TaxTMI 
TaxTMI 
2008 (10) TMI 378
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....a (hereinafter referred to as M/s. SRG Forge) and M/s. Goodwill Impex, Ludhiana (hereinafter referred to as M/s. Goodwill) are six companies of which one Shri Vinod Garg is either proprietor or Managing Director and all these companies are controlled by Shri Vinod Garg. These companies were exporting steel and rubber products declared to be "Gear cutting tools of cobalt bearing High Speed Steel", 'Heat resistant rubber tension taped', 'track wheel' etc. under drawback & DEPB claim. On receipt of information that Shri Vinod Garg was making fraudulent Drawback and DEPB claims by mis-declaring the goods being exported in the name of various companies owned/controlled by him, the officers of DRI, detained and examined 16 export containers declared to contain 'Gear cutting tools made of high speed steel', 'heat resistant rubber tension tape' and 'Track wheel'. These containers had already been cleared by the Customs officers of CFS Ludhiana and were on way to Nhava Sheva for shipment. The goods, covered by 74 shipping bills, declared to be valued at Rs. 8.69 crores, were, on examination, found to be cut pieces of bars and rods of mild steel, rubber tape of pre-vulcanized rubber and trac....
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....d that while 'Gear cutting tools of high speed steel' and 'heat resistant rubber tape' had been exported under drawback claim, 'Track wheels' had been exported under DEPB and that as per the Board's circular, samples had been drawn only from the goods exported under drawback claim where the quantum of drawback claim was more than Rs. one lakh. They, however, could not give any explanation as to why in respect of the 16 containers examined by the DRI after clearance from CFS Ludhiana, while as per the test report of the samples drawn by the DRI officers, the goods were substandard/semi-finished, as per the test of the samples drawn by them (the custom officers of CFS, Ludhiana), the goods were prime quality goods. 1.1.2 On inquiry with Shri Vinod Garg, he in his statements dated 22-6-2000 and 25-8-2000 stated that while 'heat resistant rubber tape' had been purchased for export from outside, the 'Gear, cutting tools of high speed steel', and Track wheels had been manufactured in his factory - M/s. Garg Forging and produced the purchase bills for purchase of 'heat resistant rubber tension tape' and raw material for manufacture of 'Gear cutting tools of high speed steel' and Tra....
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.... Goodwill mentioned M/s. U.K. International, Leicester; M/s. EXIM Agency, Isle of MAN, U.K.; M/s. Kar & Man Ltd., England; M/s. British Motor Co., Leicester, U.K.; M/s. Brockel Motor Agency, England and M/s. Dairy Rice Edible Nuts and Pulses, Leicester, U.K. as the consignees. On inquiry through Indian High Commission in London, all these firms/companies were found to be fictitious. 1.1.5 Inquiry was conducted with the concerned shipping lines about eleven container shipped under shipping bills No. 2343-2350 dated 6-4-2000, 2719-2728 dated 27-4-2000, 1538-1540 dated 13-3-2000, 2298-2305 dated 3-4-2000, 168-169 dated 3-2-2000 and 1541-1543 dated 13-3-2000 filed by M/s. Garg Forging, M/s. SRG, M/s. Goodwill, M/s. Ragini, M/s. Garg Forging arid M/s. Goodwill and it was found that while all these consignments had been exported to U.K., the same had been offloaded at Dubai and cleared by M/s. Aljabriah Metals Trading, Sarjah and in the documents filed before UAE customs for clearance, the value declared for 'Gear cutting tools', and 'heat resistant rubber tape' was U.S. $ 119/- per M.T. and U.S. $ 230 per M.T. respectively as against their FOB value of U.S. $ 7900/- per M.T. and U....
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....stoms, Amritsar vide the impugned order in original No. 17/Cus/2005, dated 14-3-05 by which - (a) the goods v/a Rs. 2,11,39,342/- on which drawback claim is pending and the goods v/a Rs. 6,31,29,863/- on which drawback had already been paid, were held to be liable to confiscation under Section 113(d), 113(i) and 113(ii) of the Act, observing that since the goods have already been exported, the same are not available for confiscation; (b) pending drawback claim of Rs. 1,25,04,440/- was disallowed and the demand for wrongly paid drawback amounting to Rs. 3,68,18,331/- alongwith interest was confirmed under Rule 16 of the Customs & Central Excise Drawback Rules, 1995 read with Section 75 of the Customs Act; and (c) penalties were imposed on all the noticees under Section 114 of the Act except the four customs officers, in respect of which the penal proceedings were dropped. 1.3.1 While M/s. SRG, M/s. Ragini, M/s. Garg Concast, M/s. Goodwill, M/s. Garg Forging, M/s. SRG Forge, Shri Vinod Garg, Shri N.D. Garg, Shri Manjit Singh, Shri Sanjeev Kumar, Shri Shambhu Kumar, Shri Vineet Kumar, Shri P.N. Pandey and....
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....cers were tested by the CRCL and the test reports confirmed the declared description of the goods, there is no basis for these proceedings. (4) Addendum to show cause notice cannot be issued after receipt of reply to the show cause notice [Mahindra & Mahindra v. CCE, 2006 (196) E.L.T. 62 (T)]. Moreover the addendum introduces additional evidence in form of statements of Shri Vinod Garg, N.D. Garg, Manjit Singh and Vineet Saggar, which being involuntary, have been retracted. Moreover the statements of Shri Vinod Garg, N.D. Garg and Manjit Singh had been recorded when they had been illegally detained. As per Tribunal's judgment in case of Amar Kishor Prasad v. CC, reported in 2006 (75) R.L.T. 384 = 2006 (200) E.L.T. 557 (Tribunal), no reliance can be placed on statement recorded during illegal detention, which has been retracted later. (5) Nothing has been brought on record as to who has stated that none of the foreign buyers existed at the given address and there have been diversion of goods. No evidence in this regard has been brought on record. (6) Export is complete as soon as the goods leave territorial w....
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....nts have clearly admitted that the goods imported in past were similar to the goods seized by DRI. (4) The goods are shown to have been exported to various firms in U.K. but on inquiry it was found that none of those consignees did not exist. Not only this, the export proceeds of the goods exported to the consignees in U.K. have been received from countries other than the consignee country D mostly from Canada (Toranto), Dubai, U.S.A., U.A.E., Thailand and even in some cases, from Mumbai. This is a clear indication that the exports were not genuine. (5) On inquiry, it was found that the containers consigned to U.K. have been diverted to Dubai. Although the information about diversion of containers could be collected in respect of 11 containers only, yet it is very significant in view of the fact that the buyers firms, all of U.K., are fictitious. It was also found that the goods diverted to Dubai were cleared there, by a person by declaring value, which is small fraction of their declared FOB value before the Indian Customs Authorities. The value of 'gear cutting tools' was declared in Dubai as U.S. $ 119-120 per M.T. as against the....
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....ers and which were clearly found to have been misdeclared with regard to description, quality and value, on chemical analysis, were shown to have been purchased from the same non-existent fictitious firms. Most importantly, the samples drawn by the DRI from the seized consignment fail the test, i.e. differed from the description in the shipping bill, and for the samples drawn by the customs officers from CFS, Ludhaina from the same consignments, test is positive i.e. the test results match with the description in the shipping bill. From this factual position, only one thing can be concluded, which is that the samples were not drawn from the export consignments by the officers at CFS, Ludhiana but had been supplied by the exports. Although the charge of collusion on the part of Customs officers has been set aside by the adjudicating authority for the want of any collaboration, yet in view of plethora of concrete evidence, as mentioned above, the only conclusion that can be reached is that the samples were indeed different from the export goods. (9) The appellant's act is a well though of conspiracy where the origin of the export goods cannot be traced as the....
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.... 'gear cutting tools of high speed steel', 'track wheels' and 'heat resistant rubber tension tapes', exported by M/s. Garg Forging, M/s. SRG International, M/s. SRG Forge, M/s. Ragani Steel, M/s. Garg Concast and M/s. Goodwill had also misdeclared in terms of description, quality and value and if so, whether the drawback claim would be admissible in respect of the same. Another question to be decided in respect of the review appeal filed by the Revenue is as to whether in respect of the goods exported in past, which if held as liable for confiscation under Section 113(d), 113(i) and 113(ii) of Customs Act, redemption fine in lieu of confiscation under Section 125 of the Customs Act can be demanded from the exporters, when the goods have already been exported out of India and as such are not available for confiscation. 4. As regards the first point of dispute, we for the reasons given below, hold that the goods exported by the above-mentioned six firms had been misdeclared in terms of description, quality and value and no draw-back would be admissible in respect of the same :- (1) Shri Vinod Garg in his statement dated 22-6-2000 and 25-8-2000 has....
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....Garg Forging & Casting but had actually been purchased from the market. Though Shri Manjit Singh subsequently vide letter dated 8-8-02 retracted his statements, this retraction has to be treated as an afterthought. Hon'ble Bombay High Court in the case of Vinod Solanki v. UOI reported in 2008 (228) E.L.T. 17 (Bom) has held that mere bald statement that confessional statement has been recorded under coercion and duress, by itself, is not sufficient to discard the said confession and the burden to prove that the statement was obtained under duress and coercion lies on the person retracting the same. When no gear cutting tools of cobalt bearing high speed steel, or track wheel had been manufactured in the factory of M/s. Garg Forging Casting and the firms from which the purchase of heat resistant rubber tension tape and the raw material for gear cutting tools of high speed steel of track wheels is claimed to have been made found to be non-existent, it is clear indication that the goods exported were not as per the declaration, otherwise there would have been no necessity to conceal origin of the goods in this manner. Immediately after detection of this fraud by the DRI officers, some ....
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....ely would sell the same on high sea sale basis @ 119-120 U.S. $ per M.T. and U.S. $ 230 per M.T. respectively. Moreover, as per the inquiry from the exporter's bank - State Bank of Hyderabad, Ludhiana, the remittance in respect of export consignments had been received from countries other than the country of destination shown in the shipping bills While exports are to UK, the remittance has been received from countries like Canada (Toranto), U.S.A., U.A.E., Thailand etc. and in some cases even from Mumbai. This clearly indicates that what has been claimed by the Appellants as remittance from the export consignments is not genuine remittance coming from the consignees shown in the shipping bills. Even if the consignee sell the goods at high sea sale basis to some other persons, the high sea sale buyer will make payment to the consignee and not to the exporter in India. The information regarding remittance received from the bank under letter No. DRI/674 dated 5-2-03 corroborates the statement dated 24-8-03 of Shri N.D. Garg, brother of Shri Vinod Garg that the goods exported were sub-standard goods which would never have been accepted in U.K. but their agent in Dubai managed their cl....
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....ontessa Commercial, M/s. ASK Exports, M/s. SRM Pvt. Ltd. and M/s. Varun Enterprises. The statement of Shri Sunil Kishorepuria regarding the use of his companies by Shri Vinod Kumar Garg in export fraud has also been corroborated by Shri N.D. Garg in his statement dated 25-8-03 wherein he has admitted that Shri Vinod Kumar Garg had exported similar goods in the name of four companies of Shri Kishorepuria, during the same period. (4) Shri Narsi Das Garg in his statements dated 23-8-03 and 24-8-03 has clearly admitted that the firms M/s. Krishna Hardware and Mill Store, M/s. R.K. Steel Traders, M/s. Rama Krishna Steel Traders, M/s. Jindal Steel and M/s. Jyoti Steel had been opened in the name of their employees and these were only paper firms for facilitating the transaction of goods for export by his brother Shri Vinod Kumar Garg, that the export orders were being received through one Shri Inder Pal allies Harmeet Rajpal allies Bobby of M/s. Al Jabriah of Dubai through fax or courier, that as per his directions, the export documents used to be prepared in the name various fictitious firms of U.K. while the goods exported were being diverted to Dubai, th....
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....dence and therefore the same can be used as substantive evidence against the Appellants including Shri N.D. Garg. (5) It has been emphasized by the Appellants that the basis of the Revenue's case is the allegation that the customs officers posted at CFS, Ludhiana, D.R. Ahuja, A.K. Kaul, T.N. Dhar and M.P. Singh had connived with Shri Vinod Kumar Garg in this fraud and this very foundation of Revenue's case stands demolished, as not only the Commissioner in the impugned order has dropped the penal proceedings against these departmental officers, even the departmental disciplinary proceedings against these officers has been dropped for the want of evidence. While it is true that the Commissioner in para 59.7 of the order has dropped the penal proceedings against these officers and this decision of the Commissioner has not been challenged by the Revenue in the review appeals, and, as mentioned in para 59.8 of the impugned order, even the disciplinary departmental disciplinary proceedings have also been dropped against them, we have reservations about this decision of the Commissioner, as the reasons recorded by the Commissioner for dropping penal proceedings a....
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....Garg, referred to by the Appellants' counsel, is with regard to the exports made in the name of M/s. National Steel Product Co. where the test of the samples could not through any light as to whether the goods being exported were machined forgings. In this case the exports are by other companies of Shri Vinod Garg . (7) When the consignees in U.K. were non-existent and fictitious, but still remittance was received by the exporters from countries other than the country of consignees and inquiry in respect of 11 containers meant for some buyers in U.K. revealed that the consignments had been diverted to UAE where the same had been cleared by M/s. Al Jabriah by declaring value, which is a very small fraction of the FOB value declared before the Indian Customs authorities, and when the firms/ companies from which heat resistant rubber tension tape and raw material for gear cutting tools of high speed steel and track wheels are claimed to have been purchased have been found to be fictitious, notwithstanding the test reports of the samples supposed to have been drawn by the customs officers of CFS Ludhiana, reporting the goods to be as per declaration, the only c....
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....scated the offending goods under Section 113(d), 113(i) and 113(ii) of Customs Act and imposed fine in lieu of confiscation under Section 125 of Customs Act. (ii) The order passed by the Commissioner in not confiscating the offending goods is not in consonance with the provision of Section 125 of Customs Act, which provides that whenever confiscation of any goods is authorized, in case of non-prohibited goods, the adjudicating authority shall give an option to pay fine in lieu of confiscation. Hence, once the goods are held as an offending in nature, even if the said goods are not easily available for confiscation, the same are ought to be ordered as confiscated and appropriate fine in lieu of confiscation should have been imposed by the Commissioner in terms of Section 125 of Customs Act. 6. During the period of dispute, sub-section (1) of Section 129D provided that the Committee of Chief Commissioner of Customs may, of its own motion, call for and examine the records of any proceedings in which the Commissioner of Customs as an adjudicating authority has passed any decision or order, under the Customs Act for the purpose of satisfying itself as to....