TMI Blog1992 (10) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... ager, Panam (Cargo) IGI Airport, Mr. B. Wiessmenn, Director (India) Panam Airways, Mr. S. Ranganathan, Proprietor of M/s. Airport Handling Services and Mr. Ramesh Chander, Employee of the Clearing Agents. In their statements, they admitted their knowledge and collusion in wilful mis-statement and suppression of facts and undervaluation and evasion of Customs duty during the period from 1982 onwards by producing fabricated invoices/shipping orders showing the value of the imported goods much less than the value indicated on the original documents. On the basis of the seized documents, a chart showing the shipping orders numbers, value shown in the original shipping orders, value shown in the fabricated invoices, duty actually leviable, duty actually paid and amount of duty evaded was prepared by the Department and checked by Panam representatives deputed by Mr. Wiessmenn, B. and verified to be correct, and the total duty evaded by M/s. Panam Airways during the said period from 1982 to 1987 worked out of Rs. 29,61,527/-. M/s. Panam Airways paid the said amount on 9-9-1987 without prejudice to its rights. On 20th Oct. 1987, a show cause notice was issued to the above appellants and al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umar Sehgal, Manager (Cargo) PANAM IGI Airport Rs. 5,00,000/- (Rs. five lakhs only). 4. Mr. R.D. Tiwari, Supply Officer, PANAM Rs. 2,00,000 (Rs. two lakhs only). 5. M/s. Airport Hand ling Services Rs. 7,00,000/- (Rs. seven lakhs only). 6. Mr. S. Ranganathan, Managing Partner, M/S. Airport Handling Services (CHA). Rs. 2,00,000/- (Rs. two lakhs only). 7. Mr. Ramesh Chander, Employee M/s. Airport Handling Services Rs. 5,000/- (Rs. five thousand only). Hence these appeals. 3. We have heard Shri V. Lakshmi Kumaran, ld. Counsel for appellant Nos. 1, 2 3 and Shri N. Ramanathan, ld. Consultant for appellant Nos. 4, 5 6. 4. Shri V. Lakshmi Kumaran submits that the shipping orders which have been taken as the basis for valuation of the imported goods are merely lists of articles supplied to Panam in India by its locations and the prices mentioned in the said inventory are not the prices at which Panam imported these goods into India. The shipping orders are internal documents of the company and the prices mentioned therein are only notional amounts debited by the parent company to the centres in India for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue. In some of the typed invoices the value has been shown much less than the original shipping orders. In some invoices the original shipping orders contains the value in US $ but the typed invoice shows the value in Hong Kong Dollars. In some invoices the description and value has been changed. The shipping orders, invoices and the Bills of entry, the details of which is given below have been seen by me and I have signed on them in today s date in token of having seen the same. Shipping Order/ Invoice/Receiving Report/No. and date received from supply station Value shown in the original copy received from supply station Value shown in the typed invoice made locally Bill of entry No. and date Value shown in the Bill of entry (1) (2) (3) (4) (5) B-05233760 dated 25-9-1986 $ 4900.00 $ 1193.48 51499 dt. 3-10-1986 $ 1193.48 026-61874934 dt. 15-4-1986 $ 9094.30 $ 938.30 068 dt. 19-4-1986 $ 938.30 B-04792760 dt. 17-6-1982 $ 5020.00 $ 3020.00 140 dt. 13-7-1982 $ 3020.00 A-01065153 dt.18-3-1983 $ 2286.00 $ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Director India Panam Airways, Chanderlok, 36, Janpath, New Delhi, R/o 3/31, Shanti Niketan, New Delhi. In continuation of my statement dated 2-9-1987,1 have to state that as stated in my above statement, I had deputed my two representatives S/Shri Ramanathan Rajan and Inder S. Sabarwal on 7th and 8th Sept 87 to check the calculations and details regarding evasion of Customs duty. They attended your office on the above dates and checked the details and have signed on the calculation sheets in token of having checked the details about their correctness. Wherever they found any discrepancy, the same was amended. I have also seen the calculation sheets today and have satisfied myself about their correctness. The total evasion of Customs duty from 1982 to 1987 calculated so far on the invoices as mentioned in the calculation sheets (total numbering 15) comes to Rs. 29,61,527 (Rs. twenty nine lakhs sixty one thousand five hundred twenty seven only). We are prepared to pay the said amount. The payment is being made by me today through Cheque No. 009410 dated 9-9-1987 issued in favour of Collector of Customs, New Delhi on City Bank, NA 3 Sansad Marg, New Delhi. It is requested that a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that he was aware of the practice being adopted for evasion of customs duty by submitting forged invoices" and did not stop the same since it was going on much before his arrival in India. I note from the statement of Shri Wiessmenn B. Director (India) that he has been residing in India since Jan 86 and the malpractice of the clearance of cargo on forged invoices even continued after 2 years of his taking over of the head of company affairs in the country. I find no reason as to why Shri Wiessmenn B. Director (India) did not intervene in the illegal and nefarious practice being head of the organisation and chief executive of the company in India and as such mala fides on his part cannot be ruled out. Shri Wiessmenn B. being the policy implementer and top executive having a reasonable share in decision making of the company affairs being Director (India) and Regional Managing Director, Middle East/Africa could have stopped the said illegal malpractice particularly when it has adverse revenue implications for the Government, immediately on coming to know the same and could have informed the customs accordingly which would have otherwise established his bona fides. But Sh. Wies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne operations were busted on a specific information by the DRI. 21.5. I have seen the following few invoices (original manipulated) and discuss as under which goes to establish the mala fides on the part of the Panam organisation as well as the concerned officials who wilfully and deliberately suppressed facts from the customs forgetting revenue advantage for their organisation............." 21.11. The statement of Sh. Ashok Sehgal dated 20-8-1987 also corroborates the fact that the manipulation of invoices/documents for showing less value of the goods imported for the purpose of evasion of Customs duty was also in the knowledge of Mr. Wiessmenn, Director, PANAM. 21.12. Shri Wiessmann, Director (India), PANAM, cannot absolve himself from his responsibility, both moral as well as legal as I note from the schematic organisational chart produced during the proceedings, duly signed by Mr. Wiessmann that being the Chief of the Company s Management in India, he has allowed such a nefarious malpractice under his command. 21.13. I also note from the statement of Shri Ramesh Chander, an employee of M/s. Airport Handling Services their CHA, that the malpractice of evading Customs d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note that Shri Ashok Sehgal also saw Invoice SOB No. 05154435 dated 28-4-1986 for value 18960 N (SR) appearing on p. 13 of folder No. 1 and also invoice at p. 84 bearing the same number and description of goods showing total value as SR 1896.00 as manipulated. From his statement dated 21-8-1987, I also find that Shri Ashok Sehgal could not specify the name of any PANAM employee who had fabricated the invoices but stated that they had the arrangement with Shri Ramesh Chander who himself typed the fabricated invoices or got the same typed through some other employee for which a typewriter was kept in the Airport office. It has been also confirmed by Sh. Ashok Sehgal in his statement dated 24-8-1987 that most of the Bills of Entry referred to in the Memo dated 20-10-1987 bore the signatures of Sh. Ramesh Chander of M/s. Airport Handling Services and some of the Bills of Entry were also signed by the officials of PANAM, when Sh. Ashok Sehgal was confronted with the statement of Shri Ramesh Chander he confessed his involvement as already stated in his statement dated 21-8-1987. Sh. Ashok Sehgal had also produced BLANK FORMS of Panam which were used to make fabricated Invoice Shipp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of agencies such as Central Warehousing Corpn. where the goods are stored on arrival and then handed over to the consignee. The appellant has always been maintaining proper and prescribed statutory records with full details of importation. A commission between 100 to 30 rupees is received by the appellant for each such transaction, depending upon the nature of the goods and the specialised services rendered and if the appellants incur any additional expenditure for example for local transportation etc., the clients reimburse the actual expenses. The allegation in the show cause notice is that these appellants appear to have been the persons concerned in deliberate mis-declaration of value of goods imported by Panam. The appellant Nos. 4, 5 6 replied to the show cause notice denying the allegations and submitting that the appellants had not fabricated any of the documents and they had acted on the basis of documents furnished by Panam. The ld. Consultant submits that there is no evidence to establish that there was any intention or knowledge on the part of the appellant firm or its partner or employee regarding fabrication of invoices or forging of documents and therefore, no pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Shri S. Ranganathan, Managing Partner, M/s. Airport Handling Services, being the noticee in the case and note that in his statement dated 20-8-1987 Shri S. Ranganathan has admitted that he was aware that occasionally Shri Ashok Kumar Sehgal had been asking his employee Shri Ramesh Chander to reduce the assessable value for evading Customs duty in the Bills of Entry. 25.2. I further note that M/s. Airport Handling Services who are holding licence No. 4/87 as Customs House Agent s work is a partnership concern having S/Shri S. Ranganathan S/o late Shri N. Srinivasan Aiyer and R. Ramanathan S/o Shri S. Ranganathan its partners. It is a family outfit. I also find that they were only handling the clearance of cargo relating to M/s. Panam Airways and one of their employee, Shri Ramesh Chander was authorized to handle the documents and import of cargo by M/s. Airport Handling Services. It has been further noted from the statement of Shri Ranganathan that in cases where the assessable value was reduced by fabricated invoices, they used to charge more in respect of such Bills of Entry in the form of incidental miscellaneous charges i.e. approximately Rs. 300 to Rs. 400 extra. I have als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank forms bearing PANAM World Airways have supplied by him. It will be pertinent to note that Shri Ranganathan in his statement has clearly admitted the knowledge of evading of customs duty by his employee, Shri Ramesh Chander, in collusion with PANAM officials by fabricating invoices showing lesser value in place of original invoices of higher value received from the forwarding stations of PANAM to India and he has further gone to say that he could not stop such unethical and illegal practice carried on by Shri Ramesh, their employee, due to the fear that PANAM, who is their valued customer, might terminate their services and they would lose business . 25.5. It has also been pleaded on behalf of M/s. Airport Handling Services, CHA and their partner Sh. S. Ranganathan in their submissions dated 28-9-1988 that M/s. Airport Handling Services did not have any special relationship with PANAM; that PANAM has not paid the duty in respect of some of their imports as per law and had saved some money on this account, the same has not percolated to the Agents who have not been a beneficiary of the monetary gain; that the matter of day to day work relating to clearance of goods imported by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.8. I have carefully gone through the submissions made by and on behalf of Sh. S. Ranganathan proprietor of M/s. Airport Handling Services. I am not inclined to accept the plea raised by them that in the matter of day to day work relating to clearance of goods imported by PANAM, the Managing Partner of M/s. Airport Handling Services, Sh. S. Ranganathan has not taken any active role, as he was only attending to overall Management of the office and the details of daily procedural work of PANAM s clearance was the responsibility of their employee Sh. Ramesh Chand. 25.9. In terms of Regulation 14(d) of the Customs Housing Agents Licencing Regulations, 1984 made under Section 146 of the Customs Act, 1962 and issued under Notification No. 85/Customs/84 F. No. 502/8/85-Customs-6 dated 9-3-1984. It is obligatory on the part of Customs House Agent to advise to his client to comply with the provisions of the Act and in case of non-compliance, he is required to bring the matter to the notice of the Asstt. Collector of Customs. 25.10. Further, CHA is fully responsible and accountable for all the acts of omission and commission of his employees and the plea advanced by Sh. S. Ranganathan t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case. I do not accept the contention of Shri S. Ranganathan that the statement of Shri Ramesh Chander was not voluntary since the said Ramesh Chand has neither retracted his statement so far; nor he has contested this point in reply to Show Cause Notice or in any other office communication. 25.14. I am not convinced with the action of Shri S. Ranganathan who has stated that he has issued a warning to Sh. Ramesh Chander which was not suffice, in view of the grave irregularities and malpractices committed by him under his very nose. Since the work and conduct of Sh. Ramesh Chander was against Govt. Revenue and contrary to the provisions of Customs law for which Letter of Authority , was issued to him by the deptt. to clear goods on behalf of CHA, it would have been desirable that the said Sh. Ranganathan should have reported to the deptt. and asked for cancellation of letter of Authority who was concerned in defrauding the Govt. of legitimate revenue. I am surprised to note that even till date the said Sh. Ramesh Chander holds the letter of authority on behalf of the said CHA despite abetting collossal loss to Government Revenue. 25.15. I further fail to understand as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned authority that necessary steps be taken by the Deptt. for suspension/cancellation of their CHA licence in terms of the provisions of Customs Act, 1962 and Customs House Agents Licencing Regulations, 1984. 25.18. Since the irregularities and malpractices for the huge evasion of customs duty i.e. about Rs. 30 lac approximately (1982-87) abetted by the CHA are exceedingly grave and serious and particularly in view of the fact that they were continuing from fairly long time, they deserve severe and deterrent penalties on this context. Accordingly, I hold them liable to penal action under Section 112 of the Customs Act, 1962. 26. RAMESH CHANDER, EMPLOYEE OF M/S. AIRPORT HANDLING SERVICES It has been contended by the noticee that he is an employee of M/s. Airport Handling Services and had nothing to gain by resorting to any illegal activities and has not done any act of omission which rendered the goods liable for confiscation and as such he was not liable for penal action under Section 112 of the Customs Act, 1962.I also note from the reply of Shri Ramesh Chander dated nil received on 2-3-1988 that the explanation tendered by M/s. Airport and he was an employee drawing Rs. 1,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated above. However, in view of the fact that he is an employee of M/s. Airport Handling Services (CHA) and drawing a nominal salary of Rs. 1,000/- per month I am inclined to take a lenient view. 27. From the chart (enclosed as annexure A to this order) it is evident that M/s. Panam Airways during the period 1982-87 has undervalued the goods to the tune of Rs. 21,39,568/- and cleared the same by submitting fabricated invoices rendering thereby the same liable for confiscation under Section 111(m) of the Customs Act, 1962. I, therefore, order that goods cleared during 1982-87 (and not available for confiscation) under the B/Es mentioned in the chart be held liable for confiscation under Section 111(m) of the Act ibid." 11. From the above, it is seen that the evidence in the form of statement of Shri Ashok Sehgal and the statement of appellant Nos. 5 6 themselves points to complicity in the matter and their involvement in undervaluation of goods resulting in evasion of duty gives rise to penal action. In the face of the statement of appellant Nos. 5 6 and the statement of Shri Ashok Kumar Sehgal, appellant Nos. 4, 5 6 cannot plead that penal action against them should b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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