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TMI Blog2008 (10) TMI 535X X X X Extracts X X X X X X X X Extracts X X X X ..... 24/2005 and its Director Shri Naresh Juneja in Cus. Appeal Case No. CDM-126/2005 claimed seized goods valued at Rs. 27,07,516/-, for which an option to redeem the same was given on payment of Redemption Fine amounting to Rs. 7.5 lakhs only (Rupees seven lakhs fifty thousand only) along with appropriate duty. (3) M/s. J.C.I. Chemicals India (P) Ltd. in Customs Appeal Case No. CDM-125/2005 Ltd. and its Director Shri T.P. Ghosh in Customs Appeal Case No. CDM-127/2005 claimed seized goods valued at Rs. 8,14,800/- for which an option to redeem the same was given on payment of Redemption Fine amounting to Rs. 2.5 lakhs (Rupees two lakhs fifty thousand only) along with appropriate duty. (4) Shri Naresh Juneja in Cus. Appeal Case No. CDM-126/2005 Director of M/s. Juneja Chemical Industries (P) Ltd. and Shri T.P. Ghosh, Director of M/s. Juneja Chemicals India (P) Ltd. in Cus. Appeal Case No. CDM-127/2005 were held to be guilty of illicit import and made liable to Personal Penalty under Section 112(a) and (b) of the Customs Act, 1962. (5) Shri Naresh Juneja in Cus. Appeal Case No. CDM-125/2005 was found to be kingpin and the main perpetrator of the syndicate involved in defrauding the exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action and also to examine duty liability under Customs Act, 1962 (hereinafter referred to as "the Act") as well as to find whether there was any violation of law. 3.2 The search team found 2296 drums and 308 bags of leather chemicals in the searched premises and believing that to be of foreign origin and having been illegally removed from Falta Special Economic Zone, they viewed that such goods were liable to be confiscated. Accordingly, seizure of such goods was made. However, finding difficult to remove such goods for custody, an order was passed on 25-3-04 under Section 110 of the Act, giving custody of such goods to the 3rd Appellant (Para 3 at page 2 of O-I-O). 3.3 Out of 2296 drums aforesaid, 1149 drums and 698 drums were released by orders dated 2-6-04 and 18-11-2004 respectively. Thus 449 drums remained to be questionable along with 308 bags of chemicals and that called for explanation of the Appellants (Para 13 at page 5 of O-I-O). 3.4 Joint inspection by Department and the Appellants was done to resolve confusion of parties and sample from 188 drums were drawn (Para 27 at page 9 of Order of Adjudication). Result of 186 samples was received from chemical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the foreign markings value at Rs. 11,700/- were not covered by licit duty payment documents as claimed by Mr. Juneja. (iv) 3 drums of 30 kg each of Binder IK 611, valued at Rs.9,450/- were not covered by licit duty payment documents as claimed by Mr. Juneja. (v) 1 drum of Primax IP 52 N (Resin binder) weighing 50 kg valued at Rs. 5,750/- was not covered by licit duty payment documents as claimed by Mr. Juneja. (vi) 24 drums of SF-288 of foreign origin containing Sulphonated Fish Oil, valued at Rs. 1,72,800/- were not covered by the duty payment documents as submitted by Mr. Juneja because of weight difference as mentioned above. (vii) 1 (One) drum SOFT 389/FE-140 kgxl with marks "EXCEL technologie, to Fenasia Overseas Pvt. Ltd., FSEZ, made in Italy (from out of goods detained at Sl. No. IV of inventory dated 25-3-04, and removed on 27-4-04 to 24 KPD) valued at Rs. 8,400/- was not covered by any licit documents. (viii) 8 (Eight) drums (From out of goods detained at Sl. No. IV of Inventory dated 25-3-04 and removed on 27-5-04 to 24 KPD) with foreign Markings "Hispanica quinica s.a., H.Q., Barcelona Spain" were not covered by any licit duty payment documents. The break-up of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 35 drums containing sulphonated fish oil SF - 288 of foreign origin as admitted by Mr. Naresh Juneja himself, valued Rs. 2,52,000/- were not covered by duty payment documents submitted by Mr. Naresh Juneja. (ii) 25 drums valued at Rs. 1,80,000/- containing Sulphonated Fish Oil "SF - 288" were also of foreign origin for which no duty payment documents have been submitted. (iii) 28 drums valued Rs. 2,01,600/- were not covered by duty payment documents submitted by Mr. Naresh Juneja. (C) Basis for 182 (38 + 89 + 55) drums appearing in page 23 of O-I-O questioned to 1st Appellant were : (i) 38 drums contain leather chemicals of foreign origin were not covered by Bills and Challans submitted by Mr. Naresh Juneja and for such drums no licit duty payment documents were submitted by Mr. Naresh Juneja. (ii) 89 drums contain leather chemicals of foreign origin for without licit duty payment documents. Mr. Naresh Juneja failed to prove. (iii) 26 drums containing leather chemicals of foreign origin collectively valued at Rs. 2,34,000/- were not covered by licit duty payment documents. (iv) 15 drums containing leather chemicals of foreign origin collectively valued at Rs. 1,08,000/- we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot covered by submitted bill and any other duty payment documents showing import by Fenasia Overseas Pvt. Ltd. whose markings were there on those drums. (iv) 3 drums valued at Rs. 12,750/- were not covered by any licit duty payment documents. (v) 1 drum valued at Rs. 6250/- was not covered by any licit duty payment documents. Basis of 6 drums questioned as under : Mr. T.P. Ghosh, the 4th Appellant failed to provide proof of licit importation of 6 drums. 5.2 (i) The basis of questioning 68 bags of Titanium Dioxide (out of total 278 bags of different goods seized) weighing 25 kg each of foreign origin valued at Rs. 1,36,000/- (Though the test report of sample drawn from the subject bags shows it to be "other than Titanium Dioxide" but as per markings on hags and Mr. Juneja's own contention these contain Titanium Dioxide only) was that these bags were not covered by any licit duty payment documents. (ii) Basis of questioning 178 bags of Butan 7813 (out of total 278 bags of different goods seized) valued at Rs. 2,99,706/-(For which test report of samples drawn shows "Brown powder containing Nitrogen Sulphide and Zinc bearing organic product"); and (iii) Basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement that he was the directors of M/s. T.J. Commercial and M/s. S.F. Overseas Pvt. Ltd. (C) Mr. R.N. Mitra, proprietor of M/s. R.M. International had confirmed that he had no godown. He had not maintained any stock register. He merely supplied the goods asking different parties to supply the goods directly to the buyer. He had never seen the goods and only issued the challans and invoices. He was not even aware about the origin of the goods and also as to whether they were of foreign origin. (D) In his statement dated 18-6-04, Mr. Falguni Mukherjee, Director of M/s. S. F. Overseas had failed to say what type of leather chemicals were sold and also whether they are of Indian or foreign origin. They had no godown and they had not seen the goods physically. (E) Mr. S.K. Sachdeva, proprietor of M/s. Devi Chemical Enterprises had stated that they had also sold goods to M/s. Juneja Chemical Industries Pvt. Ltd. as well as M/s. J.C.I. Chemicals Pvt. Ltd., but had no godown or warehouses. They merely imported goods from M/s. Excel Technologie, Italy. They sold the goods without seeing the chemicals and he was not aware whether they were of Indian or foreign origin. (F) In his statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behind the functioning of all the companies involved. 7.1 Ld. Counsels, Dr. Samir Chakraborty and Shri Hasmukh Kundalia, appearing for the Appellants vehemently objected the assessment and argued the matter in length as well as filed a written submission. Occurrence of events on different dates was explained in following date chart : Relevant list of Dates March 25, 2004 : Officers of the respondent Customs authorities detained/seized 2296 drums and 336 bags of leather chemicals from the godowns of JCIL and JCICI under Section 110 of the Act, alleging that the subject goods were of foreign origin and improperly acquired. June 2, 2004 : On verification of documents submitted by JCIL and JCICI, 1149 of the seized drums were found to be of Indian origin purchased from Balmer Lawrie & Co. and Fennasia Ltd. and, hence, by an order of Additional Commissioner of Customs (Preventive), West Bengal, Kolkata released the said 1149 drums of leather chemicals. September 20, 2004 : A show-cause notice issued by the Assistant Commissioner off Customs (R & I), West Bengal, Kolkata wherein it was alleged that 449 drums and 278 bags of leather chemicals (out of the seized drums and bag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tten notes of submission". July 28, 2005 : Appellants received order dated July 19, 2005 and impugned order passed by the Commissioner. 7.2 Dr. Samir Chakraborty, ld. Counsel for the Appellant argued as under : (A) In passing the order of adjudication, the Commissioner misconceived relevant provisions of the Customs Act, 1962 and misconstructed the well settled principles of law laid down by the Hon'ble Supreme Court, Hon'ble High Courts and Tribunal. Reliance was placed by Assessing Authority on the decision appearing in the impugned order completely misappreciating the true terms, scope and effect thereof and/or by ignoring the fact that the said decisions were clearly distinguishable and thus inapplicable to the present case. (B) In terms of the provisions contained in the Customs Act, 1962 and the Rules framed therein under and/or notifications issued under the said Act, chemicals are not notified items and are not covered by the provisions contained in Chapter IVA or Section 123 of the said Act. Moreover, said goods being non-notified items, there is no statutory prohibition in Customs Act, 1962 or any other law for the time being in force, in carrying, removing, kee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucted in the said godown premises of the appellant, was without any basis or foundation. The very premises with which the instant proceedings were initiated, therefore, no longer survived. From the Inventory of the seized/detained goods, it would be seen that the alleged DTA component thereof is contained under Item No. 1(a) only. From the order dated November 18, 2004 of the Commissioner, it would be seen that the Commissioner has accepted that 258 drums of the said goods were supported by DTA Procurement Documents and hence, were released. There thus remained 27 drums of the said alleged DTA goods, which formed the subject matter of the show-cause notice and the adjudication order. Before the Commissioner the Appellant had produced documents and explanation clearly evidencing the licit procurement of the said goods by the Appellant. These documents are contained at pages 58 to 64 and 65 to 69 of the Appeal Petition. However, perfunctorily and on extraneous reasoning, the Commissioner has purported to wrongfully and illegally reject the same and pass the said order, inter alia, confiscating the said 27 drums. The patent incorrectness and untenability of the Commissioner's findings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f decisions propositionwise submitted by the Appellant's representative during the course of personal hearing. Realising that these decisions if dealt with would make it impossible for the Commissioner to purport to sustain a wrongful and illegal show cause notice, the Commissioner has adopted this perverse and arbitrary method which has also vitiated the said order. (J) The Appellant had demonstrated with reference to the materials on record in the present case as to how and why none of the decisions of the Hon'ble Supreme Court and the Tribunal, referred to and relied upon by the Commissioner, have any application whatsoever to the present case and that, on the contrary, the decisions relied upon by the Appellant, fully applied to the instant case and on the basis thereof, no reasonable person, properly instructed, could have confiscated the said goods and/or imposed penalty upon the Directors of the Appellant. (K) In spite of attention being drawn of the Commissioner to the fact that the Department had no produced any positive and affirmative evidence in support of these misconceived allegations made in the show-cause notice, and as such, on this ground also, the show cause no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 14 of the Customs, 1962 read with Customs Valuation Rules, 1988. It has been held by Apex Court as well as various judicial forums that the valuation of imported goods is to be done in accordance with law and not by other method not known in law. However, the said order would show that this settled legal principle has not been followed in the instant case. (O) The Appellant, in reply to the show-cause notice as well as during personal hearing, submitted that in respect of goods allegedly valued at Rs. 12,58,870/-, they have outlived their shelf life and has no commercial value at all. To meet the ends of justice and fair play the Commissioner ought to have ordered for chemical test to find the correctness of the submission of the Appellant and, thereafter, determined the value thereof, which was not done. This also has rendered the said order violative of the principle of natural justice. (P) Condition precedent laid down in Section 111(d) for confiscation of the said goods has not and/or cannot be said to have been satisfied. In the premises, the question of the Appellant being required to redeem the said goods on payment of redemption fine and also cannot and does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ized and order of adjudication need not be interfered. 9.1 Heard both sides and perused the case records. Dr. Chakraborty, ld. Advocate for all Appellants had principal grievance that they were dealt to the detriment of justice. He brought to our notice the manner how the Appellants were dealt. It appears that without rigorous scrutiny of each and every aspect of the alleged drums and bags appearing in Para 2 and 5 aforesaid, adjudication was done arbitrarily in gross violation of principles of natural justice. First Appellant was required to explain on 343 drums (73 + 88 + 182) and 278 bags involved in controversy. Second Appellant was required to show cause against 106 drums of goods which were subject matter of scrutiny. Instead of examining relevant evidence and materiality of each and every drum and bag in question appearing in pages 22 & 23 of the order-in-original, the ld. Authority made a global assessment without assigning any reason for the questioned drum/bag. Cogent evidence against alleged drum/bag has not come forward to justify raising of the demand. Nor even the valuation met scrutiny. When the Authorities were pleased to release 1149 drums and 698 drums on 2- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enable him to lead defence/evidence. Ld. Counsel's pleading that the adjudication has gone beyond show-cause notice also calls for scrutiny for various grievances raised by Appellants in their submissions in the course of hearing before us. 10.1 Grievance of the Appellant that Revenue has failed to discharge burden of proof weigh consideration when the goods were pleaded to be non-notified and DTA sales goods. If a proceeding is ill-founded that shall not get sanction of law. Therefore, entire basis of proceeding needs fresh look. When the goods are claimed to have been DTA Sales and backed by evidence, this aspect should not be ignored, but to be tested. 10.2 Some of our aforesaid observations enable us to say that all these appeals having been challenged seriously by the Appellants on merit, legality, valuation, no determination of quantity/quality loss in course of litigation process, basis of levy of penalty, redemption fine, scope of adjudication, applicability of decisions, examination of evidence and no consideration of submissions in entirety, discharge of burden of proof, basis of proceeding, satisfaction as to procurement of goods in DTA, we are of firm opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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