TMI Blog2009 (6) TMI 871X X X X Extracts X X X X X X X X Extracts X X X X ..... ently avail the higher benefit under DEPB scheme, the officers of Directorate General of Revenue Intelligence searched the office as well as residential premises of Shri Bal Krishan Garg on 16-6-04 but no incriminating documents were found. During search, on initial inquiry with the partners of M/s. Swati, it was ascertained that two export consignments of Steel clamps and parts, of M/s. Swati under shipping bills No. 8188 dated 2-6-04 and 8667 dated 11-6-04 were pending clearance at CFS (CONCOR), Ludhiana. Export consignments were immediately detained and the samples drawn from them were sent to the CRCL as well as National Institute of Secondary Steel Technology (NISST), Mandi Gobindgarh. The tests by NISST reported the goods to be made of non-alloy steel. In the meantime inquiry was also made with Shri Bal Krishan Garg and Shri Keshav Garg. Shri Keshav Garg in his statement dated 16-6-04 recorded under Section 108 of Customs Act, 1962 stated that they were exporting the goods manufactured by them - Steel clamps and its components, bright bars, forgings etc. of non-alloy steel to UAE, Australia, Saudi Arabia, that he had resorted to over-valuation to avail excess DEPB benefits an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 108 of Customs Act, 1962, wherein he stated that he was doing the export documentation work and excise related work of M/s. Swati, that after preparing the documents, the same were being handed over to M/s. A.R. Shipping, CHA who attended to the work of Customs clearance at ICD and that he was receiving all the payments from M/s. Swati through cheques. On 17-6-04 another statement of Shri Raj Kumar was recorded under Section 108 of Customs Act, 1962, wherein he stated that M/s. Swati Industries were exporting goods under DEPB Scheme mainly to Gulf countries that he was getting directions and necessary materials for preparation of shipment documents from Shri Bal Krishan Garg, that work relating to banks was dealt by Shri Bal Krishan Garg himself only, that he had knowledge that the exported goods were being over-valued from M/s. Swati Industries for getting more DEPB incentives, that percentage of over-valuation varied from consignment to consignment but all this was decided by Shri Bal Krishan Garg, that for the purpose of over-valuation a parallel set of invoices was prepared in M/s. Swati as per the directions of Shri Bal Krishan Garg and all the records was kept by Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver-invoicing the export goods, they used to inflate the value of certain invoices by 8% to 30% of the invoice value and this increase in the value was spread over of all the items of that particular invoice, that only some of the invoices were over-valued to obtained higher rate of export incentives and all the invoices were not inflated, and that he used to personally handle the work of over-invoicing and kept a private record of such over-invoicing. He also gave the invoice-wise details of the difference between declared inflated value and actual value in respect of 14 invoices No. 23 dated 17-4-03, 95 dated 10-6-03, 130 dated 3-7-03, 145 dated 9-7-03, 160 dated 21-7-03, 177 dated 31-7-03, 186 dated 11-8-03, 198 dated 26-8-03, 212 dated 1-9-03, 222 dated 6-3-09, 236 dated 17-9-03, 279 dated 30-10-03, 294 dated 12-11-03 and 428 dated 25-2-04. The total value of exports on the basis of these invoices came to Rs. 2,73,79,456.70 and the DEPB benefits in respect of the same worked out to Rs. 47,91,106.83. 1.4 On further inquiry it was found that 14 DEPB licences issued against the exports against the above-mentioned 14 invoices, had been sold to M/s. Surindra Impex, Ludhiana, M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation of an amount of Rs. 25,00,000/- deposited against this demand, (b) ordered confiscation of the exported goods valued at Rs. 2,73,79,457/- under Section 113(d) and (i) of Customs Act, 1962 and imposed redemption fine of Rs. 25,00,000/-, and (c) imposed penalty of Rs. 25,00,000/- on Shri Keshav Garg and penalty of Rs. 20,00,000/- on Shri Bal Krishan Garg under Section 114 of Customs Act, 1962. The penal proceeding against M/s. Sanjeev Impex, M/s. Surindra Impex and M/s. Dee Kay Consultants were dropped as they had not imported goods against DEPB scrips purchased by them from M/s. Swati. It is against this order that these three appeals have been filed by M/s. Swati, Shri Keshav Garg and Shri Bal Krishan Garg. 2. Heard both the sides. 2.1 Shri Sudhir Malhotra, Advocate, the learned Counsel on behalf of the appellant made the following submissions :- (1) The goods exported had been manufactured by the appellant themselves, who had cleared the same under ARE-1 (earlier known as AR-4). There is no difference between the ARE-1 price and the FOB price declared in the shipping bills. As per Para 3 of the Board Circular No. 69/97-Cus., dated 8-12-97, in case of manufacturer-expo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts is correct or otherwise, the issue of demand of Rs. 47,91,107/- from M/s. Swati can be taken up first. In this regard we find that this is a strange order and strange show cause notice, as neither the show cause notice mentions as to under which provision of the Customs Act, 1962, the amount of Rs. 47,91,107/- was sought to be recovered from M/s. Swati, neither the impugned adjudication order mentions as to under which provision of the Customs Act, this demand has been confirmed. 3.1.1 The allegation against the appellants is that they inflated the FOB value from 8% to 30% in the shipping bills mentioned in Para 17 of the impugned adjudication order and they did so in order to claim higher DEPB benefit. The total DEPB benefit has been quantified at Rs. 47,91,107/-. Since the DEPB scrips issued to M/s. Swati had been sold by them to M/s. Surindra Impex, M/s. Sanjeev Impex, and M/s. Dee Kay Consultants, the Department made inquiry with them, who stated that they have not used these scrips for any duty free imports. There is no inquiry as to whether they sold these scrips and if so to whom and whether the buyers have used those scrips for duty free imports. If the allegation of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In such cases, the Customs Authorities are at liberty to pursue with the DGFT Authority to cancel the DEPB scrips to prevent abuse thereof, but they cannot recover the duty from the exporter when he has transferred those DEPB scrips to others. We also find that we are supported in our conclusion by Tribunal s decision in cases of Vijeta International v. CC, Mumbai reported in 2006 (199) E.L.T. 89 and Dharam Exports v. CC, Nhava Sheva reported in 2005 (192) E.L.T. 503. 4. The main point of dispute is as to whether M/s. Swati have inflated the FOB value of the goods exported under 14 invoices mentioned in Para 17 of the impugned order-in-original, for claiming higher DEPB benefit and whether the appellants i.e. M/s. Swati and its partners are liable for penalty on this ground under Section 114 of the Customs Act. 4.1 The main appellant - M/s. Swati are manufacturers and exporters of Bright bars, machined steel forgings, un-machined steel forgings, spanners, steel clamps and parts thereof, made of non-alloy steel (galvanized/un-galvanized). The exports were under DEPB claim and the export goods had been cleared from the factory under ARE-1 forms. The declared FOB value is the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tems is Rs. 25,16,512/-. Similarly no market inquiry has been conducted in respect of spanners . As regards the steel clamps we find from the export invoices from pages 139 to 216, of appeal memo of M/s. Swati, that mainly steel clamp scaffoldings (fixed), steel clamp scaffolding (swivel) and small quantity of steel clamp (put lock) have been exported at price of U.S. $ 1.92 - 1.98 per pc, U.S. $ 1.96 - 2.2 per pc. and U.S. $ 1.55 per pc. respectively. The average export price of these steel clamp is Rs. 82/- per kg. The market inquiry has been conducted in respect of put log clamp, sleeve clamp, Grave lock/Girder clamp-swivel, Grave lock/ Girder clamp fixed being exported under shipping bill 8667 dated 11-6-04 and 8188 dated 2-6-04 and their price varies from Rs. 40/- per pc. to Rs. 135/- per pc. There is no discussion in the impugned order as to whether the steel clamp (scaffolding fixed/swivel) exported under the 14 invoices mentioned in Para 17 of the order are the same as Board Retaining clamp, Sleeve clamp, Grave lock/Girder clamp fixed/swivel, in respect of which market inquiry was conducted. The only finding of Commissioner in this regard in Para 34 of the impugned order i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in support of the Department s allegation - i.e. the statement dated 16-6-04 of Bal Krishan Garg, Statements dated 16-6-04 and 11-3-05 of Shri Keshav Garg and Statement dated 17-6-04 of Shri Raj Kumar, which is the main evidence. While the statements dated 16-6-04 of Shri Bal Krishan Garg and Keshav Garg and identical and are corroborated by statement dated 17-6-04 of Shri Raj Kumar (who in his statement dated 16-6-04 had not disclosed any knowledge about alleged export over-invoicing by M/s. Swati), Shri Keshav Garg in his statement dated 11-3-05 has again confirmed his statement dated 16-6-04 and has admitted to 8% to 30% over-invoicing. These statements have been retracted by Shri Keshav Garg and Shri Bal Krishan Garg only in reply dated 26-9-05 to the show cause notice stating that the statements dated 16-6-04 and 11-3-05 of Shri Keshav Garg and dated 16-6-04 of Shri Bal Krishan Garg are not their voluntary statements but are the statements dictated by DRI officers, which they were forced to sign in face of threat of arrest and continued freezing of their bank account and that the bank account of M/s. Swati had been frozen by DRI vide letter No. 856 (21) LDH/2004/247 dated 16- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oluntary in nature and not obtained as an outcome of threat etc. if the same is to be relied upon solely for the purpose of securing a conviction. With a view to arrive at a finding as regards the voluntary nature of statement or otherwise of a confession, which has since been retracted, the Court must bear in mind the attending circumstances which would include the time of retraction, the nature thereof, the manner in which such retraction has been made and other relevant factors. Law does not say that the accused has to prove that retraction of confession made by him was because of threat, coercion etc., but the requirement is that it may appear to the court as such. 35. In the instant case, the Investigating Officers did not examine themselves. The authorities under the Act as also the Tribunal did not arrive at a finding upon application of their mind to the retraction and rejected the same upon assigning cogent and valid reasons therefor. Whereas mere retraction of a confession may not be sufficient to make the confessional statement irrelevant for the purpose of a proceeding in a criminal case or quasi criminal case, but there cannot be any doubt whatsoever that the court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, prudence and practice require that court should seek assurance by way of corroboration from other evidence adduced by prosecution and for this purpose, general corroboration would suffice, not for each detail contained in the confessional statement, and (c) wealth of details by itself is not an assurance of its voluntary character - the totality of facts and circumstances should be taken into account. Thus the ratio of the above-mentioned judgment is that confessional statement of a person would be admissible as evidence only if it has not been obtained by threat, inducement or promise and the law does not say that the accused has to prove to the hilt that retraction of confession made by him was because of threat, coercion, promise, inducement etc. - the requirement is that it may appear to the court as such. In this case there is no explanation from the Department as to why when M/s. Swati s bank account was frozen on 16-6-04, supposedly to protect the interests of Revenue, why instructions for de-freezing were given on 25-6-04 when the matter was still under investigation. Prima facie, this action of the investigating officers appears to be with the sole purpose of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... implicated by one Shri S. Solanki who had been apprehended by the customs while trying to smuggle out foreign exchange worth Rs. 13,27,212/-. (iii) Even the statement dated 17-6-04 of Shri Raj Kumar who was handling the work of export documentation for M/s. Swati on part time basis is of doubtful probative value as in his earlier statement dated 16-6-04, he had not disclosed any knowledge about export over-valuation and parallel set of invoices by M/s. Swati. Moreover being an exculpatory statement, it is of no evidence value without corroboration by other independent evidence. 4.3.1 In view of the above, we hold that the confessional statements of Shri Bal Krishan Garg, Shri Keshav Garg and Shri Raj Kumar are not reliable evidence in support of the allegation of export over-invoicing - the statements of Shri Bal Krishan Garg and Shri Keshav Garg, have not only been retracted, but, as discussed above are hit by Section 24 of the Indian Evidence Act, as the same appear to have been obtained by the Investigating Officers by threat of continued freezing of M/s. Swati s bank account. 5. In view of the above discussion, we hold that there is no evidence in support of the Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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