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TMI Blog2019 (7) TMI 970X X X X Extracts X X X X X X X X Extracts X X X X ..... those goods which were seized and provisionally released to the appellants could have been held liable for confiscation and confiscated. - Since these goods are not available for seizure or confiscation, the order of Commissioner the goods imported against these Bill of Entries is bad in law. Misdeclaration of value - admissibility of exemption under notification No 94/96-Cus - HELD THAT:- There is no merits in the submissions of the Appellant s in respect of admissibility of exemption under Notification No 94/96-Cus. Also there are no merits in the submissions of the Appellant in respect of the value of the goods, which has been determined on the basis of value of contemporaneous imports of the same goods. Demand made on the basis of facts admitted during the statement - HELD THAT:- The fact about undervaluation of the goods need not be again established as the same has been admitted by the Appellant themselves in their statements recorded under Section 108. However the fact of undervaluation is further corroborated by the value of contemporaneous imports made by the other importers at or about the same time. The appellants have misdeclared the value of the imported goods w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustoms Act, 1962 to US$ 4 per Kg aggregating to ₹ 2,55,08,750/- (Rupees Two Crore Fifty Five Lakhs Eight Thousand Seven Hundred Fifty Only). 5.1.3 I confirm the demand of differential duty amounting to ₹ 27,45,081.90/- (Rupees Twenty Seven Lakhs Forty Five Thousand Eighty One and Paise Ninety Only) under proviso to section 28(1) of the Customs Act, 1962 along with interest at appropriate rates under section 28AB of the Act ibid and order recovery forthwith. I order appropriation of ₹ 21,00,000/- (Rupees Twenty One Lakhs only) deposited voluntarily by SCPL towards duty. 5.1.4 I confiscate the impugned goods having declared value of US$ 2591.40 equivalent to ₹ 1,27,54,375/- (Rupees One Crore Twenty Seven Lakh Fifty Four Thousand Three Hundred Seventy Five only) and ascertained ₹ 2,55,08,750/- (Rupees Two Crore Fifty Five Lakhs Eight Thousand Seven Hundred Fifty Only) including the goods seized and provisionally released, under section 111(d) and 111(m) of the Customs Act, 1962. However under the provisions of section 125 (1) of the ibid Act, I extend an option to redeem the goods on payment of fine ₹ 25,00,000/- (Rupees Twenty Five Lakhs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lent to ₹ 1,27,54,375/- (Rupees One Crore Twenty Seven Lakh Fifty Four Thousand Three Hundred Seventy Five only)as mentioned in Annexure A (covered under B/Es mentioned in Ann A to this SCN) should not be rejected under Rule 12 of the Customs Valuation (Determination of Prices of Imported Goods) Rules, 1988 read with the provisions of Section 14(1) of the Customs Act, 1962. b) The assessable value should not be revised/ reassessed in respect of Bill of Entries Nos mentioned in Ann A under Rule 12, Rule 8 and Rule 10 of the Customs Valuation Rules, 2007 in terms of the value of same goods ascertained as mentioned in Annx B to this Show Cause Notice, to ₹ 12,75,02,717/- c) Differential duty amounting to ₹ 2,46,96,887/- (Rupees Two Crore Forty Six Lakhs Ninety Six Thousand Eight Hundred and Eighty Seven) should not be demanded and recovered under Section 28(1) of the Customs Act, 1962, read with Section 20 of the Customs Act, 1962 and interest be charged under Section 28AB of the Customs Act, 1962. d) The goods (mentioned in Ann A) of declared value of US$ 2,59,140/- equivalent to ₹ 1,27,54,375/- (Rupees One Crore Twenty Seven Lakh Fifty Four Tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pping bills. Out of the above exported goods, MSDL sought to sell 129.57 MT of impugned goods but were not able to do so due to sharp slump in the European Market in view of wide spread recession. b) The entire quantity for which these proceedings have been initiated are in respect of these goods only on re-import. Since this is case of re-import of the goods they are eligible to benefit under Notification No 94/96-Cus (NT). This benefit should have been extended to them, even if the same was not claimed by them at the time of filing of Bill of Entry .[HGI Industries Ltd [2007 (209) ELT 18 (T-Ahd)]. This benefit was not allowed by the Commissioner, for the reason that the re-imports were not made in the same packing contrary to the decision in case of Pansari Gems International [2005 (179) ELT 253 (T- Del)] c) If the benefit of Notification No 94/96-Cus is extended to them then would be entitled to Refund of ₹ 17,99,548.60/- being the excess amount paid by them towards the import duty. {Aegis Chemical Indus Ltd [2006 (196) ELT 441 (T-Mum)]. Further amount of ₹ 21,00,000/- paid by them during investigation also needs to be refunded. d) Commissioner has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned goods in domestic market at rates varying from ₹ 85 to ₹ 158 per Kg (average ₹ 121 per kg). Taking average conversion factor of US$ to Rupee as ₹ 48.6. Thus the costing would come as follow: Import Price = US$ 2 per kg = ₹ 97.2 per kg Custom Duties @ 7.5% = ₹ 7.29 per kg Total = ₹ 104.49 per kg. (without adding any post clearance expenses like transportation, commission, storage, profit etc.) Thus if total returns against entire quantity of import is taken it can be safely be said that the market price of imported goods was in the vicinity of the price which they paid to MSDL. k) Explanation (iii) to Rule 12 of CVR clearly lays down the situations in which the declared transaction value could be doubted or rejected. The order of Commissioner travels beyond the said explanation and hence is bad in law. l) Since the charge of suppression could not be sustained, extended period cannot be invoked, and hence the demand notice issued on 24.12.2010 in respect of the goods imported between 13.08.2009 to 3.10.2009 is barred by limitation. m) The goods covered by the Bill of Entry No 704506 dated 3.10.2009 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalties, question of imposing penalty what so ever, under any provision of Custom Act, 1962 also is frivolous and bad in law. 4.3 Arguing for Appellant 4, his counsel submitted that CHA has no knowledge about misdeclaration or any irregularity being committed by the importer hence penalty imposed by the Commissioner on him is not justified. {Buhariwala Logistics [2015 (236) ELT 170 (T-Del)] Deepak Kumar [2017 (358) ELT 854 (T-Del)]}. 4.4 Arguing for the revenue learned authorized representative submitted that- a) During the course of search some email messages were traced out relevant to the transaction of imported Acetonitrile. In one of the message, overseas supplier stated that- please raise Purchase Order for ICC material @2 USD/Ltr plus reimbursement of following charges Demurrage for ICC Material - GBP 4905 Bulk Operation Expenses - GBP 120/PMT X 120 MT SRM Storage, Testing, handling - GBP 1230 b) In another message Shri Sanjay Parmar, Director informed Shri Raju Verma of MSDL, UK that- we can finalize the price a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, 081 g) Importers have claimed that they had exported 139.2 MT of Acetonitrile to MSDL under cover of seven Shipping Bills detailed in table below: S/B No Date Qty MT Rate $/MT Total FOB Value Rs Warehouse B/E No. Date Qty MT Rate $/MT Assessable Value in Rs Country of Origin 300005128 31.1.09 12.0 20000 11376000 765098/29.1.09 12.0 16000 9540863 Taiwan 300005225 5.2.09 12.8 27000 16727040 769554/2.2.09 12.8 16000 10176921 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iling the bill of entry, charge of suppression is established against them and hence extended period of limitation has been rightly invoked. k) Since appellants have misdeclared the value of the goods imported they become liable for confiscation under Section 111 (d) and (m) of Customs Act, 1962 and have been confiscated by the Commissioner and the option to redeem the goods given to the appellants. l) Since the goods have been held liable for confiscation and also the goods have been found to be misdeclared in terms of value Commissioner was justified in imposing the penalties on the appellants and also the directors who were responsible for day to day operations of the company. m) Since CHA had filed the documents for the importation of the goods mis-declaring the value he too is liable for penalty for abetting the act of misdeclaration of the appellant 1. 5.1 We have considered the impugned order along with the appeal filed and submissions made during the course of arguments. 5.2 Appellants have raised the issue in respect of two bill of entries i.e. B/E No 702642 dated 1.10.2009 and 704506 dated 3.10.2009 the assessments are p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have contended that in the present case in respect of the two consignments under seizure the show cause notice was not issued within period of six months as prescribed by section 110 of the Customs Act, 1962, hence is bad in law. Provisions of section 110 as they existed then are reproduced below: SECTION 110. Seizure of goods, documents and things. (1) If the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods: Provided that where it is not practicable to seize any such goods, the proper officer may serve on the owner of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer. (1A) The Central Government may, having regard to the perishable or hazardous nature of any goods, depreciation in the value of the goods with the passage of time, constraints of storage space for the goods or any other relevant considerations, by notification in the Official Gazette, specify the goods or class of goods which shall, as soon as may be after its seizure under sub-section (1), be disposed of by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proper form with such security and conditions as the adjudicating authority may require. Admittedly and undisputedly in the present case, the order for provisional release of the seized goods have been issued and the goods released provisionally to the appellants within the prescribed time, hence as per the second proviso to sub-section (2) to Section 110, the time limit of six months for issuance of the show cause notice will not be applicable. Hence the arguments advanced by the appellants in this respect to are not tenable and are contrary to the expressed provisions in the section itself and hence need to be rejected. 5.4 Appellants have contended that goods covered by the B/E s other than B/E No 702642 and B/E No 704506 were never seized and there is no question for the release of the same against Bond or Bank Guarantee. Since these goods are not available for seizure or confiscation, the order of Commissioner the goods imported against these Bill of Entries is bad in law and contrary to the decisions rendered in the cases Raja Impex 2008 (229) ELT 185 (P H)], Chinku Exports [1999 (112) ELT 400 (T)] affirmed at 2005 (184) ELT A36 (SC)], Ramkhazaa Elec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants were the owners of the goods at the time of issuing of the show cause notice. The Commissioner of Customs also found that the goods were not available and no undertaking had been obtained by the department at the time of release of goods and therefore, confiscation of the goods, cannot be maintained and no fine in lieu of confiscation can be imposed especially where the goods were neither seized nor cleared on undertaking. While passing the said order, the Commissioner of Customs has relied upon the observations of Hon ble Apex Court in the case of M/s. Weston Components Ltd. v. Commissioner of Customs, New Delhi (supra), Ram Khazana Electronic v. CC (AIR Cargo) Jaipur reported as 2003 (156) E.L.T. 122 (Indel) and Chinku Exports v. CC, Calcutta reported as 1999 (112) E.L.T. 400 (Tri.). Before the Tribunal, the contention of the revenue was that even in cases where the goods are not available, order of confiscation can be passed. However, the Tribunal vide impugned order, relied upon the observation of the Hon ble Apex Court in the case of M/s. Weston Components Ltd. v. Commissioner of Customs, New Delhi (supra) and the judgment of the Tribunal in the case of Ram Khazan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that only those goods which were seized and provisionally released to the appellants could have been held liable for confiscation and confiscated. Since the total value of the goods covered by two Bill of entries as above which were seized is only ₹ 27, 55,688/- (B/E No 702642 (₹ 23,90,488/- and B/E 704506 (₹ 3,65,200/-)] against the total value of goods held liable for confiscation as held by Commissioner of ₹ 1,27,54,366/- (Covered by six bill of entries), the redemption fine even if the same yardstick as adopted by Commissioner is applied would be ₹ 5,40,146/- (Rupees Five Lakhs Forty Thousand One Hundred and Forty Six only). However Commissioner has not given basis for adopting the said yard stick. In our view end of justice will be met if the redemption fine imposed in respect of the goods covered by the said two Bill of entries and held liable for confiscation is reduced to ₹ 1,00,000/- (Rupees One Lakhs only) after taking into account the recession in the international market and sharp decline in the price of acetonitrile during the said period. 5.5 On the issue of misdeclaration of value and admissibility of exemption under notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xported value has to be taken as a transaction value at the time of import, I do say that the goods imported under above said B/Es are same goods exported by us and it is a fact that the transaction value of the export was much more higher than the present declared import value but since it was an import taken place after 7 months and that the said goods has been taken delivery by the supplier and delivered us back in ISO tank instead of sealed intact drums under which we had exported, and as the price in the international market was low during the said period we had offered a uniform price of USD 2 per kg. subject to final sale of the product in India. However I do say that the price declared by us to Customs is not the actual price in the international market, as the normal international price/contemporary import are in the range of 3 USD to 5 USD at the material time. Therefore I say that I had deposed in my earlier statements that the normal price of the said acetonitrile is not as we had declared to customs and therefore we deposited and amount of ₹ 21 lakhs towards the duty liability to be demanded in SCN to show our bonafide. I also say that since contemporary imports ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (T-Chennai)] held as follows: 7. Section 20 of the Customs Act, 1962 is the appropriate provision to deal with such goods. It reads as follows :- Re-importation of goods. - If goods are imported into India after exportation therefrom, such goods shall be liable to duty and be subject to all the conditions and restrictions, if any, to which goods of the like kind and value are liable or subject, on the importation thereof. It is clear from the provisions of Section 20 that when goods are imported into India after exportation such goods are liable to duty to which goods of the like kind and value are liable. Hence, the duty that is recoverable for the impugned goods has to be equal to the duty as would be applicable on goods of like value if imported, and not on the basis of misdeclared and inflated value. 8. It is worthwhile to note in this regard that prior to amendment of Section 20, the Section itself provided that the duty on such re-imported goods would be equal to the drawback/rebate taken at the time of export, or equal to excise duty if the goods were exported without payment of excise duty under bond. Though such provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Customs Act, 1962 and rendering themselves to penalty under section 112 of the Act, ibid. Further I also find that misdeclaration of value and other particulars of the goods in the import documents are in gross violation to the provisions of rule 11 and 14 the Foreign Trade (Regulation) Rules, 1993 r/w section 11 of the Foreign Trade (Development and Regulation) Act,1 992 thereby making the goods Prohibited Goods as defined under section 2(33) of The Customs Act, 1962 and thus rendering the said goods liable to confiscation under section 111(d) of the Act and as a direct consequence rendering the importer liable to penalty under section 112 of the Act ibid. In view of the above facts, we do not find any merits in the submissions of the Appellant s in respect of admissibility of exemption under Notification No 94/96-Cus. Also we do not find any merits in the submissions of the Appellant in respect of the value of the goods, which has been determined on the basis of value of contemporaneous imports of the same goods. Hon ble Supreme Court has in case of Radhey Shyam Ratan Lal [2009 (238) ELT 14 (SC)] held as follows: 20 . Further, Rule 4 deals with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w stating as follows: 26. In Naresh J. Sukhawani v. Union of India 1996 (83) E.L.T. 258 (S.C.) = 1995 Supp. 4 SCC 663 a twoJudge Bench [to which one of us, K. Ramaswamy, J., was a member] had held in para 4 that the statement recorded under Section 108 of the Act forms a substantive evidence inculpating the petitioner therein with the contravention of the provisions of the Customs Act as he had attempted to export foreign exchange out of India. The statement made by another person inculpating the petitioner therein could be used against him as substantive evidence. Of course, the proceedings therein were for confiscation of the contraband. In Surjeet Singh Chhabra v. Union of India - 1997 (89) E.L.T. 646, decided by a two-Judge Bench to which one of us, K. Ramaswamy, J., was a member the petitioner made a confession under Section 108. The proceedings on the basis thereof were taken for confiscation of the goods. He filed a writ petition to summon the panch (mediater) witnesses for crossexamination contending that reliance on the statements of those witnesses without opportunity to cross-examine them, was violative of the principle of natural justice. The High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Court, the fact about undervaluation of the goods need not be again established as the same has been admitted by the Appellant themselves in their statements recorded under Section 108. However the fact of undervaluation is further corroborated by the value of contemporaneous imports made by the other importers at or about the same time. Hence we hold that appellants have misdeclared the value of the imported goods with intention to evade payment of duty. In view of this extended period of limitation as provided by proviso to sub section (1) section 28 of Customs Act, 1962 is applicable for making the demands. Since we are upholding the demand of duty as determined by the Commissioner, demand of interest under Section 28AB is also upheld. Hon ble Bombay High Court has in case of Padmashree V V K Patil SSK [2007(215) ELT 231(Bom)] held as follows: 11. The question then arises whether payment of duty before issuance of show cause notice exempts the assessee from liability to pay interest u/s. 11AB. Learned Counsel Shri Kolte had placed reliance upon concluding para in the judgment of CESTAT Bangalore in the matter of Rashtriya Ispat Nigam Ltd. v. Commissioner of Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as ascertained by the assessee and the amount of duty payable as ascertained by the Central Excise Officer, is different. Thus, even if the assessee pays the short duty by virtue of liberty granted by sub-section (2B) of Section 11A, he is liable to pay interest, on the same even if the amount is paid, and he is liable to further interest also on the amount of short duty as ascertained by the department if that exceeds the self-assessment and to that extent. By this explanation, we are convinced that even if no notice is issued by the department because it agrees with the amount of short duty paid by the assessee as ascertained by the assessee himself under sub-section (2B), still the assessee shall be liable to pay interest over the same even without going through the process of determination as contemplated by Section 11A(1) and (2) commencing with a show cause notice and culminating with an order of the Central Excise Officer. The show cause notice and determination can go on if the short duty is not paid, but even if short duty is paid by taking liberty under sub-section (2B), we are afraid, that does not absolve the assessee from the liability to pay interest thereon. In case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3250000 3 500000 - - 2750000 3250000 4 - 200000 - - 200000 A. Appellant 1 From the table above it is quite evident that on Appellant 1, Commissioner has imposed penalty under Section 114A, as equivalent to the aggregate duty demanded and interest on the duty demanded. The order of Commissioner imposing penalty equivalent to the aggregate of duty and interest on the duty demanded cannot be sustained in view of decision of Tribunal in case of Sundaram Finance Ltd [2012 (279) ELT 220 (T-Chennai)], wherein following has been held: 17. The above issue as to whether penalty under Section 114A should be imposed equivalent to the duty demanded plus the corresponding interest accrued under Section 28AB of the said Act instead of penalty equivalent to the duty demanded stands decided by this Bench in the case of Bharti Airtel Others. The relevant findings are reproduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 114A. Further Section 114A envisages penalty on the person who is liable to pay the duty or interest, as the case may be, as determined under sub-section (8) of Section 28 . The Commissioner was not in a position to determine the interest amount at the time of passing the impugned order. Therefore, his imposing penalties equal to the duty determined is in order. Hence we are not in position to uphold the order of the Commissioner imposing penalty equivalent to aggregate of duty and interest, hence the order of Commissioner, is modified to hold that penalty imposed under Section 114A, to be equivalent to the duty demanded. It is settled law that in case where duty demand has been determined by invoking the proviso to Section 28(1) of Customs Act, 1962 penalty under Section 114A will get attracted. Hon ble Supreme Court has in case of Rajasthan Spinning and Weaving Mills [2009 (238) ELT 3 (SC)] stated the position in law as follows: 23. The decision in Dharamendra Textile must, therefore, be understood to mean that though the application of Section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, onc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Customs Act, 1962. Commissioner has while imposing penalties under the said section, observed in his order as follows: 4.11 Next let me take up the penalty provisions invoked against the noticees in the SCN. I find that S/Shri Dilip Parmar and Sanjay Parmar, the Director of SCPL were handling the day to day affairs of the company and have actively participated in the import of the subject goods, made correspondence with MSDL, the overseas supplier for re-importation of the subject goods. They had sent fax messages for the storage charges, price to be declared for import purpose, etc., with the foreign supplier. They have also personally dealt with the clearance of formalities of the subject goods from the port including mis declaration and undervaluation. By their acts of omission and commission these two directors have rendered the goods liable for confiscation while rendering themselves liable to penalty under the provisions of section 112(a) of the Customs Act, 1962. Further S/ Shri Dilip Parmar and Sanjay Parmar, for having knowingly and intentionally made, signed and used declarations, statements and documents which were false and incorrect in material parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. AIL under the provisions of Section 112(a) of the Customs Act, 1962, instead of the mandatory penalty under Section 114A equal to the duty. Inasmuch as the appellant-importer has been imposed with a penalty, we are of the considered view that penalty on the Director is not warranted. Accordingly, we set aside the same. Since we uphold the penalties imposed on the Appellant Company (Appellant 1) under Section 114A, we are not inclined to uphold the penalties imposed on the Directors (Appellant 2 and 3) under Section 112 (a) b. Section 114AA of the Customs Act, 1962 read as follows: SECTION 114AA. Penalty for use of false and incorrect material. - If a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of this Act, shall be liable to a penalty not exceeding five times the value of goods. From the wording of the section itself it is evident that the said section can be invoked only on establishment of the fact that the declaration, statement or do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anted. Consequently, neither the penalty on the appellant company nor on the Director was imposable. Hon ble Andhra Pradesh High Court has in case of Jai Balaji Industries [2018 (361) ELT 429 (AP)] held as follows: 6.In the aforementioned admitted facts of the case and provision of law, we are of the opinion that Section 114AA does not get attracted as sine qua non for invoking the said provision is that it must be established that a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document, which is false or incorrect in any material particular, in the transaction of any business for the purposes of the Act. As noted herein before, when the Act itself has envisaged provisional assessment, it cannot be said that incorrect value of the imported goods per se amounts to any of the acts referred to in the said provision. Thus following the above decisions penalties imposed upon the Appellant 2 and 3 under Section 114AA are set aside. C. Appellant 4 For imposing penalty on Appellant 4, who is CHA handling the clearance of goods for the Appellant 1, Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersonal greed and beyond the scope of his duty, therefore the employer, i.e., CHA cannot be penalised. In this case also, it is not in the knowledge of the appellant that Shri G.S. Prince is involved in illegal importer and Shri G.S. Prince acted in his personal capacity for monetary gains. We also find that in subsequent proceedings Shri G.S. Prince no penalty has been imposed on the appellant. Therefore, we hold that no penalty is imposable on the appellant consequently, we set aside the penalty imposed on the appellant. Similarly in case of Deepak Kumar [2017 (358) ELT 854 (T-Del)] following was held 5. Similarly, Tribunal in the case of Prime Forwarders v. Commr. of Customs, Kandla [2008 (222) E.L.T. 137 (TriAhmd .)] has observed that when the CHA acted on the basis of documents given to them and there is nothing to show that he was aware of containers being stuffed with uncalled for material, the penal action cannot be taken against them under Section 112 of the Act. Further, the Tribunal in the case of Safe C F Agency P Ltd. v. CCE [2007 (210) E.L.T. 225 (Tri.-Mum.)] has held that where CHA issued NOC for two containers for customs examination ..... X X X X Extracts X X X X X X X X Extracts X X X X
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