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TMI Blog2013 (8) TMI 506X X X X Extracts X X X X X X X X Extracts X X X X ..... he value had been misdeclared and therefore the value declared had to be rejected - We have also taken note of the provisions of the Section 111(d) of Customs Act, 1962 and have already noticed that goods were to be treated as the ones which were prohibited for import under the Exim Policy - Therefore the goods were liable to confiscation u/s 111(d) of Customs Act, 1962. Absolute Confiscation - Whether absolute confiscation was warranted in the case –Held that:- It was not only that the parties concerned had attempted to import rough diamonds at highly exaggerated value but also they attempted to manipulate the records and mislead the department that there was a mistake in preparation of invoice – The extent of over-invoicing was so high that the actual value of the goods was found to be 3.56% of the actual – It would not be fair on to consider the past activity for the purpose of deciding whether goods have to be absolutely confiscated or not - Om Prakash Bhatia v. CC, Delhi [2003 (7) TMI 74 - SUPREME COURT OF INDIA] - the rough diamonds had to be held as prohibited under the law - But the extent of over-valuation which if allowed would have resulted in repatriation of foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and for convenience we adopt the same. (a) Whether the goods under reference i.e. 28 consignments of rough diamonds were mis-declared in terms of value and whether the value of the same was highly exaggerated and required to be re-determined under Section 14 of the Customs Act, 1962 read with Customs Valuation (Determination of Value of the Imported Goods) Rules, 2007? (b) Whether one consignment of cut and polished diamond imported by M/s. Prakash Diamonds P. Ltd. was mis-declared in terms of value and required to be re-determined under Section 14 of the Customs Act, 1962 read with Customs Valuation (Determination of Value of the Imported Goods) Rules, 2007? (c) Whether the 28 consignments of rough diamonds are liable for absolute confiscation under Section 111(d) of the Customs Act, 1962? (d) Whether the goods i.e. 784.28 carats of cut and polished diamonds of foreign origin totally valued at US$ 11,25,445.50 (re-determined value) are liable for confiscation under Section 111(d) and (m) of the Customs Act, 1962? (e) Whether all the appellants are liable to penalty under Section 112(a) of the Customs Act, 1962? 3. From the case records and fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11-2008 stating that there was a mistake in preparing the invoice and they are in the process of getting the relevant amendments in the Kimberley Process Certificate. Subsequently on 3-12-2008, the concerned agent applied for amendment in the IGM based on the letters dated 3-12-2008 seeking to amend the declared value to US$ 352328.45. Further Hong Kong exporters on 13-12-2008 sought permission to re-export the goods on the ground that the same had been sent without prior confirmed orders and the importing firms were not willing to accept the consignments. 6. Shri V.S. Nankani, learned advocate on behalf of the exporters in Hong Kong submitted that the consignments were accompanied by Kimberley Process Certificate as required by foreign trade policy. He submitted that the importing firms informed the exporters on 24-11-2008 about the value and therefore exporters wrote letters to the Assistant Commissioner, Customs on 28-11-2008 indicating that there was a mistake in indicating the value. The exporters in Hong Kong promptly applied for obtaining fresh Kimberley Process Certificate (KPC) and accordingly obtained the same on 1-12-2008 and the same were submitted. Since the impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be issued only after verification of the goods. Therefore this observation cannot be sustained. He also submits that appellants live in Hong Kong and therefore they cannot be punished under Customs Act, 1962. 7. Shri J.C. Patel, learned advocate on behalf of the four importing firms and the directors submitted that the firms and the directors cannot be penalized for misdeclaration of value in view of the fact that the importing firms and directors were not part of misdeclaration. Therefore they cannot be said to have rendered the goods liable to confiscation. He submits that no bill of entry was filed by the appellant-firms. 8. Shri Anil Balani, learned advocate on behalf of Shri Prakash Sancheti submitted that the department s case is that he is the de facto owner of the four importing firms. On this ground separate penalties have been imposed on him in respect of polished diamonds as well as rough diamonds. He submits that department s contention is contradictory. On the one hand department says that the owner of the goods is Shri Himmat Mohanbhai Kheni and on the other hand the department is saying that he is the de facto owner of the importing firms. He also submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are liable for confiscation U/S 111(d) of CA 62 and thereby attracted penalty on them U/S 112(a) of CA 62. They arranged and devised this modus operandi for remitting excess Foreign Exchange because Rough Diamonds were Duty free under Notification No. 21/2002-Cus., dated 1-3-2002. (ii) M/s. Prakash Diamonds filed one BE dated 26-11-2008 for cut and polished Diamonds wherein value declared was US$ 10,74,923.50 as against actual value US$ 11,25,445.50 hence goods were confiscated U/S 111(m) of CA 62, Redemption Fine and Penalty was imposed U/S 112(a) of CA 62. (iii) Hon ble High Court of Gujarat vide order dated 9-4-2009 directed to release the goods and permit re-export of the goods. Department filed SLP in Hon ble Supreme Court. Hon ble Supreme Court vide order dated 1-5-2009, 8-5-2009 and 12-6-2009 stayed the operation of the order dated 9-4-2009 of Hon ble High Court and also directed to adjudicate the case within 4 months. (iv) SCN dated 26-10-2009 has been issued proposing confiscation U/S 111(d) of CA 62 and penalty U/S 112(a) of CA 62. Further, a request for obtaining caveat free draments under the mutual legal assistance in criminal matter ordina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut cancellation of the order since consignment is overvalued and DRI is investigating they sent letters to the overseas suppliers to escape from the legal action on them. (vii) As per Shri Sushil Kumar Babel, Director of M/s. Multi Star Gems Jewellery and M/s. Manan Exports, the order was placed by Shri Prakash Sancheti and goods were not cleared because DRI was aware about the overvaluation and investigating the case. (viii) Shri Prakash Sancheti accepted that he approached CHA, Shri A.K. Kakkad on 4-12-2008 for the clearance of goods. He had arranged the parcels of Rough Diamonds from Hong Kong in the name of companies owned/controlled by him, named as M/s. Multi Star Gems Jewellery, M/s. Manan Exports, M/s. Prakash Diamonds and M/s. Danish Exports. (ix) Under section 2(26) Importer in relation to any goods at any time between their importation and the time when they are cleared by Home Consumption, includes any owner or any person holding himself out to be importer. (x) In the following documents they are declared to be importers : 1. In the original invoice as well as in the amended invoice 2. In the original KPCs as well as in the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the consignment, the importer shall present a copy of the KP Certificate and other related documents, such as Air way Bill, invoices, P/L, etc. to the GJEPC for verification and certification. The GJPEC unit scrutinized the documents and if found in order, will make the following endorsement on the copy of KP certificate. Verified and signed the documents and the declaration in the invoice and K.P. Certificate are found in order. (v) In this case DRI received the intelligence of over invoicing the consignment of rough diamonds. The valuation of detained Rough diamonds was carried out by the panel of the GJEPC, Surat under panchnama. The value evaluated for 28 consignments of rough diamonds was found to be US$ 3,92,494 (Rs. 1.74 Crore) as against original value declared in the KPC and invoices as US$ 9,89,51,493 (Rs. 488 Crore) and amended value US$ 3,52,328.45 declared by the suppliers. In the case of cut and polished diamond US$ 11,25,445.45 as against declared value US$ 10,74,923.50. Thus, the declaration (in respect of value) in the invoices and the KP certificate was not found in order by the GJPEC in terms of Para 4(a) of the C.B.E. C. circular, therefore, the KP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms, Ahmedabad - 2010 (250) E.L.T. 310 (T. Ahmedabad). Facts in this case are distinguishable. (iii) Para 6 of C.B.E. C. Circular No. 53/2003-Cus., dated 23-6-2003 reads as under : In case a rough diamond consignment is not accompanied by a KP certificate, but otherwise in order, the importer in India may be given seven working days to arrange for the original KP certificate for the clearance of the said import consignment. If the importer is not able to submit the original KP certificate within the said period of seven working days, the goods would be sent back to the exporting authority (i.e. the certifying authority) of the country of origin. All formalities in this regard should be completed by the GJEPC and the cost of such shipment would also be borne by the GJEPC. (iv) The careful reading of Para 6 clearly shows that re-export of the rough diamonds will be permitted only if the consignment is otherwise in order. The word otherwise in order should be read as the goods are in order in other respects i.e. as per declaration in the import documents, i.e. invoice, PIL, Airway Bill, IGM, etc. when not accompanied by KPC. In this case they are ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods are liable to confiscation U/S 111 of CA 62 and not agreeing with Tribunal s order permitting the re-export of goods. 6. Absolute Confiscation of Rough Diamonds U/S 111(d) of CA 62 : (i) As per section 111(d) of CA 62 any goods which are imported or attempted to be imported or are brought within the Indian Customs water for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other Law for the time being in force. (ii) Under section 2(33) prohibited goods means any goods the import or export which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with. (iii) Under section 11(a) Illegal Import means the import of any goods in contravention of the provision of this Act or any other Law for the time being in force. (iv) As per Para 2.2 of EXIM 2004-09 no import of rough Diamonds shall be permitted unless accompanied by KP Certificates. In this case the consignment of rough Diamonds are not accompanie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value is mis-delared. They accepted the value given by GJPEC. Since the value was mis-declared hence the same were held liable for confiscation U/S 111(m) of CA 62 and R/F of ₹ 25,00,000/- was imposed. 8 . Penalties U/S 112(a) of CA 62 : (i) Under section 112(a) of CA 62 any person who in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation U/S 111 or abets the doing or omission of such an act shall be liable to penalty . (ii) The acts of importers, Directors of importing firms, the de facto -owner, overseas supplying firms, owner and authorized signatory and partners of M/s. Kantilal Exports rendered the rough diamonds/cut and polished diamonds liable to confiscation U/S 111 of CA 62, therefore, the penalty is liable on them U/S 112(a) of CA 62. (iii) The role played by them is based on the documentary as well as on the oral evidences recorded in the form of statements of these persons U/S 108 of CA 62. The details in this respect are as under : 1. Intelligence was received by DRI that importers have imported consignment of rough diamonds/cut and polished di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,493 - Para 10.1 Page No. 19. 9. Shri Sunil Kumar Jain, Director of M/s. Danish Exports and M/s. Prakash Diamonds vide statement dated 16-12-2008 stated that Shri Prakash Sancheti is the real owner of M/s. Prakash Diamonds and M/s. Danish Exports and he was getting a monthly salary of ₹ 30,000/- (Para 11.1.2 Page No. 21). Further, vide statement dated 13-5-2009 he stated that the order of the consignment was placed by Prakash Sancheti, that on arrival of the consignment he told that consignment was grossly overvalued and DRI is aware about the value and investigating, therefore, goods are not to be cleared. Since consignment is overvalued and DRI is investigating they sent letters to the overseas supplier to escape from the legal action on them (Para 11.1.3 Page No. 22). 10. Shri Sunil Kumar Babel, Director of Multi Star Gems and Jewellery and M/s. Manan Exports vide his statement stated that Shri Prakash Sancheti is the real owner of M/s. Manan Exports M/s. Multi Star Gems Jewellery order was placed by Shri Prakash Sancheti and goods were not cleared because DRI was aware about the overvaluation and investigating the case. He was getting a monthly sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w about DRI he instructed him not to file B/E. The overvaluation was as per his instructions. Shri H. Bhindi was employed earlier in his firm. He knew Shri M. Tanna through him Shri M.P. Kheni, Partner of M/s. Kantilal Exports is his nephew. Shri H.M. Kheni is the main perpetrator of the fraud and imported Diamonds belongs to him. In order to fulfil his evil design he takes the help of Shri Prakash Sancheti. In his statement dated 30-9-2009 had categorically admitted that 28 consignments at inflated value were imported from Hong Kong and channeled in India through 4 firms owned by Shri Prakash Sancheti. He was the person who instructed Shri M. Tanna A/S of supplying firms to overvalue the goods. He was the key link between the Hong Kong based exporter and Indian based importers with a motive to send illegal Money through Banking channel. 13. Circular Trading : Originally rough Diamonds were imported by 6 Indian firms to M/s. S.S. International (Hong Kong) at US$ 0.8389 per Carat. Subsequently part consignment were imported back in India at US$ 544.86 per Carat. Investigation revealed that proprietor of M/s. S.S. International is Shri M. Tanna who is also A/S of the 4 Hong ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e liable for penalty U/S 112(a) of CA 62. 19. Shri Prakash Sancheti and Shri H.M. Kheni admitted that they mis-declared the value. Their statements are corroborated. They accepted the value given by GJPEC. Therefore they are liable to penalty. Shri M. Kheni is the partner of M/s. Kantilal Exports and is the nephew of Shri H.M. Kheni who was earlier the proprietor of M/s. S.S. International which is owned by Shri M. Tanna the A/S of exporting firms hence he is also liable for penalty. 20. The owner of overseas supplying firms Shri H.S.K. Bhindi, the resident of Surat and Shri M. Tanna, A/S of their firms were knowingly involved in the over-invoicing of the goods and supplying false import documents i.e. KPC Certificates, import Invoices, etc. are liable for penalty U/S 112(a) of CA 62. Penalty is imposable on them U/S 112(a) of CA 62, because - (i) Shri Bhindi is the resident of Surat (ii) The offence is committed in India (iii) They have accepted the jurisdiction of Gujarat High Court (iv) They are Indian Nationals. 21. The reliance made on the Suraj Diamonds (l) Ltd. v. CC (Airport) Mumbai - 2008 (227) E.L.T. 471 (T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also to give justice to the importers, the third valuation of the subject goods was resorted to. The result of the third valuation substantiated the valuation given by the second expert committee and the intelligence received by DRI. There is no such dispute in the instant case as single valuation was done by a committee appointed by GJEPC and the findings of it was in conformity with the request made by exporting firms for amending the value of the goods in IGM. (2) Unanimity among valuation paneI members The CESTAT in the case of M/s. Sahil Diamonds had observed that the panel members of the second and third committee, who were appointed by the Gem and Jewellery Export Promotion Council (GJEPC), were not qualified enough to opine in the subject matter. There is no dispute as regard to the constitution of the panel or its findings as regard to the value in the present case and it also finds support from the value sought for amendment by the overseas supplier. (3) Evidence of Circular Trading These cases involve circular trading which was not the case in M/s. Sahil Diamonds Pvt. Ltd. and M/s. Suraj Diamonds India Ltd. In the instant case, Investigation was carried ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nager of Malca Amit Far East Ltd., Hong Kong. (5) In his statement Shri Tanna stated that : 1. That he was the authorized signatory to the 4 companies of Mr. Bhindi (Page 4 of statement dated 6-8-2009) 2. The source of the 28 consignments of RD shipped to India on 22 24 Nov. 09 were from M/s. S S International, Hong Kong who in turn had imported the same from India. 3. The value of the RD sold by M/s. S S International to the four companies of Mr. Bhindi was as per the initial value declared and it was only later that the same was revised. (Page 12 Page 4). 4. He admitted that the purchase rate of RD was @ US$ 1 per carat and that the sale price of the same was @ US $ 572 per carat. 5. He sent a letter dated 24-11-2009 to the Indian Customs regarding the mistake in the value of the 28 consignments shipped by them but he could not produce a copy of the letter to the Hong Kong Customs authorities. (6) In his statement Shri Gandhi Vijay Vinod Chandra stated that : 1. All the shipments were booked by Mr. Tanna with four companies declared as importer. 2. The liability cost (insurance) was on the initial amount declared of the 28 consignments of RD se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent in the IGM reducing the value to US$ 3,52,328.45. On 13-12-2008 exporting firms sought permission to re-export the goods on the ground that importers were not willing to accept the consignments. It is on record that Shri Prakash Sancheti and one of the directors approached M/s. B.K. Freight Forwarders Pvt. Ltd., Mumbai Customs House Agent for clearance of the impugned goods detained on 27-11-2008 and all the relevant documents and authorisation were executed with him on 4-12-2008. In his statement Shri Kakkad CHA stated that he was approached in the last week of November 2008 by the importers since their regular CHA had refused to file the documents for clearance. This would show that importers were ready to accept the goods till 4-12-2008 if not later. Nevertheless by 13-12-2008, exporters in Hong Kong sought re-export. By this time the department had already taken steps to get the goods revalued and experts nominated by GJEPC valued the rough diamonds on US$ 3,92,494 as against US$ 3,52,328.45 being the revised value of the exporters. During the investigation, Shri Sushil Kumar Babel, Director of M/s. Multi Star Gems Jewellery and M/s. Manan Exports Pvt. Ltd. in his two sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was worth the price indicated in these 28 consignments and there was a mistake. The second one would be the conclusion reached by the Commissioner in the impugned order. It has to be noted that the buyers and the sellers and all the persons involved in the trade are experienced in the diamond trade and it cannot be said that either the buyer or the seller is ignorant. Further it is also a known fact that in diamond trade the trust placed a big role. That is the reason why verbal orders are placed and on that basis goods are sent. In this case also admittedly the orders placed were verbal only, till 20 days from the date of receipt of the goods, the buyers were willing to receive the goods. It cannot be said that the buyers were not aware of the price because invoices were raised from 17-11-2008 to 19-11-2008 and dispatch took place on 22-11-2008 and 24-11-2008. There was already a gap of 5 to 7 days between the invoice and the dispatch. When the orders were being placed verbally and the amount involved is about ₹ 485 crores, it is strange that neither the buyer nor the seller thought it fit that there was something wrong. Further it is to be noted other than making blank st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icate number, date of issue, date of expiry, issuing authority, details of importer and exporter, carat weight/mass, value in US$, number of parcels in shipment, relevant HS code and validation of certificate by the exporting authority. It further says it may also have additional details such as quality, characteristics of rough diamonds in the shipment etc. . 14. From the above it can be seen that value is one of the essential components of the certificate and not a detail which may or may not be given. Unimportant details which may not be required have been identified and option has been given to the parties to mention them or leave them. There is no doubt in the KPCs value is an important aspect. Further the very purpose of the scheme would show the importance of the value because the proceeds of the trade can be used by rebel movements. The inflation of value can help repatriation of excess funds to rebel movements and can be used to finance them. Rebel movements would be interested in money and not in mere diamonds. Therefore when such exaggerated over-invoicing takes place it is clearly in conflict with KPCs and no country can ignore such excessive over-invoicing being si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were prohibited goods having not been covered by a proper KPC as per the requirement of the law. According to Section 30 of Customs Act, 1962, the amendment in the import manifest or import report can be permitted only if the proper officer is satisfied that the import manifest or import report is in any way incorrect or incomplete and that there was no fraudulent intention. Therefore the effort made by the exporter and the console agents to get the IGM amended on 3-12-2008 by producing a new KPC or amended KPC or revised KPC has been rightly disallowed. Once the amendment is disallowed and the revised documents have not been accepted and during the subsequent adjudication process and as per the above discussion by us, the fraudulent intention is established, the question of allowing any amendment in the IGM does not arise. Further as rightly pointed out by the learned DR as per the decision of the Hon ble Supreme Court in the case of Grand Prime Ltd. reported in 2003 (155) E.L.T. 417 (S.C.), re-export cannot be permitted when the import itself is contrary to the law. Therefore the action of the Commissioner and the authorities in not allowing the re-export was also in line and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eponderance of probability. In the recent decision of Hon ble Delhi High Court in the case of Vishnu Kumar (supra) has observed that it is a settled proposition of law that though the penalty proceedings under Customs Act, 1962 are quasi criminal in nature, the Department is not required to prove its case beyond reasonable doubt, as is required to prove commission of an offence in a criminal prosecution and it is sufficient if the guilt attributed to the charged person is established on a preponderance of probabilities. Hon ble High Court also observed As observed by the Supreme Court in Collector of Customs, Madras others v. D. Bhoormull - 1983 (13) E.L.T. 1546 (S.C.), all that is required to be established is such a degree of probability that a prudent man may, on its basis, believe in the existence of the act in issue. Appellants also relied upon the decision of Apex Court in the case of Mahalaxmi Gems reported in 2008 (231) E.L.T. 198 (S.C.) to submit that no contemporaneous evidence has been shown to prove overvaluation. Para 7 Para 8 of the said decision of the Hon ble Supreme Court are reproduced below : 7. Assessee, being aggrieved, filed appeal before the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e already noticed that goods are to be treated as the ones which are prohibited for import under the Exim Policy. Therefore the goods are liable to confiscation under Section 111(d) of Customs Act, 1962. 21. At this stage, we have to take note of the submissions made by the appellants that in this case goods could not have been confiscated in view of the fact that no duty was leviable. It was also submitted that the value was not an important element and therefore it cannot be said that the value was mis-declared. As far as value is concerned we have already rejected the claim. The appellants relied upon the decisions of this Tribunal in the case of Sahil Diamonds Pvt. Ltd. reported in 2010 (250) E.L.T. 310 (Tri.-Ahd.) to support their contention that absolute confiscation was not at all warranted. In fact it was submitted that Board itself in Circular No. 53/03-Cus., dated 23-6-2003 prescribed re-export of goods where no KP Certificate was produced. It was also urged that the submission of an invalid KPC is as good as equivalent to non-submission of KP Certificate. Para 6 of the Circular was relied upon. Para 6 of the circular provides that in case a rough diamond consignment i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rohibited goods. The Apex Court discussed the provisions of Section 2(33) and Section 113(d) of Customs Act, 1962. The Apex Court noted that Section 113(d) empowers the authority to confiscate any goods attempted to be exported contrary to any provision imposed by or under the Act or any other law for the time being in force. The Apex Court noted that according to Section 2(33) of Customs Act, 1962, prohibited goods are defined as any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with. The Apex Court from the definition concluded that if the conditions prescribed for import or export of goods are not complied with, such goods would be considered to be prohibited goods. Obviously in this case, the import of rough diamonds was made without complying with the requirements of Exim Policy, relevant Act and the Rules thereunder. Therefore the rough diamonds have to be held as prohibited under the law. Once the importation is held to be prohibited, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly had taken a view that appellants had made out a strong prima facie case in their favour. As already mentioned earlier in the case of Sahil Diamonds the department had no evidence other than the opinion of the expert panel which was also not a single one but three to contest the KPC and there was no other evidence. Further the case of Sahil Diamonds Pvt. Ltd. was clearly covered by the circular since KPC was not available at the time of import. Further the very fact that three expert panels were set up made the department s case suspect. None of those elements are found in this case. Therefore the decision and the conclusions reached in the case of Sahil Diamonds Pvt. Ltd. cannot be applied to this case. 24. Now we come to the decision of the Tribunal in the case of Suraj Diamonds (India) Ltd. The facts in Suraj Diamonds case were as under : The relevant fact that arises for consideration are on 29-2-1999, the appellant Suraj Diamonds (India) Ltd., (appellant-company) imported a parcel of rough diamonds from Sharjah and declared the same as rough diamonds. The said goods were imported as per IGM No. 5768 Line No. 1 dated 24-4-1999 under Airway Bill No. 16068163620 dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the adjudicating authority that the appellant-company filed the bill of entry, submitted the documents like invoices, airway bill, IGM No. and more specifically the following REP licences. (a) 0109283 dated 6-10-1998 (b) 03333790 dated 5-11-1998 (c) 0109284 dated 6-10-1998 It can be noticed from the above that the appellants herein were under the bona fide belief that they were importing rough diamonds, if it would not have been the case, the appellant-company would not have given the above referred REP licence for importing of consignment of value of ₹ 2,35,28,388/-. This was done by the appellant-company when the goods landed in India, before inspection and this fact is undisputed. It is also on record the Chairman of appellant-company on examination of consignment, noticing that they were worthless semi-precious stones , straightaway disowned the same by intimating the authorities that they had not contracted for import of these goods. 11. On careful perusal of the various statements of the Chairman of the appellant-company as well as others, we find that they do not bring out any categorical averment that the Chairman of appellant-company had knowledge that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 111 of the Customs Act, 1962 - In the absence of proof of such knowledge penalty not imposable , will be squarely applicable in this case. 28. These observations that were brought to our notice especially the observation taken note of by the Tribunal in the case of Jay AR Enterprises that Goods when exempted from full payment of duty are not dutiable goods but are goods not chargeable to duty, penalty under Section 112 of Customs Act, 1962 not imposable. The other two decisions also show that the appellants did not get any benefit and therefore penalty was not imposable. The underlying assumption is that if there was no evasion of duty, importer would not get benefit of misdeclaration and therefore no penalty would be imposable. 29. It becomes necessary to consider the three decisions relied upon by the Tribunal since we have already observed that the ratio of the decision in the case of Suraj Diamonds was totally different. Therefore if the other three decisions cannot be applied to the facts of the case, the decision of Suraj Diamonds also would not be applicable since the facts in the case of Suraj Diamonds were entirely different and the Tribunal had reached a conclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actory of Jagannath Steels, one of the containers was found to contain copper scrap instead of steel scrap. The Tribunal took a view that the importers were engaged in the manufacture of steel scraps, they had purchased the goods on high sea sale basis and had acted in good faith and bona fide. Even in that case, the Tribunal still held that goods were liable to confiscation and redemption fine was also upheld. With regard to penalty imposed on Subadhra Industries, it was observed that there was no evidence to show that Subadhra Industries had derived any benefit from the legal import or they had attempted to clear copper scrap in the guise of steel scrap. The Tribunal also observed that there is no evidence to show that any extra amount was received by Subadhra Industries. To sum up the conclusion of the Tribunal seems to be that Shree Subadhra Industries had no hand in rendering the goods liable to confiscation since they had sold the goods on high sea sale basis. As regards Jagannath Steels Ltd. also the same view was taken since there was no evidence to show that they were aware of existence of copper scrap in one of the containers and they had willingly cooperated with the dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Spie Capag S.A. v. CCE, Mumbai reported in 2009 (243) E.L.T. 50 (Tri.-Mum.). The Tribunal in the above case in Para 27 observed as below : 27. We have considered the submissions both oral and written from both sides and perused the records. We are not going into the merits of the case, as the appellants are not disputing the same but are contesting the demand on limitation only. The appellants main plea is that once the Revenue has come to know about the activity of manufacture of RCC pipes through the statement of their legal and fiscal advisor recorded on 2nd September 1987, the extended period cannot be invoked thereafter and the show cause notice should have been issued within the normal period from the date of such knowledge and since the show cause notice was issued on 10-2-1989, it was clearly time-barred. In this regard heavy reliance has been placed on the Supreme Court decision in the case Nizam Sugar Factory cited supra and Karnataka High Court decision in the case of Bripanil Synthetics (cited supra). We will therefore have to consider the ratio of decision of Supreme Court in the case of Nizam Sugar Factory as well Karnataka High Court decision in the case Bripan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the decision of the Full Bench of the Gujarat High Court in the case of Ahmedabad Manufacturing reported in 1982 (10) E.L.T. 821 (Guj.). After referring to the Supreme Court decisions in the case of Sales Tax Officer v. Kanhiayalal - AIR 1959 SC 135 and D. Cawasji and Co. - 1979 (2) E.L.T. (J154) and Supreme Court in the case of Madhava Rao - AIR 1971 SC 539 and ADB Jabalpur v. S. Sukla - AIR 1976 SC 1287 it was observed that the court must necessarily examine the precise question or the precise issue which arose before the court and identify the principles of law, applied by the court in resolving the issue and make further effort to find out what is a proposition of law which emerges from the decision of the court. Recently in the case of Ambika Quarry Works v. State of Gujarat - AIR 1987 SC 1073 the Supreme Court has observed as under : The ratio of any decision must be understood in the background facts of that case. It has been said long time was that a case is only an authority for what it actually decides, and not what logically follows from it. 36. The submissions made by the Revenue above and the decisions cited by the Revenue before the Tribunal, support our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if there is no duty liability and therefore there is no gain to the importers in India. However when we look at the menace of black money in this country and if one import/export activity, black money of more than ₹ 480 crores could be repatriated legally and legitimately, the benefit black money holders and the black market in India gets from this kind of activity can be imagined. At this juncture, even though it is not the subject matter of this proceedings, it would be relevant to note the conclusions reached with regard to past transactions. She has referred to a financial investigation which revealed that the diamonds imported at a cost of about ₹ 93 crores were shown to have been sold locally to non-existent firms and when the transactions were scrutinized at length it was found the money was routed from one account to another account in a single day to fund the remittances sent abroad. She has also noted that in the funds so collected for sending remittances, no money was received from the so called buyers of diamonds. 40. Shri Sushil Kumar Babel, Director of both M/s. Multistar Gems Jewellery P. Ltd. and M/s. Manan Exports Pvt. Ltd. Shri Dinesh Birawat, Dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence to show that they got any other benefit. At the same time as observed by the learned Commissioner, these appellants in their capacities as directors have knowingly participated in illegal activities. Therefore imposition of penalty under Section 112 of Customs Act, 1962 is definitely warranted but the penalty imposed needs substantial reduction. This would be finally quantified in the conclusion portion. 42. As regards penalty on Shri Prakash Sancheti, he was instrumental in formation of the companies; was the de facto owner; directors were acting as per his directions; he was the one who approached the CHA after the original CHA refused to file documents. He was well aware of the conspiracy and the very fact that he was to receive ₹ 10,000/- per crore would show that he had knowingly allowed Shri H.M. Kheni to use name of his firms to import rough diamonds at highly inflated value. Therefore he is also liable to penalty under Section 112(a) of Customs Act, 1962. 43. As regards Shri H.M. Kheni and Shri Manish Pravinbhai Kheni partners of M/s. Kantilal Exports, Shri H.M. Kheni was the mastermind and was the owner of the imported goods; he used the names of firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, i.e. invoice, KPCs are in the name of importer any disclaimer of the goods by him after their importation cannot absolve the importer for any commission or omission which may render the goods liable to confiscation, and importer to penalty - Chaudhary International v. Collector of Customs, Bombay - 1999 (109) E.L.T. 371 (T) Therefore the importing companies are separately liable for penalty. 45. Shri H.S. Bhindi and Shri M.G. Tanna have been instrumental in over-valuing the exports; in obtaining KPCs at highly inflated value; in obtaining revised KPCs after coming to know of detention of the goods exported by them and have also assisted the Indian importers by sending rough diamonds without insisting on any letter or any document in spite of the fact that the invoice was for such a high value. A claim was made that no offence was committed in India and both being residents abroad cannot be penalized what is to be seen is where the offence was committed and in this case it was in India. Therefore irrespective of their nationality, they can be penalized. In any case, investigations have shown that both are Indians. Therefore they are also liable to penalty under Section 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the absence of any concrete evidence as in the case of rough diamonds and in view of the fact that the difference between the declared price and the price arrived at by the expert panel is very marginal would also go in favour of the appellants. As regards admission of Shri Prakash Sancheti and Shri H.M. Kheni, in the absence of other evidences and in view of the reasonableness of the price, the benefit of the doubt has to go to the appellant in this case. Accordingly we hold that in respect of cut and polished diamonds, the benefit of doubt would go to the appellants and therefore the impugned order is set aside as regards confiscation as well as penalties on all the persons concerned. We are conscious of the fact that normally when statements are recorded, it has to be accepted either in full or rejected in full. In this case we have relied upon the statements of Shri Prakash Sancheti and Shri H.M. Kheni in respect of rough diamonds and therefore it would appear that when we set aside the confiscation on the ground that other than these two statements there is nothing else, it would amount to acceptance of the statement in part and rejection in part. We make it clear that we are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that they were making profit but not huge profit. He explained that when he had imported rough diamonds from the mine, the batch of gems were of different quality and some were of high quality and some were of low quality. The statement recorded on 6-8-2009 also revealed that as of April 2009, the Bhindi s four companies had received remittances only to the extent of 74% of the total consideration. The total consideration according to the Annexure accepted by Shri Tanna was 5.14 crore US$ and sum received was about ₹ 3.79 crores US$ roughly 74%. Shri Tanna admitted that out of this not a single dollar was paid to S S International who had sold the goods to the companies of Bhindi. Further he also admitted before the officer that he had turned up to the counter of trade and industry department on 28-11-2008 to apply for amendment to revise the value of the consignments sent on 22nd and 24th November. He was also asked why was he revising the value after the goods were detained by Indian customs. When he was asked whether he could produce a copy of the letter dated 24-11-2008, Shri Tanna stated the he did not have a copy. The discussion above shows that the comments about ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20,000/- (Rs. Twenty thousand only) (iv) Shri Himmat bhai Mohanbhai Kheni ₹ 1,00,00,000/- (Rs. One Crore only) (v) Shri Manish Pravinbhai Kheni ₹ 50,00,000/- (Rs. Fifty Lakh only) (vi) Shri Prakash Sancheti ₹ 50,00,000/- (Rs. Fifty Lakh only) (vii) Shri Hiren Sanat Kumar Bhindi ₹ 50,00,000/- (Rs. Fifty Lakh only) (vii) Shri Mehul Girish Tanna ₹ 50,00,000/- (Rs. Fifty Lakh only) 51. We uphold rejection of the declared value of US$ 21750437.00 of the rough diamonds totally weighing 37546.00 carats, imported under various Air Way Bills by M/s. Manan Exports Pvt. Ltd., 204, Atawale Bhavan, 2nd Floor, D.D. Sathe Marg, JSS Road, Opera House, Mumbai - 400 004, and re-determination of the same as US$ 83512.60 (Rs. 42,21,562.00 as per the applicable rate) and uphold order for absolute confiscation of the same under Section 111(d) of the Customs Act, 1962. 52. Penalties on the following firm/persons under Section 112(a) of the Customs Act, 1962 will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 10,00,000/- (Rs. Ten Lakh only) (vii) Shri Mehul Girish Tanna ₹ 10,00,000/- (Rs. Ten Lakh only) 55. We uphold rejection of the declared value of US$ 10039836.00 of the rough diamonds totally weighing 16220.00 carats, imported under various Air Way Bills by M/s. Prakash Diamonds Pvt. Ltd., 418/A, Panchratna, Opera House, Mumbai, and re-determination of the same as US$ 39474.50 (Rs. 19,95,436.00 as per the applicable rate) and uphold order for absolute confiscation of the same under Section 111(d) of the Customs Act, 1962. 56. Penalties on the following firm/persons under Section 112(a) of the Customs Act, 1962 will be as under : NAME OF THE FIRM/PERSONS PENALTY IMPOSED (i) M/s. Prakash Diamonds Pvt. Ltd. ₹ 19,00,000/- (Rs. Nineteen Lakh only) (ii) Shri Sunil Kumar Jain ₹ 4,000/- (Rs. Four Thousand only) (iii) Shri Abhay Singh Jain ₹ 4,000/- (Rs. Four Thousand only) (iv) Shri Himmat bhai Mohanbhai Kheni ..... X X X X Extracts X X X X X X X X Extracts X X X X
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