TMI Blog2017 (10) TMI 1198X X X X Extracts X X X X X X X X Extracts X X X X ..... New Delhi. The customs department has thoroughly investigated into the facts of M/s. Alpha in terms of the bond executed for the PBWL as well as conditions for grant of permission of running the DFS, which has been made with the strict condition that import of goods such as liquor, tobacco etc. were allowed duty free only for the purpose of selling the same to international passengers. They were also required to maintain detailed documentation by which the customs authorities could verify and ascertain whether the strict conditions prescribed for DFS / PBWL have been complied by M/s. Alpha. The scrutiny of the documents relating to DFS and PBWL have revealed that the appellant have completely disregarded the conditions under which licenses were granted to them. Bills were found to have been issued without mentioning required details like name, passport number, flight number, etc. of the passenger to whom liquor has been sold. The scrutiny has further revealed that the employees of the appellant have fraudulently recorded false details pertaining to the passenger to whom liquor has been sold. Fake passport numbers and wrong names were found to have been routinely recorded. Many of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth the appeals are being decided through this common order. M/s. Alpha Future Airport Retail Private Ltd. (M/s. Alpha), the appellant, have been permitted to operate Duty Free Shops (DFS) at IGI airport (Terminal 2) New Delhi in arrival as well as departure areas since March 2007. For this purpose they obtained a Private Bonded Warehouse License (PBWL) and agreed to abide by various conditions associated with the same. As per the licenses issued, M/s. Alpha were permitted to import goods such as liquor, chocolates, cigarettes, etc. duty free, to be sold only to International passengers arriving or departing from / to foreign destinations. They were required to collect the sale proceeds in foreign exchange and were also required to maintain various records as prescribed. In particular, every sale was required to be recorded and details of passenger name, passport number, flight number and other relevant details were required to be recorded and sale vouchers to be issued. The procedure required to be followed for operation of DFS were prescribed by customs vide public notice no. 5/2006. Show cause notices dated 01.04.2009, 02.07.2010 as well as 26.03.2012 have been issued to M/s. Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e terminated and appellant company were not aware of the illegal sales being made clandestinely by the rogue employees for their personal benefit. iii) All the three show cause notices dated 01.04.2009, 02.07.2010 and 26.03.2012 are related to the very same period 27.03.2007 to 08.10.2008. It is well settled legal position that more than one show cause notices cannot be issued for the same period. Consequently, the orders in original confirming the demand of customs duty and penalties based on the second and third show cause notices are required to be set aside in toto. In this regard, they relied on the following decisions: a) CCE Vs. Siddharth Tubes ltd. 2004 (170) ELT 331 b) Shreeji Colourchem Industries Vs. CCE 2013 (294) ELT 615 c) Paro Food Products vs. CCE 2005 (184) ELT 50 iv) It has been held by the Hon ble Supreme Court in the case of Hotel Ashoka Vs. AICT 2012 (276) ELT 433 (SC) that a DFS is located beyond the customs frontier of India and, therefore, goods sold by a DFS must be considered to have been sold before the goods cross the Customs frontiers of India and are thereby imported to India. Accordingly, it was submitted that no duty demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passengers. They were also allowed to run duty free shops at various locations at the IGI airport New Delhi in arrival as well as departure areas since March 2007. As per the conditions of PBWL, M/s. Alpha was required to adhere to 15 conditions including in the public notice number 5/2006 dated 27.02.2006 issued by the Commissioner (Customs) which govern the procedure for the operation of duty free shops at the IGI airport. The public notice inter alia prescribed that M/s. Alpha will maintain stock register for the goods imported duty free, and their further disposal in particular. 10. The imported or indigenous non-duty paid goods permitted to be received and stocked in the DFS shall be sold by the License only to International passengers and on obtaining from them payment in approved foreign currency or Indian currency as per the notification issued by CBEC from time to time. Every sale shall be covered by a sale voucher (which shall be deemed to be a shipping bill or bill of entry under section 69 or 68 as the case may be) which, inter-alia, shall show, the name of the passenger to whom the sales are effected, the passport number identity of passenger, the no. and date, desc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature for the sales during August 2008 to October 2008. According to customs, such act of the appellant resulted in violation of terms of Private Banded warehouse license and mandate of Public Notice No. 05/2006 dated 27.02.2006 as well as office order No. 254/2001 dated 19.11.2001 was violated. The discussons in above paragraphs showed that the goods covered thereby were not sold to international passengers and evasion of customs duty was made making false entries on record. 15. Further scrutiny of sales bills of the duty free shop operated by appellant in departure area of IGI Airport revealed that a large number of sales bills were issued in the name of and Mr. Manish who was an Indian National. Passport No. A-1425369 was mentioned against sales made to such person which was found to be fake and with change of one or more digits of that number, other fake numbers appeared in several bills. It was also found that the bills issued in the name of Mr. Manish stating the passport number as above, appeared against other names as detailed in RUD-No.-25. That proved unrealistic situation and making of fake sales entries on record. Such material fact came to record proving falsificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of further investigation custom authorities recorded statement of Shri Manvendra Singh, cashier, M/s. Alpha, Shri Rahul Sachdeva, Shri Puneet Bansal, Shri Suhail Nabi, Shri B.K. Pradhan Ms. Fauzia Bakshi. All the above employees of M/s. Alpha admitted to the fact that M/s. Alpha were violating the conditions of PBWL by selling the goods regularly to domestic passengers and other persons who were not international passengers at the relevant time. Further, it emerged that M/s. Alpha were issuing fake sale bills without details or with false passenger details from the DFS and thereby concealed and suppressed the facts that imported duty free liquor were being unlawfully removed from PBWL in the guise of sale to international passengers. The customs authorities further obtained various details such as bills of entry under which liquor was imported for the PBWL and other details and worked out the value of imported liquor diverted clandestinely. The above investigation resulted in issue of show cause notice dated 02.07.2010 in which customs duty amounting to ₹ 6,30,38,783/- was demanded along with proposals to impose penalty under various section of the customs act. 20. Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.03.2012 was confirmed by OIO dated 17.05.2013. Both the appeals against these two OIO s are being decided through this order. 25. The initial show cause notice dated 01.04.2009 covered the seizure of 51 bottles of liquor which were found to have been sold by the appellant to domestic passengers. The SCN also covered the shortage noticed in the stock of liquor at the DFS. It stands admitted by the various employees of M/s. Alpha that 51 bottles of liquor have been sold to domestic passengers in violation of the customs notification and these goods are liable for confiscation. Further, no plausible explanation has been offered regarding shortage of goods found other than a feeble statement that IGI airport was undergoing major renovation and that the location of the appellants DFS was repeatedly changed. Evidence gathered clearly suggested the goods found short have been removed from the customs bonded warehouses in contravention of section 71 of the Customs Act. Accordingly, we have no hesitation in upholding the confiscation and demand the duty made pertaining to SCN dated 01.04.2009. 26. The demands confirmed by the Adjudicating authority pertaining to show cause notices d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce dated 02.07.2010 has been issued on the basis of recovery of documents and statements recorded and were based on the allegations of falsification of the records. The show cause noticed dated 26.03.2012 has been issued on entirely different ground and was issued on the ground that the appellant sold bottle of liquor unauthorisedly to domestic passengers and not to international passengers. 28. Further, it is seen that the various case laws relied upon by the appellant, as well as, the decision of Hon ble Supreme Court in the case of Nizam Sugar Factory have dealt with demand made under section 11 of the Central Excise Act 1944 by invoking the extended period. However, in the present case, the show cause notice has been issued by raising the demand in terms of section 72 of the Customs Act. The appellant has been issued private bonded warehouse license under section 58. The appellant has also executed the bond under section 59 ibid. The investigation into the affairs of the appellant has categorically showed that the appellant has violated with impunity, the conditions of the issue of PBWL and Public Notice number 5/2006 which he is required to comply in the operation of DF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time. Every sale shall be covered by a sale voucher (which shall be deemed to be shipping bill or bill of entry under section 69 68 of the Customs At, 1962 as the case may be) which inter alia shall show, the name of the passenger to whom the sales are effected, the passport number identity of passenger no. and date, description of goods and flight. The passenger shall append his signature on the bill as per his signature in the passport. The sale voucher should be serially numbered and prepared in duplicate, the original for the passenger and the duplicate for the duty free shop. The latter copy should be available for inspection by the Customs officer at all reasonable times. Thus I find that assertions made by the notice are incorrect and not relevant. This argument of the notice is merely for the sake of it. If duty free shops are beyond Customs frontiers and therefore out of administrative control of the customs officers, then why in the first place have at all a procedure for sale of such goods from duty free shops been prescribed. In this regard, reference is invited to the law as laid down by the CESTAT in the case of Flemingo Duty Free Shops Pvt. Ltd. 2009 (248) ELT 69 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods purchased. The sale in respect of goods at the departure terminal is concerned, once the outgoing passengers purchase the goods they take them out of India, without passing or re-passing, through the Customs Frontier - since they would have crossed it before entering the Duty-free shop. Hence, the goods brought by the petitioner from abroad, when sold to outgoing passengers, such goods leave the country without becoming part of the mass of goods within the country and thus the import cannot be said to be completed as it does not cross the Customs Frontier, before being taken out of the country. 60.2. The Hon ble Court s observations in para 6 of the judgment in consideration of the applicability of the provisions of Standards of Weight and Measures (packaged commodity) Rules 1977, clearly throws out the argument (Duty free shops are outside Customs Frontiers of India) of the notice to the woods. 32. We also find that the decision of the Apex Court in the case of Hotel Ashoka (Supra) has been rendered in a totally different context and has dealt with the levy of commercial taxes and not customs duty. Hence the facts of the case are not applicable in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... By taking aggregate of the import value per unit, and the aggregate of the sale price per unit of the goods of (a) and (b) above which were found to be as of ₹ 1,29,54,358/- and ₹ 2,51,25,176/- respectively, and the same worked out ot be in the ratio of 100 : 193.95. ii) On the basis of (i) above, it was logically inferred that to fix the sale price of diverse products, M/s. Alpha, during the relevant period, usually made an addition, to the Import value, equal to 93,95% thereof, on account of profit and general expenses; and therefore, the value of the good of this category was arrived at by treating the sale price as equal to 193.95% of the import value. The sale price of item by the notice for each article has been taken at 193.95% of the import value and the import value has been worked out accordingly. Further, the rate of customs duty at which the duty has been demanded by the Department has been correctly worked out in accordance with the provisions of the Customs Act, 1962. Since, in the present case the goods have been sold unauthorisedly from the duty free shop, the rate of duty applicable on the same will be the rate prevalent on the date of impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held responsible for the acts of omission or commission of their employees since they have engaged in such a misconduct for their personal gain and that the employer cannot be held liable for such acts. 39. M/s. Alpha were granted PBWL as well as permission to operate DFS. The investigation has revealed that through the action of the employees of M/s. Alpha, liquor has been sold to unauthorised passengers in clear violation of the terms of the bond executed. The acts of the employees have been done in their official capacity and are binding on the employer who cannot escape the vicarious responsibility. The duty free imported liquor, which had been warehoused, was found to be removed in contravention of the warehousing bonds. Consequently, the customs duty is required to be paid in terms of section 72 (1)(a). The goods cleared are also liable for confiscation. But, since the goods were not seized by the department no redemption fine can be imposed. However, the appellant will be liable for levy of penalties. The various employees of M/s. Alpha are also liable for penalty under section 117. 40. In view of the above discussions, we find no reasons to interfere with the orders ..... X X X X Extracts X X X X X X X X Extracts X X X X
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