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TMI Blog2024 (3) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... to same exports at different ports justifies the penalty as has been imposed by the department through well reasoned order of the Commissioner of Customs, Kandla, which is impugned before us. Proceedings by DGFT authorities under a different statute, cannot absolve appellant of penal consequences to be visited for their acts under Customs Act, 1962. We therefore, find the order is maintainable as far as the penalty of M/s. FASHION ACCESSORIES is concerned. Levy of penalty on Employees - HELD THAT:- The role of Jile Singh Manager export and Pardeep Arora Manager Shipping has been found to be not showing any knowledge and connivance, so as to warrant penalty u/s 114 (iii), 112 or 114AA of the Customs Act, 1962. It has been stated that their role in improper importation and exportation was not found. For the same reasons penalty u/s 117 cannot be imposed on them for stated passive role in the case as Section 117 being residuary penal provision requires existence of provision as well as no specific penalty for the same. We find that remaining passive has not been shown to be violation of any specific provision. Even otherwise it is not alleged that they drew any benefit for themselves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly classified the goods under wrong CTH 94049099 in respect of Quilts fitted with cotton/ polyester did not appear to be proper to the department, as M/s. FASHION ACCESSORIES they were well aware about the correct classification of their product Quilts which were already being exported by them under correct CTH 94049019 from Nhava Sheva Sea Port at about the same time. M/s. FASHION ACCESSORIES also mentioned two different CTH i.e., 94049019 and 94099099 for the same products Quilts in their export invoices filed with the respective shipping bills and presented to the Customs Authorities. Further, Shri Jile Singh, Manager (Export) in his statement dated 15.09.2020, admitted that as per instruction from the management (Shri Anoop Thatai), the export product Quilts was classified under two different CTHs, as also informed by Shri Pradeep Arora Manager (Shipping Logistics). Shri Pradeep Arora in his statement dated 15.09.2020 also agreed with the facts stated by Shri Jile Singh. It therefore appeared to the department that Shri Anoop Thatai, partner of M/s. FASHION ACCESSORIES were aware that their firm had exported Quilts fitted with cotton/ polyester and had knowingly and consistent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 46 or 50 respectively. Thus, under self-assessment, it is the importer or exporter who will ensure that he declares the correct classification, applicable rate of duty, value, benefit of exemption notification claimed, if any, in respect of the imported/exported goods while presenting Bill of Entry or Shipping Bill. In the present case, M/s FA have deliberately contravened the above said provisions with an intention to wrongfully avail excess MEIS benefit fraudulently. 7. Whereas in the inquiry conducted, by the department it was revealed that the M/s. FA, Gurgaon by way of willful mis-statement, mis-representation and suppression of facts as regards the classification of goods, presented the subject goods for export before the designated authority of Customs with intent to avail fraudulent benefit of MEIS subsequently. In view of the above, it appeared to the department that the Exporter having indulged in fraudulent export of goods by mis-declaring the actual classification of goods so exported, which as per department fall within the ambit of 'illegal export' as defined in section 11H(a) of the Customs Act, 1962 in as much as the same was in contravention of v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also violated the provisions of Section 17, 46 and 50 of the Customs Act, 1962 which was their duty to comply, but for which no express penalty is elsewhere provided for such contravention or failure, they were also alleged to be liable to penalty under Section 117 of Customs Act, 1962. 8.1 It was also alleged that M/s Fashion Accessories, Gurgaon have transferred/sold the MEIS credit Scrips to other importers. The said importers (a person other than the person to whom the instrument (MEIS Scrips) were issued) had imported the goods by utilizing the said transferred MEIS duty credit scrips, which were fraudulently obtained by deliberate suppression of facts by M/s Fashion Accessories, Gurgaon. The excess/ineligible/wrongly availed duty credit MEIS amount which was transferred to other importers by M/s Fashion Accessories, Gurgaon and subsequently utilized by the said importers, to the tune of Rs. 3,77,53,455 was required to be recovered from M/s. Fashion Accessories, Gurgaon under Section 28AAA of the Customs Act, 1962 along with interest under Section 28AA of the Customs Act, 1962. Through common adjudication order Commissioner of Customs, Kandla disposed of the show cause notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... standing of the entries of the Customs Tariff and ITC(HS) and the legal advice received. I find that during the investigation it was noticed that M/s. FASHION ACCESSORIES used two different CTH for the same product they exported; while exporting from Nhava Sheva Port, they used CTH 94049019 and for the ports other than Nhava Sheva Port, they used the classification 94049099. In this scenario, how the claim that they bonafidely classified the quilts under 94049099 CTH cannot be taken fully into consideration. Therefore, I find the contention raised by M/s. FASHION ACCESSORIES not sustainable. (iii) The Noticee submits that while declaring goods during export, the department did not question about the classification and if they were not correct, why their export was allowed. I find that Noticee is not aware about Section 17 of the Customs Act, 1962. In the show cause notice, it is also clearly put forth that under the self-assessment era, they have to declare the true facts before the Customs. As soon as it came into knowledge of the department, DRI investigated the matter and found that they have mis-declared the description of goods while exporting goods and availed scrips and wron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the said case law defines suppression, however, in the present case, M/s. FASHION ACCESSORIES has willfully mis-stated the classification of the goods exported by them to avail the higher amount of incentive. Hence, I find the cited case law not applicable for the present case. (vii) The Noticee further relied upon the decision of Hon'ble Supreme Court in the case of Hindustan Steel Ltd Vs State of Orissa reported in 1978 ELT 159, wherein it was held that:- Penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law and was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation. The above judgment will not apply for the present case as the Manager (Shipping Logistics) of M/s. FASHION ACCESSORIES and Shri Anoop Thatai, one of the Partner of M/s. FA, during the course of recording of statement at the time of inquiry, have accepted their mistake and agreed that classification adopted by them was wrong. The relevant part of the statement recorded of the Manager (Shipping Logistics) of M/s. FA and Shri Anoop Thatai, one of the partners of M/s. FASHION ACCESSORIES is produced hereunder: Statem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Kg 20% - --- Other 94049091 --- Fitted with feathers or down Kg 20% - 94049099 ---- Other Kg 20% - (xi) It is alleged in the show cause notice that the quilts other than fitted with feather or down should be classified under CTH 94049019. However, on going through the defense submission of the noticee, I find that the noticee still believe in the classification adopted by them but they are silent on the method used by them for classification of the goods exported by them. They are also silent for the different classification adopted by them for the same goods on the different ports. I find that they failed to justify their classification of the goods under CTH 94049099 in place of CTH 94049019. I find that the noticee rather than to justify the correct classification, are only relying on the different judgments, which shows that they have no concrete evidence in respect of their version of classification. Therefore, I have no reason but to accept the classification CTH 94049019 for the goods Quilts: a two layers of cloth filled with padding/filling-cotton fill, polyester fill, etc. held in place by functioned stitched. It does not have any opening. (xii) So, it is alleged in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action and imposed a penalty for the same offence. I find that DGFT initiated action for cancellation of License / Scrips issued by them, however, the present case is related to mis-classification of exported goods and recovery of Customs Duty under Section 28 and Section 28AAA of the Customs Act, 1962. Therefore, both DGFT and Customs being different entities adjudicating for differing violations, the judgment cited is not applicable for the present case. (xiv) I find that penalty under Section 114 (iii) is imposable when any person who, in relation to any goods, does or omits to do any act which act or omission would render the goods liable to confiscation under section 113, or abets the doing or omission of such an act. As goods have already been held liable for confiscation under Section 113, penalty under section 114(iii) has been correctly imposed upon M/s. FA. (xv) M/s. FASHION ACCESSORIES has also been charged under Section 114AA and 117 of the Customs Act, 1962. I find that penalty under Section 114AA is imposable when 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 inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anyhow M/s. FA would have declared the same classification for the goods exported by them through different ports, the above judgment may be relied but this is not the case. They chose correct classification at Nhava Sheva Port and wrong classification for the ports other than Nhava Sheva Port. The only thing they wanted to do is to avail higher amount of incentive. They mis-classified the goods and availed higher incentive by debiting the scrips they fraudulently availed. This dubious classification was never informed by M/s. FA to the department. As soon as the facts regarding double classification of the goods came into knowledge of the department, DRI investigated the matter and broke their conspiracy. Further, it has already been held in para supra that they intentionally and wilfully stated the false information in the shipping bills filed by them at the time of export. Therefore, I find that department has every right to protect the government revenue and I completely agree with the duty demand of Rs. 7,66, 729/- 1 as excess ineligible amount availed in MEIS Scrips/Licenses) invoking extended period. (iii) As regards confiscation of goods having assessable value of Rs. 52,09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crips fraudulently by way of willful mis-statement and suppression of facts. I find that M/s. FA had willfully mis-declared the description of goods exported, in Form ANF-3B submitted before the DGFT, whereas they were aware of the true classification of the goods. Further, they suppressed the dubious classification adopted by the mselves and tried to evade custom duty. By way of mis-classification of the goods, they obtained MEIS scrips to avail higher amount of incentive which were utilized by them for discharging liability; therefore, I find M/s FA liable for penalty under Section 114AB of the Customs Act, 1962 and has been correctly imposed upon them. (vi) M/s. FASHION ACCESSORIES has also been charged under Section 114AA and 117 of the Customs Act, 1962 for the goods imported by themselves by utilizing scrips. I find that penalty under Section 114AA is imposable when 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. In the present case M/s FA knowingly and intentionally mis- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ole mentioned in section 112(a) and 112(b) of the Customs Act, 1962. In view of the above, I find M/s FA has acted in a manner which made the goods liable for confiscation and accordingly, I am going to impose penalty upon M/s. FASHION ACCESSORIES under Section 112(a)(ii) of the Customs Act, 1962. (iii) Further, as regards penalty under Section 114AB, 114AA and Section 117 of the Customs Act, 1962, I am going to take the similar view as taken in para supra (para 57 58). (iv) I further find that penalty upon Shri Anoop Thatai, partner, Shri Jile Singh, Manager (Export) and Shri Pradeep Arora, Manager (Shipping Logistic) of M/s. Fashion Accessories, Gurgaon, has been proposed under Section 114(iii), 112(a) (b), 114AA and 117 of the Customs Act, 1962 in respect of export of goods having assessable value of Rs. 74,52,46,978/-and in respect of import of goods having assessable value of Rs. 141,10,91,870/- (v) To impose any penalty, I have to go through their role in the present case and the only data/information available with this case is their statement recorded under section 108 of the Customs Act, 1962. (vi) I find that Shri Jile Singh, Manager (Export) in his statement dated 15.09. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention to make good their duty liability during the investigation is a factor that will be taken into account. During the personal hearings, they have also sought to put forth their credentials as a 3 Star Export house with a good track record. Taking these factors into consideration as also the nature and quantum of evasion in this case and as they paid the entire duty amount along with interest, I am going to factor the same while imposing penalty upon them. 10. In view of the above, I pass the following order: A. Goods Exported by M/s. FA (i) I reject the declared classification CTH 94049099 of the exported goods (Quilts filled with Cotton/polyester) in the Shipping Bills as detailed in Annexure-A (attached with all the SCN's), and order to re-assess the Shipping Bills by re-classifying the goods under CTH 94049019 of the First Schedule to the Customs Tariff Act, 1975; (ii) I hold the exported goods, having total declared FOB value of Rs. 137,90,91,776/-exported under Shipping Bills as mentioned in Annexure-A (attached with all the SCN's) and summarized in Column 3 of TABLE-D mentioned in para 34 above, liable for confiscation under Section 113 (i) of Customs Act, 1962. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms duty of Rs. 40,394/- along with interest of Rs. 1,14,56,140/- already paid by them as discussed in Para 61 above. C. Import by other importers against MEIS issued to M/s. FA (i) I order to recover the Customs duty to the tune of Rs. 3,77,53,455/- as mentioned in Column 4 of Table F and as detailed in Annexure-C attached with the SCN's issued, relatable to excess/ineligible/wrongly availed duty credit/MElS amount utilized by a person other than the person to whom the instrument (MEIS Scrips) were issued, from M/s Fashion Accessories under Section 28AAA of the Customs Act, 1962 along with interest in terms of Section 28AA of the Customs Act, 1962. (ii) I hold the goods totally valued at Rs. 820,92,30,497/- as mentioned in Column 3 of Table-F above as detailed in Annexure-C (having Bills of Entry wise declared assessable value as mentioned in Column 13 in Annexure-C attached with SCN issued), imported by wrongly availing exemption under Notification No. 24/2015-Cus dated 8/4 / 2015 as amended, liable for confiscation under Section 111(m) and 111 (o) of the Customs Act, 1962; As the goods are not available for confiscation, I do not impose any redemption fine. (iii) 1 impose pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 117 of the Customs Act, 1962 upon Shri Anoop Thatai, Partner of M/s Fashion Accessories, Gurgaon. (vii) I do not impose any penalty under section 112, 114 (iii) and Section 114AA of the Customs Act, 1962 upon Shri Jile Singh, Manager (Export), of M/s Fashion Accessories and Shri Pradeep Arora, Manager (Shipping Logistic) of M/s Fashion Accessories in respect of improper importation or/and improper exportation. 11. Aggrieved by the aforesaid order, appellants have filed the present appeal. The appellants submit as follows: The excess MEIS benefit as alleged to be claimed was immediately and voluntarily deposited along with due interest. The Appellant has paid the differential amount immediately on raising objection by DRI on its own before issuance of SCN along with interest as it have absolute respect for the process of law and to avoid litigation. This validates their intentions of good faith and respect for the law of the nation. Moreover, penalty was imposed by the DGFT for the same cause of action, against which an appeal was filed before Additional Director General of Foreign Trade on 26.06.2023 and is pending for adjudication. However, the Commissioner, Customs h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, rules of interpretation etc. the classification was made as per the interpretation deduced thereby. On mere basis of that the Appellant claimed higher MEIS benefit cannot become a basis to allege that the goods are misclassified. The Customs Officer did not carry out any testing and just on the basis of claiming of higher MEIS benefit made the allegation of misclassification. No objection was raised by the Customs Authorities with regards to the classification adopted by the Appellant at the of exporting the goods. Reliance was also placed on the judgment passed by the Hone Supreme Court in the case of Northern Plastic Limited Vs. Collector of Customs, 1998 (101) ELT 549 (SC), wherein it was held that where the complete description of the goods was given correctly in the Bill of Entry/ classification and the Company claims exemption, it does not amount to misdeclaration. The Appellant cannot be said to have mis-declared their goods as full disclosure has been made to the authorities. All the necessary requirements were declared in Form ANF-3A for the MEIS application as per the bonafide understanding of the Appellant and the mis-declaration was not intentional and as soon as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the partner also made voluntary payment as per his stated 06.07.2021 against excess availment of MEIS benefit on account of mis-classification. All the above statements recorded under Section 108 are admissible evidence and are sufficient evidence too, in overall facts of the matter. Department in these circumstances including that the appellant had in some other ports classified the goods correctly, (thereby giving impetus to the notion of the department that as found out in their intelligence and investigation), has submitted that the same was done with deliberate intent to avail excess benefit of MEIS Scheme. In the light of above, we find that the benefit having been reversed indicates wrongful use of MEIS Scheme and the conduct of differential treatment to same exports at different ports justifies the penalty as has been imposed by the department through well reasoned order of the Commissioner of Customs, Kandla, which is impugned before us. Proceedings by DGFT authorities under a different statute, cannot absolve appellant of penal consequences to be visited for their acts under Customs Act, 1962. 12.1 We therefore, find the order is maintainable as far as the penalty of M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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