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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 ..... hri 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 suspicion, further investigation were conducted. As a result of which statement of various persons were recorded. It was found that the exporter had obtained export/import code in the month of August 1999 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 informed that the Dubai based importer firm M/s. UMM Doreman Trading Estd., though registered with the Dubai Chamber of Commerce, do not operate at present. From the enquiries conducted by them it is revealed that the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eight 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 ld. Advocate are that subsequent investigations conducted by the revenue which did not specifically reveal any mis- declaration on the part of the appellant were wrong and based upon the same it cannot be said that the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the ball pen it has been contended that the same was not declared by them correctly so as to save some freight. In any case DEPB benefits are available with reference to the value of the goods and not to the weight. There was also no clause in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 with the Dy. Commr., to whom the samples were shown. Question by Shri N.B. Sonavane Q.6 In all the 14 shipping bills where you supervised the examination, did you find that the declared no. of packages were correctly received in the export shed? A.6 Yes. 16. As is clear from the above, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der 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 do not find any justification for holding the goods liable to confiscation and imposing penalty on M/s. Al Hadi Impex. Accordingly, we set aside the penalty upon the said appellant. Inasmuch as the appeal of Al Hadi Impex has been allowed. There is no justification for imposition of penalty on other two appellants. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of 21% on the claimed export value of Rs. 3.69 crores. Moreover, it is unreasonable to expect that the airlines would be so lax to routinely carry more weight than the declared quantity, thereby endangering the very safety of the aircraft. 23. It is claimed that 53,60,000 Ball Point Pens were exported. The impugned order clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alties, both the Members have unanimously agreed and set aside the penalties imposed on the appellants. At the outset I would like to point out that as regards the DEPB benefit, the same has already been granted to the appellant after due verification of exports by the Customs Department i.e. appraising and audit and also by DGFT but the same has been denied by the impugned order and that is the subject-matter of difference of opinion. 14 Shipping bills all dated 1-9-1999 were filed at Air Cargo Complex, Mumbai for 134 cartons containing 53,60,000 ball point pens of a total FOB value of Rs. 3,69,08,190/-. All the 14 shipping bills were duly examined by the assessing staff as per the Examination Report dated 7-9-99 and the same is reproduced as under "SA/EO Inspect lot, examined 10% After Sel. Ch. Despn. & wt. Follow SO 7300/97 r/w 19/99 vfy DV fair" and thereafter the examination report which reads; "ACC/127- 7-9-1999 Lt. inspected Open and examined 10%, 332,36 (different S/B, different Ctn. No.) Chd. Desp/qty. Foll, s/o 7,300/97 Rd 19/99 Verfy. D.V. Fair Gr seen Examination Order & Report SA/EO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; as seen Prafulla H APPRAISER Reed 10Cts Sd/- Sd/- Sd/- SA 7/9 7/9 & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 0216416 dt. 1-9-99, 021783 dt. 1-9-99, 021784 dt. 1-9-99, 021785 dt. 1-9-99, 021786 dt. 1-9-99, 021787, dt. 1-9-99, 021788 dt. 1-9-99021789 dt. 1-9-99, 021790 dt. 1-9-99, 021791 dt. 1-9-99. 021792 dt. 1-9-99, 021793 dt. 1-9-99, 021794 dt. 1-9-99 and, 021795 dt. 1-9-99. 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 with the Dy. Commr., to whom the samples were shown. Question by Shri N.B. Sonavane Q.6 In all the 14 shipping bills where you supervised the examination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignments of tooth-brushes and readymade garments to Dubai in September/October 1999. On verifying the payment part, it has been found that the entire amount of remittance received by the said firm had either been withdrawn as cash or had been transferred to some other accounts in the same bank or different amounts of cheques had been issued to other parties having accounts in different banks. Amounts, so transferred, have also been withdrawn as cash. The addresses of such parties/firms are not traceable. However, it is noteworthy that none of the three so called seller of ball-pens has received any payment except M/s. Ronal Enterprise, who had received Rs. 19,50,000/- by two cheques. Out of this two, one cheque amounting to Rs. 13,00,000/- was a bearer one and was encashed by a firm M/s. Unique Knit Wear, Mumbai. From the above, it is seen that the amount of Rs. 13,00,000/- was also not received directly by the so called pen supplying firm namely M/s. Ronak Enterprise, against the purported supply of ball pens to M/s. Al Hadi Impex." "Para 14 - The remittance received and bank transactions made by M/s. Al Hadi Impex has been verified. Initially remittance of US $ 5,96,728 was rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e so called pen supplying firm namely M/s. Ronak Enterprise, against the purported supply of ball pens to M/s. Al Hadi Impex.'" 31. It is significant to point out that the investigating agency as per their letter dt. 8-1-0 1 have already released capital DEPB benefits. Consulate General of India informed the Commissioner of Customs (Preventive) that the consignee registered with Dubai Chamber of Commerce & Industry and as evidenced from the certificate issued by the Airport Authority the consignments had indeed arrived at Fujairah and has been cleared. The letter of the Consulate General is reproduced as under "CE/V/2/2002 &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s issued within 30 days from the date of export, the PMV declared shall be deemed to have been accepted." The Board circular is binding on the Department which requires verification at the time of examination of the goods and not after the goods have been gone and after 30 days the export value is deemed to have been accepted. It is significant to point out that in this case the notice was issued after three years of final clearance of the goods i.e. on 28-6-2002 whereas the goods were exported on 1-9-1999. The ld. Counsel appearing for the appellants have relied on the following case laws: (a) J.G. Exports v. C.C., Chennai - 1999 (105) E.L.T. 258 (Mad.) Export promotion - Duty Entitlement Pass Book Scheme (DEPB Scheme) under Chapter 7 of the EXIM Policy 1997-2002 - Declared FOB value of software (CD-ROMS) accepted and shipping bills passed by Customs without demur - No SCN for alleged overvaluation issued to exporter within 30 days of export - Customs contention in the counter affidavit that the export consignment was grossly overruled and that they were thinking of inquiring into it, not acceptable - Declared value deemed to have been accepted by the authorities after expiry o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the authority concerned not only starts search, seizure, enquiry, investigation but also with hold clearances of DEPB licenses on the ground of possibilities, element of highhanded ness or colourable exercise of power cannot be ruled out - Section 113 of the Customs Act, 1962. (b) Smuggling - If one has exported a quantity of goods without manufacturing the same but buying from the market cannot be said to be ground to believe that the goods were smuggled - Section 113 of the Customs Act, 1962 (c) Smuggling - Valuation dispute of export goods can be brought to the notice of the DGFF - A civil dispute in respect of money claim cannot be converted to a quasi criminal dispute of smuggling at the rigour of the administration - Section 2(39) of the Customs Act, 1962. (e) Kanhaiya Exports v. CC -2001 (133) E.L.T. 280 (Cal) Valuation (Customs) - Export - Value accepted provisionally in the first instance and finally after PMV inquiry and thereafter DEPB license issued by DGFT - Customs impounding the license at the stage on a mere apprehension of fraud violative of departmental circulars as well as of Article 19(1)(g) read with Article 301 of Constitution of India and further Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; Sd/- (C. Satapathy) (Archana Wadhwa) Member (Technical) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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