TaxTMI 
TaxTMI 
2013 (9) TMI 175
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....of the assessee-company challenging the penalty of Rs. 1,00,000/- imposed on him under Section 112 (a) of the Customs Act, 1962. 1.4 Appeal No. C/323/2009 is by M/s J. M. Baxi & Co. challenging the penalty of Rs. 50,00,000/- imposed on them under Section 112 (a) of the Customs Act, 1962. 1.5 Appeal No. C/376/2009 is by Capt. A.R.B. Dsouza, Vice President of M/s J.M. Baxi & Co. challenging the penalty of Rs. 1,00,000/- imposed on him under Section 112 (a) of the Customs Act, 1962. 1.6 Appeal No. C/375/2009 is by Shri Austin S.Fernandes, Assistant Manager, M/s J. M. Baxi & Co. challenging the penalty of Rs. 2,00,000/- imposed on him under Section 112 (a) of the Customs Act, 1962. 1.7 Appeal No. C/374/2009 is by Shri B. N. Malli, Manager (C&F), M/s J. M. Baxi & Co. challenging the penalty of Rs. 1,00,000/- imposed on him under Section 112 (a) of the Customs Act, 1962. 1.8 Appeal No. C/298/2009 is by Shri D. V. Daivajna, Superintendent of Customs (Imports), Customs House, Karwar challenging the penalty of Rs.2,00,000/- imposed on him under Section 112 (a) of the Customs Act, 1962. 1.9 All these appeals arise out of a common order and involve common facts and issues a....
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....and the test result was entered in the sample Register as Sl No. 16/04 on 31.3.2004. (g) The Bill of Entry No. 76/2004 dated 13.2.2004 relating to clearance of 10545 MTs which was originally assessed provisionally on 13.2.2004 was re-assessed provisionally on 27.5.2005 for the reason that Additional Customs Duty/Cess were found to be payable for the imports under Notification No. 46/2002 using DFRC Licences. Accordingly, an amount of Rs. 89,63,250/- towards the duty was paid by the assessee on 31.5.2005 and the interest due amounting to Rs. 17,45,992/- was also paid on 17.6.2005. (h) The assessments of three Bills of Entry were finalized on 29.8.2006 extending the benefits of exemptions under the Customs Notifications Nos. 43/2002 & 46/2002. (i) The officers of DRI, on the basis of specific intelligence, searched the Registered office, the Corporate office and the Factory all belonging to the assessee and also the premises of M/s J.M. Baxi & Co., the CHA and recovered documents. On investigation, they found that the sucrose content of sugar was only 98.1% as per Chemical Examiner's Report and the same was overwritten to read as 98.9%, that the manipulation was done with a ....
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.... export obligation has been validly discharged. Under these circumstances, the allegations of violations of conditions of the Notification 43/2002-Cus and 46/2002-Cus are not justified. The Customs authorities are bound by the decision of the JDGFT authorities who are the competent authorities in matters relating to EXIM Policy. In this regard, he relies on the following decisions: (i) Autolite India Ltd. vs. UOI [2003 (157) ELT 13 (Bom)] (ii) Crystal Fashions vs. CC [2007 (211) ELT 580 (T)] (iii) Rajesh Exports Ltd. vs. CC [2006 (199) ELT 833 (T)] (iv) Sivshankar Tilakraj vs. UOI [1987 (28) ELT 342 (Bom.)] (c) The licences permit import of raw cane sugar and no specification on the sucrose content in respect sugar to be imported is in the said licences. SION E-52 cannot be treated as a mandatory condition. As per the Bureau of Indian Standards (BIS), the sucrose content is required to be only more than 96.5% and the said condition has been fulfilled by them. (d) There is no reliable evidence that the figure of sucrose contents in the report of the Chemical Laboratory was manipulated. The alleged overwriting to make 98.1% as 98.9% is not conclusively proved. The C....
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....12.2005 of the Commissioner of Customs and a reference dated 6.12.2005 by JDGFT. They resolved that, in such a situation, the licence holder would have to discharge the export obligation by procuring additional quantity of raw cane sugar so as to fulfill the export obligation as prescribed. In other words, they held that lower quality raw cane sugar might lead to low yield of export product but the licensee has to use more raw materials and fulfill the export obligation. The decision as above taken in the ALC Meeting held on 2.2.2006 was communicated vide letter dated 24.2.2006. JDGFT, Bangalore, in their subsequent communication dated 25.6.2008 has, also referred to the decision of the ALC Meeting held on 2.2.2006. Referring to Para 2.3 of Foreign Trade Policy, it was submitted that the decision of DGFT on interpretation of policy contained in Foreign Trade Policy and others was final and binding on the Customs authorities. (k) Some of the DFRC licences were procured from third parties. Export obligation has already been fulfilled by the said parties who were the licence holders. The Commissioner has also clearly held that the export obligation stands discharged. Under these ci....
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....ECR 609] (iii) Sher Bahadur vs. Union of India & Others, AIR [2002 SC 3030] (iv) Nimesh Suchde vs Commissioner of Customs, Nhava Sheva [2007 (209) ELT 276] 7.1 The learned Advocate, Shri B.V. Kumar appearing for Shri Daivajna, at the outset submits that, in terms of Section 155 of the Customs Act no proceedings could be initiated against the appellant without issue of a month's previous notice in writing of the intended proceeding and of the cause thereof or after the expiry of three months from the accrual of such cause. In this regard, he relies on the following decisions : (i)C.C., New Delhi vs. M.I. Khan [2000 (12) E.L.T. 542 (T) (ii) Costao Fernandes vs State at the instance of D.S.P., C.B.I., Bombay [1996 (82) E.L.T. 433 (S.C.)] (iii) CC & C.Ex., Hyd.-II vs. Rajiv Kumar Agarwal [2007 (217) ELT 392 (Tri.-Bang.)] 7.2 Alternatively, he submits that there is no evidence that the manipulation of the Lab Report was done by the appellant. In fact, there is no finding that the appellant had tampered or concerned himself with the tampering of the test report. The finding is only to the effect that, by delaying the finalization of provisional assessment, the appell....
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...., the Supdt. has kept the file for nearly 2= years before taking up the matter for finalization on 29.8.2006. The evidence of the employees of the assessee-company and those of the CHA clearly indicate that the problem relating to sucrose content was attempted to be solved with the help of the Supdt. That being the case, the Supdt. and the officials of assessee-company and those of the CHA have to be jointly held responsible for tampering the lab report with a view to cause loss to the government revenue. Therefore, he submits that penalties have been rightly imposed on them. (c) The protection under Section 155 of the Customs Act can be invoked only in respect of action taken by an officer in good faith. The present case, involving deliberate tampering of test results with a view to cause loss to the Govt. revenue, cannot be treated as action in good faith. No valid reason has been adduced for the undue delay of about 2= years in taking up the finalization of provisional assessment when the test report was received in March 2004 itself. (d) The copy of the tampered report was found in the records of the CHA also. (e) The evidences of the officials of the assesee-company a....
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....eated as a precedent. The clarification vide letter dated 25.6.2008 given by JDGFT Bangalore referring to consignment imported by M-V LAVANTE has, therefore, no relevance to the facts of this case. (j) E-mails dated 23.11.2005 exchanged between Shri Nandan Yalgi of the assessee-company and Capt. ARB D'souza of CHA-company clearly indicate the designs of the appellants. It talks about taking all precautions to avoid any problem with PHO or Cochin Lab. It also holds that it is the responsibility of the CHA to ensure that everything goes smoothly. (k) CBI has also filed FIR against the importer and the connected persons under Cr. PC. (l) The issue of show-cause notice under Section 28 of the Customs Act without resorting to challenging the order of final assessment is valid and as provided under the law. In this regard, he relies on the following decisions: (i) Union of India vs. Jain Shudh Vanaspati Ltd. [1996 (86) ELT 460 (S.C.)] (ii) Venus Enterprises vs. Commissioner of Customs, Chennai [2006 (199) ELT 405 (Mad.)] [SLP against the said decision was dismissed as reported in 2007(209) ELT A61 (S.C.)] (iii)Titanide Coating (P) Ltd. vs. Assistant Collector of Cust....
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....3A, of the said Customs Tariff Act, subject to the following conditions, namely:- (i) that the importer has been granted duty free replenishment certificate licence by the Licensing Authority for import of the said materials in terms of paragraph 4.2 of the Export and Import Policy (hereinafter referred to as the said licence ) and the said licence is produced at the time of clearance for debit by the proper officer of the customs; (ii) the said licence contains the endorsements specifying, inter alia; (a) the Standard Input Output Norm (SION) number, description and value of the resultant product exported on the reverse; (b) the shipping bill number(s) and date(s) FOB value in Indian Rupees of the resultant product, on the reverse; and (c) the description, value and quantity of the materials which are allowed to be imported : Provided that in respect of resultant products specified in the Sensitive List contained in paragraph 4.31 of the Hand Book of Procedure (Vol. 1) of the Export and Import Policy, the materials permitted in the said licence shall be of the same quality, technical characteristics and specifications as the materials under in the said resultant ....
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....B value of the resultant product exported are endorsed on the said licence. Provided that where import takes place before fulfilment of export obligation, the quantity or FOB of the resultant product to be exported are endorsed on the said licence; (iii) that the importer at the time of clearance of the imported materials executes a bond with such surety or security and in such form and for such sum as may be specified by the Assistant Commissioner of Customs or Deputy Commissioner of Customs binding himself to pay on demand an amount equal to the duty leviable, but for the exemption, on the imported materials in respect of which the conditions specified in this notification have not been complied with, together with interest at the rate of twenty four per cent per annum from the date of clearance of the said materials. Provided that bond shall not be necessary in respect of imports made after the discharge of export obligation in full; (iv) . . . (v) that the export obligation as specified in the said licence (both in value and quantity terms) is discharged within the period specified in the said licence or within such extended period as may ....
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....tent of sucrose by weight, in dry state, in raw sugar must correspond to a polarimeter reading of less than 99.5% but not less than 98.5%. 2. *** Name Qty allowed ------------------------------ Raw Sugar 1.05 MT 10.1 The appellants have imported 25,750 MTs of raw sugar in February 2004 and cleared 10,545 MTs by producing 8 DFRC licences in terms of notification No. 46/2002-Cus. In respect of 3,446 MTs they claimed duty-free import in terms of Notification No. 43/2002 Cus on the basis of advance licence after the export has been fulfilled. For the balance of 11,759 MTs, duty-free clearance was sought for in terms of Notification No. 43/2002-Cus producing advance licence against which exports were yet to be made. 10.2 According to the department, the sucrose content of the above consignments were less than 98.1% and consequently the conditions in SION were violated and therefore, benefits of the said notifications are not available. However, the assessee and the other appellants concerned have conspired to manipulate the test report and the sample register maintained by the Karwar Customs to read the sucrose content as 98.9% and availed the benefit of notifications irr....
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....Notice dated 29/11/2002. There is a clear purpose in imposing the above restriction. The appellant-assessee has been permitted to import raw sugar duty-free with a view to enable them to export processed white sugar or by way of replenishment towards white sugar already exported. Obviously, import of raw sugar involves outgo of foreign exchange and export of white sugar involves inflow of foreign exchange. It would not make sense to import very high quality raw sugar and export white sugar. The sucrose content of domestically produced sugar, in some cases, may be lower and if high quality raw sugar is imported indiscriminately, the same can have adverse impact on the domestic sugarcane growers and sugar factories. Therefore, intention of the Government is to restrict import of raw cane sugar with the sucrose content of not less than 98.5% and at the same time not to allow import of raw cane sugar with sucrose content exceeding 99.5%. The import has to be governed by the provisions of EXIM Policy as applicable at the time of import. Therefore, it is incumbent that the materials imported shall be of the same quality, technical characteristics and specifications as the materials used ....
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....ovided in the Indian Specification of Raw Sugar No. IS-5975 1970 i.e. 96.5%. In view of the above, the Committee decided that Customs Mangalore may be informed that the Raw Sugar which they have detained (their letter No. S-16/118/2005 DEEC Imp. Dated 02.12.2005) may be released, despite lower Pol content. This may not be cited as a precedence as this has been allowed on account of detention as well as comment from Directorate of Sugar that Pol content can get reduced on account of hygroscopic nature of Sugar and Lower Pol Content results in lower yield. The Committee felt that E.O. in quantity and value may not be lowered, although the lower limit of Pol content may be waived/deleted, if needed by RLA. Thus, it is seen that the above relaxation has been given only in respect of specific consignments imported by M.V. Lavent in April 2005 and the detained goods were ordered to be released making it clear that the same could not be treated as a precedent. The concerned advance licence was accordingly amended. The specific amendment permitted in a particular licence in the given facts and circumstances cannot be treated as guidelines applicable to all licences issued in the past. ....
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....has not been allowed as the matter was not placed before the ALC, which is the competent forum to amend the conditions of licence already issued. Therefore, this communication dated 25.06.2008 merely reiterating the decision taken by ALC on 02.02.2006 which has no precedent value is of no help to the appellants. In other words, an amendment carried out as per the decision taken by ALC after deliberation by them to an advance licence which was used for clearing goods imported in May 2005 cannot come to the rescue of the assessee-appellant. Whether the lab report was containing 98.1% sucrose content and the same was manipulated to read as 98.9% 13.1. The Customs Laboratory Report found with the Customs at the time of search by the DRI officers and also the sample register with the Customs department were sent to Forensic Lab for examination. The report clearly indicates that the sucrose content of 98.1% was overwritten to read as 98.9%. The office copy of the Customs Lab Report at Cochin was also recovered and the same indicated the sucrose content as 98.1% only. In addition, the evidence given by Shri V.N. Prasad, Inspector goes to show that when the report was received from C....
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....same was subjected to further scrutiny during cross-examination on behalf of the appellant. 13.5. Another submission was made that load port report was in their favour. However, as rightly shown to us by the learned Additional Commissioner with reference to the purchase contract, we find that the test report relates to goods supplied in wet condition and therefore, cannot support the case of the appellants. As already noted, test reports maintained by the assessee themselves are against them. 13.6. A submission is being made that as per BIS, it is enough that the sucrose content of the sugar is more than 96.5%. It is to be appreciated that BIS is in respect of sugar produced/manufactured in India and obviously takes into account the varied conditions under which sugar cane is produced in India and sugar manufactured in India. The minimum stipulation of sucrose content in BIS cannot be the relevant factor to overlook the specific condition about sucrose content in respect of imported RCS which is prescribed under EXIM Policy by issue of Public Notice. If the Lab Report is held to be manipulated, then who is the person or persons who are responsible for the manipulation of the ....
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....es may be extracted: It is clear from the statements of Shri Austrin and Shri Malli that they were aware since December 2005/January 2006 that the test report did not meet the parameters of SION E-52. It has been argued on behalf of Shri Daivajna that it was revealed during cross examination that files were kept in the copboard in the hall and many officers had access to them. However, no direct question was raised about the MV Mandarin file to the concerned officers and this assertion is based on the general replies of the three officers concerned. However, as indicated earlier the custody of files with Shri Daivajna does not establish that he carried out the tampering. The fact that the employees of the importer and CHA were discussing among themselves as to how to solve the problem arising out of an unfavourable test report, clearly suggests that when the test report was received at Karwar, it showed sucrose content as 98.1%. By delaying finalization of provisional assessment, Shri Daivajna provided an opportunity for this crucial record to be tampered with. Both Shri Fredrick Dsouza, of M/s. SRSL and Shri Austin Fernandes of the CHA were aware that there was a probl....
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....ude that he has tampered with or abetted the tampering. 14.5 The Supdt. Shri. Daivajna points his finger at Shri Austin Fernandis as possible culprit in tampering with the test report at the instance of Federic Dsouza from the importer side. It is again his opinion. It is evident that the test report and the sample register were not in proper safe custody as it is claimed that the same was accessible to many persons. Therefore, there could be suspicion falling on the officials of CHA who were visiting the Karwar Customs office that they might have done that and that the same could have been done only at the instance of the officials of the assessee-company. All these are suspicions. The suspicion, however strong the same may be, cannot take the place of proof. As rightly held by the Commissioner in para 34, the investigation by DRI could not pinpoint the person who has committed the manipulation. The adjudication proceedings are based on evidences relied upon in the show-cause notice. In other words, as far as the department is concerned, the show-cause notice is the outer limit and a decision taken by the Commissioner cannot go beyond the evidences relied upon in the show-cause....
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....e of Origin Reference No. 22 to 27 all dated 2.2.2004 4) Certificate of analysis of manufacturer 6 Nos. 5) Insurance Policies 2 Nos. The above position is clear from the note dated 26.07.2006 which was put up by superintendent for the purpose of finalization of the assessment. In the said note the sucrose content of raw sugar, as per the report of the Chemical Examiner was noted as 98.9%. On the basis of above details, the assessment was finalized by the Assistant Commissioner. 15.2. The subsequent investigation by DRI has revealed that the Chemical Examiner's report dated 29.03.2004 relied upon for the purpose of finalisation was a tampered one. Therefore, the finalization was found vitiated as the same was based on tampered documents. 15.3 The decision of the Hon'ble Supreme Court in the case of Collector of Central Excise Vs. Flock (India) Pvt. Ltd., relied upon by the assessee related to a case where the assessee did not challenge the order dated 21.01.78 on classification but claimed a refund on 06.04.79 on the ground that the goods were wrongly classified. It was contended on behalf of the assessee that the jurisdiction to determine the validity and sustain the....
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....ovisional assessment. 15.6. A submission was also made that, unlike in Section 11A of the Central Excise Act, the term fraud is conspicuously absent. This submission does not in any way advance the case of the appellant-assessee. In Central Excise, when non-levy, non-payment or short-levy short payment etc. have happened by reason of fraud, collusion or any willful misstatement or suppression of facts, or contravention of any provisions of this act or of the rules made thereunder with intent to evade payment of duty. demand can be raised invoking the extended period of limitation of five years. In a Customs matter, when duty has not been levied or has been short-levied etc. by reason of collusion or any willful mis-statement or suppression of facts the extended period of limitation of five years can be invoked. It is not as if fraud cannot be there in relation to a customs evasion case. It only means that, even in the absence of fraud, five years period of limitation can be invoked in a customs case when the above conditions are satisfied. In other words, the provisions for invoking extended period in the Customs Act are stronger against the assessee than those under Section 11A....
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....port and the sample register and the needle of suspicion is on several persons but the evidence is not sufficient to sustain penalties on any person other than the assessee-company. It is like a case where theft is confirmed but thief is not identified. (h)The reliance placed on e-mail correspondence dated 23.11.2005 between Shri Nandan Alvi, Director of assessee-company and Captain ARV D'souza, Vice-President of CHA company relate to import made in November 2005 and the said communications even if they are suspicious, may not be relevant for the impugned import which took place much earlier in February 2004 and therefore, cannot be of help to fix responsibility for manipulation done on the lab report received in March 2004. (i) The applicability of Section 155 of the customs Act, in respect of Shri D.V. Daivajna, need not be gone into, as we have held that there was no evidence for fixing the responsibility for the manipulation on Shri D.V. Daivajna. 17. In other words, the major issues framed for consideration require to be resolved as follows: (a) Sucrose content of less than 98.5% in the imported raw cane sugar disentitle the goods to the benefit of Notification No.....