TMI Blog2017 (4) TMI 371X X X X Extracts X X X X X X X X Extracts X X X X ..... from 23% to 90.2% - penalty upheld. Appeal dismissed - decided against appellant. - C/4,35/2009,C/43-44,56,62,72/2012,C/12283-12284,12333-12334,12523-12526,12587, 12836,12848,13065,13163-13164,13372, 13373,14097/2013,C/11677, 11890,12216-12217,13924-13925/2014,C/10600/2015, C/10846/2016 - A/10697-10728/2017 - Dated:- 31-3-2017 - Dr. D. M. Misra, Hon ble Member (Judicial) And Mr. Raju, Hon ble Member (Technical) For the Appellant : Shri Anand Nainawati, Shri P. D. Rachchh, Shri T. Damani, Advocates For the Respondent : Shri J. Nagori, Authorised Representative Mahavir Foods Versus C.C.-Kandla Vivek Shukla Versus C.C.-Kandla Santosh Kumar Versus C.C.-Kandla Vipul Sharma Versus C.C.-Kandla Subh Labh Agencies Versus C.C.-Kandla SKK Agro Pvt Ltd Versus C.C.-Kandla And Vice-Versa Rice India Exports P Ltd Versus C.C.-Kandla Ganeshom Cereals Pvt Ltd Versus C.C.-Kandla Ganpati Foods Versus C.C.-Kandla Jindal Arya Impex Pvt Ltd Versus C.C.-Kandla United Foods Pvt Ltd Versus C.C.-Kandla Arya International Versus C.C.-Kandla Chamanlal Setia Exports Ltd Versus C.C.-Kandla Shree Mahavir International Versus C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Broker against imposition of penalties against them in the case of exports of rice made by M/s Global Arya Impex. 1.4. In Appeal No. C/43/2002 Revenue has sought to increase the penalty imposed under Sections 114 (i) and 114 AA on the grounds that the value of goods exported was 2.24 crores, but, the penalties imposed are in the range of ₹ 60,000/- to ₹ 15,00,000/-. It has been argued that said penalties are meagre when compared with the maximum penalty can be imposed under Section 114 (i) and 114 AA. It has been argued that the value of goods declared by the exporter is ₹ 2.25 crores approximately. As per Section 114 AA the penalty not exceeding five times the value of the goods can be imposed. Similarly high penalty of upto ₹ 6.75 crores can be imposed under Section 114 of Customs Act, 1962. In this case, against the maximum penalty of ₹ 11.25 crores, very low penalties have been imposed on M/s. Balgopal Shipping Logistics, Shri G. R. Dwivedi, Partner of M/s. BSL, Shri A. Rajesh Borker and others. Increase in penalty has been sought for Shri Vipul Sharma, Shri Santosh Kumar, Vivek Shukla and M/s Subh Labh Agencies also. While the review order co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A has been imposed. He argued that the said penalty has been wrongly imposed as Section 114 AA can only be invoked when there is only a paper transaction and no real export. He argued that in the instant case there were actual export and not be a paper transaction and therefore Section 114 AA could not have been invoked. To support this argument he relied on Para 63 of the Report of Standing Committee On Finance (2005-2005) which reads as follows:- 63. The information furnished by the Ministry states as follows on the proposed provision: Section 114 provides for penalty for improper exportation of goods. However, there have been instances where export was on paper only and no goods had ever crossed the border. Such serious manipulators could escape penal action even when no goods were actually exported. The lacuna has an added dimension because of various export incentive schemes. To provide for penalty in such cases of false and incorrect declaration of material particulars and for giving false statements, declarations, etc. for the purpose of transaction of business under the Customs Act, it is proposed to provide expressly the power to levy penalty up to 5 times the value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Orion Enterprises (supra) answers all the questions raised by the exporters regarding confiscation and imposition of penalty under Section 114 (i). In the said decision of Hon ble High Court has observed as follows:- 4. Pursuant to the above order, samples were drawn on 10th March, 2011 and sent to the Regional Agmark Laboratory, Okhla, New Delhi (RAL). Two analytical reports, both dated 14th March 2011, were submitted by the RAL. The findings returned by the RAL in the said reports were as under : 1. The sample does not conform to standards prescribed in Basmati Rice (Export) Grading and Marketing Rules, 1979 (hereafter the Basmati Rules). 2. The sample conforms to the requirements of length and length/breadth ratio as per the Notification dated 5th November, 2008 of the Director General of Foreign Trade (DGFT). 5. Since there was some ambiguity in the above report, the Commissioner of Customs (CoC) wrote a letter dated 15th March, 2013 to the RAL, New Delhi asking it to clarify, specifically in the light of the notification dated 5th November 2008, whether the product in question was Basmati (including Pusa Basmati 1121) or Non-Basmati Rice. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to also conform with the requirement of the Basmati Rice Rules. Schedule 2 to the Basmati Rice Rules specifies the maximum presence of other rice including red grain as 20%. 13. Therefore, the contention of the respondent that the samples in question were required to conform only to the DGFT notification dated 5th November 2008 and only in terms of the length and length/breadth ratio as specified in said the DGFT notification is not acceptable. In the decision in Global Agro Impex (supra), the CESTAT did not have the benefit of noticing the DGFT circular dated 30th September, 2008 which permitted samples to be sent for analysis to Agmark Centres. It was in that context that the CESTAT declined to act on the Agmark Standards which conform to the standards prescribed under the Basmati Rice Rules. To that extent, the CESTAT, in the impugned order, by mechanically following the earlier decision in Global Agro Impex (supra) clearly committed an error. In the present case, the testing by the RAL was on the request of the respondent itself as is evident from the order dated 1st March, 2011 passed by this Court in Writ Civil Petition No. 953/2011. Learned counsel for the appellant is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.01.2003 clearly applies to all these consignments. 5. In view of above, we hold that in all these cases the proportion of non-Basmati Rice found in the samples exceeded 20%. The goods were exported against test bond and therefore the liability of confiscation and penalty under Section 114 (i) arises. 6. As far as penalty under Section 114 AA is concerned, the Section 114 AA of Customs Act, 1962 reads as under:- SECTION [114AA. Penalty for use of false and incorrect material. - If a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of this Act, shall be liable to a penalty not exceeding five times the value of goods.] It is seen that the scope of Section 114 AA is wide. Section 114 AA can be invoked to impose penalty against any person who knowingly and intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect or any material particular is liable to penalty. In the instant case, it is seen that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -Kandla C/13924/2014 Basic India Ltd C.C.-Kandla C/13925/2014 Basic India Ltd C.C.-Kandla C/10600/2015 C L International C.C.-Mundra 7. As regards, Appeal No. C/43/2012 filed by the Revenue for enhancement of penalties imposed on M/s. BSL, Shri G. R. Dwivedi and Shri A. Rajesh under Section 114 (i) and 114 AA, It is seen that the penalty of ₹ 2.50 Lakhs each has been imposed against he maximum possible penalty of ₹ 6.75 Crore and ₹ 11.25 Crore respectively under Section 114 (i) and 114 AA respectively. On the same grounds, it has been argued that penalties imposed on Shri Vipul Sharma and Shri Vivek Shukla and Shri Santosh Kumar are very low. It has been argued that the Commissioner has not given any grounds for imposing such low penalties. Shri Vipul Sharma, Shri Vivek Shukla and Shri Santosh Kumar and M/s. Subh Labh Agencies are in appeal against the penalties imposed against them under Section 114 (i) and 114 AA. However, Revenue has not challenged the quantum of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in his statement dated 30.07.2010 that he was aware about the presence of said 12 containers of the said exporter in the CFS and hides the said facts from the DRI officers on the insistence of Shri Prateek and Subhash Jindal and the said fact was also confirmed by Shri Prateek Jindal, Director of the export company in his statement dated 16.08.2010. I also find that Shri Bharat was fully aware that the export documents including SDF declaration was signed by employee of M/s Global Arya Impex Pvt. Ltd. At Gandhidham as PRATEEKwhich forged. I am, therefore, convinced that the complicity of the CHA firm and its employee in the attempted export of non-basmati rice is established. I also observed that, the Customs House Agent is a very important person for customers and the act of appointment f Custom House Agent is an act of faithe by the department in him, if however, he becomes a party to the fraud it would be in fitness of things to impose penalty in order to curb such tendencies. Since they have not performed their duties lawfully, I hold them liable to penalties. I accordingly hold that they are liable to penalty under Section 114 (i) and Section 114 AA of the Customs Act, 1962. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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