2022 (2) TMI 1080 - AT - Customs

Appeals Granted: Penalties Overturned Due to Procedural Errors

The Tribunal set aside penalties imposed on appellants for alleged illegal export of Norephedrine due to discrepancies in the test report from Indonesia, ... Smuggling - Norephedrine - misdeclaration of goods exported - prohibited goods or not - Confiscation - penalty - HELD THAT:- It has to be stated that though in the Show Cause Notice, the value of the the alleged goods in the nature of Norephedrine was estimated and arrived at ₹ 12 crores, the adjudicating authority in his findings recorded in para 32 has worked the price of 337 kilograms of Norephedrine to be ₹ 3,13,511/- only. The department has not filed any appeal against this finding of valuation arrived by the adjudicating authority. The main ground raised by the appellant is that the test report cannot be accepted as conclusive evidence to establish that the goods exported are Norephedrine. Tropical Biomarine Systems Pvt. Ltd. have exported the goods vide shipping bill dated 31.1.2007 declaring the consignment to be shrimp feed premix, MPEX shrimp feed and golden spawn. The goods were initially shipped to Enbiosys Services Pte. Ltd. Singapore. Later switch bill of lading obtained for deviating the goods to PT Gita Mandiri Abadi, Jakarta, Indonesia. The exporter Tropical Biomarine Systems Pvt. Ltd. has not informed the customs authorities as to the diversion of the goods. They have obtained the switch bill of lading issued by their freight forwarder - When the goods reached Jakarta, the same were detained on specific intelligence received by DRI. They were opened for examination by Indonesian Police and sent for test to laboratory. It is noted in para 4 of the adjudication order that the substance in the 15 bags was in the nature of white powder and not of the same consistency as the remainder of the shipment which granular and brown. The bags which contained the white powder substance were all imported with a small “x” on the bottom of the bag differentiating these bags from the rest of the consignment. After conducting test, the substance was found to be Norephedrine. There is no mention of the name of Tropical Biomarine Systems Pvt. Ltd. who is the exporter of the goods or the name of Shri Rajesh Khanna. Even the name of the consignee Enbiosys Services Pte. Ltd. or PT Gita Mandiri Abadi, Jakarta, Indonesia is not seen stated in the test reports. Instead the name of suspect is shown as Suriman Buyung Als Lukas who is not in any way connected with the present case - the learned AR was not able to explain as to why the name of suspect is shown as Suriman Buyung Alas Lulkas. From the difference in the date of test report (8.1.2007) and the difference in the name of suspect, the probability that can be arrived is that the test report of some other investigation has been furnished by the department in the present case - Needless to say that the test report is the basis for holding that the goods exported are Norephedrine and prohibited goods. The entire case of the department is based upon the test report. Though the appellant has pointed out the discrepancies at the stage of replying to the Show Cause Notice itself, the department has not been able to explain the discrepancies. The impugned order is passed on erroneous facts and documents and therefore cannot sustain - Appeal allowed - decided in favor of appellant. Issues Involved:1. Alleged illegal export of Norephedrine.2. Validity of the test report from the National Narcotics Board, Indonesia.3. Compliance with legal procedures during the seizure and testing of goods.4. Requests for retesting and cross-examination.5. Imposition of penalties on the appellants.Detailed Analysis:1. Alleged Illegal Export of Norephedrine:The Directorate of Revenue Intelligence (DRI) received intelligence about the illegal export of 300 kilograms of Norephedrine by M/s. Tropical Biomarine Systems Pvt. Ltd., concealed in a shipment declared as shrimp feed products. The consignment was initially destined for Singapore but was redirected to Jakarta, Indonesia. Indonesian Customs, upon examination, found 337 kilograms of a chemical substance identified as Norephedrine, a precursor chemical under the NDPS Act, 1985. The consignment was marked with an 'x' to differentiate it from the rest of the shipment.2. Validity of the Test Report from the National Narcotics Board, Indonesia:The test report from the National Narcotics Board, Indonesia, was critical in establishing the nature of the seized substance. However, the appellants argued that the report was in Indonesian and the provided translation was unofficial and contained discrepancies. The original report mentioned sample codes X1 to X15, whereas the translation referred to X-01a to X-07a. Additionally, the dates and signatures differed between the original and translated versions, raising questions about the report's authenticity and reliability.3. Compliance with Legal Procedures During the Seizure and Testing of Goods:The appellants contended that the seizure and sampling procedures violated Section 144 of the Customs Act, 1962, and the Appraising Manual's guidelines. They argued that the samples were taken without their presence or that of their representatives, contravening the principles of natural justice. The department's failure to ensure the appellants' presence during sampling was highlighted as a significant procedural lapse.4. Requests for Retesting and Cross-Examination:The appellants requested a retest of the samples and the cross-examination of key officials, including the Consulate General of India, Hong Kong, and DRI officers. These requests were denied, which the appellants argued violated their rights. They cited precedents from the High Courts of Allahabad and Bombay, emphasizing the necessity of cross-examination to ensure a fair trial.5. Imposition of Penalties on the Appellants:The adjudicating authority imposed penalties of Rs. 5,00,000 each on M/s. Tropical Biomarine Systems Pvt. Ltd., M/s. Eurasia Nutritions Pvt. Ltd., and individual directors under Section 114 of the Customs Act, 1962. The Commissioner (Appeals) reduced the penalties to Rs. 3,13,511. The appellants argued that there was no evidence of their direct involvement or knowledge of the alleged illegal export, making the penalties unjustified. They pointed out that the mere presence of the company name on the bags was insufficient to establish liability.Judgment Analysis:The Tribunal noted several discrepancies in the test report, including differences in dates, sample codes, and suspect names, which were not satisfactorily explained by the department. The test report mentioned a suspect named Suriman Buyung Als Lukas, unrelated to the case, further undermining its credibility. The Tribunal concluded that the test report could not be relied upon as conclusive evidence.The Tribunal emphasized that the department's case hinged on the test report, and the discrepancies pointed out by the appellants were significant. The procedural lapses during sampling and the denial of requests for retesting and cross-examination were also critical factors. Consequently, the Tribunal set aside the impugned order, allowing the appeals with consequential relief.Conclusion:The judgment highlights the importance of adhering to procedural safeguards and ensuring the reliability of evidence in customs and narcotics cases. The discrepancies in the test report and procedural violations led to the Tribunal's decision to set aside the penalties and confiscation orders, providing relief to the appellants.