TMI Blog2001 (1) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... ering the intelligence by the DRI, Bombay that Shri Mukesh Shah of Shah and Mehta was importing fast moving items like gum rosin, hydrogen peroxide, citric acid etc. by misdeclaring the value, unauthorisedly selling the goods in the market after clearing under OGL subject to actual user condition. He has imported 450 MT of gum rosin of declared CIF value of Rs. 28,70,865/- on behalf of Shah and Mehta CHA No. 11/0613 in the name of Metal and Alloy Inds., and out of the said quantity 250 MTs are sold in the market and the balance of 198 MT of declared value of Rs. 12,63,181/- has been placed under seizure under Section 110 of the Customs Act on 3-7-90, as the same are liable to confiscation under Sections 111(d) and (m) of the Customs Act. He has also cleared and sold in the local market 414 MT of gum rosin of declared value CIF of Rs. 25,54,391/- imported in the name of Gulmohar Industries, Calcutta. He has also cleared 79.8 MT hydrogen peroxide of the declared value of Rs. 6,21,910/- in the name of Metal and Alloy Inds. and sold it in the market. All the aforesaid quantities are imported for home consumption as per Appendix 6, list 8, Part I, Serial No. 234 of AM 88-91 and Item No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unserved with the endorsement as "not known". It is a bogus company. The summons issued to Raju K. Doshi and Mayur Raja also were received back with the same endorsement. Kishore Hemani has filed his affidavit under letter dated 20-8-91 expressing no knowledge whatsoever about the goods and his communication anywhere. The value of the gum rosin at the material time have been found to be US $ 440 to 500 per MT CIF as against the declared value of US $ 352. By taking the minimum value, the loss of duty on account of Gulmohar Inds., comes to 9,60,138/-. On 30-6-91 Mukesh Shah has agreed to the loading of his invoice value at the rate what was passed through Hawala to Sampatraj Dugar, whose outstanding bill was seized in search of his house on 29-6-91. Mukesh Shah, Raju Doshi, Kishore Hemani failed to inform and explain about the payment of goods in question through Sampatraj Dugar. 198 MT of gum rosin seized appears to be liable for confiscation under the provisions referred above. For illegal sale of 252 MT of gum rosin and 79.8 MT of hydrogen peroxide and 414 MT action under Section 112 Act read with 111(d) and (m) of the Customs Act has to be taken. Mukesh Shah the main person in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . After going through the material available on records and considering the contention of the counsels the impugned order was passed on 17-9-92 by the Collector of Customs holding that the value of the gum rosin to be taken as US $ 440 PMT in terms of Rule 5 of Valuation Rules, 1988 vide under Section 14 of the Customs Act. 198 MT of gum rosin valued at Rs. 15,78,976/- was ordered to be confiscated under Rule 111(d) and (m) of the Customs Act with redemption fine of Rs. 4 lakhs. Since 252 MT of gum rosin and 79.8 MT of hydrogen peroxide which were illegally imported and were not available for confiscation, the value of which comes to Rs. 20,09,606/- at 404 $ per MT resulting in the loss of duty of Rs. 6,04,022/- and 6,21,910/- the value of hydrogen peroxide. They are liable to action under Section 3 of the Import Export Act, 1947 read with Section 111(d) and (m) of the Customs Act as imported in contravention of the Import Control Order 1955 issued under Sections 3 and 4A of the Customs Act. Penalty of 13.5. lakhs was imposed under Section 112 of the Customs Act on Metal Alloy Inds. Gum rosin of 414 MT was also imported and cleared by Shah and Mehta in the name of Gulmohar Inds. on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the entire order. In earlier order, imposing penalty of Rs. 23 lakhs under Section 112 of Customs Act on Gulmohar Inds., and read with Section 147 of Customs Act on the firm Shah and Mehta. The corrigendum changes the basis and the person on whom the penalty is imposed. There is no proposal in the notice to impose a penalty on the customs house agent firm of Shah and Mehta and imposition of penalty by resorting to the Section 147 of the Act is legally not sustainable. 198 MT of gum rosin imported by Metal and Alloy is not liable to confiscation which are not cleared, on the ground that they were going to be sold. The violation of the condition of actual user after clearance of the goods cannot attract Section 111(d). The violation of post-importation condition cannot render the import invalid or contrary to law. The finding regarding undervaluation of gum rosin is bad in law. As the Commissioner has based on the telefax recovered from the premises of the appellant, which does not relate to the goods in question. The finding that the payment of difference in value is established by telefax recovered from the appellant's premises is wrong. The letter dated 14-8-92 of the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant was an investor or otherwise. The impugned order does not give any reasons for imposing penalty of Rs. 2 lakhs on the appellant. The impugned order is passed without application of mind with the erroneous finding about the innocence of the appellant as regards to the alleged sale of the imported goods by Mukesh Shah, and the alleged import by the appellant. The available documents on records were not properly appreciated. Even though the impugned order holds Mukesh Shah that he has sold imported goods, he was set free for the clandestine sale of the subject goods but punished the appellant by confiscating the goods and imposing personal penalty on its partner even though there was no finding in the order-in-original that the appellant is responsible for the same. The ld. adjudicating authority has erred in not appreciating the xerox copy of the SSI registration certificate granted by the Director of Cottage and Small Scale Industries Assam and relied upon the same without asking for the production of the original by the appellant which was always in his custody and could be produced at any point of time. He has merely disbelieved the xerox copy of the said certificate. The ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .M. George, the ld. JDR has contended that the detection in this case was on a specific information that Mukesh Shah, a broker and seller of imported goods in association with Shah and Mehta customs clearing agents are importing fast moving industrial chemicals like gum rosin hydrogen peroxide unauthorisedly in the name of certain industrial units and selling at a higher profit in the market contrary to the provisions in the ITC Policy. The investigations have shown that Mukesh Shah was acting in unison with the clearing agent firm Shah and Mehta in which his two brothers Kamal J. Mehta and Satish J. Mehta are partners. They have imported 450 MT of gum rosin on 11-12-90 under 5 bill of entry bearing No. 2613/58.78 to 81 valued at Rs. 28.7 lakhs CIF in the name of Mehta and Alloy Inds. There is a clear admission by them of selling 250 MT in the local market under the instructions of the importers. Mukesh Shah has clearly admitted in his statement of selling another quantity of 414 MT of gum rosin of the declared value of Rs. 25.54 lakhs imported in the name of Gulmohar Inds. and 79.8 MT of Hydrogen peroxide valued at Rs. 6.22 lakhs of Metal and Alloys Inds. and sold in the Mumbai ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he import and sale are liable to the penalty under Section 112 of the Act. 9.Ld. JDR has further contended that as per the show cause notice there is an under-invoicing in respect of gum rosin imported and cleared in the light of contemporaneous value of gum rosin (N grade) by others during the material period for 440 to 500 US $ PMT as against 352 $ PMT at CIF price by Metal and Alloy Inds. and Gulmohar Inds. This is admitted by the importer Mukesh Shah in his statement under Section 108 of the Customs Act. The party has failed to produce any material in support of the contention that the invoice cited by the department are not comparable to the present import. There is a clear admission by Mukesh Shah regarding the issue of the outstanding bills from his house. On 29-6-91 during the search by the DRI a fax message received from Sampatraj Dugar showing certain entries regarding the name of the party who imported the goods, invoice number, differential amount to be paid to the party in Hong Kong were found. These things are not contested by the appellant before the adjudicating authority. Nothing further was submitted after the undertaking by the counsel. It says that they have n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lable material on record have been duly considered by the adjudicating authority in passing the impugned order. Penalty imposed is commensuarate with the value of the goods involved and the activities of the appellants in dealing with them violating the provisions of Customs Act and Import Control Act and Rules as discussed in the impugned order. There is no justifiable ground to disturb the same. 11.Perused the show cause notice dated 31-1-91 and reply filed by the appellants on 6-5-92, 6-7-92, 25-5-92 and also to the addendum to show cause notice dated 25-5-92, 31-3-92 and the documents produced and the impugned order dated 17-9-92 and the appeal memorandum filed in all these cases and Sections 111(d) and (m), 112, 147 of the Customs Act. So also Appendix 6(1) of 1993 Policy. The appellants have challenged the corrigendum issued on 2-4-93 by the Collector to the order-in-original substituting the imposition of penalty of Rs. 23 lakhs from Gulmohar Inds., Shah and Mehta to Mukesh Shah under the original order dated 18-1-93. Rs. 23 lakhs was imposed under Section 112 on Gulmohar Inds., and Section 112 read with Section 147 on Shah and Mehta. It is contended by the appellant that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Page 17 of the order-in-original did not disclose anything in that regard. There is an order of confiscation of 198 MT of gum rosin under Sections 111(d) and (m) of the Customs Act with redemption fine of Rs. 4 lakhs. Penalty of Rs. 13.5 lakhs is imposed on Metal Alloy Inds. as 252 MT of gum rosin and 79.8 MT of hydrogen peroxide were not available for confiscation. Duty evasion is also pointed out. In paragraph 42 and 43 in the main show cause notice Mukesh Shah and others were called upon to show cause in writing within 15 days of the receipt of the notice as to why 198 MT of gum rosin N grade valued at Rs. 12,63,181/- seized on 3-7-91 should not be confiscated and for causing unauthorised import of 450 MT of gum rosin and for misdeclaration of value and for illegal sale of 252 MT of gum rosin of declared CIF value of Rs. 16,07,684/- and 79.8 MT of hydrogen peroxide of declared CIF Rs. 6,21,910/- in the market, why penalty should not be imposed on them under Section 112 of the Customs Act. In paragraph 43 of the show cause notice they were called upon to show cause why penalty should not be imposed upon them on the ground that Mukesh Shah is also the main person behind the unauth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r issued therein by the competent authorities. He has further observed that the action taken in this case is without prejudice to any other action that may be taken in this behalf by the concerned authorities under the concerned Act as per paragraph 20 of the Policy. Thus, he has negatived the contention of the appellant that he has no jurisdiction to deal with the licence. 16.From the perusal of the Import Export Policy for April, 1990 to March, 1993 in paragraph 19 and 20 in Chapter 2 under the heading General Licensing Matters reflected the same. Paragraph 20 clause (2) says that in the matters relating to Import Export Policy and Procedures, the interpretation given by the Chief Controller of Imports and Exports is final, the customs authorities should consult the Import Trade Control authorities in case of doubt. This is the only hindrance for the Customs authorities in dealing with the imports. The consultation confines to the Policy and proceedings and the interpretation. In the instant case, the adjudicating authority has dealt with the imported goods from the angle of customs duty and the confiscation, which is vested only with the customs authorities. The question of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll of entry for home consumption which were not at all considered by the adjudicating authority while passing the impugned order on 17-9-92. All these documents relates to acrylic scrap. In the covering letter it is mentioned that the documents establishes that invoice referred to in the telephone communication Jerry account, refers to importation of acrylic scrap and not to gum rosin the value of invoices, challans with the value shown in the said communication. The documents relied upon by the department alleging under invoicing is unaccpetable in facts and law. Apart from that, it is the main grouse of the appellant that contemporaneous imports documents were not produced in the proceedings and the appellant were not supplied with any such material to show that such identical have been cleared by the Mumbai Customs house at a higher price. As per the show cause notice contemporaneous value of the gum rosin N grade 440 to 500 US $ per MT in support of which no documents were produced and supplied to the parties. The statement of Mukesh Shah dealt with in the impugned order has to be decided in the light of the above documents produced before the adjudicating authority, and also t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement under Section 108 of the Customs Act and the goods transport receipts clearly supports the finding of the adjudicating authority about the active role played by Mukesh Shah who was sitting in the premises of Shah and Mehta, the CHA and he is also the brother of one of the partners of the said firm i.e. Suresh K. Shah. He is a broker by profession, and admittedly has sold the imported chemicals commanding higher premium in the local market, imported under OGL. He has taken assistance of the importers to further his business. All the physical activities at Mumbai have been attended by Mukesh Shah and Kamal Mehta as per the statements recorded in these cases. The statement dated 30-6-91 of Mukesh Shah explained how fake lorry receipts were obtained. The admission by him coupled with their corroborative statement referred above makes out the capability of Mukesh Shah and Kamal Mehta in these transactions. As observed by the adjudicating authority the importers have also taken belated action against Mukesh Shah about the sale of the imported goods in the open market namely after the DRI entered the scene and exposed the fraud. No action was taken except writing to the CHA abou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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