TMI Blog2007 (10) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Universal Exports (UE) both situated at 162, Famous Studio Building, Mahalaxmi, Mumbai having I.E. Code number 0396027440 and 0399035281 respectively are exporting chemicals under Duty Entitlement Pass Book Scheme (DEPB)/Duty Exemption Entitlement Certificate Scheme (DEEC) after misdedaring the value and description of the goods, investigations were carried out by the Directorate of Revenue Intelligence (DRI), Mumbai. 3.During the course of investigation, the shipping bills of SI and UE were taken over in search at the office premises of SI and UE. These shipping bills revealed that SI and UE had done fraudulent exports as 3rd party exports against Advance Licences obtained by M/s. Shree Pushkar Petro Products Ltd., Mumbai (SPPL). Hence, the office of SPPL and residential premises of its Director, Shri Punit Makharia were searched on 2-11-2001. The factory premises of SPPL were also searched on 10-11-2001. 4.Investigations revealed that :- (i)Goods manufactured by SPPL for purpose of export under DEEC Scheme were in fact never exported and were diverted to local market and were sold for profit. (ii)What was exported in reality were low value fertilizers. The fertilizers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under sub-section (1) of Section 127B is made. So in the subject case, the application has been filed under Section 127B on 23-5-2007, but the said case has been already adjudicated vide order dated 30-4-2007 (issued on 27-7-2007) by the Adjudicating Authority confirming all charges. Therefore, it appears that the subject application will not come under the purview of Section 127B by virtue of Section 127A(b) of the Act. Therefore, the application filed by the applicants are liable for rejection. 9.The Revenue further submitted that in the instant case, 6 Detention Orders have been issued by the Joint Secretary (COFEPOSA), New Delhi, against the main accused and the co-conspirators as mentioned below :- (i) Shri Yusuf Razaak Dhanani, Power of Attorney holder of M/s. Sana International (ii)Shri Sarfaraz Yusuf Dhanani, Partner of M/s. Sana International [absconding] (iii) Shri Shakil Ahmed Fakih, Partner of M/s. Universal Exports (iv) Shri Govinddhar Pandey, Custom House Agent (v) Shri Raja Chandran, Manager of Steamer Agent, M/s. W.W. Shipping Pvt. Ltd., and M/s. Saturn Ship Agencies Pvt. Ltd. (vi) Shri Maqsood Yusuf Merchant, Proprietor of M/s. Super Chemi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicants, after briefly narrating the facts of the case, submitted that since the entire duty liability has been paid by the applicants, the case may be admitted. With reference to the plea of the Revenue that the case has been adjudicated, vide order dated 30-4-2007, by the Commissioner of Customs (Adj.), Mumbai, he submitted that the date of issue of the said order is 27-7-2007 and the application was filed by the applicants on 23-5-2007. He, therefore, submitted that the order, though passed on 30-4-2007, was issued on 27-7-2007 (and the applicants must have received the order a few days later), i.e., after filing the application, becomes honest/non operative. He submitted the following orders in support of his contention. (i) Admission Order dated 23-8-2000 passed by this Bench in the case of M/s. Pratibha Syntex Ltd. (ii)Order dated 13-2-2001 passed by this Bench in the case of M/s. Emjay Creations [reported in 2001 (131) E.L.T. 716 (Sett. Comm.)] (iii) Interim Order No. 12/2001-Cus., dated 17-5-2001 passed by this Bench in the case of Shri Karappam v. A. Backer. 15.The ld. Advocate of the applicants, with reference to the entertai-ability of an application where th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Commission had no power to alter the terms of contract between the petitioner therein and the Customs Department. (iii) The Division Bench of the Hon'ble Madras High Court, while disagreeing with the aforesaid judgment of Hon'ble Calcutta High Court held that - "4.....The Settlement Commission however relying upon the decision of Calcutta High Court in Commissioner of Customs (Port) v. Settlement Commission, (cited supra) held that it has no jurisdiction to grant waiver of interest which is not payable under the Customs Act, but under the contract, and which is evidenced by the bond executed by the petitioner...." "5. With respect, we are unable to subscribe to the view taken by the Calcutta High Court......." "6. On a plain in reading of the section, it is clear that the provision enables the Settlement Commission to grant immunity either wholly or in part from the imposition of any penalty, fine and interest under the Customs Act with respect to the case covered by the settlement. Therefore, even interest payable under the provisions of Customs Act can be waived by the Settlement Commission. In the instant case, the petitioner had availed the benefit of notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very or the interest imposed vide the order of this Hon'ble Commission. (vi) He also submitted that the rate of interest specified in the bond is governed by the statutory provisions and notifications issued under the statutory provisions, for which reason even Hon'ble Calcutta High Court while delivering the judgment reduced the interest from 24% (which was specified in the bond), to 15% (which was specified vide a notification issued subsequent to execution of bond). (vii) Even if the obligation under bond is deemed as contractual obligation, after admission of the 'case', the Hon'ble Commission vide section 127F (1) and (2) enjoys all the powers of Commissioner, and can therefore vary the terms of such contract, including the liability to interest, in terms of the prevailing Notifications as well as the statutory powers bestowed vide section 127H of the Act. (viii) He further submitted that the Hon'ble Commission is a Tribunal having jurisdiction on several States. The Larger Bench of Appellate Tribunal in Atma Steels Pvt. Ltd. and Others v. Collector of Central Excise, Chandigarh and Others reported in 1984 (17) E.L.T. 331 (Tribunal - LB) has categorically held that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Shah v. State of Maharashtra Ors [2007 (210) E.L.T. 13 (S.C.)], which is supporting earlier views of this Bench where identical issue was involved, held that the matters of Settlement Commission and the COFEPOSA are altogether different issues, the orders of the respective authorities should not and cannot be binding or influencing each other. Provisions of the Settlement Commission in Chapter XIVA of the Customs Act, 1962 do not bar an application from a COFEPOSA detenue or an absconder. From sub-section (7) of Section 127C it is clear that an applicant can represent before the Settlement Commission himself or through a representative duly authorized in this behalf. It is, therefore, clear that an applicant's so called abscondance cannot be a bar to entertain his application by the Settlement Commission. If there is a case for levy, assessment and collection of duty, a Bill of Entry and a Show Cause Notice related to the Bill of Entry is also present along with a true disclosure of the duty liability then the case has to be admitted, howsoever be the fraudulent nature of the case. Howsoever, grave the manipulations may be, it could only culminate into an Show Cause Notice dema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Yusuf Dhanani and partner in M/s. Sana International and an absconder under COFEPOSA was aiding and abetting Shri Yusuf Dhanani and purely acted on the directions of Yusuf. Even if he is caught now and interrogated after such a lapse of time he may not in all probability be able to throw any further light more than what Shri Yusuf Dhanani has brought out. We are of the view that there is no bar, therefore not to admit his application. We however, do not have any mind to grant him unconditional immunities. 22.2Secondly, we take up the issue of admission of the applications filed by the co-applicant Nos. 2 to 7, who all filed their applications after 1-6-2007. Applications filed after 1-6-2007 have to be dealt with as per the amended provisions brought into force after the enactment of the Finance Bill, 2007. It may, however, be appreciated that the full duty demanded in the SCN has been accepted and paid by the applicants. Further, keeping in view the decision taken by the Principal Bench of this Commission in the case of Oriflame India Private Ltd. reported in 2000 (122) E.L.T. 601, in which, inter alia, it was held that in settlement proceedings, a show cause notice has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of value and description etc., and called for on the unlawful export of 202 MT (approx.) of Phosphate Fertilizers which was prohibited for exports. These goods are liable for confiscation but as they have already been exported, full immunity from penalty cannot be extended. 26.The applicants and some of the co-applicants concerned in the fraudulent exports and imports have by their commissions and omissions have rendered themselves liable for penalties. 27.The entire sequence of events as revealed during investigations and from the allegations levelled in the SCN, it can be safely concluded that Shri Yusuf Dhanani was the main brain cum prime mover in the entire clandestine activity and was also responsible for duty evasion by fraudulent activity. The entire fraudulent activities were under his command and control. He has caused revenue loss for his personal gains. He cannot be granted total immunity from penalty under the Act. Though he has already been in preventive detention and the duties also have been paid and co operated in the proceeding before the Commission. In so far as Shri Sarfaraz Dhanani is concerned, he had aided and a betted his father. This is also a fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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