 1962 on 29-3-1994, stated inter alia that he knew the buyers M/s. Lozan Trading Co., and Nickil Bhai of Kuwait and approached Shri Shyam Sunder in November 1993/February 1994 for supply of fabrics and made-ups on commission, the quantum of which was not fixed. Accordingly, the purchases were made through his brother, Shri Pawanlath from places like Varanasi, Surat, Bombay, Bangalore etc. and as instructed by S. Sunder Shah, Shri Gopilath went to madras office and prepared packing list, invoice etc. for the 6 export consignments to be exported under DEEC scheme against the 2 Advance Licence in question. Shri Gopilath admitted that he had knowingly increased the weight of the consignment to suit the requirement of export obligation under DEEC scheme. Regarding prices, he stated that he simply followed the prices agreed upon by the buyer with M/s. Eastern Silk Industries, even though the materials had been procured at various prices as were shown by him from out of the seized documents. He further confirmed that the handwriting/corrections made in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany. He further stated that the price declared under the shipping bills and GR 1 forms was the actual price and there could be no violation of Section 18(1)(a) of FERA. In this connection, he relied on the following decisions :- (i) 1993 (65) E.L.T. 201 (ii) 1994 (69) E.L.T. 228 It was further contended that there is no evidence to show that Shah knew anything about the corrections and the alterations. There are no mala fides on the part of the company or its Managing Director and there is no mens rea in their part. If the mistake had been done without the knowledge of the company or the Managing Director, they cannot be penalised. He also pointed out that the confiscation of 10.196 mts. is without any basis and the goods are prohibited or restricted item and they are not allowed to be exported freely. It is also not the case of the deptt. that the appellants have imported any goods against the value based licence and the DEEC scheme. Hence, no loss is caused to the Govt. It was further pointed out that Section 18(1)(a) of FERA speaks about the export value of the goods which is the contracted price between the buyer and the supplier. However, the customs insisted on loading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he adjudicating authority they have raised certain points and hence the question of violation of principles of natural justice does not arise in this case. In para 3 of the order, the learned adjudicating authority has clearly stated that the only plea raised during the hearing as well as in the statement recorded at the time of investigation is for taking a lenient view. It is now seen that Sri Gopilath had given a statement on 29-3-1994 wherein he stated that he knew the buyers M/s. Lozan Trading Co. and Nickil Bhai of Kuwait. He accordingly approached Shri Shyam Sunder for supply of fabrics. The purchased were made through his brother Shri Pawanlath. He had also admitted that he knowingly increased the weight of the consignment to suit the requirement of export obligation under the DEEC scheme. Regarding price, he stated that he simply followed the price agreed upon by the buyer with Eastern Silk Inds., even though the materials had been procured at various prices as were shown by him from out of the seized documents. He has further confirmed that the handwriting corrections made in the same manner in regard to preparation of invoices were in his hands and the invoices were type ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he redemption fine imposed is Rs. 2.00 lacs each. In the circumstances, we reduce the same to Rs. 1.50 lacs (Rupees one lac fifty thousand) in each Shipping Bill (total 4.5 lacs). As far as Shipping Bill No. 6562 is concerned, the redemption fine imposed is Rs. 1.00 lac and in the facts and circumstances, we reduce the same to Rs. 75,000 (Rupees seventy five thousand). As far as the shipping bill Nos. 6563 6565 are concerned, the redemption fine imposed is Rs. 1.50 lacs each which in the facts and circumstances of the case are reduced to Rs. 1.25 lacs (Rupees one lac twenty-five thousand) in each Shipping Bill and thus a total of Rs. 2.5 lacs. But for the above reductions, the confiscation and allowing the same to be redeemed on payment of redemption fine is confirmed. Thus the total redemption of Rs. 10 lacs imposed on these (sic) consignments, in the impugned order is reduced to Rs. 7.75 lacs i.e. Rupees seven lacs and seventy-five thousand only. 20. The next point for determination is whether the penalty of Rs. 10 lacs imposed on ESI is sustainable. It is now seen that the goods were exported on behalf of ESI. On behalf of ESI, Shri Gopilath was authorised by Shri Shah to do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf i.e. by Shri Shah in his statement dated 29-3-1994 that as Chief Executives of M/s. ESI to the attempted export with excess declaration under DEEC scheme to avail benefit of duty-free import of material involving duty of nearly Rs. 80 lacs. Accordingly, he has also rendered himself liable to penalty under Section 114(1) of Customs Act, 1962. It is now seen that Sri Gopilath in his statement has not implicated Shri Shah in any way. On the contrary, in his statement he has stated that he had made the corrections. But, nowhere he has stated that he made these corrections as well as the manipulations at the instance of Shri Shah and that Shri Shah has instructed him to prepare the invoices on other documents. There is nothing in the evidence to show that he has instructed Shri Gopilath to misdeclare the goods both in value or in weight. No doubt he admitted that he undertook the full responsibility for the details given in the shipping bills. Since the company is already penalised and when there are no materials to show that all the mis-declarations were done at his instructions and when Shri Gopilath himself who has carried out these manipulations has not implicated him, and in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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