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TMI Blog2023 (10) TMI 1123X X X X Extracts X X X X X X X X Extracts X X X X ..... s issued on 18.11.2021 at Karachi and B/L from JEBEL ALI to Nhava Sheva was issued on 28.11.2021 and the container was found to be intact with the same seal throughout from Pakistan to India. This only reflects that there could not have been any inspection at Sharjah, UAE as per the PSIC Certificate dated 13.11.2021 issued by PSIA and therefore the necessary corollary is that the PSIC was fake and forged. This also points to the fact that the container in question originated from Pakistan. The department having found that the goods originated from Pakistan was not wrong in re-classifying the goods under CTH 98060000 as per Notification No. 5 /2019-Cus dated 16.2.2019. Nothing further was required to be done at the end of the department as pleaded by the importer company. The justification or non-justification of procuring the goods i. e., Brass scrap Pallu from Pakistan was on the importer company which they failed to substantiate by any valid supporting evidence. The burden was exclusively on the importer company and not on the revenue to place on record positive evidence in support of their submissions. Responsibility of the Importer Company - HELD THAT:- Declaring the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty related penalty, i.e., penalty not exceeding ten percent of the duty sought to be evaded. Thus the outer limit or the maximum amount of penalty that could be levied could not be more than ten percent of the duty. Similarly, the penalty under section 114AA is value related, i.e., penalty not exceeding five times the value of goods - Here also the Commissioner has proportionally increased the penalty and we find no reason to interfere with the same. Normally, the principle in levying penalty by way of punishment has to commensurate in terms of the provisions providing the penalty. As against the penalty imposed by the adjudicating authority, the appellate authority has considerably increased the penalty amount on all counts both against the importer company and also its director which is not only sufficient to penalise them but would also act as a deterrent in future. Hence no interference is called here. Re-export Redemption Fine with Penalty - HELD THAT:- The exercise of discretion both by the adjudicating authority as well as by the appellate authority in not ordering absolute confiscation and allowing the importer to redeem the goods on payment of redemption fine and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ICD (Inland Containers Depot), Concor, Kanakpura, Jaipur under the provisions of Section 46 of the Customs Act, 1962 through Kodiak Containers Lines Pvt. Ltd., Code No.AADCK2481PCH001 having assessable value of Rs.90,23,371/- as the tariff value fixed for Brass Scrap (all grades) under CTH 74040022 @ 5691 USD/MT vide Notification No.95/2021 Customs (N.T.) dated 30.11.2021 and classification of the same was made under CTH (Customs Tariff Heading) 74040022 and duty was self-assessed BCD(Basic Customs duty) @ 2.5% + SWS (Social Welfare Surcharge) @ 10% + IGST @ 18%. 3. The importer company had uploaded documents regarding its BOE No.6601963 i.e. Bill of Lading bearing reference no.SASLNH21715 dated 28.11.2021, Container No.SVWU9892740/40, Seal No.017410, Port of Lading JEBEL ALI (UAE) along with Pre-Shipment Inspection Certificate (PSIC) issued by Pre-Shipment Inspection Agency (PSIA) bearing certificate No.WFZE/SHJO/9959/2021 dated 13.11.2021, which duly mentioned type of scrap unshredded, Country of Origin UAE, Place of Inspection Sharjah and duly enclosed Commercial Invoice, Packing List, Sales Contract, Certificate of Origin and Form 6 (Transboundary movement document) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7005 3. 5063295 16.08.2021 8808842 4. 5173059 24.08.2021 7412945 5. 5407130 11.09.2021 7443238 6. 6430842 27.11.2021 8715980 8. That in follow-up action, premises of Mr. Abdul Kader Bombaywala, Indenter of the importer company was searched and statements of Mr. Abdul Kader and Shri Kailash Vittal Mhatre, Sr. Manager, M/s. Hub and Links India Pvt., Ltd. were recorded. As the Importer Company was found to have mis-declared the country of origin as UAE instead of Pakistan with intent to evade customs duty and mis-classified the goods under CTH 74040022 instead of 98060000, the goods imported were seized by the Customs officers under Section 110 of the Customs Act, 1962 (the Act). Accordingly, show cause notice dated 15.06.2022 was issued to the Importer Company and its Directors, which was duly replied by them. 9. Having examined the matter, the Adjudicating Authority passed the order-in-original d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here was incentive for the company to import the goods of Pakistan origin. Thus, there is no evidence that the Importer Company knowingly and intentionally mis-declared the country of origin. (c) That all the relevant documents, as submitted by their suppliers in UAE were duly filed by them before the Customs Authorities. (d) The information obtained from PICT website is not authentic and reliable and relied on the decision of the Apex Court in M/s. Hewlett Packard India Pvt. Ltd. 2023 (1) TMI 700, which says that online sources such as Wikipedia should be used with due caution to support the conclusion of the investigation. (e) Re-exporting the goods would serve the purpose sought to be achieved by the Government of India in imposing BCD at 200% on the goods originating in Pakistan and referred to the decision in M/s. Raj Grow Impex LLP Ors. 2021 (377) ELT 145, whereby the Apex Court allowed re-export of the imported beans, peas and pulses, though they were held to be prohibited. The redemption fine and penalty in case of re-export of the goods is not imposable. (f) The goods are not liable to confiscation under Section 111 (m) of the Act. (g) Penalty under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Origin: 14. The first and the foremost question to be considered is whether the goods in question originated in or were exported from Pakistan. The goods in question were shipped in container No. SVWU9892740/40. On the basis of the information from the Additional Director General, National Customs Targeting Centre (NCTC), New Delhi that the said container was at high risk as it had originated from Pakistan investigations were carried out. Accordingly, the container No SVWU9892740/40 with seal No. 017410 relating to Bill of Entry No. 6601963 dated 9.12.2021 was verified from the website of Pakistan International Container Tracking Portal (PICT) https:/pict.com.pk/en/online-Tracking and it revealed that the seal No. affixed on the said container was the same as originated from Pakistan. Further, on physical examination of the goods some worn and torn PP bags filled with brass scrap were found on which the words Karachi, Pakistan, Government of Punjab, Korangi Industrial Area etc. were found printed. Coupled with this, the tracking details also revealed the actual arrival date of the said container, i. e. the B/L from Karachi to JEBEL ALI was issued on 18.11.2021 at Karachi and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame. There is no reason to disprove and disregard the aforesaid modus-operandi mentioned in the statement of Shri Kailash Vitthal Mhatre recorded under section 108 of the Customs Act, 1962. The documents showing the movement of the container with goods from Karachi to JEBEL ALI, container wise sheet, container wise tracking details obtained from PICT website clearly indicated that the containers originated from Pakistan. We also do not agree with the reliance placed by the learned Counsel for the appellant on the decision of the Apex Court in Hewlett Packard (supra) which is clearly distinguishable from the facts of the present case. The department having found that the goods originated from Pakistan was not wrong in re-classifying the goods under CTH 98060000 as per Notification No. 5 /2019-Cus dated 16.2.2019. Nothing further was required to be done at the end of the department as pleaded by the importer company. The justification or non-justification of procuring the goods i. e., Brass scrap Pallu from Pakistan was on the importer company which they failed to substantiate by any valid supporting evidence. The burden was exclusively on the importer company and not on the revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the appellant is a regular importer of these goods and during the investigation of the live consignment the past imports were also unearthed which were also routed in similar fashion. The Handbook of Procedures 2015-2020, Para 2.56 (b) also makes the importer and exporter responsible as under:- 2.56 Responsibility and Liability of PSIA, Importer and Exporter (a) .. (b) The importer and exporter would be jointly and severally responsible for ensuring that the material imported is in accordance with the declaration given in PSIC. In case of any mis-declaration, they shall be liable for penal action under Foreign Trade (Development Regulation) Act, 1992, as amended. 17. The next contention of the appellant is that they have submitted all the requisite documents showing the country of origin as UAE. As noted above, there is complete discrepancy as the PSI Certificate dated 13.11.2021 shows the date of inspection as 11.11.2021 at Sharjah, UAE whereas the containers itself departed from Pakistan on 18.11.2021 as per the B/L from Karachi to JEBELALI, therefore the only logical conclusion is that the certificate is fake or has been forged and no inspect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are afraid we do not agree with this submission in view of the entire discussion above which prima-facie points to the acts of omission and commission on the part of the importer, M/s. Bright Metal (India) Pvt. Ltd., who imported the goods vide bill of entry No. 6601963 dated 9.12.2021 and Sanjay Porwal being the active director of the importer company who looks after all the work of import of the goods and was fully responsible for purchase of the said goods and its clearance thereof, are liable to penalty under section 112 (a) (ii) and 114AA of the Act for contravention of the provisions of the Customs Act, 1962 read with FTP 2015-20. The conclusions arrived at by us gain support from the decision in Collector of Customs, Bombay Vs. M/s Elephanta Oil Industries 2003 (152) ELT 257 (SC), wherein the Apex Court distinguishing the provisions of section 112 (a) imposing penalty and section 125 providing for redemption fine, upheld the imposition of penalty under section 112 of the Act, observing : 10 . From the aforesaid two sections, it is apparent that both operate in different fields, namely, one requires imposition of penalty and other provides for confiscation of improperl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to re-export the goods back to UAE. The appellant repeated the request on 2.03.2022 and subsequently on 30.12.2022. Accordingly, the adjudicating authority vide order in original dated 24.04.2023 confiscated the goods under Section 111(m) and gave an option to the appellant to redeem the goods and re-export them on payment of redemption fine under section 125 of the Act. The said order has been maintained by the Commissioner (Appeal) by the impugned order relying on the decisions of the Supreme Court and the Tribunal holding that request of the importer for re-export is in consonance with the underline object of issuing the notification dated 16.02.2019 under section 8A of the Customs Tariff Act. We may now consider whether the request of re-export has been rightly allowed by the authorities below as well as on the issue of imposition of redemption fine when the goods are allowed to be re-exported back. The department has raised an objection that permission for re-export on a request made by the importer company is not within the purview of the adjudication proceedings in view of the decision of the Tribunal in Hemant Bhai R. Patel V Commissioner of Customs 2003 (153) ELT 226 (T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, however, if the importer exercises the option to redeem the goods on payment of fine as ordered by the adjudicating authority in terms of section 125 of the Act and a request is made for re-export, as noticed by this Tribunal in K K Gems V Commissioner of Customs, Mumbai-I 1998 (100) ELT 70 (Tribunal), such re-export is a post redemption facility allowed to the importer at his request. Further, with reference to section 125, Tribunal observed that, the fine envisaged thereunder is only to get over the order of confiscation irrespective of whether the goods are cleared for home consumption or for re-export. 22. The learned Authorized Representative vehemently opposed the permission for re-export granted by the authorities below, however, we have already held that the same cannot be accepted. We, in arriving at the conclusion that the appellant having paid the redemption fine is entitled to redeem the goods and it is permissible to seek re-export thereof, are supported by the decisions of this Tribunal as well as of the superior Courts. Our view is substantiated by the decision in Escorts Herion Ltd. 1997 (107) ELT 599 (Tribunal), referred to by the learned Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions raised by the department in the case Hemant Bhai R. Patel (supra), which clearly reflects that the department accepts re-export as an option. The relevant paras from the decision in Hemant Bhai R. Patel (surpa) are as under:- 6 . The learned DR would on the other hand submit that a permission granted for re-export is irrelevant for exercise of the power to impose redemption fine when goods are confiscated. Once the goods are confiscated unless the importer redeems the goods by paying redemption fine he is not reacquiring the ownership of the goods which would entitle him either to clear for domestic consumption or for re-export. 7 . The learned DR brought to our notice a decision of the Apex Court in M.J. Exports Ltd. v. CEGAT,1992 (60) E.L.T. 161 where the Supreme Court has affirmed re-export of imported goods. After rejecting the contention of the Revenue that if an importer intends to export the goods imported he should clear them for warehousing and then proceed in terms of Section 69 Similarly, the case law referred by the Revenue of Preeti Exim Vs. CC, New Delhi 2007 (214) ELT 555 (Tribunal-Delhi), wherein the contention of the Revenue was that importer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods into India, the Act prescribes no form of a Bill of Entry under which he can clear such goods intended for re-export. It would not be correct to insist that he must clear them for warehousing and then export them by clearing from the warehouse. Whether to deposit the goods in a warehouse or not is an option given to the importer. If he is able to pay the import duties and has his own place to stock the goods, he is entitled to take them away. But, where he has either some difficulty in payment of the duties or where he has no ready place to stock the goods before use or sale, he cannot clear the goods from the customs area. The warehouse is only a place which the importer, on payment of prescribed charges, is permitted to utilise for keeping the goods where he is not able to take the goods straightaway outside the customs area. There is nothing in the provisions of the Act to compel an importer even before or when importing the goods, to make up his mind whether he is going to use or sell them in India or whether he proposes to re-export them. Again, there may be cases where he has imported the goods for use or sale in India but subsequently receives an attractive offer w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted out by counsel for the appellant, para 174(1) of the Policy which reads : No REP benefits are admissible in the case of imported goods which are re-exported in the same State without undergoing any processing or manufacturing operations in India. 25. In K K Gems (supra), the Tribunal while considering the issue that redemption fine cannot be levied for re-export as section 125 does not empower such a levy, distinguished the fine under section 125 as a condition for re-export and fine in lieu of confiscation under section 125 referring to the earlier decision in Allen Bradley India V Collector 1992 (58)ELT 268, where the Tribunal held that the goods need not have been subjected to confiscation and levy of fine in lieu of confiscation in view of clear findings that wrong goods had been shipped because of suppliers mistake and the importer had disclosed the fact to the department even before the examination of the goods. Thus, fine in lieu of confiscation has been found to be in consonance with the provisions of section 125 of the Customs Act, 1962 as an option to the importer to redeem the goods which have been confiscated and has not been made as a condition for re-exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch of these two actions is independent and is permitted by law. An order whereby both are combined, therefore, is not contrary to law. 11 . If we take up the issue from another angle that where the adjudicating authority allows re-export of the prohibited goods and in such a case, by holding that the order of confiscation and redemption fine is not justifiable, this will make the provisions of Section 125 of the Customs Act redundant which specifically empowers the adjudicating authority to exercise his powers in respect of prohibited goods. As confiscation and redemption fine in lieu of confiscation and reexport are two independent actions, hence the view taken that in case the assessee is allowed to re-export, the confiscation and redemption fine is not justified, is not a correct view. Further, we find that this view is also taken by the Hon ble Supreme Court in the case of C.C. v. Elephanta Oil Industries Ltd. reported in 2003 (152) E.L.T. 257 (S.C.) rejected the contention of the importer that once the imported article is reexported as directed by the department, there is no question of levying any penalty or redemption fine. The Hon ble Supreme Court held that power to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of reexport of finished/semi-finished goods qua the imports made. Thus the issue is no longer res integra and hence we are of the considered view that re-export of the goods is permissible and both redemption fine as well as the penalty under section 112 and 114AA of the Act are leviable even if the goods on redemption are allowed to be reexported. 28. The learned Counsel for the appellant has placed on record the latest decision of the Delhi High Court in Ajay Kumar Gupta vs Commissioner of Customs 2023 (5) TMI 207, inter-alia observing, that there is no provision under the Customs Act which entitles the revenue to retain the goods after the concerned party has paid the redemption fine as well as the penalty as determined. The Court further held that merely because the revenue seeks to challenge the order passed by the appellate authority is no ground for non compliance of the said orders. Here, the appellant has submitted that pursuant to the order in original, they have paid the redemption fine of Rs. 10,00,000/- and penalty of Rs. 6,00,000/-towards penalty on 3.04.2023, however the department has not permitted them to re-export the goods. In view of the decision in Ajay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viously, warranted. 84 . Hence, on the facts and in the circumstances of the present case as noticed and dilated hereinabove, the discretion could only be for absolute confiscation with levy of penalty. At the most, an option for re-export could be given to the importers and that too, on payment of redemption fine and upon discharging other statutory obligations. This option we had already left open in the order dated 18-3-2021, passed during the hearing of these matters. 30. Considering the aforesaid decision, we are of the considered opinion that the exercise of discretion both by the adjudicating authority as well as by the appellate authority in not ordering absolute confiscation and allowing the importer to redeem the goods on payment of redemption fine and penalty with permission to re-export the goods is in consonance with the object and purpose with which the notification was issued, i.e. to dissuade commercial transactions with Pakistan byimposing extremely high penalty of 200%. 31. Suffice it to say, that Notification No 05/ 2019 dated 16.2.2019 in simple words provides that the goods imported having country of origin as Islamic Republic of Pakistan shall be cl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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