TMI Blog2005 (12) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... er considering his submissions, we find he is trying to wriggle out of this case on the ground that the Show Cause Notice has not been served on him as per law. The Commissioner has dealt with this issue and we agree with this. S/Shri Ravi Karumbaiah and Thomas Mathew are liable for penalty u/s112(a). The appellant M/s. CCEPL are liable for penalty u/s 114A of the Customs Act. The differential duty demanded is liable to be paid by them along with the interest. As regards, the imposition of penalty on Shri Sanjeev Kabbur, we find that he was an employee of the appellant-firm and he had acted under the directions of his bosses. There is no evidence to show that he personally benefited from the under-invoicing. Thus, we set aside the penalties on Shri Sanjeev Kabbur. With these modifications, we confirm both the Orders-in-Original. - HON'BLE DR. S.L. PEERAN, MEMBER (J) AND SHRI T.K. JAYARAMAN, MEMBER (T) For the Appellant : B.V. Kumar and Lakshmi Narayan, Advs. For the Respondent : K.S. Bhat, SDR and K.S. Reddy, JDR Order T.K. Jayaraman, Member (T) 1. These appeals have been filed against Orders-in-Original No. 27/2004, dated 27-7-2004 passed by the Commissioner of Customs, Bang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their first import in the year 1995 through ICD, Bangalore. The foreign suppliers invoice and packing list had been signed by Shri Thomas Mathew on behalf of M/s. Proma SRL. CCEPL communicated their requirements along with the drawing to Proma SRL with a copy to Veneta Cucine, sometimes the order were communicated directly to Veneta Cucine. Proma SRL prepared the bill showing the actual price in Lira and forwarded the drawings to Veneta Cucine. Veneta Cucine in turn forwarded the confirmation order to Proma SRL and CCEPL. These orders of confirmation indicated the actual price of the products ordered in Liras. Veneta Cucine at the time of loading of containers and shipment prepared their own packing lists showing the order numbers of CCEPL and the destination as CCEPL. CCEPL arranged for their representatives to the present at the time of loading of the containers at the factory premises of Veneta Cucine to ensure not only proper loading but also to relabel the packages to make it appear that the shipment had been affected by Proma SRL. CCEPL presented the invoices prepared in the name of Proma SRL along with the Bills of Entry which showed substantially lower prices than what was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned order. (e) The statement of Ravi Karumbaiah is not admissible on the ground that they were given under duress and also there is no corroboration by independent evidences. (f) The statement of Ravi Karumbaiah was recorded immediately after the income-tax officers conducted interrogation, for which he was detained on 18-12-98 till late in the night. This was immediately followed by the interrogation by the DRI till next day and the statement was recorded when he was under pressure and strain. (g) No reliance can be placed on the statement of Sanjeev Kabbur dated 27-11-1999, as he is a co-accused. It is well settled that on the basis of the confession of the co-accused, no conviction can be made unless the said confession in corroborated in the material particulars. The learned counsel relied on a large number of decisions. (h) Relying on the decision in the case of Elektro Kool Industries v. CCE, Hyderabad - 2004 (172) E.L.T. 255 (T) = 2004 (63) RLT 296 (T), the learned advocate submitted that the appellants should have been given an opportunity to cross-examine Sanjeev Kabbur, since the Commissioner wanted to rely on his statement. The Tribunal has held that if the low ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mile copy of a document shall be admissible in any proceedings but does not provide that a photocopy of a facsimile can be used against an importer for making a charge of undervaluation of the goods. (m) The alleged transactions mentioned in the said fax message have not been corroborated by leading evidence in the form of a statement of Thomas Mathew or from Paramount Kitchen or Veneta Cucine. In absence of such corroboration, the fax message is not admissible in evidence. (n) In the impugned order, no findings have been given to establish a directs correlation between the contents of the said fax message dated 21-4-1997 with the imports made at Bangalore Customs and Chennai Customs. (o) The Commissioner relying on the statement of Pushpa Reddy, land lady of the residence rented out to Thomas Mathew has observed that the appellant-company had access to the said premises which is factually incorrect and far from truth. During the cross-examination of Shri C.V. Sachidananda, Sr. Intelligence Officer, it was revealed that the key of the house was produced by the land lady Mrs. Pushpa Reddy. (p) No investigation was conducted in Italy in respect of the oversea suppliers of the impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dmitted that the cash payments were used to settle the difference between the actual value and the declared import value, is not correct. The Commissioner has mis-interpreted the statement of Ravi Karumbaiah as nowhere in his statement dated 7-8-1999 he has stated that he paid the difference in value to Thomas Mathew to settle it with Veneta Cucine. (w) The letter dated 10-1-98 from the residence of Sanjeev Kabbur at Belgaum was seized, on 27-11-99 almost one year from the date of commence of the investigation. It appears that the said Mahazar was drawn at Bangalore while the residence which was searched is at Belgaum. The place of drawing the Mahazar has been mentioned as Bangalore. Further, this letter has not been shown to Ravi Karumbaiah to verify the authenticity of the letter. This letter was signed by Sanjeev Kabbur who is a co-accused and since he has not been cross-examined, no reliance can be placed on the said letter. (x) The contents of the letter dated 10-1-98 have not been proved. Moreover, Sanjeev Kabbur being an ex-employee could have fabricated the letter. (y) Under Section 61 of the Indian Evidence Act, 1872, the correctness of the contents of the documents can on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Kuwait and he is a citizen of Italy. He was resident of Italy from 1985 to 1996, thereafter he has been staying at Kuwait. He has never been a resident of India. During his business visits to India, he came into contact with Ravi Karumbaiah, thereafter he was appointed as a Director of the Importer Company (CCEPL, Bangalore) with no official duties to be discharged as per the provisions of the Company's Act, 1956. During his visit to Bangalore, he availed of the hospitality of CCEPL who had an office-cum-guest house at Indira Nagar, Bangalore. The premises of the importer was never the postal/permanent/temporary address of the appellant. No statement was recorded by the DRI from the appellant, the entire enquiry was directed against the importer and its promoter Ravi Karumbaiah. With a view to extricate himself, Shri Ravi Karumbaiah appears to have made certain allegations and given certain exculpatory statement, as if the appellant was instrumental in the alleged violation of the various provisions of the Customs Act, 1962. No opportunity was given to the appellant to have his say in the matter. The show cause notice dated 7-12-99 was not furnished to the appellant. On 3-6-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the imported goods using a particular modus operandi. Many incriminating documents have been seized from the premises of the appellants. Statements have been recorded under Section 108 of the Customs Act, 1962 from S/Shri Ravi Karumbaiah, Managing Director of CCEPL, Sanjeev Kabbur, an ex-employee, V. S. Chandan and Ms. Jagruty Sevak. The DRI investigation was taken up consequent to certain income-tax department's investigations. Shri Ravi Karumbaiah the Managing Director is the chief promoter of the appellant-company. Shri Sanjeev Kabbur was ex-marketing manager of the company. Shri Thomas Mathew is the Director of appellant-company and he is also a Director of Proma SRL, who issued the invoices relating to the imports. The allegation is that with the help of Thomas Mathew invoices were issued by Proma SRL using it as a front. The actual suppliers of the imported equipment were M/s. Veneta Cucine and other foreign companies. Investigations have established that the value of the imported goods as per Veneta Cucine is different from those in the invoices of Proma SRL. The difference between these two values has been settled by Shri Thomas Mathew, who would collect the dif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the principles of natural justice. It was further stated that the statement of Shri Ravi Karumbaiah was obtained under coercion and threat. It was submitted that there was actually no undervaluation and the foreign suppliers gave them huge discount. Many case laws were cited to show that transaction value cannot be rejected by directly taking recourse to Rule 8 of the Customs Valuation Rules. It was further stated that M/s. Proma SRL is actually an existing and not a front company as held by the Adjudicating Authority. It was further contended that the fax dated 21-4-1997 relates to a period from November, 1995 to December, 1996 and during that period there was no import through Bangalore. As regards, the collection by cash it was contended that the appellants while supplying the goods to the customers are expected to undertake considerable civil work and for that purpose cash was collected. That cash has nothing to do with the value of the imported goods. 8. We have considered all the above contentions of the learned advocate. Shri Ravi Karumbaiah has given three statements under Section 108 of the Customs Act. In his statement dated 7-10-99, we are giving the following extract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evealing - I was aware that the documents in the name of Proma SRL were used only to present a lower CIF value for the purpose of assessment at the time of Customs clearance in India. As far as I know that the goods imported from Italy were under-valued by above 65% of the original Italian price and customs duty was paid in India on such manipulated prices. 10. Shri Kabbur has also confirmed that part of the amount is collected by cash and the balance by cheque. Ms. Jagruty Sevak in her statement has confirmed the practice of collecting part of the amount from the Customers by cash. The documents seized indicate that the value declared for customs purposes is much less than the actual value. When Ravi Karumbaiah and Sanjeev Kabbur were confronted with the documents seized the entire modus operandi was revealed. Shri Karumbaiah has accepted that the undervaluation is to the extent of 65%. This has been corroborated by Sanjeev Kabbur. There is no evidence to show that the statements recorded under Section 108 of the Customs Act have been retracted. In other words, the contents of the documents seized have been corroborated by the statements of Karumbaiah and Kabbur. It is true that T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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