TMI Blog2009 (4) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... rder : S/Shri Ashok Jindal, Member (J) and A. K. Srivastava, Member (T) S/Shri C. Harishankar and S.N. Kantawala, Advocates, for the Appellant. Shri B. K. Singh, Jt. CDR, for the Respondent. [Order per : M.V. Ravindran, Member (J)]. - The present appeals are directed against Order-in-Original No. 13/2007/CAC/CC/KS, dated 4-12-07, issued by the Commissioner of Customs (Adjudication), Mumbai. By the said order, the Commissioner has- (i) rejected the value declared in respect of 378 dozen shirts [@ US $ 105 per dozen] and 17964 dozen handkerchiefs [@ US $ 18 per dozen], exported under Shipping Bills [hereinafter referred to as "S/Bs"] Nos.1000018965, 1000018960 and 1000018967, dated 2-2-99, under claim for credit under the Duty Entitlement Pass Book [DPEB] Scheme, (ii) adopted the values alleged shown in the documents presented at Dubai [of US $ 3 per dozen for shirts and US $ 0.5 per dozen for handkerchiefs] for effecting clearance of the said goods, as the ex port value for the purposes of DEPB benefit, (iii) confiscated the goods in question under Section 113(d) and 113(i) of the Customs Act, 1962 [hereinafter referred to as "the Act"], (iv) imposed, in lieu the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the appellant, that the above goods were locally procured from one G.B. Traders, who also conducted finishing operations thereon, at Viswajyoti Impex's factory premises, on job charges basis. As against this, the Revenue, which disputes this assertion, points out that the whereabouts of G.B. Traders, allegedly a proprietorship of one Gopiram, has remained undisclosed, as Sanjay Agarwal, on being questioned on this point [in his statement recorded under Section 108 of the Act], professed not to recollect either the ad dress or the locality where G.B. Tracers was located, and that Gopiram himself had expired since then. 9. Mr. C. Hari Shankar presses the following submissions into service, to contend that the exports were legitimate and that the allegation of misdeclaration is without substance: (i) Viswajyoti Impex was, from the beginning, is maintaining all records, such as the RG 1 and Form IV register. Representative copies thereof were on record. (ii) At the time of allowing factory stuffing to Viswajyoti Impex, vide letter dated 27-1-90 addressed by the AC, Appraising Group VI to the AC, Range 05, Div. Chembur, Mumbai-II, a detailed mode of examination was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mittance was received, against the said exports, as was manifested by the Bank Realization Certificates [BRCs] issued by the State Bank of Saurashtra, which are also on record. (ix) There was no evidence of any Hawala/flowback. The Show Cause Notice contained a bald allegation, which read thus: "they had brought in the remittance to India through banks, the money which was sent by hawala and channeled through M/s, Town General Trading. The routing of the amount was to show that the export transactions are genuine. Although the amount is shown as realized, this amount was actually sent by M/s. Town General Trading LLC, who is a related party in Dubai to one of their connected party M/s. Ravraj Impex, India. However, they have routed this amount through M/s. Vishwajyoti Impex in order to show realization of their exports. The banking transactions revealed that the entire amount received by M/s. Vishwajyoti Impex has been credited thereafter to M/s. Ravraj Impex." Mr. Hari Shankar emphasizes that this allegation is entirely bald in nature, without any supportive evidence whatsoever. No document, supporting this allegation, is relied upon. The Commissioner, too, in the impugned o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. (xii) The familial relationship between the proprietors of Viswajyoti Impex and TGT was inconsequential, in the absence of any material to indicate that the value of the goods had been affected thereby. Reliance was placed, for this proposition, on Commissioner of Customs, Mumbai v. Clariant ( India ) Ltd., 2007 (210) E.L.T. 481 S.C. (xiii) In fine, it was submitted that, apart from the allegation of Hawala, the following findings of the Commissioner were merely his ipse dixit, without any supportive material: (a) that Viswajyoti Impex was running a "pseudo factory", (b) no goods were manufactured therein, (c) G B Traders was a fictitious entity, (d) the documents relating to the export were bogus and manipulated, and (e) cheap goods had, in fact, been procured by Viswajyoti Impex from local traders. On the basis of the above submissions, Mr. Hari Shankar would request that the impugned Order of the Commissioner be quashed. 10. Mr. Sujay Kantawala, appearing for Kamal Malkani, submitted that his client was entirely innocent, and had merely submitted all import documents to his buyer in Dubai, who had presented the documents and secured release of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e) payment had not been made to G.B. Traders till date, against the material supplied by it, (f) Gopiram, the proprietor of G.B. Traders, had expired on or about April 1999, and (g) he was unwilling to state whether Gopiram was related to him or not. Besides, it was pointed out, Sanjay Agarwal had admitted that only ironing, stain removing, thread cutting, finishing and packing was done, on the goods received from G.B. Traders. (vi) Sanjay Agarwal had further admitted, in his statement, that he had the inspection reports, figuring along with the export invoices, had been prepared on the computer by him. (vii) There was no evidence that Viswajyoti Impex possessed the requisite electricity to run its factory. On this issue, Sanjay Agarwal had stated that, though there was no electric power supply, they had taken direct electric supply, bypassing the BSES electric meter, and had paid the penalty therefor. There was, however, no evidence of such payment. (viii) Mohd Israel Khan, a truck driver, had also deposed that part of the goods in question had not been loaded at Chembur [where the factory was located] but in a "gulley" at Juhu, and taken to Chembur, where the balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fact that, though the DEPB licences stood suspended on 6-7-1999, the statements of Sanjay Agarwal were recorded nearly three years thereafter, in 2002, so that, if he did not remember the details asked for, nothing could turn thereon. It was stressed that, once the fact of export, and the receipt of full remittance there against, was undisputed, then, in the absence of proof of Hawala, the case could not sustain for an instant. He reiterated that the Central Excise and Customs officers had neither been made noticees, nor had any collusion been alleged with them. Regarding forwarding of samples to the Customs officers, he submitted that Shashikant's statement was being misinterpreted, as he had merely confessed not to having seen the samples, and not that no samples had been received whatsoever. Rather, Mr. Hari Shankar contends, the statement, when holistically read, indicates that samples were, in fact, received by the Customs authorities. He further drew our attention to the ground plan showing the separate premises of Viswajyoti Impex, on the basis whereof Central Excise registration had been granted to them. Insofar as the decisions relied upon by Mr. Singh are concerned, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said decision makes it apparent that the Tribunal rejected all the submissions of the appellant primarily relying on the fact that its conduct, as evidenced by the said live consignment and the misdeclaration in respect thereof, showed its capacity to defeat procedural protections and succeed in committing fraud. This is apparent from the following finding, in the said para: "The suggestion that the Dubai importer may have filed fabricated invoices to evade customs duty can also be taken only as an effort to divert blame and create doubt, while blame has been found to stick to the appellants themselves in view of the fraud committed by the appellant in May, 1995." (Emphasis supplied) In the present case, there is no live consignment which, on examination, has been found to be misdeclared. Rather, the examination reports unhesitatingly support the case of the exporter (as would be discussed hereinafter). The main ground on which this Tribunal proceeded, in Annapurna Yarn Fabrics (supra), therefore, is not available to the Revenue in the present case. 18. India Watch Parts Mfg (supra) has no parallel whatsoever with the case at hand. That was a case of undervalued import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in the case of exports under claim for DEPB. However, in that case, it was pointedly noticed, by this Tribunal, that (a) the samples drawn, when examined, revealed that the value declared in respect thereof was very high, (b) the importers were found to be fictitious, (c) the exporters, too, had given fictitious addresses, (d) the supposed suppliers of the export product, in their statements, denied having made any such supplies, (e) two of such suppliers were non-existent, (f) no evidence had been produced, by the exporter, to contradict this material, (g) neither did the appellant pray for cross-examination of the suppliers, (h) once it was found that the appellant had overinvoiced one item, it was legitimate to conclude that it had tasted blood and had, therefore, resorted to the said mod us operandi in its subsequent exports as well [for which reliance was placed on Annapurna Yarn Fabrics (supra)]. These factors, cumulatively seen, convinced this Tribunal to hold against the exporter in that case. Per corollary, their absence, in the present case, denudes the judgment in Sai Traders (supra) of all precedential value herein. 21. Olympia Overseas (supra) was, again, a ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not, as has already been noticed by us hereinabove, obtaining in the instant case. We have, therefore, to examine whether, on the material available on the record, it is possible to uphold the charge of over-invoicing, or whether, as Mr. Hari Shankar would contend, the onus on the Revenue has failed to be discharged. 24. The examination reports entered on the export invoices, if accepted, clearly indicate that the goods were subjected to examination in respect of quantity, value and technical characteristics. In the case of handkerchiefs, the report goes to the extent of recording that burning test was also conducted. The submission, of the Revenue, that the reports were made by Sanjay Agarwal, cannot, in our view, discredit them; firstly, for the reason that Mr. Agarwal has merely stated that they were typed on his computer and, secondly, because they bear the signatures of the Central Excise inspector and Superintendent. Mr. Singh would, nevertheless, exhort us not to accept the said reports, on the ground that the said officers had, in their statements recorded under Section 108 of the Act, admitted not having examined the said consignments properly. We are not prepared to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... too, the said officers have not made any positive deposition against Viswajyoti Impex, but have merely stated that they were negligent in examining the export goods. 26. The examination reports, as entered on the export invoices, have, therefore, to be regarded as evidence of the goods having been properly examined, before being sealed, as also of the fact that representative samples thereof having been forwarded to the Customs authorities. 27. We may now refer to the statement of Shashikant, Appraiser, which, according to Mr. Singh, would indicate that no samples had been received by the Customs authorities. A holistic reading of the said statement, however, in our view, cannot support this submission. We may usefully reproduce the relevant extracts, from his statement, in this regard, thus: "... In reply I state that from the documents seen by me it is clear that samples were not seen by me. Procedurally, if samples were seen by me, there would have been endorsement of seeing the samples ... Since no such endorsement are appearing on the copies of S/Bills seen by me I say that representative samples stated to have been drawn by the Central Excise officers were not seen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he did not remember the address of G.B. Traders, (b) he did not remember the area or locality where G.B. Traders was located, (c) he did not remember whether the machinery referred to in the letter supra, addressed by Viswajyoti Impex to the Range Superintendent, was available in the factory premises, (d) he remembered, however, that the machinery belonged to G.B. Traders, (e) payment had not been made to G.B. Traders till date, against the material supplied by it, (f) Gopiram, the proprietor of G.B. Traders, had expired on or about April 1999, and (g) he was unwilling to state whether Gopiram was related to him or not. It may be that these depositions reflect an uncooperative attitude on the part of Sanjay Agarwal; on the other hand, it may also be that he actually did not remember the details sought. We cannot, obviously, enter any definite finding in this regard. We note, however, that there is no suggestion coupled with confrontation with any evidence whatsoever, by the Revenue, to Mr. Agarwal, in his statement, that what he has said is false. The professed inability, of Mr. Agarwal to remember the details of G.B. Traders, cannot go to buttress the case of the Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gajjar, handwriting expert, cannot be pressed into service by the appellants, being in the nature of new evidence without any application for taking it on record. We have, however, seen the signatures on the two sets of invoices, and, taking guidance from Lalit Popli (supra), we, on a dispassionate comparison thereof, are convinced that they bear no similarity, whatsoever, to the admitted signatures of Sanjay Agarwal, as they appear on the body of the statement recorded from him under Section 108 of the Act. Mr. Singh, too, was not in a position to make any statement that the two sets of signatures bore, even prima facie, any resemblance. There is nothing, barring the said signature to link the said invoices to Viswajyoti Impex. There is, significantly, nothing whatsoever to indicate that either Viswajyoti Impex or Sanjay Agarwal was aware of, or privy to, the alleged second set of invoices. Even the statements of Kamal Malkani do not show his awareness regarding this second set of invoices, and therefore the possibility of his buyer in Dubai fabricating the second set of invoice for saving Customs duty in Dubai cannot be ruled out. We are, in the circumstances, not willing to acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jected for want of any corroborative evidence, especially in view of the fact that the BRCs, which showed remittance of full proceeds against the exports, remained undisputed and unchallenged. A similar conclusion must, in our view, follow, in the present case. 36. As we have held in favour of the appellants on merits, it is not necessary for us to examine the applicability of the judgment in C.K. Kunhammed (supra). We do not, therefore, express any opinion thereon. 37. The appeals of the appellants, consequently, succeed, with consequential relief, if any. (Pronounced in court on.........) Sd/- (M.V. Ravindran) Member (Judicial) 38. [Order per : K.K. Agarwal, Member (T)]. - I have perused the order proposed by my learned brother. Since I am not in agreement with the same, I am recording a separate order. 39. I must state that the facts have been clearly brought out by my ld. Brother as well as the rival contentions from both sides. As rightly stated by my ld. Brother, there is no dispute that the goods in question had been exported to Dubai and had been cleared at Dubai and that full remittance appears to have been received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e truck driver that part of the goods were loaded at Juhu and no goods were loaded at the factory gate, which means that the goods were not examined by the central excise officers at all. It is quite note worthy that none of these statements have been retracted and are part of the relied upon documents annexed to the show cause notice. It is very strange that the appellants did not consider it proper to cross-examine any of these vital witnesses. A reference has been invited to some decision of the Tribunal in the case of Select Impex cited supra holding that the statement of the officers who were subject matter of vigilance enquiry were rightly rejected. In the present case, no evidence has been brought to show that these officers were under vigilance enquiry. On the other hand, the appellants have taken a stand that no action was initiated against the officers and therefore they cannot be considered as having aided and abetted them as otherwise, they would have been made a noticee in the show cause notice. I must state that even if it is presumed that vigilance enquiry has been initiated against officers for gross negligence, they would in their cross-examination make every attem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voice, relying upon therein the handwriting expert's opinion obtained after adjudication of the case by the original authority. I may state that firstly, the handwriting expert's opinion was not available to the original authority and procured subsequently and therefore cannot be admitted as evidence. I further note that the handwriting expert has compared the signatures on the Xerox copy of the invoice with the Xerox copy of the statements recorded from Shri Sanjay Agarwal carrying his signature. Comparison of Xerox copy is not the correct method unless fresh signatures are obtained. Though the ld. Advocate for the appellant has submitted that the bare perusal of Shri S. Agarwal's signature on the export invoices and the invoices received from Dubai customs will itself show that the two signatures are totally different and will not require a handwriting expert's opinion as the court can draw its own conclusion by visual comparison. In this regard I may state that Shri S. Agarwal's signature as proprietor/authorized signatory on the proforma invoices submitted by them at pages 93 to 95 of the paper book and those on the invoices submitted to Dubai customs at pages 154, 156 and 158 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng, thread cutting, finishing and packing. The entire goods were exported on 1-2-99 and the licence was surrendered thereafter. Thus unit remained in existence only for 10-15 days. (ii) Though some machines, namely sewing machines, cross stitching machine, cutting machine, tables and irons were installed in the factory there is no proof regarding their purchase, purchase price, payment particulars etc. (iii) There was no power supply to the unit and the appellants have admitted the same but have stated that they were stealing the power for which they were fined but no proof of such fine has been submitted. The fact that they were indulging in power theft shows the character/conduct of the appellants. (iv) The appellants purchased unfinished shirts and handkerchiefs from one GB Traders but they failed to give the address of the supplier GB Traders. GB Traders was stated to be a proprietary firm of one Gopiram, who is said to have expired in April 1999. As appellants own say, no payment could be made to GB Traders as he expired in April. Though the raw material register shows that unfinished sleeve shirts were purchased and handkerchiefs were purchased vide purchase order no. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rawn is that the goods were indeed over-valued. The decisions of the Tribunal in the case of Olympia Overseas (supra) as well as Sai Traders (supra) are fairly applicable as they lay down the law that mere receipt of remittance does not establish that the goods have not been over-valued when totality of circumstances speak otherwise. In those cases also, the goods were already exported and no sample was available but even then over-valuation was established on the basis of live consignment detected later. Normally, a detection of over-valuation in a live consignment does not ipso facto mean that the earlier consignment must have also been over-valued. But looking in the totality of the circumstances, the Tribunal held them to be over-valued. The facts of the present case may not be identical but looking in the totality of the circumstances and preponderance of evidence, the charge of over-valuation has to be upheld and I accordingly uphold the findings of the Commissioner including that on extent of over-valuation and limiting the DEEP benefits to the value declared to Dubai customs. 48. As regards imposition of redemption fine of Rs. 37,50,000/-, I hold that since the goods we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant have allowed all the appeals, learned Member (Technical), holding against the appellant on the main issue of valuation, has granted some consequent relief in redemption fine and penalties as indicated in his order. 54. I have heard ld. Advocate appearing for the appellants and ld. JCDR appearing for the Revenue. As the facts in detail, already stands reflected in the order passed by learned Member (Judicial), I am not repeating the same so as to avoid redundancy. The final outcome of the present appeal relating to serious accusation of over-valuation of the exported goods, depend upon the appreciation of evidence on record and standard of proof required to prove the allegations. It is a matter of fact that the goods already stand exported by the appellant and there is no dispute on the legal issue that the onus to prove the charges of over-valuation is upon the Revenue. 55. My attention has been drawn to the order proposed by the learned Member (Technical), wherein he has used the expression that - "There is a strong belief that the money may not have been received through legal routes. I do not deny these possibilities". Ld. Advocate Shri Hari Shankar strongly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut of consideration. 57. Further, learned Member (Technical) has disagreed with the learned Member (Judicial) by referring to the fact of receipt of full remittance by the appellant from their foreign buyers. Such difference is on the ground that no LC was opened and the remittance was received through telegraphic transfer. I find that there is no dispute about the receipt of full remittance from their Dubai buyers. The fact of non-opening of LC by itself will not lead to any inevitable conclusion that the goods were over-valued. The mode of receiving the remittance by the appellant is a legal mode and merely because they have chosen to adopt the same instead of through a Letter of Credit, cannot reflect upon their mala fide. The Revenue's entire case is based on the invoices submitted by the importer at Dubai to the Customs authorities. Apart from the fact that the signatures on the second set of invoice differ from the signatures of Shri Sanjay Agarwal appearing in the statements (which fact is obvious and apparent even to the naked eye and does not need any handwriting expert opinion), I also note that the format of the two invoices is also different. This only takes us to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , but there may be degrees of probability within that standard. The degree depends on the subject-matter. A civil court, when considering a charge of fraud, will naturally require a higher degree of probability than that which it would require if considering whether negligence were established. It does not adopt so high a degree as a criminal court, even when it is considering a charge of a criminal nature, but still it does require a degree of probability which is commensurate with the occasion." As such, he has requested to decide the matter on the basis of preponderance of probabilities. I find that even in above paragraph, Denning Lord J. has observed that in criminal cases, charges are required to be proved beyond reasonable doubts. Even the degree of probability in civil matters will vary from matter to matter depending on the issue involved, having observed that the degree of probability required in semi-criminal matters is much on the higher side. There is admittedly no incriminating statements by the proprietor of the exporting firm, clinching the disputed issue in favour of the Revenue, the entire evidence on the record is in the nature of surmises and conjectures and m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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