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TMI Blog2007 (9) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... f this Bench. The Admission Hearing in respect of the applications filed by the applicant and co-applicant Nos. 1, 2, 3 and 4 was held on 28-6-2007. During the hearing, the representative of the Revenue submitted that in the instant case, one co-applicant (viz., co-applicant No. 4) is an absconder. 3.1 The Bench, vide Admission Order No. 165/CUS/MGR/2007 dated 13-7-2007, observed that provisions of Settlement Commission in Chapter XIVA of the Customs Act, 1962 do not bar an application from a COFEPOSA detenue or an absconder. From sub-section (7) of Section 127C it is clear that an applicant could represent before the Settlement Commission himself or through a Authorised Representative. It is, therefore, clear that an applicant s so called abscondance cannot be a bar to entertain his application by the Settlement Commission as held consistently by the Commission. If there is a case for levy, assessment and collection of duty, a Bill of Entry and a Show Cause Notice related to the Bill of Entry is also present along with a true disclosure of the duty liability then the case has to be admitted, howsoever be the fraudulent nature of the case. Howsoever, grave the manipulations may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal amount of Rs. 44,80,835/- vide three pay Order No. 033653 dated 26-6-2007 for Rs. 24,25,357/- 033654 dated 9-6-2007 for Rs. 12,77,199/- and 033655 for Rs. 7,78,279/- on 29-6-2007 as directed by the Settlement Commission. It reiterated that the co-applicant (No. 4) has not disclosed to the Commission that COFEPOSA Detention Order is pending for execution against him. As per Section 127B of the Act, the applicant/co-applicant has to disclose full facts of the case in his application before the Commission which had not been adhered to in this case. It also submitted that co-applicant No. 4 never appeared before the investigating agency and has not co-operated in the investigation. The said co-applicant No. 4 has never been examined by DRI during the investigation, nor has he made any disclosure of his role in the offence. He is seeking immunity only on the plea that if the case against the main applicant is settled, his application may also be settled granting immunity to him also from all charges. Even the veracity/authentication of the signature of the co-applicant No. 4 said to be signed in the application form cannot be verified/commented on by DRI as he had never appear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commission. However, in cases of outright smuggling/misdeclaration wherein there is suppression of true disclosure by the applicant vis-a-vis their knowledge/involvement and more particularly wherein the Detention Order has been issued and is pending execution against the applicant, such case may not be considered for admission and no relief/immunities from fine, penalty and prosecution may be granted to such unscrupulous applicants. 4.4 The Revenue further submitted that the applicant had misdeclared the goods exported as H Acid, a high value chemical as against actual goods, viz., potassium chloride, a low value item solely for the purpose of availment of DEPB benefit fraudulently to the tune of Rs. 16,40,616/- in 8 export consignments. The fact remains that it was a fraud committed by the applicant and the actual goods meant for export were illegally diverted into local market for profit. It may be a fact that in the demanding Paras of Show Cause Notice the DEPB amount of Rs. 16,40,616/- to be recovered from the applicant is not mentioned. However, the misuse of DEPB, inasmuch as how the noticee had committed the fraud, intention to abuse/misuse the DEPB Scheme and role ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Advocate of the applicant submitted that the issues required to be settled during this Final Hearing are as follows :- (I) Issue of Duty Liability, (II) Issue of immunity from interest, (III) Issue of immunity from Fine, Penalty and Prosecution. I. Regarding issue of Duty Liability: 1. The case in the SCN issued to the applicant is of fraudulently obtaining of DEEC and DEPB licences and erroneous availment of credit facilities thereunder. 2. The alleged violations are contained in para 36 of the SCN (pg. 43) and the paras that follow. They may be enumerated thus, also setting out the admissions made by the applicant. (i) The applicant misdeclared the goods exported by it as high value chemicals, whereas they were actually low value chemicals. On the basis of such misdeclared exports, the applicant obtained DEPB from the DGFT, which was subsequently cancelled by the DGFT itself. The DEPBs so obtained were utilized by the applicant to effect imports, whereby duty of Rs. 2,58,582/- was evaded. [paras 36A to E of the SCN at pg. 43-44]. This liability is admitted and paid by the applicant. (ii) Against DEEC licences which were obtained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng reasons: (i) The proviso to Section 23(2) was inserted vide Finance Act, 2006 only w.e.f. 18-4-2006. To make the duty payable on the goods imported prior to the date of insertion of this proviso , the Revenue cannot snatch away the substantive vested right of the applicant to relinquish the title to the goods, which crystallized and accrued since the date of importation of the goods, by applying the amendment retrospectively. Reliance is placed on Section 6(c) of the General Clauses Act, 1897, which reads as under - 6. Effect of Repeal. Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not, (c) affect any right, privilege, obligation, or liability acquired, accrued or incurred under any enactment so repealed; or any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture, liability or punishment may be imposed as if the repealing Act or Regulation had not been passed. (ii) Even otherwise the proviso is not applicable. He placed r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... munity from interest : He prayed for grant of immunity from interest, and submitted as under :- (i) It may please be appreciated that the Notification No. 51/2000-Cus. dated 27-4-2000 issued under Section 25(1) of the Act, under which the exemption was availed and the bond was executed by the Applicant, specifically provides for interest liability at a specified rate, and therefore in light of the judgment dated 8-9-2006 of a Division Bench of Hon ble Madras High Court in the matter M/s. SLS Exports Pvt Ltd. v. Customs Central Excise Settlement Commission, Chennai in WP No. 18607 of 2005, the Hon ble Commission had powers to grant immunity from interest. (ii) Prior to this a Single Judge of Hon ble Calcutta High Court in Commissioner of Customs (Port) v. Settlement Commission, 2005 (179) E.L.T. 336 (Cal.) held that owing to the contractual obligations under the bond executed, the Hon ble Commission could not waive the requirement of interest, in exercise of its powers under Section 127H of the Act because Hon ble Commission had no power to alter the terms of contract between the petitioner therein and the Customs Department. (iii) The Division Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th regard to the waiver of interest under the notification. (iv) The Hon ble Bombay High Court in the matter Tanu Healthcare Ltd. v. Union of India reported in 2007 (207) E.L.T. 641 referred the aforesaid decision of Single Judge of Hon ble Kolkata High Court, while declining to reduce the interest @ 15% imposed by this Hon ble Commission. However, it may please be appreciated that the aforesaid judgment of Division Bench of Hon ble Madras High Court was not brought to the Notice of Hon ble Bombay High Court. (v) This Hon ble Commission, in its Final Order No. 185/CUS/NBP/ 2006 dated 9-11-2006 in the case of M/s. Arihant Optics Ltd. rejected the plea, of the assessee therein, for waiver of interest, following the judgment of the Hon ble Calcutta High Court. The said assessee, in view of inter alia the above divergent views of various High Courts, carried the matter directly to the Hon ble Supreme Court by way of SLP and the Hon ble Supreme Court, vide its order dated 31-1-2007, while issuing notice on the SLP, stayed recovery of the interest imposed vide the order of this Hon ble Commission. (vi) He also submitted that the rate of interest specified in the bond is go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quished by the applicant, submit that no interest is payable on these goods as the same have not been cleared from customs, and moreover, since now, the title would rest with Central Government there would be no duty payable, consequently there would be no question of any interest. III Regarding issue of immunity from Fine, Penalty and Prosecution : In view of the full cooperation extended by the applicant, with the settlement proceedings, and full and true disclosure of duty liability by it, he respectfully prayed that the applicant may be given immunity from fine, penalty and prosecution, as prayed for in the settlement application. 6. The ld. Advocate of the co-applicants submitted as under :- (a) Yusuf Dhanani This applicant is the main accused in the instant SCN, and is the de facto owner M/s. Universal Exports and M/s. Sana International, under whose command and control the import-export activities were carried out. He has already suffered custody for a period of one year under preventive detention. It is a matter of record that he has co-operated in the settlement proceedings. He further submitted that it may please be appreciated that complete duty liabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered, while deciding the issue of grant of immunities from penalty (under Customs Act) and prosecution (under Customs Act, IPC). He prayed for complete immunity from penalty (under the Customs Act), and from prosecution under the Customs Act, 1962 and Indian Penal Code. REGARDING OTHER CO-APPLICANTS : He submitted that the co-applicants are apologetic and have chosen the path of complete surrender to the dictates of this Hon ble Commission and have co-operated in the Settlement Proceedings. The co-operation extended in the Settlement Proceedings, may please be considered, while deciding the issue of grant of immunities from penalty (under Customs Act) and prosecution (under Customs Act, IPC). He prayed for complete immunity from penalty (under the Customs Act), and from prosecution under the Customs Act, 1962 and Indian Penal Code. 7. The representative of the Revenue reiterated the submissions made vide reports dated 31-7-2007. 8. The Bench has considered the submissions made from both the sides. 8.1 First of all we take up the issue of admission of the application filed by Shri Sarfaraz Dhanani who is reportedly a COFEPOSA absconder. We had in our Admission Or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iminal Procedure Code. The Revenue has made a plain plea that the applicant absconder s signature may not be authentic but has made no verification on this score. In case the Revenue at a later date confirm that the signature of this co-applicant was not genuine then the immunities granted could be withdrawn for false evidence as per Section 127H(3). He could also be proceeded criminally on this count. We are of the view that there is no bar, therefore not to admit his application. We however, do not have any mind to grant him the full immunities as he is also an absconder which proves his guilt. We, therefore admit Shri Sarfaraz Dhanani s application for settlement. 8.2 We also admit the applications of Shri Abdul Rahman Shaikh (co-applicant No.5), Shri Galib Shaikh (co-applicant No. 6), Shri D.K. Sharma (co-applicant No.7), Shri Suhail Abdul Rahim Shaikh (co-applicant No. 8), M/s. Zubi Shipping Pvt. Ltd. (co-applicant No. 9) and M/s. Sahil Freight Express P. Ltd. (co-applicant No. 10) and for which the Revenue (DRI) also had no objection. 8.3 We now come to the final orders for settlement of the case for all the applicants. 8.3.1 Out of the total duty demand of Rs. 44,80,83 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The importer could have got them provisionally released on payment of duties and other terms and conditions of the Revenue. The case laws cited by them did not have a situation like this before them when those decisions were made. An order for home clearance was not possible in this case due to the fraudulently obtained DGFT Licences and availing undue duty concessions. How in such a situation, an order for home clearance could have been made. We do not therefore, agree for the relinquishing of the title of the goods inasmuch as no order of clearance could have been given in the case and the abandonment at this stage was not for bona fide reasons. The duty in this case is payable and is already paid. Interest of course on its late payment would not arise as the goods are under the custody of the Department and no detention charges have to be paid by the applicant for its release thereon. 8.6 Though the SCN has not demanded the DEPB credit obtained wrongly, the Revenue s representative submitted during the Hearing that even if the SCN has not demanded the return of the DEPB credit, the Commission could demand it. We wish we could do so. It is well settled that DEPB is in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rated and still under seizure. A token fine in lieu of confiscation would do. Interest also is to be waived as the goods have been not yet cleared and are under seizure. 9(c) Fine in lieu of confiscation is also called for, for the imports made on fraudulently obtained DEPBs for which import duty of Rs. 2,58,582/- was evaded and later paid. 10. Penalties are also called for on the 14 export consignments, exported under mis-declaration of value and description etc., and called for on the unlawful export of 180 MT (approx.) of Phosphate Fertilizers which was prohibited for exports. These goods are liable for confiscation but as they have already been exported, full immunity from penalty cannot be extended. 11. The Applicant and some of the co-applicants concerned in the fraudulent exports and imports have by their commissions and omissions have rendered themselves liable for penalties. 12. The entire sequence of events as revealed during investigations and from the allegations levelled in the SCN, it can be safely concluded that Shri Yusuf Dhanani was the main brain cum-prime mover in the entire clandestine activity and was also responsible for duty evasion by fraudulent acti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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