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TMI Blog1992 (10) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from Shri Ashok Kumar Sehgal, Manager, 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 purpose of budgetary allotment. Since the goods imported did not have any asce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal 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 $ 800.00 093 dt. 3-6-1983 $ 800.00 B-004835235 dt. 13-5-1983 $ 2016.00 HK $ 1050.00 084 dt. 16-5-1983 HK $ 1050.00 B-03495726 dt. 15-7-1982 $ 9540.00 $ 3020.00 157 dt. 20-8.1982 $ 3020.00 B-04172560 dt. 4-9-1984 $ 1840.00 $ 920 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 copy of the calculation sheets may be given to me for record. I have given the above statement voluntarily without any pressure and is correct". 6. There is also no dispute that in some of the Bills of entry, the description of the goods have also been changed and the fact of substituting the original invoices received from the Supplying Station with that of fabricated invoices showing less value and sometimes, different description have been confirmed in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Wiessmenn B. Director preferred to aid and abett the said unlawful practice for the revenue advantage of his company and took no steps whatsoever either to put an end to the practice nor informed the customs department. Sh. Wiessmann was having full knowledge and had reasons to believe that by wilful suppression of facts; and deliberate concealing of "original invoices", and by fabricating forged invoices the Govt. was defrauded of its legitimate revenue. Being the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes 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 duty by substituting the original invoices in connivance in Company's officials continuing regularly since 1976. The offence committed by M/S. PANAM Airways with the active collusion and connivance with Wiessmann and other officials of the company, and their CHA is grave and serious and calls for very deterrent penalties on them, particularly when a company like PANAM, which is of great repute is entering into such a malpractice of manipulating invoices for duty evasion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 Shipping Orders. 22.5. From the above, I conclusively conclude that Shri Ashok Sehgal had comprehensive knowledge about the systematic evasion of customs duty by manipulating the description of goods as well as indicating less value on the fabricated documents knowing well that the goods were liable to confiscation under Section 111(m) of the Customs Act, 1962 and as such is liable to penal action under Section 112 of the Act ibid. Since above undercover operation for the evasio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 penalty is warranted in these circumstances. The appellants received commission in the normal course of business and nothing extra and because of disallowance by Panam of some of the appellants bills, Shri Ramesh Chander (appellant No. 6) prepared a few kachha vouchers mentioning certain small amount of Rs. 200, 300 etc. for special services rendered so that, on that basis, the appellant firm could recover the amount outstanding from Panam. The ld. Consultant submits that the adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 also noticed that during investigations, Shri Ranganathan was confronted with Bill of Entry No. 34679 dated 24-6-1987 and two kachha vouchers submitted to him by Ramesh Chander wherein he had shown Rs. 100/- as miscellaneous charges on account of reducing the assessable value from US $ 108.00 to US $ 10.80 for the consignment mentioned in the said Bill of Entry. Shri Ranganathan has admitted having reduced the assessable value as mentioned above and the said Shri S. Ranganathan has als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 PANAM; the partner of M/s. Airport Handling Services, viz. Shri Ranganathan has taken no active role as he was mainly attending to the overall management of the office and the details of every day procedural work of PANAM's clearance was the responsibility of their employee, Shri Ramesh Chander as brought out clearly in the statement of Shri Ranganathan and Sh. Ramesh Chand. They further submitted that in the statements relied upon by the Deptt., there was clear evidence to suggest th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ANAM'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 that he was looking after overall management and rest of the daily work of PANAM was the responsibility of Sh. Ramesh Chander is untenable, ridiculous and redundant in view of the provisions contained in Regulation No. 20(7) of the CHA Licencing Regulations, 1984. Regulation 20(7) reads are under: "The Customs House Agent shall exercise such supervision as may be necessary to ensure the proper conduct of any such employees in the transaction of business as Agent and be held responsible for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tices 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 to why the said CHA continued to abet and aid illegal and nefarious practice of evading customs duty by fabricating the original invoices with the forged ones, when he came to know about this practice and it was obligatory on his part to inform the customs deptt. immediately which would have proved his bona fides; but unfortunately he preferred to be a party in defrauding the Government of its legitimate Revenue over Rs. 29 lac by aiding and undervaluation of consumable and other articles of stores ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terrent 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. 1,000/- per month. It has been further contended by the noticee that whatever the documents given to them by M/s. PANAM Airways, the Bill of Entry was filed on the basis of those documents and the declaration on the Bills of Entry have been attested by the senior officers of the Panam Airways as per procedure prescribed by the Customs Department. It has been further submitted that apart from the statement of Shri Ashok Sehgal which incriminated him none of the other statements either corroborated the deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 be dropped as in the case of Mr. Hemrajani. The adjudicating authority has recorded in paragraph 23.11 of his order that the most forceful plea taken by Mr. Hemrajani is that his signature nowhere appeared on any Bill of Entry/invoices nor has he presented the same to Customs for clearance and the statement of Shri Ashok Sehgal have not been corroborated by any independent evidence and that no statement has been recorded from Mr. Hemrajani himself. The statements of appellants 5 & 6 are self inculpatory and i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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