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TMI Blog2005 (12) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004, dated 30-9-2004 passed by the Commissioner of Customs, Chennai are as follows : Appeal No. Appellant Differential Duty Redemption fine Penalty C/436/04 M/s. Carpenter Classic Exim (P) Ltd. Rs. 36,96,201/- - Rs. 9,61,506/- C/437/04 Ravi Karumbaiah, MD, CCEPL - - Rs. 9,00,000/- C/13/05 Thomas Mathew - - Rs. 5,00,000/- C/06/05 Sanjeev Kabbur - - Rs. 7,00,000/- 2. The DRI Officers received intelligence regarding the undervaluation of imported goods by the appellants. The business premises and the residential premises of the concerned persons were searched and incriminating documents were seized. Statements of S/Shri Ravi Karumbaiah, Managing Director of M/s. Carpenter Classic Exim Pvt. Ltd., V. S. Chandan, CADD Operator were recorded under Section 108 of the Customs Act, 1962. The residential premises of Shri Sanjeev Kabbur, Ex-Marketing Manager of the company were searched and some documents were seized. Statement of Sanjeev Kabbur was also taken. Ms. Jagruthy Sevak was the Executive of the appellant-company, her statement was also recorded. The investigations conducted revealed that Shri R. Karumbaiah, his wife, Shri Thomas Mathew and his wife as Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir import consignments in order to evade payment of customs duty. Similar modus operandi were adopted to import goods through Chennai Port also. On the basis of investigation, show cause notices were issued to the noticees. After observing the principles of natural justice, the adjudicating authorities at Bangalore and Chennai passed the impugned orders. 3.Shri B.V. Kumar appeared for the appellants-CCEPL and Shri Lakshminarayan appeared on behalf of Mr. Sanjeev Kabbur. Mr. K. S. Bhatt, SDR and Mr. K. S. Reddy, JDR appeared on behalf of the Revenue. 4.The learned Counsel urged the following points : (a) The impugned orders reveal non-application of mind by the adjudicating authorities. (b) The Orders have been passed merely on assumptions and presumptions without any evidence on record except for one consignment. This is an admitted fact by the Department in their own affidavit filed before the Hon'ble Settlement Commission, Chennai during the course of proceedings held in respect of the application filed by the appellants under Section 127D of the Customs Act for the settlement of the present case. (c) The learned Commissioner failed to give any findings on the affidav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arding payment by cash and cheque, it was submitted that such payments do not represent the cost of the goods imported as they are meant for civil work for availing the services of mansons, carpenters, plumbers and electricians who carry out the installation of equipments. (k) Reliance has been placed on a fax dated 21-4-1997 said to have been sent by Thomas Mathew. The Commissioner has observed that the fax reveals that for the imports made during the period from November, 1995 to December, 1996, the value paid to M/s. Veneta Cucine was Rs. 82.82 lakhs, whereas the CIF value of imports as per Bills of Entry filed with the Department during the same period comes to only Rs. 33.22 lakhs, which indicates that the declared value was lowered to the extent of 60% from the actual value. It was submitted that during the financial year 1995-96, only one import took place through ICD, Bangalore vide Bill of Entry dated 18-4-1995. The said import does not fall within the period November, 1995 to December, 1996, as mentioned in the alleged fax message. As such the contents of the said fax message have no nexus to the Bill of Entry dated 18-4-1995. Therefore, the Commissioner erred in relyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 5-4-97, it was submitted that there is nothing contained therein to prove the case of the Department that the appellants under-valued the goods. A perusal of the facts shows that these are instructions given to Thomas Mathew of Proma SRL as to the procedures to be followed to ensure proper packing of the goods. Since these goods are imported against specific order, which are customs made and are also fragile. (s) The fax dated 5-4-1997 is a photocopy and an unsigned document and hence no reliance can be placed on this document. (t) As regards the fax message 8-10-98 alleged to have been signed by Ravi Karumbaiah and addressed to Thomas Mathew, the Commissioner has observed that this fax message confirms the fact that he had arranged for payment of US $ 60,000 and will organize more funds as and when needed. It was submitted that in the reply filed by Thomas Mathew to the impugned show cause notice, he has stated that he never received any amount in cash towards the alleged difference in prices. He further submitted that the contention of the Department that the impugned goods were under-valued is based on assumptions and presumptions and entirely arbitrarily. No document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legation in the show cause notice or the findings in the impugned order that the invoice of the foreign supplier were either manipulated or prepared at Bangalore by the appellant-company and were sent by them to Italy. In the absence of such evidence to support such an allegation is not correct. (aa) The Commissioner has observed that Ravi Karumbaiah has admitted that Proma SRL was a front company set up in order to get the documents in the name of the said company and to evade payment of Customs duties. The appellants submit that from the extract from the Company's house record, it is clear that the Proma SRL is a genuine company, which is in existence. Hence, it is clear that there are discrepancies in the statement recorded from Ravi Karumbaiah and as such it is clear that the statement was obtained under duress and coercion. (bb) It was submitted that the overseas suppliers have the appellants substantial discount on the listed price and it was for this reason that the prices mentioned in the invoices were deleted. It is a normal trade practice not to reveal the price of the product at which they are procured by the importer/wholesaler to a customer. This is done basica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty. None of the relied on documents has established the case against the appellants. The adjudication order copy meant for the appellant has been addressed to the advocate, as if the advocate is an agent for this purpose. The adjudicating authority failed to appreciate the contention of the appellant throughout the proceedings that the show cause notice has not been served in accordance with the provisions of the act and therefore, the said proceedings are rendered ab initio void. The Commissioner failed to appreciate and consider this specific judgment of the Hon'ble Tribunal in the matter of M/s. Jaishree Textiles wherein it has been held that what is required to be accomplished within six months is not the issue of the notice but service of the notice to the person concerned. 5.Shri Lakshminarayan, Advocate appeared on behalf of Mr. Sanjeev Kabbur. The appellant was only an employee of the company and he has acting entirely on the directions of the Managing Director. The appellant was not a beneficiary in respect of any of the dealings of the company and cannot therefore be held liable for penalty action for violation of the provisions of the Customs Act. When the investig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21-4-97 addressed to Anchise Ballestrieri and Vittorio Tollardo of Veneta Cucine S.P.A., Treviso, Italy. * Photocopy of a fax message No. CCEPL/TM/089/97, dated 5-4-97, said to have been sent by Carpenter Classics to Thomas Mathew. * Photocopy of a fax message dated 8-10-98, said to have been sent to Thomas Mathew by Ravi Karumbaiah. * Photocopy of a letter No. CCEL/Proma/1362/97-98, dated 10-1-98 to have been sent by Carpenter Classics to Proma SRL. * Photocopy of Bill of quantity and Order confirmations of M/s. Veneta Cucine pertaining to shipment called lndia-13 and lndia-14. * Photocopy of packing list of M/s. Veneta Cucine pertaining to shipment called lndia-13 and lndia-14. 7. Several objections have been made by the learned advocate Shri B.V. Kumar with regard to the reliance on the above documents. According to him, some of the documents are unsigned and photocopies of faxes and these documents have not been properly proved by calling the authors of the documents and examining them. Our attention was invited to the fact that no statement has been recorded from Shri Thomas Mathew. It was further submitted that the handwriting in the documents have not been examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . To your request I state that I and Mr. Thomas had reached an understanding that a part of the proceeds collected by me in cash over and above the bills raised on our customers would be accumulated and the same would be handed over in cash to Mr. Thomas Mathew." 9. Further in his statement dated 19-12-1998 Shri Ravi Karumbaiah has stated the following : "As the market for such western kitchen is quite competitive in India, particularly in Bangalore, our company being new in the field had to sustain. The limited margin of profit was estimated to be very low in such a severe competition. Therefore, Shri Thomas Mathew who is one of the Director of the Company and also our source of strength located at Kuwait suggested that the amount of Customs Duty payable on the goods imported could be brought out substantially to have a better margin of profit. Therefore he informed us that instead of importing directly from M/s. Veneta Cucine manufacturer of the said goods imported, viz., Kitchens, the goods could be routed through another front company of their own, so that overseas sale invoices could be prepared by themselves in the name of such front company so that invoice value for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re events which had taken place. On the basis of the available documents and the statements recorded during investigation, they have to come to a conclusion. In a quasi-judicial like this, we are concerned more with a pre-ponderance of probability rather than proof beyond reasonable doubt, as held by various judicial fora. On the basis of the available records, we are convinced that undervaluation to the extent of 65% has taken place. Shri Thomas Mathew has played a crucial role in this nefarious activity. After 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 under Section 112(a). The appellant M/s. CCEPL are liable for penalty under Section 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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