TaxTMI 
TaxTMI 
2013 (8) TMI 506
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....f Directorate of Revenue Intelligence and were subsequently seized on the ground that the value of the rough diamonds were misdeclared and the value declared was highly exaggerated. Another consignment of cut and polished diamonds was also seized on the ground of overvaluation. After investigation and issue of show cause notice and observance of principles of natural justice, the impugned order has been passed whereby the rough diamonds as well as cut and polished diamonds under seizure have been absolutely confiscated and penalties have been imposed on various firms and persons involved. All these firms and persons are in appeal before us. 2. The issues to be decided in this case have been outlined in the impugned order and for convenience we adopt the same. (a) Whether the goods under reference i.e. 28 consignments of rough diamonds were mis-declared in terms of value and whether the value of the same was highly exaggerated and required to be re-determined under Section 14 of the Customs Act, 1962 read with Customs Valuation (Determination of Value of the Imported Goods) Rules, 2007? (b) Whether one consignment of cut and p....
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....d to be the de facto owner of all the importing firms and Shri Himmat Mohanbhai Kheni is alleged to be actual owner of the impugned goods and these allegations have been upheld in the impugned order. 5. All the 28 consignments of rough diamonds arrived in India between 22-11-2008 to 24-11-2008 from Hong Kong and were detained on 27-11-2008. All the exporting firms faxed letters dated 24-11-2008 to the Assistant Commissioner of Customs, Surat which were received on 28-11-2008 stating that "there was a mistake in preparing the invoice and they are in the process of getting the relevant amendments in the Kimberley Process Certificate." Subsequently on 3-12-2008, the concerned agent applied for amendment in the IGM based on the letters dated 3-12-2008 seeking to amend the declared value to US$ 352328.45. Further Hong Kong exporters on 13-12-2008 sought permission to re-export the goods on the ground that the same had been sent without prior confirmed orders and the importing firms were not willing to accept the consignments. 6. Shri V.S. Nankani, learned advocate on behalf of the exporters in Hong Kong submitted that the consignments were accompanied by Kimberley Process Certific....
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....s do not fulfil the condition for valid import namely the requirement of a proper valid KPC, they are deemed to be prohibited is not correct in view of the above observations. Further he also submits that learned Commissioner has observed in her order that on the date when application for amendments was submitted, the goods were not available in Hong Kong nor copies of all the certificates. However he submits that nowhere in the KPC scheme it has been stated that KPC would be issued only after verification of the goods. Therefore this observation cannot be sustained. He also submits that appellants live in Hong Kong and therefore they cannot be punished under Customs Act, 1962. 7. Shri J.C. Patel, learned advocate on behalf of the four importing firms and the directors submitted that the firms and the directors cannot be penalized for misdeclaration of value in view of the fact that the importing firms and directors were not part of misdeclaration. Therefore they cannot be said to have rendered the goods liable to confiscation. He submits that no bill of entry was filed by the appellant-firms. 8. Shri Anil Balani, learned advocate on behalf of Shri Prakash Sancheti submitted ....
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....monds, which in fact are pertaining to Shri H.M. Kheni only. The owner of 4 Exporting firms is Shri H.S.K. Bhindi an ex-employee of M/s. Kantilal, resident of Surat and Shri M.G. Tanna is the authorized signatory. Both are Indian Pass Port holders. The exporting firms, their owner their authorized signatory, the importing firms, the de facto-owner of the importing firms, and their Directors and Partners of M/s. Kantilal are hand in glove with each other and each of them actively participated in the import of over-invoiced, prohibited Rough Diamonds which are liable for confiscation U/S 111(d) of CA'62 and thereby attracted penalty on them U/S 112(a) of CA'62. They arranged and devised this modus operandi for remitting excess Foreign Exchange because Rough Diamonds were Duty free under Notification No. 21/2002-Cus., dated 1-3-2002. (ii) M/s. Prakash Diamonds filed one BE dated 26-11-2008 for cut and polished Diamonds wherein value declared was US$ 10,74,923.50 as against actual value US$ 11,25,445.50 hence goods were confiscated U/S 111(m) of CA'62, Redemption Fine and Penalty was imposed U/S 112(a) of CA'62. (iii) &nb....
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....s from legal action. (v) Shri A.K. Kakkad, CHA, B.K. Freight Forwarders stated vide his statement dated 10-12-2008 that Shri Sushil Jain and Shri Prakash Sancheti approached him for clearance in the last week of November 2008 as their regular CHA had refused to file the document. All firms gave him authority letter dated 4-12-2008 along with IEC copies for the clearance of goods, hence they cannot say that they are not importies. (vi) Shri Sunil Kumar Jain Director of M/s. Danish Exports and M/s. Prakash Diamonds vide statement dated 13-5-2009 stated that the order for consignment was placed by Shri Prakash Sancheti, that on arrival of the consignments he told him that consignment was grossly overvalued and DRI is aware about the value and is investigating, therefore, goods are not to be cleared. About cancellation of the order since consignment is overvalued and DRI is investigating they sent letters to the overseas suppliers to escape from the legal action on them. (vii) As per Shri Sushil Kumar Babel, Director of M/s. Multi Star Gems & Jewellery and M/s. Manan Exp....
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....shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods where sold for export to India for delivery at the time and place of importation, or as the case may be, for export from India for delivery at the time and place of exportation, where the buyers and seller of the goods are not related and the price is the sole consideration for the sale subject to such others conditions as may be specified in the rules made in this behalf. (iii) As per Para 2.2 of EXIM 2004-2009 No Import of rough diamonds shall be permitted unless accompanied by Kimberley Process (KP) certificate as specified by Gem & Jewellery EPC (GJEPC). (iv) KPC scheme for rough diamonds is implemented by C.B.E. & C.'s Circular No. 53/2003-Cus., dated 23-6-2003. As per Para 3 the KP certificate is a forgery resistance document. The KPC contains the following details : Country of origin, the certificate number, date of issuance, date of expiry, issuing authority, the details of importer and exporter, Carat weight/Mass, value in US$, etc. Further, as per Para 4(a) on or before arrival of the c....
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....s satisfied that the import manifest or import export is in any way incorrect or incomplete, and that there was no fraudulent intention, he may permit it to be amended or supplemented. (ii) Subsequent to detention of consignments and detection of incorrect value in the invoice and KPCs by the DRI the cargo handlers, i.e. M/s. Malca - Amit Logistics Pvt. Ltd. applied for the amendment in the IGM (based on the amended relevant house Air way Bills and sought to amend the declared value from US$ 9,89,51,493 to US$ 3,52,328.45 to the A.C., which was rightly turned down by him in terms of section 30(3) of CA'62 as the same was originally false with respect to valuation. (iii) when fraud was detected, amendment therein was not allowed U/S 30(3) of CA's 62 - Biren Shah v. Collector of Customs, Bombay - 1994 (72) E.L.T. 660 (T) 5. Request for Re-Export : (i) The foreign suppliers applied to AC vide their letter dated 13-12-2009 to re-export the rough diamonds which was rejected by AC vide his letter dated 2-1-2009. (ii) &nb....
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....e a valid KPC with them goods are prohibited for import as per Para 2.2 of EXIM 2004-09 and are liable for confiscation U/S 111(d) of CA '62 and the goods being not otherwise in order in terms of Para 6 of C.B.E. & C. circular, the re-export cannot be permitted and the same are liable for absolute confiscation U/S 111(d) read with Para 7 of C.B.E. & C. circular. (vi) The facts of this case are distinguishable with the facts of the case in case of Sahil Diamonds because in that case the basic dispute was regarding declaration of value which according to Hon'ble Tribunal could not be established by the department and accordingly mis-declaration of value in the KP certificate could not be established, therefore, Hon'ble Tribunal considered the KP certificate valid. In this case the value arrived by the GJEPC is US$ 3,92,494 (Rs. 1.74 Crore) as against original value US$ 9,98,51,493 (Rs. 488 Crore) and amended value submitted by the overseas supplier is US$ 3,52,328.45 (difference 3,92,494 - 3,52,328.45 US$ 40,165.55 only i.e. approx 10% difference). This clearly shows that the value arrived by the department on the basis of GJEPC and the value su....
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....panied by KP Certificate it means it should be accompanied by a valid KP certificate. Since this condition is violated hence it is prohibited import and this makes goods liable for confiscation U/S 111(d) of CA'62. Hon'ble Supreme Court's decision in case of Om Prakash Bhatia v. Commissioner of Customs, Delhi - 2003 (155) E.L.T. 423 (S.C.) is relied. (vi) The import of rough Diamonds in this case is in contravention of section 11 of Foreign Trade (Development and Regulation) Act, 1992 and rule 14 of Foreign Trade (Regulation) Rules, 1993. (vii) Import and export of cut and polished Diamonds are subject to prohibition under erstwhile Foreign Exchange Regulation Act, 1973 and Foreign Trade (Development & Regulation) Act, 1992 and rules made thereunder, thus bringing them under purview of prohibited goods. Mis-declaration and over-invoicing of such goods makes confiscation sustainable - Shree Corporation v. Commissioner of Customs, Mumbai - 2004 (166) E.L.T. 471 (T. Mumbai). Goods detained by Customs before submission of Fax message of foreign supplier regarding mix up of consignment. Mis-declaration of goods is i....
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....nbsp; DRI detained 29 parcels (28 of Rough Diamonds and one of cut and polished Diamonds) on 27-11-2008 4. For one consignment of cut and polished Diamonds M/s. Prakash Diamonds filed B/E dated 26-11-2008. For 28 consignments of rough Diamonds overseas exporter sent 14 letters all dated 24-11-2008 through fax on 28-11-2008 stating that there was a mistake in preparing the invoices and they are in the process of getting the amendment in KPCs (Para 4 Page No. 11). From the date of these letters it is clear that as on 24-11-2008 the overseas exporters as per their own admission were very well aware about the incorrectness of valuation in the KPCs and invoices, however, they admitted this incorrectness only when the intelligence was already received and goods were detained by DRI on 27-11-2008. Therefore, their letters dated 24-11-2008 sent by fax on 28-11-2008 were after thought and were declared only after knowing that this fact has already come into the knowledge of the DRI. 5. AC vide letter dated 3-12-2008 informed that exporters through Cargo h....
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....ing a monthly salary of Rs. 15,000/- and Shri Kumar Bisawat Rs. 10,000/-. Shri Abhay Singh Jain Directors of M/s. Prakash Diamonds, Shri Dinesh Bisawat, Director of M/s. Manan Exports Pvt. Ltd., Shri Manish Kumar Jain, Director of M/s. Danish Exports Pvt. Ltd. and Shri R.P. Tater, Director of M/s. Multi Star Gems and Jewellery failed to respond to summons issued by DR. 11. Shri Prakash Sancheti admitted that he is actually managing and controlling the importing firms. He approached Shri A.K. Kakkad, CHA on 4-12-2008 for the clearance of the goods. For the 28 consignments of rough Diamonds and one consignment of cut and polished Diamonds he negotiated with Shri M. Tanna. The value of import consignment was overvalued. He agreed with panchnama dated 27-11-2008 and 24-12-2008 vide which Diamonds were overvalued - Para 14.2 Page No. 29. vide statement dated 14-5-2009 he stated that the practice of mis-declaration was done as there was no Duty on the import of rough Diamonds & cut and polished Diamonds. He interacted with Shri Sushil Babel and offered him to import the said goods in his company's name on commission basis to which he gave his consen....
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....led that proprietor of M/s. S.S. International is Shri M. Tanna who is also A/S of the 4 Hong Kong based exporting firms. Shri M. Tanna initially imported the goods from India and subsequently exported to India after overvaluation in the name of the firm's floated in the name of Shri H.S. Bhindi. Intelligence also revealed that Shri Tanna is working for M/s. Kantilal. M/s. S.S. International was first got registered on 16-6-1997 in the name of Shri M.P. Kheni and later on Shri M. Tanna becomes its proprietor w.e.f. 24-3-1999. This is the case of Re-routing Diamonds. KP Certificates are signed by Shri M. Tanna for exporting supplier. It is who manipulated KP Certificates at his end. 50% of Diamonds imported under KP Certificate dated 30-7-2008 has been exported on 4-9-2008 under KP Certificate dated 4-9-2008 as rejected. On 17-11-2008 under KP Certificate dated 17-11-2008 the remaining 50% were exported as rejects. Thus, the entire quantity originally imported was exported as rejected. Thus, clearly shows the modus operandi of circular Trade. 14. The Hong Kong based firms had deliberately given false declaration, certifying the correctness of t....
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....p; Shri Bhindi is the resident of Surat (ii) The offence is committed in India (iii) They have accepted the jurisdiction of Gujarat High Court (iv) They are Indian Nationals. 21. The reliance made on the Suraj Diamonds (l) Ltd. v. CC (Airport) Mumbai - 2008 (227) E.L.T. 471 (T) is misplaced as the facts of the case are different. In that case goods were found to be semi-precious stones, instead of rough Diamonds declared. It was held therein that in view of the valid REP Licenses, the goods would have been exempted from duty. The emphasis in this case is on the prohibited nature of goods. 22. For evidential value of co-accused the following case laws are relied : (i) Kolkata Abbas Haji v. Government of India and others - 1984 (15) E.L.T. 129 (Ker.) (ii) Ganesh M. Verma v. Collector of Cus. (P) Mumbai - 2001 (137) E.L.T. 628 (T-Kol) 23.  ....
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....nimity among valuation paneI members The CESTAT in the case of M/s. Sahil Diamonds had observed that the panel members of the second and third committee, who were appointed by the Gem and Jewellery Export Promotion Council (GJEPC), were not qualified enough to opine in the subject matter. There is no dispute as regard to the constitution of the panel or its findings as regard to the value in the present case and it also finds support from the value sought for amendment by the overseas supplier. (3) Evidence of Circular Trading These cases involve circular trading which was not the case in M/s. Sahil Diamonds Pvt. Ltd. and M/s. Suraj Diamonds India Ltd. In the instant case, Investigation was carried out regarding the movement of the goods, it is fact that the previous imports were not the consideration in the instant case, yet the investigation into the matter was found relevant as the complex and systematic scheme of Circular Trading was brought on record and a link between present imports and earlier exports were also discovered and brought on record. The Investigation has categorically brought on record that the 28 consignments of rough diamonds weighing 181608.00 car....
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....was as per the initial value declared and it was only later that the same was revised. (Page 12 & Page 4). 4. He admitted that the purchase rate of RD was @ US$ 1 per carat and that the sale price of the same was @ US $ 572 per carat. 5. He sent a letter dated 24-11-2009 to the Indian Customs regarding the mistake in the value of the 28 consignments shipped by them but he could not produce a copy of the letter to the Hong Kong Customs authorities. (6) In his statement Shri Gandhi Vijay Vinod Chandra stated that : 1. All the shipments were booked by Mr. Tanna with four companies declared as importer. 2. The liability cost (insurance) was on the initial amount declared of the 28 consignments of RD sent to India from Hong Kong on 22/24 of Nov. 09 and no downward revision of the same has been made as the same cannot be amended as per their company rules. This aspect has already been dealt with in the O-I-O at Para 25 and the above facts based on the report of the Hong Kong Customs are merely an extension of the evidences already discussed in details in the said Para. (The copy of the received from the Consul, Consulate General of India, Hong Kong Attached). ....
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....im on 4-12-2008. In his statement Shri Kakkad CHA stated that he was approached in the last week of November 2008 by the importers since their regular CHA had refused to file the documents for clearance. This would show that importers were ready to accept the goods till 4-12-2008 if not later. Nevertheless by 13-12-2008, exporters in Hong Kong sought re-export. By this time the department had already taken steps to get the goods revalued and experts nominated by GJEPC valued the rough diamonds on US$ 3,92,494 as against US$ 3,52,328.45 being the revised value of the exporters. During the investigation, Shri Sushil Kumar Babel, Director of M/s. Multi Star Gems & Jewellery and M/s. Manan Exports Pvt. Ltd. in his two statements dated 5-2-2009 and 13-5-2009 admitted that he was only an employee; Shri Prakash Sancheti was the real owner. The order had indeed been placed by Shri Prakash Sancheti and after the consignment arrived Shri Sancheti had never informed him that DRI was aware about overvaluation and has started investigation and therefore the goods are not to be cleared. The cancellation letters were sent according to him because of DRI investigation only. A similar statement was....
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....y verbal orders are placed and on that basis goods are sent. In this case also admittedly the orders placed were verbal only, till 20 days from the date of receipt of the goods, the buyers were willing to receive the goods. It cannot be said that the buyers were not aware of the price because invoices were raised from 17-11-2008 to 19-11-2008 and dispatch took place on 22-11-2008 and 24-11-2008. There was already a gap of 5 to 7 days between the invoice and the dispatch. When the orders were being placed verbally and the amount involved is about Rs. 485 crores, it is strange that neither the buyer nor the seller thought it fit that there was something wrong. Further it is to be noted other than making blank statement that there was a mistake, no other explanation is forthcoming as to how the mistake occurred. It is not the case of the exporters that they had exported several consignments to India at the same time and to several other countries and there was a mix up and because of that there was wrong mention of value. If this was correct, there should be other consignments during the same time. There is not even a hint of another consignment sent to someone else during the relevan....
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....l which may or may not be given. Unimportant details which may not be required have been identified and option has been given to the parties to mention them or leave them. There is no doubt in the KPCs value is an important aspect. Further the very purpose of the scheme would show the importance of the value because the proceeds of the trade can be used by rebel movements. The inflation of value can help repatriation of excess funds to rebel movements and can be used to finance them. Rebel movements would be interested in money and not in mere diamonds. Therefore when such exaggerated over-invoicing takes place it is clearly in conflict with KPCs and no country can ignore such excessive over-invoicing being signatory to the scheme. Therefore we are unable to agree with the contention of the learned advocate for the exporters in Hong Kong that it was a genuine mistake. 15. As already discussed, in this case it is not only the exporters in Hong Kong who are responsible for mis-declaration of value in the relevant documents such as invoice, airway bill, KPC etc. but also the Indian importers as brought out from the statements. In view of the fact that the value was revised down by ....
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.... by producing a new KPC or amended KPC or revised KPC has been rightly disallowed. Once the amendment is disallowed and the revised documents have not been accepted and during the subsequent adjudication process and as per the above discussion by us, the fraudulent intention is established, the question of allowing any amendment in the IGM does not arise. Further as rightly pointed out by the learned DR as per the decision of the Hon'ble Supreme Court in the case of Grand Prime Ltd. reported in 2003 (155) E.L.T. 417 (S.C.), re-export cannot be permitted when the import itself is contrary to the law. Therefore the action of the Commissioner and the authorities in not allowing the re-export was also in line and in accordance with the existing law of the country. 18. The discussion above very clearly shows that the transaction value is not the real transaction value in this case and therefore has been rightly rejected by the Commissioner in her order. The evidences gathered during the investigation which continued for more than nine months and elaborately discussed by the learned Commissioner in her order and briefly discussed by us would clearly show that all the persons concerned....
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....blished on a preponderance of probabilities. Hon'ble High Court also observed "As observed by the Supreme Court in Collector of Customs, Madras & others v. D. Bhoormull - 1983 (13) E.L.T. 1546 (S.C.), all that is required to be established is such a degree of probability that a prudent man may, on its basis, believe in the existence of the act in issue." Appellants also relied upon the decision of Apex Court in the case of Mahalaxmi Gems reported in 2008 (231) E.L.T. 198 (S.C.) to submit that no contemporaneous evidence has been shown to prove overvaluation. Para 7 & Para 8 of the said decision of the Hon'ble Supreme Court are reproduced below : "7. Assessee, being aggrieved, filed appeal before the Tribunal. Tribunal by its impugned order has set aside the findings recorded by the Commissioner (Customs) by observing that "the value of the goods that was declared was the transaction value. The genuineness of the invoice that the assessee produced has not been questioned. It has not been alleged that it was fabricated or fake or that any relationship existed between the importer and the exporter". It was also held that there was no contemporaneous evidence to prove that the go....
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.... be said that the value was mis-declared. As far as value is concerned we have already rejected the claim. The appellants relied upon the decisions of this Tribunal in the case of Sahil Diamonds Pvt. Ltd. reported in 2010 (250) E.L.T. 310 (Tri.-Ahd.) to support their contention that absolute confiscation was not at all warranted. In fact it was submitted that Board itself in Circular No. 53/03-Cus., dated 23-6-2003 prescribed re-export of goods where no KP Certificate was produced. It was also urged that the submission of an invalid KPC is as good as equivalent to non-submission of KP Certificate. Para 6 of the Circular was relied upon. Para 6 of the circular provides that in case a rough diamond consignment is not accompanied by KP Certificate but otherwise in order, the importer may be given seven working days to arrange for the original KPC for clearance of the import consignment. If the importer is not able to submit the original KPC within seven working days, the goods could be sent back. Unfortunately, the appellants failed to notice the words "otherwise in order". The provision in this para applies only when diamond consignment is otherwise in order but a KPC is not availabl....
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....bject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with." The Apex Court from the definition concluded that if the conditions prescribed for import or export of goods are not complied with, such goods would be considered to be prohibited goods. Obviously in this case, the import of rough diamonds was made without complying with the requirements of Exim Policy, relevant Act and the Rules thereunder. Therefore the rough diamonds have to be held as prohibited under the law. Once the importation is held to be prohibited, the learned Commissioner has the discretion to decide whether the goods have to be absolutely confiscated or allowed to be redeemed on payment of fine. In this case it is not only that the parties concerned have attempted to import rough diamonds at highly exaggerated value but also they attempted to manipulate the records and mislead the department that there was a mistake in preparation of invoice. The effort stopped only when the appellants came to know that department has comm....
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....e expert panels were set up made the department's case suspect. None of those elements are found in this case. Therefore the decision and the conclusions reached in the case of Sahil Diamonds Pvt. Ltd. cannot be applied to this case. 24. Now we come to the decision of the Tribunal in the case of Suraj Diamonds (India) Ltd. The facts in Suraj Diamonds case were as under : "The relevant fact that arises for consideration are on 29-2-1999, the appellant Suraj Diamonds (India) Ltd., (appellant-company) imported a parcel of rough diamonds from Sharjah and declared the same as rough diamonds. The said goods were imported as per IGM No. 5768 Line No. 1 dated 24-4-1999 under Airway Bill No. 16068163620 dated 24-4-1999 and the goods were shipped vide Invoice No. R0002/9990 dated 24-4-1999 by M/s. Viraj Holdings Ltd., Sharjah. The duty free clearances of said goods was sought under Customs Tariff No. 7102.31 and under exemption Notification No. 20/99-Cus., dated 28-2-1999 against REP Licence. The consignment was ordered for first check examination. On examination of the goods by the officers, it was noticed that four pieces, declared as rough diamonds do not appear to be diamonds. Henc....
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....have given the above referred REP licence for importing of consignment of value of Rs. 2,35,28,388/-. This was done by the appellant-company when the goods landed in India, before inspection and this fact is undisputed. It is also on record the Chairman of appellant-company on examination of consignment, noticing that they were worthless "semi-precious stones", straightaway disowned the same by intimating the authorities that they had not contracted for import of these goods. 11. On careful perusal of the various statements of the Chairman of the appellant-company as well as others, we find that they do not bring out any categorical averment that the Chairman of appellant-company had knowledge that the import is of "semi-precious stones" instead of "rough diamonds". Further, it was submitted by the ld. Consultant that this matter was referred to FERA and FEMA authorities and on conclusion of an investigation, the case was closed, as there were no remittances of Foreign Exchange. It is an undisputed fact that the appellants had not remitted any foreign exchange." 26. The conclusion in the Para 11 reached by the Tribunal would clearly show that the department could not show tha....
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....also show that the appellants did not get any benefit and therefore penalty was not imposable. The underlying assumption is that if there was no evasion of duty, importer would not get benefit of misdeclaration and therefore no penalty would be imposable. 29. It becomes necessary to consider the three decisions relied upon by the Tribunal since we have already observed that the ratio of the decision in the case of Suraj Diamonds was totally different. Therefore if the other three decisions cannot be applied to the facts of the case, the decision of Suraj Diamonds also would not be applicable since the facts in the case of Suraj Diamonds were entirely different and the Tribunal had reached a conclusion there that importer had a bona fide belief that it was importing rough diamonds and there was no intentional import which is not the case here. 30. In Jay AR Enterprises case, the appellant was manufacturer of leather and they had exported four consignments of leather to USA out of which one consignment was sent back. However while filing bill of entry, the appellant declared origin of the country as USA and thereafter an offence case was registered. The Tribunal took note of th....
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....t there was no evidence to show that Subadhra Industries had derived any benefit from the legal import or they had attempted to clear copper scrap in the guise of steel scrap. The Tribunal also observed that there is no evidence to show that any extra amount was received by Subadhra Industries. To sum up the conclusion of the Tribunal seems to be that Shree Subadhra Industries had no hand in rendering the goods liable to confiscation since they had sold the goods on high sea sale basis. As regards Jagannath Steels Ltd. also the same view was taken since there was no evidence to show that they were aware of existence of copper scrap in one of the containers and they had willingly cooperated with the departmental authorities and had given all the facts. Therefore penalty on manager of Jagannath Steels was also waived. It has to be noted that penalty on M/s. Shree Jagannath Steels Ltd. was upheld. To sum up in that case even though there was no evidence to show that M/s. Jagannath Steels was aware of existence of copper scrap in a container, the confiscation and penalty was upheld. The upholding of penalty would mean that M/s. Jagannath Steels Ltd. was considered to have rendered the ....
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....of RCC pipes through the statement of their legal and fiscal advisor recorded on 2nd September 1987, the extended period cannot be invoked thereafter and the show cause notice should have been issued within the normal period from the date of such knowledge and since the show cause notice was issued on 10-2-1989, it was clearly time-barred. In this regard heavy reliance has been placed on the Supreme Court decision in the case Nizam Sugar Factory cited supra and Karnataka High Court decision in the case of Bripanil Synthetics (cited supra). We will therefore have to consider the ratio of decision of Supreme Court in the case of Nizam Sugar Factory as well Karnataka High Court decision in the case Bripanil Synthetics. For culling out the ratio of these two decisions it will be relevant to consider the various case laws cited by ld. DR which clearly brings out that the ratio of a decision must be culled out from the facts involved in a given case. A decision is an authority for what decides and not what can logically be deduced therefrom. The ratio of any decision must be understood in the background of the facts of that case. A case is only an authority for what it actually decides a....
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....on or the precise issue which arose before the court and identify the principles of law, applied by the court in resolving the issue and make further effort to find out what is a proposition of law which emerges from the decision of the court. Recently in the case of Ambika Quarry Works v. State of Gujarat - AIR 1987 SC 1073 the Supreme Court has observed as under : "The ratio of any decision must be understood in the background facts of that case. It has been said long time was that a case is only an authority for what it actually decides, and not what logically follows from it." 36. The submissions made by the Revenue above and the decisions cited by the Revenue before the Tribunal, support our view that the ratio of decision in the case of Suraj Diamonds was entirely different and not what was submitted before us i.e. that if there is no duty liability no penalty can be imposed. 37. Section 112(a) of Customs Act, 1962 provides for penalty on any person who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under Section 111, or abets the doing or omission of such an act shall be liable to penalty. ....
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....o note the conclusions reached with regard to past transactions. She has referred to a financial investigation which revealed that the diamonds imported at a cost of about Rs. 93 crores were shown to have been sold locally to non-existent firms and when the transactions were scrutinized at length it was found the money was routed from one account to another account in a single day to fund the remittances sent abroad. She has also noted that in the funds so collected for sending remittances, no money was received from the so called buyers of diamonds. 40. Shri Sushil Kumar Babel, Director of both M/s. Multistar Gems & Jewellery P. Ltd. and M/s. Manan Exports Pvt. Ltd. Shri Dinesh Birawat, Director of M/s. Manan Exports Pvt. Ltd., Shri Rakesh Premchand Tater, Shri Sunil Kumar Jain, Director of both M/s. Prakash Diamonds P. Ltd. and M/s. Dianish Exports P. Ltd., Shri Abhay Singh Jain, Director of M/s. Prakash Diamonds P. Ltd., Shri Manish Kumar Jain, Director of M/s. Dianish Exports P. Ltd. in reality were employees of Shri Prakash Sancheti and were getting monthly salary from him. All these persons aided and abetted Shri Prakash Sancheti in the fraudulent imports of over-invoiced ....
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....es; was the de facto owner; directors were acting as per his directions; he was the one who approached the CHA after the original CHA refused to file documents. He was well aware of the conspiracy and the very fact that he was to receive Rs. 10,000/- per crore would show that he had knowingly allowed Shri H.M. Kheni to use name of his firms to import rough diamonds at highly inflated value. Therefore he is also liable to penalty under Section 112(a) of Customs Act, 1962. 43. As regards Shri H.M. Kheni and Shri Manish Pravinbhai Kheni partners of M/s. Kantilal Exports, Shri H.M. Kheni was the mastermind and was the owner of the imported goods; he used the names of firms owned and controlled by Shri Prakash Sancheti; to fulfil his desires of converting of the excess foreign exchange he was instrumental in arranging the rough diamonds to be sent to Hong Kong and re-routing the same as imports at highly inflated value. Shri Manish Pravinbhai Kheni actively assisted him. Therefore both are liable to penalty under Section 112(a) of Customs Act, 1962. 44. We have already rejected the contention that when there is no duty no penalty is imposable. We find that all the importing firms ....
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....or penalty. 45. Shri H.S. Bhindi and Shri M.G. Tanna have been instrumental in over-valuing the exports; in obtaining KPCs at highly inflated value; in obtaining revised KPCs after coming to know of detention of the goods exported by them and have also assisted the Indian importers by sending rough diamonds without insisting on any letter or any document in spite of the fact that the invoice was for such a high value. A claim was made that no offence was committed in India and both being residents abroad cannot be penalized what is to be seen is where the offence was committed and in this case it was in India. Therefore irrespective of their nationality, they can be penalized. In any case, investigations have shown that both are Indians. Therefore they are also liable to penalty under Section 112. The firms abroad are ownership firms and therefore no separate penalty can be imposed on the firms owned by Shri H.S. Bhindi. 46. Now we consider the issue relating to one consignment of cut and polished diamonds weighing 784.28 carats. In respect of this consignment bill of entry has been filed and the value declared was US$ 10,74,923.5. Value determined by the members of expert pa....
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....ice, the benefit of the doubt has to go to the appellant in this case. Accordingly we hold that in respect of cut and polished diamonds, the benefit of doubt would go to the appellants and therefore the impugned order is set aside as regards confiscation as well as penalties on all the persons concerned. We are conscious of the fact that normally when statements are recorded, it has to be accepted either in full or rejected in full. In this case we have relied upon the statements of Shri Prakash Sancheti and Shri H.M. Kheni in respect of rough diamonds and therefore it would appear that when we set aside the confiscation on the ground that other than these two statements there is nothing else, it would amount to acceptance of the statement in part and rejection in part. We make it clear that we are going by the circumstantial evidence and the marginal difference and the interest of justice. We also take note of the fact that in this case the importation is covered by KPC and just only other than two statements there is no other evidence. 47. We had observed before we started discussion about the case that the learned DR had submitted the details of further investigation taken by....
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....onsideration. The total consideration according to the Annexure accepted by Shri Tanna was 5.14 crore US$ and sum received was about Rs. 3.79 crores US$ roughly 74%. Shri Tanna admitted that out of this not a single dollar was paid to S & S International who had sold the goods to the companies of Bhindi. Further he also admitted before the officer that he had turned up to the counter of trade and industry department on 28-11-2008 to apply for amendment to revise the value of the consignments sent on 22nd and 24th November. He was also asked why was he revising the value after the goods were detained by Indian customs. When he was asked whether he could produce a copy of the letter dated 24-11-2008, Shri Tanna stated the he did not have a copy. The discussion above shows that the comments about circular trading and the misuse of import/export of diamonds for other purposes are clearly established. It is strange that the four companies of Shri Bhindi did not consider it necessary to pay a single US$ out of 74% consideration received by them. It has to be noted that the amount is not small by any means. The total consideration would more than Rs. 200 crores and the amount already rece....
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....ported under various Air Way Bills by M/s. Manan Exports Pvt. Ltd., 204, Atawale Bhavan, 2nd Floor, D.D. Sathe Marg, JSS Road, Opera House, Mumbai - 400 004, and re-determination of the same as US$ 83512.60 (Rs. 42,21,562.00 as per the applicable rate) and uphold order for absolute confiscation of the same under Section 111(d) of the Customs Act, 1962. 52. Penalties on the following firm/persons under Section 112(a) of the Customs Act, 1962 will be as under : NAME OF THE FIRM/PERSONS PENALTY IMPOSED (i) M/s. Manan Exports Pvt. Ltd. Rs. 40,00,000/- (Rs. Forty Lakh only) (ii) Shri Sushil Kumar Babel Rs. 8,000/- (Rs. Eight Thousand only) (iii) Shri Dinesh Birawat Rs. 8,000/- (Rs. Eight Thousand only) (iv) Shri Himmat bhai Mohanbhai Kheni Rs. 40,00,000/- (Rs. Forty Lakh only) (v) Shri Manish Pravinbhai Kheni Rs. 20,00,000/- (Rs. Twenty Lakh only) (vi) Shri Prakash Sancheti Rs. 20,00,000/- (Rs. Twenty Lakh only) (vii) Shri Hiren Sanat Kumar Bhindi Rs. 20,00,000/- (Rs. Twenty Lakh only) (vii) Shri Mehul Girish Tanna Rs. 20,00,000/- (Rs. Twenty Lakh only) 53. We uphold rejection of declared value of US$ 1,15,08,817.00 of the roug....