9911796707
TMI Blog2012 (10) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... oceeding. The main Appellant, M/s. Sonam International, a proprietorship concern of Shri Kirtilal Shah, imported certain goods from Nepal declaring the goods as "Poultry Feed Supplement AV-107" in Bill of Entry No. 487/2002 dated 1-12-2002 filed at Land Customs Station Sonauli. The importer had claimed exemption under Notification 40/2002-Cus., dated 12-4-2002. The goods were initially warehoused, apparently under Section 49 of the Customs Act, but were finally assessed and released by Customs on 21-5-2003. The goods were intercepted by Directorate of Revenue Intelligence on 23-5-2003 at Ghaziabad and seized under the belief that the importer had mis-declared the goods in the Bill of Entry for claiming the exemption under Notification 40/2002-Cus., dated 12-4-2002. 3. The case made out by DRI is that exemption under Notification 40/2002-Cus. was meant for goods of Napalese origin; the goods imported were pure Calcium Di-Pantothenate, classifiable under Customs Tariff Heading 29.36 and the goods were imported from Germany (as indicated in the cost sheet submitted by importer at the time of import) by M/s. Anvit Industries in Nepal and despatched to India without doing any manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia from Nepal after completion of the project subject to the following conditions namely : ................" 7. Now it is proper to see the conditions of Notification 40/2002-Cus. which are reproduced below : Condition No. Condition 1. If the goods are wholly produced in Nepal. 2. A (1)The goods are manufactured in Nepal wholly from Nepalese materials or Indian materials or Nepalese and Indian materials; or (2) The goods involve a manufacturing process in Nepal that brings about a change in classification at four digit level of the Harmonised Commodities Description and Coding System, different from those, in which all the third country origin materials used in the manufacture of such goods are classified and the manufacturing process is not limited to insufficient working or processing as indicated in the illustrative list below : (i) Operations to ensure the preservation of articles in good condition during transport and storage (e.g., ventilation, spreading out, drawing, chilling, placing in salt, sulphur-dioxide or other aqueous solutions, removal of damaged parts and like operations); (ii) Operations consisting or removal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r produce, at the point of entry in Nepal, where this can be proven to the satisfaction of the Assistant Commissioner of Customs or Deputy Commissioner of Customs, or the earliest ascertainable price paid for the materials, parts or produce of undetermined origin in Nepal where the working or processing takes place. Explanation - For the purpose of this notification, the value of materials, parts or produce originating from countries other than India or Nepal shall be the CIF value at the time of importation of materials, parts or produce, at the point of entry in Nepal, where this can be proven to the satisfaction of the Assistant Commissioner of Customs or Deputy Commissioner of Customs, or the earliest ascertainable price paid for the materials, parts or produce of undetermined origin in Nepal where the working or processing takes place. 8. The Appellants make the following submissions in this appeal. 8.1 The imported goods were covered by a certificate of origin issued by Nepalese Chamber of Commerce as required under condition-B of Notification 40/2002-Cus. If the Indian Customs had any suspicion about the certificate they should have checked up with the Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customs duty only if the manufacturer of such goods produces or manufactures copper from raw material other than copper ore or copper concentrate. Board's Circular No. 37/2001-Cus., dated 18-6-2001 provides that if the condition of a notification is not verifiable, such exemption should not be extended. In the case of copper/brass sheets imported from Nepal, normally it would appear that the verification of the source/raw material is not possible in a foreign territory. However, in this particular case, by virtue of the Indo-Nepal Treaty (para 5 of the Article 5 of the Treaty), the verification can be done by the Indian Customs. Hence, the issue is whether the exemption should be extended. 3. This matter was discussed in the Tariff Conference of Chief Commissioner of Customs held at Visakhapatnam on 25th and 26th September, 2003 (Agenda Point A-25). 4. The Conference noted that the condition regarding the kind of raw materials used for manufacture of the copper/brass given in the above referred Central Excise notification would require physical verification of the raw materials used fro the production of export commodities made of copper/brass. Normally, such a conditio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a product specified in US pharmacopia and it can be used by human beings in the form of tablets and capsules, whereas DL-Calcium Pantothenate 45% Feed Grade is not specified in US pharmacopeia and hence not permitted for use in human formulation. 8.11 In a similar case where the main appellant also was a party the Tribunal has set aside confiscation and penalty as reported as Baader Schulz Laboratories - 2005 (188) E.L.T. 40 (Tri.) and therefore similar orders should be passed in this case also. 8.12 The value of goods have been increased from Rs. 11 lakhs to Rs. 33 lakhs without any basis. 9.1 The ld. SDR points out that this case is made on the basis of following test reports : (a) Report C No. 35/Cus/2003-CL 97/DRI/30.5.2003 of the Central revenue Control Laboratory, New Delhi reporting that the sample is in the form of white coloured fine powder and answers positive test for Calcium Pantothenate. (b) Report No. 77694 dated 5-6-2003 of the Analytical Testing Corporation Lucknow reporting that the samples are Calcium D-Pantothenate 98.67 % (w/w) of standard quality and fit for human consumption. (c) &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce and there was no joint visit to Nepal to find out whether the supplier had facilities for manufacture of the goods etc. are just flimsy technical objection being raised without in bona fide ground for defence. 9.4 Further the SDR points out that the statements given by the following persons confirm mis-declaration in the description of goods in the Bill of Entry. (i) Statement dated 6-9-2003 from Shri Nilesh Dhirajlal Sapriya, the Chemical-cum-Plant in Charge of M/s. Baadar Schulz Laboratories; (ii) Statement dated 2-6-2003 of Shri Sanjay P. Shah who was in charge of the affairs of M/s. Sanjay Agencies, Valsad who was another buyer of the product from Sonam International; (iii) Statement dated 31-5-2003 of Shri Kalpesh Shah son of Shri Kirtilal Shah, the proprietor of Sonam International; (iv) The statements dated 2-1-2004 and 3-1-2004 of Shri Pradeep Pathak, who was the authorized agent of M/s. Sonam International for clearing the goods from customs. 9.5 From the statement of Shri Pradeep Pathak on 2-1-2004 (para 21 of SCN), it is seen that samples from the consignment were drawn firstly on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was granted he did not appear before the Customs Authorities. So it is very obvious that he did not want any joint inspection at that stage. The next objection is that the samples were not drawn in his presence. When he was absconding the samples could not have been drawn in his presence. There was no such request when his preliminary statement was recorded on 3-6-2003. We also take note of the fact he did not raise this objection when the goods was still available and new samples could have been drawn. His original objection was only that the goods should have been tested microbiologically. This was done by revenue and the results were adverse to the Appellants. In the circumstances we do not find any merit in the arguments raised by the Appellant. 12. Thus the case of the department is proved based on test reports mentioned in para 8.01 above. The case is proved if the statement of Shri Pradeep Phatak is taken as correct. Though there is mention about retraction from the statement nothing is coming out which part of the statement was retracted when and what was the correct position of the facts as per retraction. The fact that cross examination of Shri Pradeep Phatak was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit : Provided that, without prejudice to the provisions of the proviso to sub-Section (2) of section 115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon. (2) Where any fine in lieu of confiscation of goods is imposed under sub-section (1), the owner of such goods or the person referred to in sub-section (1), shall, in addition, be liable to any duty and charges payable in respect of such goods." 14. However the adjudicating authority has not recorded the reason for not giving such option. Where any authority has a discretion under a statute to do a thing, the authority has to exercise such discretion based on reason. The reason for not giving such option should be recorded. Since no such reason is recorded such absolute confiscation is bad in law. It is to be noted that the goods in question is not of a type which causes injury to public health or can cause damage or threat to the society if released into Indian market. In fact the counsel for appellant submits that the goods have been so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty imposed on the firm is about 45% of the assessed value of seized goods. Considering that goods were absolutely confiscated, and the relief from such order is being granted only after more than 8 years, and thus the appellant has suffered severe penal consequence we reduce the penalty from Rs. 15,00,000/- to Rs. 7,50,000/- Further there is no ground to impose separate penalties on the firm and the proprietor of the firm. So the separate penalty on the proprietor Shri Kirti Lal Shah is set aside. (ii) From the records it comes out that the real person behind the manipulation is Shri Nilesh Shah was in de facto control of the activities of the firm. So a penalty on him is warranted. But considering that the penalty on the firm itself is reduced to Rs. 7,50,000/the penalty on Shri Nilesh Shah is reduced to Rs. 5,00,000/-. (iii) In the matter of penalty on Shri Pradeep Soni, Manager and authorized Representative of Sonam International, for Rs. 5,00,000/- we find that he is only an employee of the firm and he was hardly responsible for the wrong declaration. Penalty is imposed on the ground that he should have been aware of the wrong doings. There i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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