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TMI Blog2007 (4) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... Sadiq Hussein Yusuf Ali Pattawalla and penalty of Rs. 1 lakh imposed upon Shri Divyesh Gandhi under the provision of Section 114 of the Customs Act, 1944. 2. We have heard Shri M.L. Grover and Shri A.K. Chatterjee, ld. Advocates appearing for the appellants and Shri K.L. Bablani, .Jt. CDR for the revenue. 3. As per facts on records M/s. Al Hadi Impex filed 14 shipping bills dated 1-9-1999 for export of 134 cartons containing 53,60,000 ball pens declaring the total FOB value as P.s. 3.69 crores. The said exports were meant for Dubai. The export documents as also the container in question was examined and on everything found to have been declared correctly the same were air freighted on 10-9-1999 to the consigner at Dubai. It is also not in dispute that the entire remittance for the export consignment was received by the said appellant. 4. Thereafter the revenue doubted the correctness of the declaration made by the appellant and started investigation. On scrutiny of the export related documents, it was found that the declared net weight of the total consignment was 8643 kilos and as such the average weight of 1 ball pen was found to be 1.26 gm. On the basis of the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and he was never in the business of sale/purchase or as broker of ball pens. Efforts to locate Shri Diveyesh Gandhi however did not succeed. The revenue recorded the statement of his associates viz. Shri Mukesh D. Dattani and Shri Haresh V. Doshi and others who disclosed that cheque payments made from the account of Al Hadi Impex was not the payment of any sale/purchase of ball pens which was in fact "cheque discounting" through Divyesh Gandhi. 7. Statement of the Asst. Manager and godown keeper of M/s. Eastern Cargo Carriers were also recorded who deposed that the consignment had been deposited in their godown prior to actual shipment. In the document maintained by the said carriers no mention of weight of the consignment and its challans were made. Statements of the driver and owner of the truck revealed transportation of the said goods in their truck. 8. DGFT office in Mumbai and DEPB section of Cargo Complex were requested by this office to stop issuance of DEPB scripts to the exporters till a clearance in this matter was issued by this Investigations were also conducted through DRI at Dubai. The Consul (ECONOMIC),. Dubai vide letters dated 11-2-2002 and 20-2-2002 info ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh cheques to some of the suppliers as admitted in the show cause notice and some was made to others in cash but,: that non-availability of the sellers at the time of investigation could not act prejudice to them; that the weight of the entire consignment was declared by them on the lower side so as to save freight charges. 11. The above contention was not accepted by the Commissioner who passed the impugned order. The said order has been challenged before us by submitting that the consignment in question have long been exported by the Customs authorities after due verification of the export documents as also after examining the goods in question by the Customs Officers. Our attention has also been drawn to the cross-examination of Shri R.R. Chadi, Examining Officer and Shri V.V. Tiwarekar, Supdt. of Customs wherein they had clearly deposed that they had examined the contents of the containers and the same were found to be pens and they did not find anything wrong with the consignment. The matter was also discussed with the Dy. Commissioner to whom the samples were shown and on by thereafter verification of declared value was made and accepted. As such submissions made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brother-in-law of Shri Pattawala and it was only in that connection that he was helping him in his export. The same cannot be made basis for imposing penalties. 14. Shri Divyesh D. Gandhi had submitted that there is nothing on record to show that he was the person who had arranged the procurement of ball pens from the market for the export firm. All the statement of various persons and associates are to the effect that he was only in the business of "cheque discounting" which cannot invite any penal action against him. For the above proposition he relied upon various decision of the Tribunal. 15. We have considered the submissions made by both the sides and have gone through the impugned order. The order passed by the Commissioner is mainly based upon the fact that the weight of the pen, as per declaration made by the exporter was only 1.6 gm and the investigation conducted during the post export period revealed non-existence of various pen suppliers as also remittance received from the foreign has been encashed either directly or by transferring the same to the other bank accounts. All the above points have been satisfactorily explained by the exporter. As regard weight of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unted the cartons in each shipping bill and they were 10. CROSS EXAMINATION OF SHRI V.B. TIWREKAR, SUPDT. OF CUSTOMS BY ADVOCATE SHRI BAKRE . Q.1 During 1999, where were you posted? A.1 I was in the Air Cargo Complex. Q.2 I am showing you the shipping bill Nos. 021646 dt. 1-9-1999,. 021783 dt. 1-9-1999, 021784 dt. 1-9-1999, 021785 dt. 1-9-1999, 021786 dt. 1-9-1999, 021787 dt. 1-9-1999, 021788 dt. 1-9-1999, 021789 dt. 1-9-1999, 021790 dt. 1-9 1999, 021791 dt 1-9-1999. 021792 dt. 1-9-1999, 021793 dt. 1-9-1999, 021794 dt.1-9-1999 and 021795 dt 1-9-1999. On going through the shipping bills would you confirm that you supervised the shipping bills? A.2 Yes Q.3 While you were supervising the examining, did you see the contents of the packages, which were examined. If so what were they? A.3 I did see the contents and they were pens Q.4 While supervising the examination on the basis of the examination order given on each shipping bills, did you find anything wrong in the examination orders? A.4 No. Q.5 In the examination order, there is a remark "verified D.V. Fair". How did you verify the fairness of the declared value? A.5 This was done after discussion w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n case of doubt such shipping bills should be endorsed "Provisionally cleared for export" so that the designated authority of DGFT does not provisionally accepted PMV for fixing the upper limit of the credit. The said circular further said that the inquiry should be completed within one month of let export order and shipping bills should be finally assessed thereafter. In the present matter there was no provisional assessment of the shipping bills in terms of above circular. This clearly indicates that no infirmity was found in the declaration made by the exporter at the time of verification of export declaration 18 . In the case of J.G. Exports v C C., Chennai reported in 1999 (105) E.L.T. 258 (Mad.) it was held that where the declared FOB value of software was accepted and shipping bills passed by Customs without demur and no show cause notice for alleged over valuation was issued to the exporter within 30 days of exports, the declared value is deemed to have been accepted by the authorities after expiry of 30 days period in accordance with Ministry's Circular No. 69/97 dated 8-12-1997 which is binding on the Customs Department. 19. In view of the foregoing discussion, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 3.69 crores of Ball Point Pens is claimed to have been purchased by them from three firms. However, the appellants have furnished no details whatsoever to enable the Customs Authorities to trace these firms and find whether these firms genuinely manufactured any Ball Point Pens and supplied to the appellants for export. It is inconceivable that such a large quantity of export goods can be procured and paid for without leaving a trace of the suppliers. The facts on record evidencing payments by cheques in respect of fictitious persons and subsequent discounting of these cheques on behalf of the appellants clearly point to the manipulative nature of transaction and procurement of goods claimed to have been exported. 22. The declared weight of the consignment translates to an average weight of a mere 1.6 gms per Ball Point Pen, an impossibility which is sought to be explained away by the appellants stating that they had under-declared the weight to the airline's authorities to save on freight. Such explanation does not stand to reason to a rational mind as no genuine exporter would try to save a small amount by way of freight at the risk of losing a huge amount of DEPB benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case, I am of the view that the DFPB benefit has been rightly denied by the Adjudicating Commissioner. 25. Since there is a difference of opinion on the question of eligibility to DEPB benefit between the two Members of the Bench which heard this case, the matter may be referred to the Hon'ble President of the Tribunal as provided Under sub-section (5) of Section 129C of the Customs Act, 1962. Sd/ (C. Satapathy) Member (Technical) DIFFERENCE OF OPINION 26. Whether all the appeals are to be allowed in its totality as held by the Member (Judicial) or the DEPB benefit has to be denied to the exporter as held by Member (Technical). Sd/- Sd/- (C. Satapathy) (Archana Wadhwa) Member (Technical) Member (Judicial) dated 24-9-2005 dated 19-10-2004 Appeal Nos. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foIl Sb 7300/97 Rd 19/99 Vef D.V. fr Sd. 2.9 as seen Prafulla H APPRAISER Reed 10Cts Sd/- Sd/- Sd/- SA 7/9 7/9 V.B. TIWREKAR Mangababu Supdt. of Customs (P) Dy. Commr. The cross-examination of the above officer was done by the Commissioner of Customs on 3-9-2002 and the same is reproduced as under :- Cross Examination of Smt. R.R. Ghadi, Examining Officer by Advhri Bakre: Q. 1 During the year 1999 where were you posted? A.1 I was posted in Air Cargo Complex. Q.2 Briefly describe the procedure once the goods arrive for examination? A.2 Once the consignment arrives for examination, based on the examination order given in the shipping bill, we ask the exporter/agent to open the packages selected by us for examination. Q.3 I am showing y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the declared no. of packages were correctly received in the export shed? A.6Yes Sd/- 1. Shri A.V. Bakre, Advocate 2. Shri. N.B. Sonavane 3. Shri V.B. Tiwrekar, Supdt. Sd/- (Y.G. Parande) Commissioner of Customs 30. Thus it may be seen from the above examination report and the Cross Examination of the Officer who conducted the examination that they have done the examination under their supervision and they found declaration value to be fair and the goods were air freighted on 10-9-1999 by 5A.M Aviation Flight to the consignee at Dubai. The entire remittance for the export consignments covered by 14 shipping bills have been received and admitted at Para 15 of the impugned order and Para 14 of the show cause notice, which are reproduced below "Para 15. The remittance received and bank transactions made by M/s. Al Hadi Impex has been verified. Initially remittance of US$ 5,96,728 was received in the bank account of the export firm from M/s. UMM Dorman Trading Est., Dubai towards the exports pertaining to the 10 S/Bills out of the 14 S/Bills in question till 8-9-2000 as per Union Bank of India's (the banker of the exporter) letter dated 7-9-2000 to the department. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the bank account of the export firm from M/s. UMM Dorman Trading Est., Dubai towards the exports pertaining to the 10 S/Bills out of the 14 S/Bills in question till 8-9-2000 as per Union Bank of India's (the banker of the exporter) letter dated 7-9-2000 to the department. The bankers subsequently informed the department vide their letter dated 2-1-2000 that the balance remittance of US$ 2,55,982 had also been received in the account of M/s. Al Hadi Impex. The Union Bank of India (Foreign Exchange Branch) Operate House, Mumbai vide their letter No. TRB/INWR/2002 dated 19-3-2002 had finally informed the department that the remittance from Dubai based consignee (M/s. UMM Dorman Trading Est.) was received by their branch in favour of M/s. Al Hadi Impex and they had is sued eight FIRC Nos. 102316/27-9-99, 102315/27-9-99, 102427/8-10-99, 102667/13-11-99, 102636/5-11-99, 102575/29-10-99, 102841 /2-12-99, 114411/11-9-2000 for remittance amount of US$ 63995, 63995, 63995, 89595, 127995, 63995, 127995, 255982 (total US$ 8,87,547). It is now clear that the account of the export firm M/s. Al Hadi Impex in the Union Bank of India has received the remittance of all the 14 S/Bs. It may be seen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yield any results, as the Customs authorities at Fujairah had expressed their inability to locate these documents. As mentioned in our earlier letter M/s. Umm Dorman Trading Est., registered with Dubai Chamber of Commerce and Industry, could not be contracted/located. As evidenced from the Certificate issued by the Airport authority, Fujairah and Delivery Order issued by them the consignments had indeed arrived at Fujairah and had been cleared. Other than this no information could be gathered. This is for your information and further necessary action at your end please. Yours faithfully, Sd/ (M. Ponnuswamy) Consul (Economic) Copy to Shri Balesh Kumar, Joint Director (CI), DRI, New Delhi with reference to our endorsement letter of even number dated 11-2-2002. This is with reference to his Unit's letter F.No. 50C/143/2001 CI dt. 21-1-2002. (M. Ponnuswamy)" Consul (Economic) 32. The CBEC had issued Circular Nos. 15/97 dated 3-6-97 and 69/97 dt. 8-7-97 which requires a declaration to be filed regarding PMV and the assessing officer as well as the examining officer are required to verify the declared value as well as the capital PMV at the time of examination of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise Act, 1944 (and correspondingly Section 151A of Customs Act, 1962), binding on authorities in the Department - Rule 233 of Central Excise Rules, 1944. (b) Kobian ECS v. CC, Mumbai - 2003 (157) E.L.T. 662(T) Mumbai (a) EXLM-DEPB credit - Eligibility for - Jurisdiction of Customs authorities - Customs authorities not competent to sit over the decision of DGFT authorities regarding grant of DEPB credit. In case any irregularity had come to their notice, they have only o report the matter to DGFT authorities. (b) Confiscation and penalty - Prohibited goods - Mis-declaration - DEPB not covered by word 'license' under Foreign Trader (Development and Regulation) Act, 1992 and claim for DEPB ex port not declaration for import, hence, alleged mis-declaration not covered under Rule 14(2) for Foreign Trade (Regulation) Rules, 1993 - Foreign Trade (Regulation) Rules, 1993 being is sued under Section 19 ibid, not an order under Section 3 ibid - Hence, impugned goods not prohibited goods liable to confiscation - Penalty not sustainable - Sections 113 114 of Customs Act, 1962. (c) M.K. Fisheries v. CC, Cochin - 2002 (150) E.L.T. 998 (Tri.) = 1999 (35) RLT 280 CEGAT Jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein half-hearted conclusions arrived at regarding fictitious export, overvaluation, bogus buyers, etc., along with a finding that overvaluation not proved - HELD: It casts doubt on capacity of Customs department to deal with matters competently and responsible - Rule 41 of CESTAT (Procedure) Rules, 33. During the course of argument, the ld. JDR appearing for the Revenue has clearly stated that he is not challenging the recovery of the export proceeds. He, however, reiterated the impugned order and submitted that the appellants have wrongly availed the DEPB benefits. 34. After hearing, perusal of the records and the case laws relied on by the ld. Counsel I find that in view of the actual and legal position as mentioned in the preceding paras and applying the ratio of the above decisions, I have no reasons to differ with the order recorded by the ld. Member (Judicial). I, there fore, agree with the ld. Member (Judicial) that the DEPB benefit cannot be denied and all the appeals have to be allowed with consequential benefit. Sd/- (Krishna Kumar) Member (Judicial) (Pronounced on 24-11-2006) FINAL ORDER In view of the majority decision, all the appeals are allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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