TMI Blog2008 (10) TMI 378X X X X Extracts X X X X X X X X Extracts X X X X ..... sdeclared in terms description, quality and value with intention to claim drawback and since their actual value was much less than the amount of drawback claimed, no drawback was admissible and the penalty has been rightly imposed. Confiscation of goods exported - Commissioner in the impugned order has observed that since the goods have already been exported, the same are not liable for confiscation and accordingly he has not imposed any redemption fine in lieu of confiscation under Section 125 of Customs Act. - Appeal by revenue - Authorization by committee of chief commissioners - held that:- It is only in the Finance Act, 2008 that a specific provision was made for reference to the Board in case of disagreement between the two Chief Commissioner’s of the Committee of Chief Commissioners, on the question of legality and proprietary of the Commissioner’s order, but this provision cannot be given retrospective effect. In view of this, the three appeals of the Revenue have to be dismissed, as the same are not backed by a valid review authorisation. - C/301-314/2005 , C/535-536 & 539/2006 - C/395-411/2008(PB) - Dated:- 16-10-2008 - S/Shri S.S. Kang, Rakesh Kumar, JJ. REPRES ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rods of mild steel instead of high speed cobalt bearing steel, the rubber tape were of un-vulcanized steel and track wheel were in unfinished condition. The total amount of drawback and DEPB benefits claimed on the basis of the declared value was Rs. 3.06 crores as against their actual market value of Rs. 44.05 lakhs. It was also found that the test of the samples drawn from these very containers by the customs officers of CFS Ludhiana showed the goods to be as per the declaration, which indicated that the goods actually exported were different from the goods from which the samples had been drawn and this indicated collusion between the Exporter and the Customs officers of CFS Ludhiana. The 16 containers were placed under seizure. A show cause notice No. 855 (14) ASR/2000/313-330 dated 22-5-01 was issued to the exporters for confiscation of the seized goods, disallowing the drawback DEPB benefit and imposition of penalty under Section 114 of the Customs Act. Since these six companies had exported goods declared as - Gear cutting tools of high speed steel , heat resistant rubber tension tape and Track wheel earlier also under drawback DEPB claim, on reasonable belief that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fictitious. However, in the bank accounts of M/s. Jindal Alloys, M/s. Jyoti Steels, M/s. Krishna Hardware Mill Store and M/s. Rama Krishna Steel in State Bank of Hyderabad, Ludhiana, the proprietors of these firms were shown to be Shri N.D. Garg, brother of Shri Vinod Garg, and Shri Shambhu Kumar, Shri Vineet Kumar, Shri Sanjeev Kumar and Shri Pratap Nath Pandey, who are employees of the companies of Shri Vinod Garg and as per the bank s record, all these accounts had been opened on introduction from Shri N.D. Garg and Shri Manjit Singh. From the statement dated 6-8-02 of Shri Manjit Singh it appeared that in the factory of M/s. Garg Forging, only bogus production of Gear cutting tools made of high speed steel was being shown without actually producing this item. 1.1.3 In course of inquiry it was also learnt that Shri Vinod Garg was also exporting the same items i.e. Gear Cutting tools of high speed steel , heat resistant rubber tape and track wheels under drawback DEPB claim in the name of M/s. Contessa Commercial Co. (P) Ltd., Kolkata, M/s. SRM (P) Ltd., Kolkata, M/s. ASK Exports, Kolkata and M/s. Varun Enterprises, Bhagalpur, from CFS Ludhiana and these companies wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose shown in the shipping bills. In most of the cases, the export proceeds had been received from Canada (Toranto), Dubai, U.S.A., U.A.E., Singapore, Egypt, Thailand, Israel and in some case, even from Mumbai. 1.2 In view of the above, a show cause notice No. 855 (14) ASR/2000/Pt/IV/1331 dated 3-10-2000 was issued to the Appellants asking them to show cause as to why : (a) the goods exported by M/s. SRG, M/s. Garg Forging, M/s. Ragini, M/s. Garg Concast, M/s. Goodwill and M/s. SRG Forge, declared to be valued at Rs. 2,11,39,342/, on which drawback amounting to Rs. 1,25,04,440/- is pending and the goods declared to be valued at Rs. 6,31,29,863/- on which drawback amounting to Rs. 3,68,18,331/- has already been paid, should not be held to be liable to confiscation under Section 113 of the Customs Act, for misdeclaration of their description, quality and value, and why the drawback amounting to Rs. 1,25,04,440/- should not be disallowed and the drawback amounting to Rs. 3,68,18,331/- already paid should not be recovered with interest; (b) penalty under Section 114 of the Act should not be imposed on the above- mentioned six companies ; and (c) penalty under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eek imposition of redemption fine in lieu of confiscation in respect of the goods held by the adjudicating authority to be liable for confiscation under Section 113(d), 113(i) and 113(ii) of the Act. 2. Heard both the sides. 2.1 Shri Kamal Jeet Singh, Advocate, the learned counsel on behalf of the Appellants in appeal No. C/301-314/05, made the following submissions :- (1) The present show cause notice alleges that since the seized goods, subject matter of another show cause notice, were found to have been misdeclared, the earlier consignments where the export has already been completed, must also have been misdeclared. Since the CRCL reports for these exports were in order, it has been alleged that the Appellants substituted the samples with the connivance of the offices. But the impugned order has dropped the penal proceedings against the officers on the ground that there is no evidence of their connivance with the exporters. Therefore there is no basis for denying the drawback/DEPB benefit on imposing penalty on the Appellants. (2) Admittedly the goods had been exported out of India and the remittance had also been received by the Appellant companies, as certifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d procedure, three samples are drawn by the officers wherever it is decided to draw the sample. 1st sample is sent to CRCL, 2nd sample is given to the exporter and 3rd sample is kept in the customs office for record. When the Revenue doubts the declared description and quality of the goods exported, the third samples, available in the office should have been got tested by the CRCL but this has not been done. In absence of any concrete evidence of misdeclaration, the benefit of doubt should go to the appellants. 2.2 Shri R.K. Verma, the learned Departmental Representative, made the following submissions :- (1) There was no manufacture of export goods in the factory, as confirmed by Shri Manjit Singh, the authorized signatory. The records were maintained to justify export by making false entries in the Central Excise records like RG-1 register and this fact has been accepted by Shri Manjit Singh in his statement. The fact that the goods being exported were sub-standard, is clear from the fact that immediately after detection of the fraud by DRI, certain consignments declared to be gear cutting tools of high speed steel heat resistant rubber tension tape , track wheels, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods could never be accepted in U.K., but in Dubai their agent managed their clearance and that the difference between the declared value received from foreign countries and actual value of exported goods was being returned to one Shri Harmeet Rajpal alias Inder Pal Singh alias Bobby in Dubai, through hawala transactions. (7) Since the goods exported have been misdeclared in terms of value description in quality, the same would be liable for confiscation under Section 113(d), 113(i) and 113(ii) of the Act. Even though the goods are not available for confiscation but still personal penalty is imposable on appellant under Section 114 of the Customs Act. In this regard, reliance is placed on Hon ble Calcutta High Court judgment in the case of Euresian Equipment and Chemical Limited and Others v. Commissioner of Customs and others reported 1980 (6) E.L.T.38 (Cal.). (8) Main reliance has been placed by the appellants during course of hearing on the fact that the test reports in respect of the samples drawn at the time of export show the goods to be as per the description in the shipping bills. In this regard, it is to submit that a common investigation was initiated by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... May-June 2000 a total of 16 containers covered by 74 shipping bills, declared to contain gear cutting tools made of high speed steel, heat resistant rubber tension tapes and track wheels and which had been cleared by the Customs officers of CFS, Ludhiana were intercepted by the DRI - 15 containers were intercepted at Nhava Shiva and one container at Ludhiana and on examination of the samples drawn from these consignments, it was found that the goods declared as gear cutting tools of high speed steel were actually bars and rods of mile steel, the goods declared as heat resistant rubber tension tapes were actually made of unvulcanised rubber and the track wheels were in unmachined, and unfinished condition and that the value of the goods was much less than the amount of draw back claim in respect of the same. At that time on enquiry at the CFS Ludhiana, it was found that from those very consignments, the customs officers at Ludhiana had also drawn 5 samples out of which 4 samples had passed i.e. the report of the chemical examiner indicated the goods to be as per declaration. Since, this indicated connivance between customs officers and exporter and since in past the same exporting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NPT Mumbai/Ludhiana. Though Shri Vinod Garg has claimed that while the heat resistant rubber tension tape have been procured from outside for export and the gear cutting tools of high speed steels and track wheels have been manufactured in his factory, M/s. Garg Forging Casting, the firms from which the purchase of heat resistant rubber tension tape and the raw material for gear cutting tools of high speed steels and track wheels are claimed to have been purchased, have been found to be non-existent. On inquiry with the bank, where the companies/firms, which are claimed to have supplied heat resistant rubber tension tape and raw material for Gear cutting tools of high speed steel and track wheels, have their account, it was found that in the bank records Shri Shambhu Kumar, Shri Vineet Kumar, Shri Sanjeev Kumar and Shri Pratap Nath Pandey, the employees of Shri Vinod Garg, have been shown as the proprietors and all these accounts had been opened on introduction by Shri N.D. Garg or Shri Manjit Singh an employee of Shri Vinod Kumar Garg. Subsequently, Shri Manjit Singh in his statements dated 6-8-02 and 7-8-02 admitted that there was no production of gear cutting tools of cobalt b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leared by one Shri Harmeet Rajpal, alias Inder Pal Singh alias Bobby and in the import documents filed at Dubai, the value of gear cutting tools had been declared as U.S. $ 119-120 per M.T. as against their declared FOB value of U.S. $ 7900 per M.T. and similarly the value of heat resistant rubber tapes was declared as U.S. $ 230 per M.T. as against their FOB value of U.S. $ 2100 per M.T. declared before the Customs Authorities at CFS, Ludhiana. Though the evidence of diversion of export containers to Dubai and the value of the goods declared before Dubai Customs is available only in respect of 11 containers, this evidence is significant in the background of the fact that none of the consignees in U.K. to whom the goods are to shown to have been exported, exist. In fact, Shri Vinod Garg in his statement dated 31-10-2000, which has not been retracted, has stated that in respect of all the exports, the Bills of lading were being issued upto Dubai and he could not state whether the goods exported by him to buyers in U.K. reached U.K. or not. The value of the goods declared at Dubai clearly indicates that the goods of sub-standard quality and had been grossly misdeclared in terms of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found the owned/controlled by one Shri Sunil Kishorepuria, Shri Manjit Singh, was acting as authorized representative of these companies of Sunil Kishorepuria. Shri Sunil Kishorepuria, in his statements dated 21-8-02 and 22-8-02 has admitted the export fraud having been committed by Shri Vinod Kumar Garg through his (Shri Kishorepuria s) group companies, with his consent. Shri Kishorepuria in his statements admitted that he allowed Shri Vinod Kumar Garg to use the names of his companies for export of goods by him (Shri Vinod Kumar Garg), that sourcing of the export goods, clearance from Customs, and foreign exchange remittance was to be handled by Shri Vinod Kumar and he (Shri Kishorepuria) was to get 1.5% of the export turnover as commission and that he has admitted his liability of paying back the already claimed drawback of Rs. 2.6 crores and he has already surrendered the pending drawback claim of about Rs. 92 lakhs. This statement of Shri Sunil Kishorepuria has not been retracted by him. The goods exported through the companies of Shri Kishorepuria had been procured through the same fictitious firms - M/s. Krishna Hardware Mill Store, M/s. R.K. Steel Traders, M/s. Rama Kris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se production records had been prepared to show their production, that the difference between the amount of declared value, sent from foreign countries and the actual value of export goods was being returned to Shri Inder Pal Singh alias Harmeet Raj pal alias Bobby in Dubai through hawala transaction. The above statements of Shri N.D. Garg, though subsequently retracted, are corroborated by the evidence, as mentioned above otherwise there is no rational explanation as to how the remittance in respect of the goods exported was being received from countries other than the country of the consignees. Moreover Hon ble Supreme Court in case of Naresh J. Sukhwani v. Union of India reported in 1996 (64) ECR 346 (S.C.) = 1996 (83) E.L.T. 258 (S.C.) has held that statement of a co-accused recorded under Section 108 of the Customs Act implicating the petitioner is usable as a substantive evidence connecting him with the contravention of illegal export of foreign exchanges, that statement recorded under Section 108 of Customs Act is not a statement recorded under Section 161 of the Criminal Procedure Code, 1973 and, therefore, it is a material piece of evidence collected by Customs official u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h speed steel were found to be just bars and rods of mild steel and the goods declared as track wheel were found to be in unfinished condition. The Commissioner s orders does not discuss at all as to how the samples drawn by the officers at CFS, Ludhiana were found to be of prime quality goods, while those very containers from which the samples have been drawn, on examination by the DRI subsequent to their clearance from CFS, Ludhiana were found to be containing sub-standard goods. In view of this and also in view of the fact that not only the firms from which the purchase of heat resistant rubber tension tape and raw material for gear cutting tools of high speed steel and track wheels is shown to have been made to be non-existent and also the fact that all the consignees were not-existent and the goods after their shipment, instead of being received by consignees, as mentioned in the shipping bills, had been diverted to Dubai, where the same had been cleared by M/s. Al Jabriah Metals Trading by declaring value which is very small fraction of declared FOB value, it is clear that notwithstanding the test reports of the samples drawn by officers of CFS, Ludhiana, in respect of the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Looking to the nature of the fraud, we do not interfere with the quantum of penalties imposed on the Appellants as drawback frauds of this type are more serious than the cases of customs duty evasion by misdeclaration of value or description the drawback frauds are more like plunder of the Government treasury. Therefore deterrent penalty is warranted on every person also has committed or abetted such fraud. 5. Coming to the second question, as to whether in respect of the goods which have been held by the Commissioner to be liable to confiscation under Section 113(d), 113(i) and 113(ii) of the Customs Act, whether the redemption fine in lieu of confiscation under Section 125 of Customs Act could be imposed, we find that on this point the Commissioner in the impugned order has observed that since the goods have already been exported, the same are not liable for confiscation and accordingly he has not imposed any redemption fine in lieu of confiscation under Section 125 of Customs Act. However, this portion of the Commissioner s order has been challenged by the Revenue in the three review appeals No. C/535/06, C/536/06 and C/539/06. The review appeals have been filed on the followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we find that there is disagreement between the two Chief Commissioners on the question of confiscation of the goods and imposition of redemption fine and the two Chief Commissioners have recorded diametrically opposite views on this issue in this order and as such, there is no opinion of the Committee of Chief Commissioners on the issue being contested. The review direction has been signed by both the Chief Commissioners based on the Board s Circular No. 825/2/2006/CX., dated 6-2-06 according to which in case two Members of the Committee of Chief Commissioners take different view i.e., one Member takes a view to file appeal and the other Member opposes this, the decision of the Committee should be to file the appeal. It is based on this circular of the Board that the Committee of Chief Commissioners, in spite of their diametrically opposite views on the question of confiscation of the goods and imposition of redemption fine when the goods are not physically available for confiscation, have signed this review authorization directing the Commissioner to file a review appeal before the Tribunal. We are of the view that this is not a valid review authorisation as the Committee of Chie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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