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TMI Blog2017 (9) TMI 1787X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered view that under the facts and circumstances of the case, import under Bill of Entry 4572044 dated 7-9-2011 is not hit by the bar envisaged under Section 123 of the Customs Act, 1962. Pendency of another SCN demanding Anti-Dumping Duty - Held that:- The Bench has considered this issue and is of the firm view that the SCN demanding Anti-Dumping Duty is not a proceeding pending before an adjudicating authority against which the applicant has filed settlement application and the applicant has approached the Settlement Commission in settling the issue arising out of SCN regarding the wrong availment of benefits of Notification No. 21/2002-Cus., dated 1-3-2002. Hence the Bench holds that the pendency of another SCN demanding Anti-Dumping Duty is not an impediment in settling this case. The Bench is of the opinion that the applicant has made full and complete disclosure of the duty liability, co-operated with the investigation and discharged their duty liability along with interest immediately on commencement of investigation i.e., over one year before issuance of SCN dated 31-3-2015. Accordingly, the Bench considers it as a fit case to settle the differential duty liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harasan Director - “the Co-applicant I”, Shri N. Sridhar, Managing Director - “the Co-applicant II”, Shri S. Ramachandran, Director - “the Co-applicant III” under the provisions invoked in the show cause notice and grants immunity to the applicant in excess of the above amount. The penalty should be paid within 30 days from the date of receipt of this Order and compliance reported to the jurisdictional Commissioner. The Bench is inclined to consider grant of immunity from prosecution to the applicant and co-applicants. - Settlement Application Nos. C/62-65/2015-SC in File Nos. Cus/62-65/2015-SC - Final Order Nos. 41-44/2017-CUS - Dated:- 29-9-2017 - Shri C. Rajendiran, Vice-Chairman and R.D. Negi, Member Shri S. Ramachandran, Consultant, for the Appellant. Shri P. Kannabiran, SIO, DRI, Coimbatore, for the Respondent. ORDER M/s. Danavarshini Exports, Pvt. Ltd. (hereinafter referred to as the applicant ) located at No. 3, Kula Thottam, Kangeyam Road, Tirupur, 641 604 (i) Shri K. Tamizharasan Director (hereinafter referred to as the Co-applicant I ), (ii) Shri N. Sridhar, Managing Director (hereinafter referred to as the Co-applicant II ) and (iii) Shri S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is a notified item covered under Section 123 of the Customs Act, 1962. 1.4 Officers of DRI, Coimbatore Regional Unit (CRU-DRI) conducted investigations which revealed that the applicant had imported 67 consignments of garment accessories during the year 2011-12 and had cleared the same under nil rates of duty by availing the benefit of the Notification No. 21/2002-Cus., dated 1-3-2002 (Sl. No. 167). Out of the 67 consignments only 53 consignments were actually imported by the applicant and used in their export production. The remaining 14 consignments were imported by third parties in collusion with Shri Jatin Seth and Shri S. Balaji (6 consignments); Shri Gupta, and Shri Subramanian (8 consignments). The garment accessories imported vide the said 14 consignments were never brought to the factory premises of the applicant and were never used in export production as mandated under Condition No. 21 of the said notification. Instead, the imported garment accessories were sold in the domestic market. 1.5 As regards the 6 consignments imported by Shri Jatin Seth in collusion with Shri Balaji of M/s. Jay Bee Logistics and Shri Kannan of the applicant company, the same is cove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d) the impugned goods imported and cleared vide the said 8 Bills of Entry as detailed in Annexure A of the SCN, with a total assessable value of ₹ 86,38,679/- should not be held liable for confiscation under Section 111(d) and 111(o) of the Customs Act, 1962; (e) penalty should not be imposed on them under Section 112/Section 114A and also under Section 114AA (separately) of the Customs Act, 1962; and (f) the amount of ₹ 29,54,681/- already paid by them should not be appropriated against the liabilities arising out of the show cause notice. 1.8 Shri. S. Kannan, incharge (Imports), M/s. Danavarshini Exports Pvt. Ltd., was called upon to show cause to the Additional/Joint Commissioner of Customs Commissionerate-II, Customs House, Chennai as to why penalty should not be imposed on him under Section 112(a) and also under Section 114AA (separately) of the Customs Act, 1962. Averment of the applicant and co-applicants : 2.1 The applicants in their Settlement Applications have submitted that :- they are engaged in the manufacture and export of knitted readymade garments and importing garment accessories at nil rate of duty by availing the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the provisions of Section 123 of the C.A., 1962. They were permitted to be imported without payment of any Customs Duties under Notification No. 21/2002-Cus., dated 1-3-2002 (Sl. No l67) based on the import certificates issued by the AEPC subject to end use condition No. 21 of the said notification. As per IC issued by AEPC they had imported zip fasteners during the impugned period and had used them as accessories in the production of ready-made garments which were duly exported. The imports are not part of SCN since they had imported them and complied with the requirements of law as regards such imports. The provisions of Section 123(1) of CA, 1962 are applicable only to goods which are seized under the CA, 1962. The zip fasteners covered under the Bill of entry 4572044, dated 7-9-2011 were imported by misuse of ICs issued in their Company s name by their staff without their knowledge. 3.3 Subsequently, a letter F. No. S.A. Cus./62-65/2015 S.C., dated 13-10-2015 was issued to both the applicant and the Revenue and were asked to comment on the maintainability of the applications in terms of third proviso to sub-section (1) of Section 127B of the CA, 1962 bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of gold brought by a passenger from Dubai to Delhi in concealment. The Hon ble High Court held that as the gold was a specified item under Section 123, the Settlement Commission cannot entertain any petition under Section 127B filed by the passenger and the order passed by the Settlement Commission was also without jurisdiction. While communicating the above order, C.B.E.C. vide letter in F.No. 275/46/2015-CX 8A Legal Cell dated 1-10-2015 clarified that the Settlement Commission has no jurisdiction to decide cases in relation to smuggling of goods specified under Section 123 of the Customs Act, 1962 and also instructed the field formations to challenge any such petitions filed before the Settlement Commission in the High Court by way of writ. The allegation against M/s. Danavarshini Exports Pvt. Ltd., Tirupur is that they misused the certificates issued by the Apparel Export Promotion Council, AEPC, Tirupur and wrongly availed the benefit of Notification No. 21/2002, dated 1-3-2002, that is, they imported garment accessories (including zip fasteners) without payment of duty on the strength of import used by AEPC, Tirupur and instead of consuming the imported goods in their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd it is also not a case of smuggling of goods to which Sec. 123 of the Customs Act applies. On the contrary, it was merely a case of non-fulfilment of the end use requirements, as stipulated under Notification No. 21/2002-Cus., dated 1-3-2002. He also distinguished the case laws referred to in the Notice issued by the Commission on the maintainability of the application, to claim that the application is not hit by third proviso to Sec.127B(1) of the Customs Act, 1962. 5.4 As regards merits of the case, he stated that his client is not disputing the allegations in the show cause notice that the goods imported under eight Bills of Entry at Nil rates of duty by third parties and in violation of the conditions of Notification No. 21/2002-Cus., dated 1-3-2002. According to him, his client, having admitted the offence, had also paid the differential duty along with interest, even before the issue of show cause notice. 5.5 As regards the co-applicants, the Consultant stated that they were not party to the offence and that one of the staff of the applicant Company took advantage of the surplus entitlement certificates available to the applicant under AEPC, and supplied the same to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In case the Honble Commission deems the case to be fit for admission in spite of the averments contained in paras above, it is requested to impose appropriate fine and penalty on the importer and its Directors for deliberate and gross failure on their part to monitor their import transactions. It is evident that the entire fraud committed has been brought out clearly in Para 14 of the SCN. The company is equally responsible for the actions of its employees. It is a matter of fact that 6 more consignments were also imported in a similar manner of contravention and therefore, the offence on the part of applicant is graver than it appears. It is also to be noted, that the applicants have preferred this Settlement Application only with regard to the SCN dated 31-3-2015 issued by ADG, DRI, Zonal Unit, Chennai. In the said SCN, it is brought out in Para 16 that another notice bearing No. S Misc 242/2012/Gr 3 4, dated 5-7-2012 was issued to the applicant demanding that Anti-Dumping Duty in respect of two Bills of Entry, viz., 5220272/11-11-2011 and 5572045/26-11-2011. When a separate SCN seems to have been issued by the Customs Department, the Settlement would not be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n vide para 27 of judgment, the Hon ble Court agreed with the decision of the Settlement Commission in that case, that issue in show cause notice cannot be split to seek settlement of certain issue and remand of the case in respect of the other issues. 7.3 In view of the above discussions, the Bench concluded that the applications filed by the applicant and co-applicants are not maintainable and by virtue of powers vested in it in terms of Section 127-I(1) of the Customs Act, 1962, sent the case back to the adjudicating authority vide Final Order No. 11/2016, dated 29-2-2016. Writ petition filed by the applicant : 8.1 The applicant aggrieved by the Final Order 11/2016, dated 29-2-2016 filed a Writ Petition No. 29489 of 2016 W.M.P. No. 25525 of 2016, dated 15-11-2016 [2017 (346) E.L.T. 172 (Mad.)] in the Hon ble High Court of Madras. The Hon ble High Court of Madras vide its Order dated 15-11-2016 ordered as follows : 7. As submitted by the DRI, the petitioner had admitted the entire allegation much prior to the issuance of the show cause notice and in fact, that was precisely the stand taken before the Settlement Commission. Thus, for the above reason and taking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tirely on a different ground; that they also reiterate their submissions with regard to maintainability of application in respect of one Bill of Entry under which the Zip Fasteners had also been imported. 9.5 In view of the submissions made in the application filed, and additional written submissions and oral submissions made today, he prayed for complete immunity from penalty and prosecution. 9.6 The Learned Departmental Representative reiterated the submissions made in the DRI report F. No. VIII/26/12/2013 DRI, CBE, dated 20-11-2015, and stated that the misuse of the certificate issued by AEPC could not have taken place without the knowledge of the management and hence, they are liable to penalty as proposed in the SCN. He also confirmed the payment of entire duty involved and the interest before the issue of show cause notice and also stated that ADD issue is covered by another notice issued by Customs House as mentioned in para 16 of the impugned SCN dated 31-3-2015. With regard to prosecution, he left it to the discretion of the Bench. Findings of the Bench : 10.1 The Bench has carefully gone through the records of the case, and taken note of the submissions ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned parties and finds force in the arguments of the applicant as well as DRI that the impugned goods were neither smuggled nor seized to make it illegal import under Section 123 of the Customs Act, 1962. It was imported against the import certificate issued by the AEPC. The only allegation in the impugned SCN is that the applicant has not fulfilled the conditions of Notification No. 21/2002-Cus., dated 1-3-2002, thereby making them ineligible for Nil rate of duty on the accessories imported. As the goods were neither seized by the DRI nor there is any allegation against the applicant that they smuggled clandestinely these goods, the Bench is of the considered view that under the facts and circumstances of the case, import under Bill of Entry 4572044 dated 7-9-2011 is not hit by the bar envisaged under Section 123 of the Customs Act, 1962. 10.6 The jurisdictional Commissioner had objected in settling this case as another SCN demanding Anti-Dumping Duty was issued to the applicant by Customs House, Chennai, in which two out of Eight Bills of Entry of this impugned SCN were also involved. The Bench has considered this issue and is of the firm view that the SCN demanding An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfiscation under Section 111(d) and 111(o) of the Customs Act, 1962 for not fulfilling the conditions prescribed under Notification No. 21/2002, dated 1-3-2002 and accordingly the applicant is liable for penalty under the provisions of the Customs Act invoked in the SCN. However, keeping in view the full and true disclosure of additional duty liability, payment of the entire differential Customs duty along with applicable interest before issue of SCN and the co-operation extended during the proceedings, the Bench considers this as a fit case for extending partial immunity from penalty to the applicant. On the Co-Applicants (i)Shri K. Tamizharasan Director ( the Co-applicant I ), (ii) Shri N. Sridhar, Managing Director ( the Co-applicant II ) and (iii) Shri S. Ramachandran, Director ( the Co-applicant III ), of the applicant company : 10.10 Investigations conducted revealed that Shri P.R. Subramanian and Shri Kannan an employee of the applicant firm, used the IEC and ICs of the applicant firm for their commission benefits, fabricated the import documents as if the imports were by the applicant firm. It is inconceivable to believe that the Directors failed to monitor their imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd adjusted towards the duty liability and no further liability subsists in this regard. ii . INTEREST : The interest in this case is settled at ₹ 6,35,309/- (Rupees six lakhs thirty-five thousand three hundred and nine only). As the applicant has already paid the said amount as confirmed by the Revenue, the same is appropriated and adjusted towards the interest liability and no further liability subsists in this regard. iii . FINE : The show cause notice proposes confiscation of the imported goods cleared vide the said 8 Bills of Entry with a total assessable value of ₹ 86,38,679/- under Section 111(d) and 111(o) of the Customs Act, 1962. However, the question of ordering confiscation and imposition of redemption fine do not arise in the instant case as there was no seizure of the impugned goods at any point of time. iv. PENALTY : Taking into account the facts and circumstances of the case, the Bench imposes a penalty of ₹ 40,000/- (Rupees Forty thousand only) on the applicant - M/s. Dhanavarshini Exports, Tirupur - under the provisions invoked in the show cause notice and grants immunity to the applicant in excess of the above amo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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