TaxTMI 
TaxTMI 
2010 (12) TMI 668
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.... in the CIF value is reasonable. In the case of Zero Duty imports, the minimum residual life of the second-hand capital goods shall be 10 years. The above company imported 18 second-hand machines in CKD condition in 27 containers for total CIF value of Rs. 21,64,03,510/- (DM 87,82,610). 24 of the 27 containers arrived at ICD, Hyderabad through Mumbai Gateway Port and 3 containers remained at Mumbai Port for transshipment to ICD, Hyderabad. On 23-10-1996, KSL filed two Bills of Entry Nos. 497 and 498 at ICD, Hyderabad for duty-free clearance of 9 machines (out of the 18 imported machines) which arrived in 7 containers (out of the 24 containers). They also filed Invoices No. 300081 dated 3-7-1996 and No. 300084 dated 8-7-1996 of M/s. TECTRA EXPORT GmbH, Hamburg, Germany. Besides these invoices, packing lists, copy of EPCG licence, photographs of the machines and Chartered Engineer's Certificates were also filed by KSL. The 24 containers which had arrived at ICD, Hyderabad were seized by officers of Customs on 14-2-1997 after discrepancies were found, on examination of the goods, with regard to the age, description, value, etc. of the goods. The examination had revealed inter alia tha....
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....rrectly certify the facts revealed by the physical examination held on 26-3-1997. In his statements, Shri H.S. Sethi, Managing Director, stated that the second hand machines were imported from M/s. TECTRA EXPORT GmbH by placing purchase orders on them. He asserted that the actual supplier of the machines was TECTRA only. Statements of KSL's CHA were also recorded by SIIB. Similarly, statements of D. Santhanam were recorded from time to time, the later ones being in the nature of strengthening the apprehensions of SIIB about the suspect conduct of the importer. 2. On the basis of the results of investigations, a show-cause notice was issued to KSL and others on 13-12-1998. This notice proposed (a) to deny the benefit of Zero Duty EPCG Scheme to KSL in respect of the goods imported by them with a declared invoiced value of Rs. 21.64 crores CIF as also to confiscate the goods under Section 111(d) of the Customs Act; (b) to confiscate the goods imported in 7 containers covered by Bills of Entry Nos. 497 and 498 dated 23-10-1996 (declared value over Rs. 10.28 crores CIF) under Section 111(d) and (m) of the Act; (c) to confiscate the goods (invoiced value over Rs. 11.35 crores CIF) im....
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....ined, but these requisitions also fell on deaf ears. Further, the opportunities of personal hearing offered from time to time by the adjudicating authority also were not availed of. We observe that the Commissioner, as adjudicating authority, found himself at his wits end in the case of KSL. Ultimately, he passed the impugned order, wherein he ordered against KSL as follows :- "(i) Under sections 111(d), 111(l) and 111(m) of the Customs Act, 1962 I confiscate all the 19 second-hand heavy duty machines (in knocked down condition) alongwith components and accessories of CIF value Rs. 246.13 lakhs imported in 27 containers out of which 24 containers are lying in ICD, Section 125 of the Customs Act, 1962 I give M/s. Kitti Steels Ltd., Hyderabad an option to redeem the said goods by paying a fine of Rs. 1 crore (Rupees one crore only). This option to redeem shall be exercised by M/s. Kitti Steels Ltd., Hyderabad within three months from the date of receipt of this order. (ii) Under sections 111(d), 111(l) and 111(m) of the Customs Act, 1962, I order confiscation of all the bearings, sprockets and chains of value Rs. 1 crore (CIF) imported by M/s. Kitti Steels Ltd., Hyder....
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....m would not be applicable to the machines actually imported by KSL. Shri H.S. Sethi, Managing Director of the company, who handled the commercial transactions, could not offer any reliable explanation of the above discrepancies. Shri Santhanam, Vice-President and Authorised Signatory of the company, and Shri Choudhary, who was in-charge of production planning, expressed their inability to explain the discrepancies noticed in the age and value of the machines under import. In fact, Shri Santhanam, in one of his letters, conceded that the goods under import were not as per the specifications mentioned in the purchase order and he also requested for permission to re-export the goods so that they could obtain replacement as per the purchase order. In another letter, he requested for return of the EPCG licence so that they could approach the licencing authority for an amendment. Shri H.S. Sethi, in his letter dated 12-4-1997, admitted that, because of the delay in opening of Letters of Credit and obtaining EPCG licence, some machines, which were originally offered to them, were sold away and similar machines were dispatched to them by TECTRA. 5. After carefully applying his mind....
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.... and (b) letter dated 12-5-1999 of TECTRA addressed to Enforcement Directorate. Both the letters indicated that M/s. TECTRA EXPORT GmbH were functioning only as handling agents for supplying the machinery to KSL. The first letter stated that the manufacturing company in Germany had confirmed that the prices of machines supplied to KSL were slightly more than the price for the machines originally contracted. It further stated that the manufacturing company had taken care to see that the machines supplied to KSL had long residual life more than 15 years and that they would perform equally well as the machines originally ordered. The second letter of TECTRA purported to intimate to the Enforcement Directorate the financial aspects of the transactions with KSL. This letter also indicated the amounts paid to the German manufacturer (M/s. Wirths) as price of the machines, to the engineers as upgradation charges, to TECTRA as handling charges, etc. This letter was produced by the counsel to show that the machines were supplied to KSL after upgradation resulting in value addition and hence there was no overvaluation by them. 7. After examining the reco....
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.... held with no iota of doubt that the adjudicating authority duly observed the principles of natural justice. 7.2  The learned counsel further raised the grievance that the information furnished by TECTRA was not considered by the Commissioner. As a matter of fact, a copy of TECTRA's letter dated 12-5-1999 to the Enforcement Directorate was never submitted to the adjudicating authority by the appellants. Even any copy of TECTRA's letter dated 27-3-1997 addressed to KSL was not shown to the adjudicating authority. Obviously, the learned Commissioner had no occasion to consider the information contained in these letters. 7.3 The next question to be considered is whether the goods were liable to confiscation under Section 111(d) of the Customs Act. It is not in dispute that the machines under import were not the same as those mentioned in the purchase order. A lot of discrepancies were found upon examination of the goods and these discrepancies could not be satisfactorily explained by the appellants. On the other hand, the statements given by D. Santhanam, Vice-President and Authorised Signatory of the company and Shri S.M. Bhola, Chartered Engineer are, by and large, s....
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....yderabad. Even the remaining 3 containers retained at Mumbai port were also meant for similar transhipment. All the goods imported by KSL were covered by declaration for transhipment under Section 54 of the Customs Act. These facts pleaded by the SDR were not denied by the counsel. Therefore, as rightly submitted by the learned SDR, the appellants cannot claim support from the Tribunal's decision in Royal Impex (supra). As per clause (m) of Section 111, any goods under transshipment, which do not correspond in respect of value or any other particular with the declaration for transhipment referred in the proviso to sub-section (1) of Section 54 of the Act, are also liable to confiscation. In the result, for the applicability of Section 111(m), there can be no differentiation between the goods in respect of which Bills of Entry were filed and other goods under transhipment for which no Bills of Entry were filed. Clause (m) of Section 111 covers two cases viz. misdeclaration of 'value' and misdeclaration of 'any other particular'. In so far as value of the goods is concerned, it was submitted by the learned counsel that the show-cause notice did not specifically allege that the appell....