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TMI Blog2009 (12) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... supplied by the duty free shop of the first respondent. Subsequently, the customs officers carried out extensive investigation, during which it was known that the first respondent was selling goods imported duty free to unauthorised persons. It was also revealed that the first respondent was generating bills showing the sale to members of the crew of various vessels. Some of the crew were not in the port and some ships were on coastal run at the relevant time. In a large number of cases, the signatures of the buyers did not tally with the signatures available with the department. Thus, altogether, it was allegedly found that the first respondent had made unauthorised sales by about 5000 bills and the total value of such non-bona fide sales was Rs. 1,72,30,568/-. Accordingly, a show cause notice was issued, demanding a duty of Rs. 3,87,63,211/- on the entire goods sold to unauthorised persons. Interest on the duty amount was also demanded. It was also proposed to impose penalty on the respondents 1 to 7 in addition to revoking the licence to operate the duty free shop inside the harbour. 3. Aggrieved over the same, the respondents 1 to 7 filed an application for settlement before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the respondents could not take shelter under the audit done by the department, as the violations done by them were beyond the scope of audit. It was also the stand of the Revenue that they had done a meticulous investigation and, in 1246 bills, they found that the signatures of the buyers tallied with those available with the department and, therefore, they did not include them for demanding duty, whereas in 3004 bills, the signatures did not tally; hence, the duty was demanded and, as such, the entire duty demand was correct and no immunity should be granted to the respondents. 7. Dispelling the stand of the Revenue and justifying the act of the Settlement Commission, learned Senior Counsel for the respondents has cited the following authorities: (i) New Bharat Rice Mills v. Union of India, 2008 (229) E.L.T. 502 (P & H): "4. The Settlement Commission has in exercise of its powers under sub-section (5) of Section 127C of the Customs Act, 1962 settled the customs duty qua the petitioner for Rs. 1,46,75,646/- and interest payable on this amount as Rs. 3,26,400/- which stood paid by the petitioner. A penalty of Rs. 25,00,000/- has only been imposed and immunity from prosecution u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also that they had complied with all the requirements of the regulations. Therefore, it could not be said that the sales were effected to ineligible persons. 10. On an analysis of the allegations made in the show cause notice and also the submissions of the learned Senior Counsel for the respondents, what transpires is that the Department had made allegations on the basis of visual comparison of the signatures on the bills with the signatures in the declaration forms available with the Department, which was objected to by the respondents. Before coming to the conclusion that the signatures in the sales bills did not tally with those available in the declaration forms available, the Department should have got the opinion of a forensic expert or a handwriting expert, for certification. 11. It is true, the task of comparing the signatures in 3004 cash bills is huge and it might not have been possible to verify all the signatures by a handwriting expert. However, what is found is that not even one signature was verified by a forensic expert or a handwriting expert to ascertain whether it tallied with the signature available with the department. In the normal course, at least, a sma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent had also stated that they placed the goods on board the various ships under proper customs escort, for which they placed escort slips before the Commission. It has been mentioned in the show cause notice that the officers signed those escort reports periodically but actually they did not accompany the goods. The officers, who certified the escort reports, are the proper officers authorised to escort and place the goods on board the vessels. It is also seen that the said officers were posted on cost recovery basis at the duty free shop. In other words, they were exclusively in-charge of the duty free shops and their services were paid for by the respondent company. Hence, they should have been entrusted with no other work but instead dedicated to ensure the smooth and proper functioning of the duty free shop in accordance with the guidelines issued by the Department. If there was any failure on the part of the Department, it cannot be held against the respondent company. 15. As for the respondent company, they were required to place the goods on board the vessel and get such placement certified by the officers concerned. Since the respondents had complied with the said requi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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