1999 (12) TMI 480 - AT - Customs

Penalties upheld for diamond value manipulation; Appellate tribunal overturns penalties on courier agency and manager

The penalties imposed on the appellants for manipulating the value in the Home Air Way Bill (HAWB) were upheld due to attempts to overvalue rough uncut ... Penalty - Valuation Issues Involved:1. Imposition of penalties on the appellants for alleged manipulation of value in the Home Air Way Bill (HAWB).2. Determination of the real importer of the consignments.3. Legitimacy of the penalties imposed on the courier company and its manager under Section 112(a) of the Customs Act, 1962.4. Evaluation of evidence and intent behind the amendments made in the HAWB.5. Difference of opinion between the Judicial and Technical Members regarding the personal penalty on the manager.Issue-wise Detailed Analysis:1. Imposition of penalties on the appellants for alleged manipulation of value in the Home Air Way Bill (HAWB):The appellants were penalized by the Collector of Customs, Bombay, for manipulating the value in the HAWB to aid the importers in overvaluing consignments of rough uncut diamonds, thereby attempting to remit excess foreign exchange. The manipulation was discovered during customs examination and expert valuation, which revealed significant discrepancies in the declared and actual values of the consignments.2. Determination of the real importer of the consignments:Investigations revealed that the importers, M/s Praveen Kumar Kothari & Co. and M/s Chandrakant Mangaldas & Co., were front companies set up by Shri M.C. Vakharia. The adjudicating authority concluded that Shri Vakharia was the real importer and was responsible for the over-invoicing of the imported diamonds. Consequently, penalties were imposed on him.3. Legitimacy of the penalties imposed on the courier company and its manager under Section 112(a) of the Customs Act, 1962:The adjudicating authority imposed penalties on the courier company, M/s Lemuir Express, and its manager, Shri H.M. Thadani, under Section 112(a) of the Customs Act, 1962, for aiding in the overvaluation. The authority held that Shri Thadani had knowledge of the consignor's identity and had manipulated the HAWB to assist the importer in remitting excess foreign exchange. However, the appellate tribunal found no evidence of omission or commission by M/s Lemuir Express that warranted a penalty, setting aside the penalty on the courier agency.4. Evaluation of evidence and intent behind the amendments made in the HAWB:Shri Thadani admitted to amending the HAWB values based on telephonic instructions from the foreign shipper, without prior customs approval. He claimed the amendments were made in good faith to expedite customs formalities. The adjudicating authority did not accept this defense, attributing malafide intent to Shri Thadani due to his knowledge of the consignor's identity and his instructions to the CHA to withhold the amendments from customs. The tribunal, however, found no evidence of collusion or personal gain, and the amendments were deemed routine business practice.5. Difference of opinion between the Judicial and Technical Members regarding the personal penalty on the manager:The Judicial Member upheld the penalty on Shri Thadani, reducing it to Rs. 75,000/- per adjudication order, citing his knowledge and actions as indicative of malafide intent. The Technical Member, however, argued that Shri Thadani acted in his official capacity without personal gain, and the penalty should be on the courier agency, not the individual. The Third Member concurred with the Technical Member, finding no evidence of malafide intent or collusion, and recommended setting aside the penalties on Shri Thadani.Majority Order:In light of the majority opinion, the penalties imposed on Shri Hiro Mulchand Thadani were set aside, and his appeals were allowed. The penalties on M/s Lemuir Express were also set aside, as there was no evidence warranting such action.