TMI Blog2010 (12) TMI 668X X X X Extracts X X X X X X X X Extracts X X X X ..... essee whether the machines under import were liable to be confiscated in terms of Section 111(m) of the Act - for the applicability of Section 111(m), there can be no differentiation between the goods in respect of which Bills of Entry were filed and other goods under transhipment for which no Bills of Entry were filed - It is not in dispute that the goods under import were not of the same specifications as those of the goods mentioned in the purchase order - Decided against the assessee whether some of the items imported by KSL along with the machines without mentioning the same in the import documents are liable to confiscation under clause (l) of Section 111 of the Act - The redemption fines determined by the Commissioner in lieu of confiscation of the goods are apparently proportionate to the lower CIF values estimated in the relevant punchnamas and not to the declared higher CIF values - Held that: value could not have been revised by the Commissioner is agreed to by me since there was no proposal to revise the value in the show-cause notice by due rejection of transaction value and proposal to reduce it under a specific rule with supporting evidence - In the absence of sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olete technology, that the goods were overvalued by about 10 times and that brand new bearings and certain other items had also been imported along with the old machines. The actual value of the imported machinery was estimated at Rs. 2.16 crores as against the declared value of Rs. 21.64 crores. In the course of further investigations, statements of certain functionaries (including Shri H.S. Sethi, Managing Director of KSL), Shri S.M. Bhola, Chartered Engineer and Chief Executive of M/s. NQA Quality Systems (Registrar) Ltd. and others were recorded under Section 108 of the Customs Act. While so, in a letter dated 28-1-1997, Shri D. Santhanam, Authorised Signatory and Vice-President of KSL requested the Customs authorities to return the EPCG licence for the purpose of obtaining an amended licence from DGFT, but the request was not acceded to. At that stage, the investigation was taken over by the Special Investigation and Intelligence Branch (SIIB). On 26-3-1997, 7 containers at ICD, Hyderabad, were opened and the goods examined, whereupon it was found, inter alia, that the reference particulars on the goods matched those mentioned in certain records seized earlier from Santhanam s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and (m); (d) to confiscate 3 floor plates (CIF value over Rs. 22.79 lakhs) imported in the 3 containers lying at Mumbai Docks for transhipment to ICD, Hyderabad, under Section 111(d), and (m) of the Act; (e) to confiscate the sprockets and chains (valued at about Rs. 50 lakhs) and the new bearings (valued at about Rs. 50 lakhs) (which were not included in any import document but imported under the Zero Duty EPCG licence), under Section 111(d), (l) and (m) of the Act; and (f) to impose penalty on KSL under Section 114A of the Act. The show-cause notice also proposed penalties on Shri H.S. Sethi (Managing Director) and other functionaries of the company and also their CHA under Section 112(a)/114A of the Act for their alleged role to facilitate the imports by KSL under Zero Duty EPGG Scheme with fraudulent intent to evade payment of duty. KSL or others did not reply to the show-cause notice, nor did they cooperate with the adjudicating authority. Though, in a Writ Petition filed by KSL before the Hon ble High Gourt of Judicature at Hyderabad, the Hon ble High Gourt, by an order dated 18-8-1998, required them to file a reply to the show-cause notice within the time granted by the adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods by paying a fine of Rs. 50 lakhs (Rupees fifty lakhs only). (iii) I hold that zero duty EPCG licence No. 01500481/1/13/10/1/01 dated 5-7-96 is not valid for the goods (19 second-hand heavy duty machines and bearings, sprockets and chains) under import and therefore deny import of the said goods under cover of the said licence. (iv) Under Section 112(a) of the Customs Act, 1962, I impose a penalty of Rs. 50 lakhs (Rupees fifty lakhs only) on M/s. Kitti Steels Ltd., Hyderabad. The adjudicating authority also imposed penalties on many of the noticees including Shri H.S. Sethi, on whom a penalty of Rs. 50 lakhs was imposed under Section 112(a) of the Customs Act. Hence, the present appeals. 4. The records of the case indicate that KSL placed a purchase order on TECTRA on 4-6-1996 for 18 second-hand heavy duty machines. This purchase order showed complete details of these 18 machines including year of manufacture ranging from 1991 to 1993 for a total value of DM 87,82,610 (CIF, Hyderabad). TECTRA issued three invoices dated 3-7-1996, 8-7-1996 and 31-8-1996 for the 18 second-hand heavy duty machines mentioned in the purchase order. The first two invoices were filed with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d between 1991 and 1993 but manufactured between 1961 and 1982 and, therefore, there was substance in the charge of overvaluation also. The adjudicating authority further found that the new bearings, sprockets and chains, totally valued at Rs. 1 crore, which were also found with the machinery under import, were not component parts of any of the second-hand heavy duty machines under import. The Commissioner also found that these items were meant for supply to one M/s. Prism Cements Ltd. and had nothing to do with the second-hand machines under import. These items were found to have been not mentioned in any of the import documents. The Commissioner, therefore, held these items to be liable to confiscation. The adjudicating authority further found that KSL had established contacts with M/s. Wirths GmbH, Germany, and had also negotiated the price of 15 out of the 19 second-hand machines under import. Certain invoices of M/s. Wirths GmbH were found to be clinching evidence of gross overvaluation of the machines inasmuch as the prices indicated in TECTRA s invoices were many times higher than those indicated in the invoices of M/s. Wirths. The adjudicating authority arrived at similar c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the adjudicating authority. The records of this case would speak volumes about the non-cooperation of the party with the adjudicating authority. As we have already noted, no reply to the show-cause notice was filed by KSL despite numerous opportunities having been given and even despite specific directive of the Hon ble High Court. The Commissioner s repeated offers of personal hearing were also not availed of. The plea of KSL for permission to cross-examining witnesses was duly considered by the Commissioner. KSL wanted to cross examine all those persons whose statements were relied upon in the show-cause notice . They, however, did not name any of them, nor did they state any reason why they wanted to cross-examine them. The Superintendent of Customs who prepared the punchnama was, in fact, allowed to be cross-examined. It is settled law that cross-examination is not a matter of right. It should be claimed by stating valid reasons. In the present case, the learned counsel submitted that the appellants could not reply to the show-cause notice as they were not allowed to cross-examine the witnesses. That cross-examination of witnesses is a pre-requisite for reply to show-cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement dated 26-3-1997 of Shri S.M. Bhola. The machines under import did not match the description of the goods given in the import documents, whether it be in relation to the age, value or residual life of the machines. The relevant EXIM Policy (1992-97) required the minimum residual life of second-hand machines to be ten years for zero duty imports. With the withdrawal of certificate by the Chartered Engineer, this requirement remained to be established. The results of examination of the goods also went against the importer on this aspect. For all these reasons, we are in agreement with the finding of the learned Commissioner that the Zero Duty EPCG licence produced by KSL was not applicable to the goods under import. In other words, the goods imported by KSL were imported without valid licence and hence liable to confiscation under Section 111(d) of the Customs Act. 7.4 The next question to be considered is whether the machines under import were liable to be confiscated in terms of Section 111(m) of the Act. Under this provision of law, any goods which do not correspond in respect of value or any other particular with the entry made under the Act shall be liable to confisca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isdeclared the value of the goods and, therefore, it did not embark on any determination of value of the goods under Section 14 of the Customs Act. The learned SDR did not rebut these arguments of the counsel. Therefore, we hold that the goods imported by KSL cannot be confiscated on the ground of misdeclaration of value. The position is different with regard to any other particular . It is not in dispute that the goods under import were not of the same specifications as those of the goods mentioned in the purchase order. Particulars such as year of manufacture, residual life, value, etc. of the goods as found on examination did not match the particulars declared/mentioned in the import documents. Therefore, as rightly submitted by the SDR, the goods are liable to confiscation on the ground of misdeclaration of description in terms of Section 111(m) of the Act. 7.5 The next question is whether some of the items imported by KSL along with the machines without mentioning the same in the import documents are liable to confiscation under clause (l) of Section 111 of the Act. It is not in dispute that sprockets, chains and new bearings, which were found in the consignment under impor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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