TMI Blog2009 (7) TMI 584X X X X Extracts X X X X X X X X Extracts X X X X ..... s Twenty-Five Lakh Seventy-Seven Thousand Nine Hundred Sixty-Seven) on Shri Sudhanshu Mittal under Section 112A of Customs Act; The duty demand of Rs.25,77,967/- (Rupees Twenty-Five Lakh Seventy-Seven Thousand Nine Hundred Sixty-Seven) comprises of two parts - Rs.23,81,816/- (Rupees Twenty-Three Lakh Eighty-One Thousand Eight Hundred Sixteen) is the demand of Customs Duty on account of misdeclaration of quality, quantity and value and the duty demand of Rs.1,91,151/- (Rupees One Lakh Ninety-One Thousand One Hundred Fifty-One) is towards Special Additional Duty (SAD) under Section 3A of Customs Tariff Act, which according to the Department was payable as the appellants were not eligible for SAD exemption under Notification No. 58/98-Cus., dated 1-8-98. Held that- As regards the eligibility for exemption from SAD, under Notification No. 56/98-Cus. We find that the importer did not have any sales tax registration and he did not give any evidence, whatsoever, that the goods have been sold from a place where sales tax was chargeable. Shri Sudhanshu Mittal was not even able to tell the full name and address of the person to whom the goods had been sold. In view of these circumstances, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Forty-One)" at ICD, Ballabgarh vide bills of entry No. 167 dated 22-9-98, 248 dated 22-10-98 and 269 dated 30-10-98. Some of the other importers were M/s. Veer Enterprises, M/s. Rajiv Enterprises, M/s.Alok Overseas and M/s.Ashish International (P) Ltd. 1.2 Enquiry was made with Shri Sudhanshu Mittal and his statement was recorded on 24-5-99 under Section 108 of Customs Act, 1962, wherein he admitted that he is the sole proprietor of M/s. Chirag and he was in the business of hiring of bulldozers, that since he was not having good business, he started the import of zinc ingots, that the import has been made from M/s. ATL, USA, that Shri Naresh Mittal, Proprietor of M/s. American Trade Link, is his first cousin, that he had imported 6 (six) containers at ICD, Ballabgarh under 3 (three) bills of entries, that his cousin Shri Naresh Mittal had offered to supply the zinc on credit, that since on arrival of the goods, he did not have the enough money to pay to the bank for retiring the documents and paying the duty, and only an amount of Rs.10,00,000/- (Rupees Ten Lakhs) could be arranged by him, the rest of the money for retiring the documents and payment of duty was arranged by h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a show cause notice dated 8-6-99 was issued to M/s. Chirag and Shri Sudhanshu Mittal for - (a) enhancement of the assessable value of the goods to Rs.70,34,034/- (Rupees Seventy Lakh Thirty-Four Thousand and Thirty-Four) CIF as against the declared of Rs.31,58,641/- (Rupees Thirty-One Lakh Fifty-Eight Thousand Six Hundred Forty-One)/ (b) recovery of differential duty of Rs.25,77,967/- (Rupees Twenty-Five Lakh Seventy-Seven Thousand Nine Hundred Sixty-Seven) from M/s. Chirag under proviso to Section 28(1) of Customs Act, 1962 along with interest on this duty under Section 28AB; and (c) imposition of penalty on Shri Sudhanshu Mittal under Section 112(a) of Customs Act. 1.4 Subsequently in course of further investigation, the Department was of the view that certain officers namely Shri Irfan Ahmed, Assistant Commissioner; Shri B.S. Suhag, Appraiser; Shri Pradeep Sharma, Appraiser; Shri Vinod Parkash, Superintendent; Shri Y.P. Gupta, Inspector; and Shri S.K. Chauhan, Inspector; who were associated in clearances of these consignments, had also abetted this illicit import and accordingly an Addendum dated 6-6-2000 to the earlier show cause notice dated 8-6-99 was issued for im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The issues involved in these appeals are - (a) whether the Commissioner is legally correct in holding that the appellant wilfully misdeclared the goods imported under bills of entry No. 167 dated 22-9-98, 248 dated 22-10-98 and 269 dated 30-10-98 as "secondary zinc ingots" and have undervalued the same and also whether the weight of the consignment has been misdeclared as 108.047 MTs as against the actual weight of 157 MT determined by the Commissioner in the impugned order; (b) whether the Commissioner is legally correct in determining the value of the three consignments at Rs.70,34,034/- (Rupees Seventy Lakh Thirty-Four Thousand and Thirty-Four) and on this basis confirming the differential duty demand amounting to Rs.25,77,967/- (Rupees Twenty-Five Lakh Seventy-Seven Thousand Nine Hundred Sixty-Seven) which includes the Additional Customs Duty demand amounting to Rs.1,96,151/- (Rupees One Lakh Ninety-Six Thousand One Hundred Fifty-One); and (c) Whether the Commissioner is correct in imposing penalty of Rs.25,77,967/- (Rupees Twenty-Five Lakh Seventy-Seven Thousand Nine Hundred Sixty-Seven) on Shri Sudhanshu Mittal under Section 112A of Customs Act; The duty demand of Rs.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e show cause notice has stated that the nature and quality of the consignments, in question, were ascertained by the way of visual examination, as by virtue of long experience in examination of the imported goods, he had occasion to compare secondary metal with prime quality metal and it was possible for him to distinguish between the two. He has also stated that it is possible to distinguish between the prime quality zinc and secondary zinc by visual examination without any laboratory tests. (5) During course of investigation, the Investigating Officer had raided the appellant's premises and wherein no incriminating documents or material or any offending goods had been recovered. Had there been any fraud or any murky deal, the Department would have definitely found some incriminating material. (6) The finding of the learned Commissioner qua the misdeclaration of quality on the basis of test report pertaining to the consignment of other importer purportedly supplied by the same overseas supplier, is contrary to the common prudence and settled law. The test reports in respect of the zinc ingots imported by M/s. Alok Overseas and M/s. Ashish International from the same supplier c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e importers accepted the misdeclaration and deposited the differential duty. Therefore in the present case when the supplier is the same and the goods were declared as secondary zinc ingots, the preponderance of probability would be in favour of the goods being prime quality zinc ingots. (b) The importer's firm is owned by Shri Sudhanshu Mittal who is first cousin of Shri Naresh Mittal. For this import, Shri Naresh Mittal, as admitted by him in his statement, could arrange only Rs.10 lakhs (Rupees Ten Lakhs) for making payment to the supplier through the Bank and payment of duty and the remaining amount for making payment to the bank for retiring documents and for payment of duty was arranged by Shri Naresh Mittal. Even the CHA was not engaged by him. (c) Shri Sudhanshu Mittal, could not even tell the full name and address of one Shri Jagdish to whom the imported consignments are claimed to have been sold. (d) The customs declaration forms attached with the bills of entry have been signed by one Shri Ambika Saroj, proprietor of M/s. Chamunda Metal Co. No explanation has been given by Shri Sudhanshu Mittal as to how Shri Ambika Saroj of M/s. Chamunda Metal Co. has signed the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious exports also." (4) All the aforesaid judgments clearly indicate that evidence required to be produced by the Department is not restrict evidence and the Department has to prove its case only by preponderance of probability, which has been established by the Department in this case. (5) The Commissioner has correctly determined the value on the basis of the LME price of the prime quality zinc ingots. (6) As regards misdeclaration of weight, as has been held by the Commissioner relying upon a number of bills of lading, the international norm is to make bundle of one MT each of the zinc metal. This fact has not been disputed by the appellant by producing even a single bill of lading of zinc ingots showing different weight per bundle. Therefore, the Commissioner's finding that total weight of the three consignments consisting of 157 bundles was 157 MTs as against the declared weight of 108 MT, is correct. (7) Since the appellant did not have the sales tax registration number and no evidence has been produced to show as to whether the place where the goods were sold, the sales tax was payable, the SAD exemption under Notification No. 56/98-Cus., would not be available and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 44/RH/Adj./04 dated 28-1-05 passed by the Commissioner in the cases of M/s. Alok Overseas, M/s. Ashish International, M/s. Veer Enterprises and others, which stands upheld by the Tribunal vide order-in-appeal No. 921-28/05-Cus., dated 31-10-05 and use the evidence against the appellants in that case, in this case also. 4. Investigation into this group of cases were started when on 26-3-99, the DRI officers in pursuance of specific information examined 10 containers declared to contain "zinc slabs scull" with declared value of U.S. $ 575 per MT and on examination, found the goods to be prime quality zinc ingots wrapped in pallets with iron strips with manufacturer's certificate certifying the purity as 99.995%. While the declared weight of the consignment was 201.866 MT, each pallet was found to be containing about one MT of the zinc ingots and the total quantity in the 10 containers was found to be 259.79 MT. While the declared country of origin was Netherlands, on examination the black cards found affixed on the pallets were mentioning country of origin as Russia. The supplier of this consignment was M/s. ATL, USA whose proprietor was Shri Naresh Mittal. Since, it was foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining "201.866 MTs of Zinc Slab Scull", on examination by the DRI officers on 26-3-99 were found to be 269.79 MTs of prime quality zinc ingots of 99.995% purity. On considering the evidence on record, the Commissioner vide order-in-original No. 44/RH/Adj./04 dated 28-1-05 has held that the zinc ingots imported in the name of M/s. Alok Overseas, M/s. SR Overseas, M/s. Veer Enterprises, M/s. Ashish International, M/s. Shyam International and M/s. Chamunda Metal Co. were prime quality zinc ingots packed in bundles of one MT each and on this basis confirmed the duty demand of Rs.4,05,73,710/- (Rupees Four Crore Five Lakh Seventy-Three Thousand Seven Hundred and Ten) against these companies and imposed penalties on them besides penalty of Rs.4,05,73,710/- (Rupees Four Crore Five Lakh Seventy-Three Thousand Seven Hundred and Ten) on Shri R.K. Jain and penalty of equal amount on his brother Shri Pradeep Kumar Jain. One significant fact in the case adjudicated by Commissioner vide order dated 28-1-05 is that M/s. Chamunda Metal Co. is also held to be a front company put up by Shri R.K. Jain, whose proprietor Shri Ambika Saroj, is a driver of Shri R.K. Jain. 5. In the present case, the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of quantity, we find that in this group of imports in whichever case the goods were physically available, and examined the average weight of each bundle/pallets was one MT. A number of other bill of lading mentioned in the Commissioner's order show that the zinc ingots are normally packed in the bundle of one MT. The appellants have not produced any bill of lading showing the packing of zinc ingots bundle/pallets less than one MT. In view of these circumstances, we concur with the Commissioner's finding regarding misdeclaration of quantity. 7. In this case, it is true that the goods had been examined by the Customs officers but examination had been done visually and from visual examination it is not possible to distinguish between prime quality zinc ingots and secondary zinc ingots. Though the officers have been exonerated by the Commissioner, we find it strange as to how these officers without taking any sample and getting the same tested, have concluded that the consignments were of secondary zinc ingots while in whichever cases the goods were physically available and were tested, the same were found to be prime quality zinc ingots with purity of 99.995%. At pages 91 to 95 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly are not expert in metals, merely on visual examination, in one case gave the report that the goods are as per declaration, in other two cases gave ambiguous reports that - "the goods are said to be secondary zinc ingots". It is on the basis of such report, that Shri Irfan Ahmed as Assistant Commissioner, finalized the assessment and the goods were cleared out of Customs charge. 7.2 In the present case, as well as in case of importers in the name of M/s. Ashish International, M/s. Alok Overseas, M/s. S.R. Overseas, M/s. Veer Enterprises, M/s. Shyam International and M/s. Chamunda Metal Co., even though the bills of entry had been prepared by Shri Sanjay Sharma, a CHA and it is he who had handled the customs clearance work, the bills of entry had been filed under 'self' for which permission had been granted by Shri Irfan Ahmed. This had obviously been done to conceal the identity of the importer firms. In case of "self" bills of entry i.e. bills of entry not filed through a CHA, the officers have to be extra cautious, as in case of any serious irregularity, if the importer is found to be fictitious or vanishes, there is nobody from whom the customs officers can make any inqui ..... 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