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TMI Blog2007 (9) TMI 509X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the applicant and co-applicant No. 1, 2, 3, 4 and 5 was held on 28-6-2007. During the hearing, the representative of the Revenue submitted that in the instant case, two co-applicants (viz., co-applicant No. 2 and 5) are absconders. 3.1 The Bench, vide Admission Order No.166/CUS/MGR/2007 dated 13-7-2007, observed that provisions of the Settlement Commission in Chapter XIVA of the Customs Act, 1962 do not bar an application from a COFEPOSA detenue or an absconder. Front sub-section (7) of Section 127C it is clear that an applicant can represent before the Settlement Commission himself or through a representative duly authorized in this behalf. It is, therefore, clear that an applicant s so called abscondance cannot be a bar co entertain his application by the Settlement 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 be, it could only culminate into a Show Cause Notice demanding duty and/or co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase in their application before the Commission which had not been adhered to in this case. It also submitted that co-applicant No. 2 never appeared before the investigating agency and has not co-operated in the investigation. The said co-applicant No. 2 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 from all charges. Even the veracity/authentication of the signature of the co-applicant No. 2 said to be signed in the application form cannot be verified/commented on by DRI as he had never appeared before DRI vis-a-vis the investigation in the case. The submission made in the application before the Commission may not be considered following the ratio laid down by the Settlement Commission, Additional Bench, Mumbai in the case of Sadik Sadruddin Chunara in its Final Order No. 38/2006-Cus. dated 5-5-2006 reported in 2006 (203) E.I..T. 324 (Sett. Commission), wherein it was observed : Apparently therefore the deposition made by Shri Pravin Shah cannot be held as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the applicant had mis-declared 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. 38,60,053/- in 18 export consignments. The fact remains that it was a fraud committed by the applicant and the actual goods meant for exports 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. 38,60,053/- 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 of each noticee in the said fraud has been detailed and substantiated in the Show Cause Notice issued to them. 4.5 The Revenue further invited the attention of the Bench to the fact that the case before it made by the applicant under Section 127B of the Act is not for adjudicating the case under Section 122 of the Act but to make a settlement by an order under Section 127C(7), after hearing both the parties and considering the nature and circumstances of the case and af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... violations are contained in para 30 of the SCN [pg 36], and the paras that follow. They may be enumerated thus, also setting out the admissions made by the applicant : (i) Allegation : 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 sold by the applicant in the open market for profit, to parties named in Annexure B to the SCN. DEPB of Rs 38,60,053/- was claimed on the basis thereof. [paras 30A to C (ii) of the SCN-pg 36-37] Submission : There is no demand in the SCN for this amount. As such, there is no admission of this alleged liability by the applicant. Even otherwise, this duty cannot be demanded from the applicant, in view of the judgment of the Hon ble Bombay High Court in C.C. v. Jupiter Exports, 2007 (213) E.L.T. 641 (Bom.), as the applicant is neither the importer of the goods in question, nor claims to be the same. Therefore this Hon ble Commission has not directed for payment of this amount in the Admission Order dated 13-7-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that proviso to Section 23(2) would also not act as a bar to exercise the right to relinquish the title to the goods for the following 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, priviledge, 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 punishme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest with the Central Government and, therefore question of duty liability on these goods will not arise. II. Regarding issue of immunity 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. 386 (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating to levy of Customs duty and interest liability has been created under this notification. Thus, the Settlement Commission has power with 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 31-01-2007, while issuing notice on the SLP, stayed recovery of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (xi) Without prejudice, the Applicants in respect of the seized goods which are lying at port, and the title to which has now been relinquished 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 of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded in the Settlement Proceedings, and the aforesaid position as per the decision of Hon ble Supreme Court, may please be considered, while deciding the issue of grant of immunities from penalty (under Customs Act) and prosecution (under Customs Act, and IPC). He prayed for complete immunity from penalty (under the Customs Act), and from prosecution under the Customs Act, 1962 and Indian Penal Code. (c) Maqsood Yusuf Merchant This applicant, who is brother-in-law of Yusuf Dhanani, was resident of Dubai at the relevant period. From Dubai, he was operating a trading firm M/s. Super Chemical Trading LLC, Dubai, before coming to India for permanent settlement. While in Dubai, he issued a letter of authority in favour of one Mrs. Naseem Desai based in London to authorise, collect and deposit documents for and on behalf of his company M/s. Super Chemical Trading LLC, though the said company never existed in London. He also endorsed blank Bills of Lading sent to Dubai for his signatures, at the instance of Shri Yusuf Dhanani. Since none of these acts were done in India, the provisions of Customs Act, 1962, which as per sub-section (2) of section 1 of the Act only extends to the who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This applicant is not liable to any penalty whatsoever. He submitted that the co-operation extended in the Settlement Proceedings, and the aforesaid Statutory position as per the decision of Hon ble Tribunal, may please be considered, while deciding the issue of grant of immunities from penalty (under Customs Act) and prosecution (under Customs Act, and IPC). He sprayed 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, and 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en though some of the persons concerned were arrested, no criminal complaint seems to have been filed all these years which could have run concurrently with the COFEPOSA orders. Revenue could also not emphatically inform as to whether Sarfaraz and Maqsood have been declared as proclaimed offenders under the Criminal Procedure Code. The Revenue has also not verified as to whether the absconder s application is authentic or not. Mere doubt on the part of the Revenue is not enough. We have to accept the applications as the Revenue has not brought on record the results of verification, if any, done in this regard. In case the Revenue at a later date confirm that the signature of the co-applicants were not genuine then the immunities granted could be withdrawn for false evidence as per Section 127H(3) and 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 immunities in full as he is also an absconder which goes against him. We, therefore, admit Shri Sarfaraz Dhanani s application for settlement. Similarly, Shri Maqsood Yusuf Merchant, who is brother-in-law of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of settlement. Now they have contested the recoverability of duty on the ground of relinquishment of title to the goods. 8.5 We do not agree to this relinquishment of the title at this late stage before the Commission and that too, after issue of the Show Cause Notice. The goods are still under seizure. We, at the stage of admission itself, did not agree for the relinquishment of the title and sought from the applicant the duty on this score. It is also to be noted that the relinquishising of the title before home clearance could have been possible if the other things had been proper, where in the normal course of business, an importer abandons the goods - the reasons could be several for doing so like cancellation of the purchase order, wrong delivery of the goods, payment disputes etc. Here we have a case where the import took place in the year 2001 and till date there was no relinquishing of title. No order for home clearance could have been made in the case as the goods were under investigations. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt has stayed the interest as above referred to. 8.8 The applicants have pleaded for immunity from fine, penalty and prosecution on the ground of co-operation, payment of duties etc. 9.(a) The case before us is a case of fraudulent obtaining of licences and undue duty benefits by way of customs duty concessions. It is also a case of collectively conspiring to fraudulently evade the duty amounting to Rs. 4,54,822/- on imported consignment of DASDA imported vide Bill of Entry No. 517 dated 10-5-2001 by substituting the same with low value potassium chloride during its transit to CWC Warehouse at Kalamboli. The goods are liable for confiscation and in their absence fine is called for. Full duty has been paid on this Bill of Entry. (b) The other consignment imported vide Bill of Entry No. 527556 dated 13-9-2001 which have been not allowed to be relinquished and on which a duty of Rs. 7,64,224/- have already been paid is also liable for confiscation. However, the goods are long in custody must have deteriorated 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. 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. But in the spirit of settlement they had deposited this amount. 13. We, therefore, settle the case on the following terms and conditions under Section 127C(7). For the sake of convenience, the Duties, Fines, Penalties are compositive. (a) Customs Duty is settled at Rs.12,19,046/-. (b) Interest : Interest @10% is to be paid for the delay in payment of duties. The interest is to be computed exclusive of the duty component of Rs. 7,64,224/- as these goods are still under seizure. Interest amount is to be paid within 30 days of receipt of the order. Interest in excess of 10% is waived. (c) Fine : Redemption Fine in excess of Rs.1,00,000/- (Rupees One lac only) is waived for the imports as at 9(a) above and in excess of Rs. 75,000/- (Rupees Seventy Five thousand only) for 9(b) above. (d) Penalties : (i) It is well settled law that penalties, on both the Partnership Firm and the Partners cannot be imposed. We, therefore, refrain from any penalty on the Partnership Firm - M/s. Sana International. (ii) Penalties in excess of the amounts shown against each of the applicants below is waived. (i) Shri Yusuf Dhanani, co-applicant - Rs. 3 lakhs (Rupee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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