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TMI Blog2005 (7) TMI 664X X X X Extracts X X X X X X X X Extracts X X X X ..... n adoption of British gallon, the appellants were not able to fulfil the export obligation for imports at Mumbai and they are liable to pay duty of ₹ 3,95,761/-. Thus, the appellants are liable to pay customs duty of ₹ 4,40,539/- at Jaipur and ₹ 3,95,761/- at Mumbai, in respect of imports made against advance licences no. 2277827 dated 5-11-92 and 1535022 to 1535025 all dated 26-2-93. There was a clear misstatement and suppression of facts in the invoices. They had given false declaration of quantity in para (e) of declaration submitted along with the shipping bills for use of waste oil in manufacture of refined lube oil exported. They have made false declaration in shipping bill before the customs that entire quantity of raw material has been utilized for meeting export obligation under the relevant licences. This attempt on the part of the appellant is with intention to defraud the Revenue by misstating the facts and by suppressing the real facts from the department. Therefore, we are convinced that extended period for demanding duty was applicable. We find that none of the demand is beyond the period of 5 years and this position was conceded by Shri J.M. Sharma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BI Manual was referred to by the Commissioner which would have rendered the goods liable for confiscation for violating of condition (vii) of Notification 204/92. Regarding penalty of ₹ 6,00,000/- imposed by the Commissioner of Customs, Jaipur, we find that it is imposed for the evasion of duty on imported waste oil used in exported goods during the extended period allowed by the licensing authority for meeting the export obligation. These goods have been taken as used in export production. Therefore, the imported waste oil used in refined lube oil exported during the extended period has to be considered as duly used for fulfilment of export obligation. Such exports are also entered in the DEEC Book. Therefore, this penalty can not sustain. In view of above, we modify the order of the Commissioner of Customs, Jaipur and orders of the Commissioner of Customs, Mumbai in the following manner :- (1) Order of the Commissioner of Customs, Jaipur (C/681 and 682/02) :- (i) The demand of ₹ 16,40,941/- is reduced to ₹ 4,40,539/-. (ii) Penalty of ₹ 12,00,000/- imposed on M/s. Vibhuti Exports under Section 114 of the Customs Act, is set aside. (iii) Redemption fine is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cence No. 2277817 dated 5-11-92 the quantity imported was 980 barrels of 44 gallons each and under advance licence No. 2277826 dated 5-11-92, the import was of 960 barrels of 44 gallons each. The obligation for export under these two advance licences was 294 barrels and 288 barrels of 44 gallons each respectively. M/s. Vibhuti Exports filed shipping bills No. 261 and 262 both dated 31-3-93 under these two advance licences at ICD, Jaipur for 300 barrels each of 44 gallons of reclaimed lube oil to Singapore. On the basis of these two shipping bills, M/s. Vibhuti got the endorsement of exports in the respective DEEC books and submitted the same along with the part H duly certified by a Chartered Accountant to the Jt. DGFT, Jaipur who allowed redemption of the LUT (legal undertaking) in respect of these two advance licences. During investigation, it was found that a 20 feet container can contain a maximum of 96 barrels of 44 gallons each as was evident from the bills of entry in respect of the imports of waste oil made by M/s. Vibhuti Exports and it was also accepted by Shri Gulab Chand Jagetia, in his statement dated 14-11-96. Under S/B no. 261 and 262 both dated 31-3-93 of ICD Jaipur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ences mentioned in the preceding paras. They inflated the export quantity of reclaimed lube oil in the shipping bills, invoices etc. by showing export of the entire quantity of their export obligation and get the DEEC books endorsed with fulfilment of export obligation and get the LUT released by Jt. DGFT, Jaipur. However, on apprehension of being caught, they changed their mind and then made a request to DGFT for extension of period of export to fulfil the export obligation. DGFT extended the period to fulfil export obligation up to 31-1-96 in respect of these five advance licences. Initially M/s. Vibhuti Exports filed shipping bill for export of reclaimed lube oil equal to the quantity under export obligation in terms of barrels of 44 gallons and for full FOB value of the export obligation quantity. The FOB value mentioned in the shipping bills, invoices, GRs etc. was for full export obligation in order to claim fulfilment of export obligation under the respective licences. However, after changing their mind, they made more exports in respect of these five licences and claim before their bankers, M/s. Corporation Bank, Jaipur that no foreign exchange was to be realized for subseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicated by the Commissioner of Customs (Adjudication), Mumbai under two different orders of adjudication. Adjudication order No. 296/2002/CAC/CC/MD dated 20-6-2002 (issued from File No. S/10/27/97-Adj.) related to advance licence No. 2277817 and 2277826 both dated 5-11-92 for imports made through Mumbai Port. Commissioner confirmed duty demand of ₹ 18,22,318/- along with interest on the delayed payment. He ordered adjustment of ₹ 13,22,380/- already deposited by M/s. Vibhuti Exports against duty confirmed. He also imposed penalty of ₹ 18,22,318/- on M/s. Vibhuti Exports under Section 114A of the Customs Act, penalty of ₹ 3,00,000/- on Shri Gulab Chand Jagetia and penalty of ₹ 2,00,000/- on Ms. Anjana Jagetia, under Section 112(a) of the Customs Act. Under Order-in-original No. 315/2002/CAC/CC/MD (issued from file No. S/10/13/2001-Adj.) dated 28-6-2002, the duty short paid on imports relating to five advance licences no. 2277827 dated 5-11-92, 1535022 to 1535025 dated 26-2-93 was adjudicated for the imports made from Mumbai Port for which conditions of notification 204/92-Cus. dated 19-5-92 read with Export Import Policy was violated by non-realization ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imports of the waste oil on the following grounds which are discussed below :- (i) The findings of the Commissioner of Customs, Jaipur that in the container of 20 feet 96 number of barrels of 44 gallons can be accommodated and, therefore, the appellants had wrongly declared the export of 300 barrels of 44 gallons in 20 feet container was challenged on the ground that the appellants have exported container of 16 litres. The weight of oil exported is shown in the shipping bills. The quantity arrived at by the Commissioner by taking one gallon equal to 4.546 litres is not correct. While importing and exporting, they have taken into consideration only American gallon which is 3.785 litre per gallon. Therefore, duties worked out based on British gallon, which is equal to 4.546 litres are not correct. Reliance was placed on the letter dated 4-10-95 of the Sales Manager of M/s. Globe Petroleum, INC, Ohio where it was certified that with reference to their (Appellant) letter dated 4-12-1992 and 9-12-1992, they have arranged waste oil supplies to M/s. Vibhuti Exports through suppliers in Singapore, Hong Kong and Dubai. All the waste oil was supplied in U.S. gallons. In respect of export let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and realized the entire value of the goods for export obligation required to be fulfilled by them. However, the quantities exported were much less and to get their export obligation fulfilled, they sought extension of time from DGFT for exporting the goods and DGFT had extended the time to fulfil the export obligations up to 31-1-1996 in respect of these five advance licences. The letters of extension are placed at page 57 Annexures S.1, S.2, S.3, S.4 and S.5 of Jaipur paper book. Even though initially they have shown full value of the goods required to be exported by them in their first shipping bill but in terms of quantity, they have exported the balance quantity during this extended period and fulfilled; their export obligation. Therefore, there has been no short fall in their export obligation and they have not violated any condition of the Notification No. 204/92-Cus. dated 25-9-92, as alleged in the show cause notice. (iii) The department has charged that G.R. forms for exports made by them during the extended period were not submitted to their banker namely Corporation Bank, Jaipur for realization of the foreign exchange as shown in the G.R. forms submitted to the custom a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment to sit in review on the action taken by the DGFT through show cause notice issued under the Customs Act. (viii) According to container dispatch sheet (placed at page 80 of Jaipur file) 56 barrels were received empty. Therefore, duty on 56 barrels of empty containers cannot be demanded for waste oil. Shri Sharma, however, could not correlate these 56 barrels with advance licences under which this consignment was short received. 7. Shri Vikas Kumar and Shri O.P. Arora, learned SDRs appeared for the Revenue. It was pleaded that:- (i) Revenue is not contesting that DGFT cannot give extension for fulfilment of the export obligation. The demand in the show cause notices for the goods exported during the extended period is on the ground that the refined lube oil which was exported during the period of extension under each of the five advance licences in dispute, value of export was not realized. On initial exports before extension was granted although full value for total export obligation was realized but the quantity exported was much less than the export obligation fixed for them in terms of the quantity. Subsequent exports made during the extended period cannot be taken for fulf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the findings of the adjudicating authorities on such charge. (v) The demands are not time-barred under Section 28 of the Customs Act, as show cause notices were issued within the period of five years from the corresponding imports. The appellants had given a declaration before the Assistant Commissioner of Customs at the time of imports that they will export the goods as per export obligation and bound themselves to pay on demand an amount equal to the duty leviable but for exemption on the imported material in respect of which conditions specified in Notification No. 204/92 are not being complied with. The appellants have also given legal undertaking and the bond before the licensing authority for discharging of the export obligation. Therefore, for continuing imports and exports under the advance licences in terms of the bond, time limit will not be counted from the date of imports but it will be from the date of show cause notice. He relied on the Larger Bench decision in the case of Lady Amphthil Nurses Instns. v. CC, Chennai, reported in 2002 (150) E.L.T. 776 (paras 56 57). He also pleaded that there had been suppression of facts on the part of the appellants and in the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods and certifying the quantity passed for shipment on the duplicate copy, Customs will return it to the exporter for submission to the authorized dealer for negotiation or collection of export bills. In the GR form value shown by the appellant for the first export was accepted by the customs and this value was also realized. For the subsequent exports, although the value was accepted by the customs but the appellant had not submitted GR form to their banker for realization of the export proceeds. The claim of the appellant that they had realized the entire amount in advance is also not correct as para 6C.6 gives procedure for advance remittance and this procedure as given in the RBI Manual was not followed by the appellants. Reference was made to letter dated 20th October, 1997 written by the Corporation Bank, Jaipur to the Assistant Director, Directorate of Revenue Intelligence, Jaipur Regional Unit, wherein they have mentioned :- To comply with the DGFT requirements, the exporter made further shipments to fulfil his export obligation as directed by the DGFT authorities. Accordingly, the value of the initial shipment was reduced by the exporter. The DGFT found that his initial s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s case there was misrepresentation and misdeclaration in showing the wrong information in shipping bill, packing list and invoices. They were detected subsequently. Therefore, show cause notices were correctly issued. (ix) Since appellant could not correlate any short shipment of 56 barrels with any licence and total quantities of inputs and exports have been taken for demanding duty on actual basis and they are not pressing this issue, no relief is called for on this account. 8. We have considered the submissions made by both the sides and have heard them at length. 9. We find that the appellant M/s. Vibhuti Exports were issued seven advance licences under DEEC Scheme for import of waste oil and to export reclaimed lubricating oil equal to 30% of imported waste oil in terms of quantity. The imports were made under Notification No. 204/92-Cus. dated 19-5-92. At the time of imports, the goods were allowed to be cleared in terms of exemption Notification No. 204/92 by customs without payment of customs duty. All the goods imported were entered in DEEC book. The appellants were allowed to import waste oil duty free with quantity of import authorized and export obligation fixed against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in compliance with the said condition. We agree with the appellants that once the DGFT has given extension for meeting the export obligation, the quantities exported during the extended period have to be taken into consideration for meeting the export obligation. 12. The appellants have claimed that they have fulfilled the export obligation in respect of licences nos. 1535022 to 1535025 all dated 26-2-93 and licence no. 2277827 dated 5-11-92 as they had imported the waste oil in American gallon and exported the refined lube oil in American gallon. We are unable to accept this contention of the appellants. We find that import invoice shows that waste oil in one barrel of 44 gallon was weighing 208 Kgs. This relates to barrel having capacity of 44 gallon of British unit and not American unit. The Commissioner of Customs, Jaipur in his order, has discussed this issue in details in Paras 48 to 50 and he has examined the issue of unit to be taken and based on import documents finally came to the conclusion that import had taken place in terms of British gallon which is equal to 4.546 and not American gallon. His findings are reproduced below :- 48. I have carefully gone through the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of quantity of Waste Oil imported in barrels of 44 gallons each, or the American Gallons were adopted for the same. I find the net weight as well gross weight of the consignment of Waste Oil imported by noticee No. 1, has been given in Bill of Entry No. 000037 dated 17-12-93. I consider the above Bill of Entry No. 000037 dated 17-12-93 as basis for the calculations. To show the quantity of Waste Oil imported in the containers, for comparing their contents in both the situations i.e., in the case when British Gallon is adopted as unit of measurement or in the case when American Gallon is adopted as unit of measurement, the calculations are as under : Sl. No. Particulars If British Gallon is adopted as unit of measurement. (1 Gallon = 4.546 ltr.) If American Gallon is adopted as unit of measurement. (1 Gallon = 3.785 ltr.) (a) (b) (c) (d) 1(i) Quantity of Waste Oil in 1 Barrel of 44 Gallons 200.024 Ltr. (44 x 4.546) 166.54 Ltr. (44 x 3.785) 1(ii) Tare weight of 1 Barrel of 44 Gallons 15 Kg. 15 Kg. 1(iii) Net weight of Waste Oil in 1 Barrel of 44 Gallons 185 Kg. 185 Kg. 1(iv) Specific gravity of Waste Oil [Col. 1(ii)/Col. 1(i)] i.e., weight of Waste Oil (in Kg.) per litre contents. 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30143.74 Ltr. (ii) Net weight of above quantity of waste oil of specific gravity 0.925 33489.01 Kg. (i.e., 33.49 MT) 27882.95 Kg. (i.e., 27.88 MT) (iii) Tare weight of 181 barrels (of 44 gallons each) @ 15 Kg. Per barrel 2715 Kg. (i.e., 2.71 MT) 2715 Kg. (i.e., 2.71 MT) (iv) Gross weight of Waste Oil in 85 Barrels of 44 gallons each [Col. (ii) + (iii) above] 36.20 MT 30.59 MT (v) Weight of Waste Oil in 181 Barrels of 44 gallons each, declared in the B/E No. 000006 dated 17-1-1994. 36.20 MT 36.20 MT (vi) Difference between the declared weight as per Col. (v) and gross weight calculated as per Col. (iv) above Nil 5.61 MT 3(i) Quantity of Waste Oil in 640 Barrels of 44 gallons each (B/E No. 000035 dated 20-4-1994) 128015.36 Ltr. 106585.60 Ltr. (ii) Net weight of above quantity of waste oil of specific gravity 0.925 118414.20 Kg (i.e., 118.41 MT) 98591.68 Kg. (i.e., 98.59 MT) (iii) Tare weight of 640 barrels (of 44 gallons each) @ 15 Kg per barrel 9600 Kg (i.e., 9.60 MT) 9600 Kg. (i.e., 9.60 MT) (iv) Gross weight of Waste Oil in 640 Barrels of 44 gallons each [Col. (ii) + (iii) above] 128.01 MT 108.19 MT (v) Weight of Waste Oil in 640 Barrels of 44 gallons each, declared in the B/E No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d during the extended period are to be taken into account for counting fulfilment of export obligation as extension was given by the competent authority. Accordingly the lubricating oil exported during the extended period for each licence to meet the export obligation has to be counted for fulfilling export obligation. After taking into account these exports, we find that still the appellants were not able to fulfil the export obligation for each of the advance licences. The figures of short fall worked out in annexure T3 to T7 to show cause notice were accepted by the appellants during hearing of appeals. Therefore, Shri J.M. Sharma counsel for the appellants stated that they are liable to pay duty of ₹ 4,40,539/- for import of the waste oil at Jaipur for which the export obligation was not fulfilled on adopting unit of British gallon. He also accepted that on adoption of British gallon, the appellants were not able to fulfil the export obligation for imports at Mumbai and they are liable to pay duty of ₹ 3,95,761/-. Thus, the appellants are liable to pay customs duty of ₹ 4,40,539/- at Jaipur and ₹ 3,95,761/- at Mumbai, in respect of imports made against a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, we are convinced that extended period for demanding duty was applicable. We find that none of the demand is beyond the period of 5 years and this position was conceded by Shri J.M. Sharma, the learned counsel for appellants. 15. Now coming to the liability of confiscation of the imported waste oil, we find that the appellants have not disputed that they have not fulfilled the export obligation in case of licences no. 2277817 and 2277826 both dated 5-11-92 and they have not disputed the duty demand on this since waste oil which was imported for export production under these two licences was not used for production of refined lube oil for export to the extent of short fall in exports. Therefore, the said waste oil not used in production of exported goods is liable for confiscation under Section 111(o) of the Customs Act for violating condition no. (v) of Notification No. 204/92. However, the Commissioner of Customs, Mumbai has not ordered confiscation on the ground that the goods were not available for confiscation. In respect of 5 other disputed licences, part of the waste oil which was not used in meeting export obligation, was imported from Mumbai Port and part was imported th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side as this penalty is imposed on the duty demand on the goods exported during extended period allowed by the licencing authority. (iii) In order No. 296/2002 the Commissioner of Customs, Mumbai imposed penalty of ₹ 18,22,318/- on M/s. Vibhuti Exports under Section 114(A) of the Customs Act. This Section came into effect w.e.f. 23-9-96. It was argued before us that since all the imports were prior to the introduction of Section 114A, therefore, penalty imposed under Section 114A is not correct. We find that the Commissioner has given clear cut finding in Para 44 that the conditions of the licences as per EXIM Policy and the Notification No. 204/92-Customs, dated 19-5-92 have been violated and hence, M/s. Vibhuti Exports rendered the imported goods liable for confiscation and are liable for penalty. Although the Commissioner has wrongly mentioned Section as 114A but for this contravention, the penalty is imposable under Section 112(a). It was also pleaded by the learned counsel Shri Sharma that since the appellants have deposited a sum of ₹ 13,22,380/- before the issue of show cause notice, therefore, this fact should be taken into consideration while imposing the penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted waste oil used in exported goods during the extended period allowed by the licensing authority for meeting the export obligation. These goods have been taken as used in export production. Therefore, the imported waste oil used in refined lube oil exported during the extended period has to be considered as duly used for fulfilment of export obligation. Such exports are also entered in the DEEC Book. Therefore, this penalty can not sustain. 20. Commissioner of Customs, Mumbai has imposed penalty of ₹ 2,00,000/- under Section 112(a) on Ms. Anjana Jagetia under his Order-in-Original No. 296/2002. She had full knowledge about the entire misrepresentation and misdeclaration made in regard to Import/Export under the impugned advance licences. She signed many documents relating to applications for advance licences and import/export under the impugned advance licences, bank paper etc. She allowed Gulab Chand Jagetia to misrepresent the facts before DGFT and custom authorities. She is the person who has done or omitted to do acts and/or omissions which have rendered the imported goods under the impugned advance licences liable for confiscation under Section 111(o) of the Act. The l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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