TaxTMI 
TaxTMI 
2013 (11) TMI 1394
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....eclared as gear cutting tools of cobalt, that was found to be made of low carbon steel as per IS226 i.e. mild steel and were without cobalt. The CTL Mumbai's report dated 05.09.2000 in respect of seven samples drawn from the goods declared as heat resistant rubber tension tape stated as follows: Each of seven samples is in the form of cut piece of grey coloured tape. Each is composed of natural rubber, carbon black, in organic filters and additives. It breaks when stretched. Each is not vulcanised. Therefore, the sample is considered as compound of pre-vulcanised compound rubber. 1.2 It was found that all the four exporter appellants had made export of inferior quality of goods and aggregate value thereof was as depicted in column (3) of the Table below. Duty Drawback to the extent indicated against each appellant as per Column (4) of the Table below was paid to them while certain claims of drawback of the value by each such appellant as depicted in column (5) of the Table remained pending sanction as mentioned against each: Sr. No. Name of the Firm/Company Total Export Value (FOB) in Rs.) DBK availed DBK claim Pending (1) (2) (3) (4) (5) 1. &n....
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....toms making fraudulent claim of drawback through mis-declaration of description of goods, they were brought to adjudication along with appellants 5, 6, and 7 of Table-1 who were their directors/partners of appellants 1 to 4 of that Table for appropriate consequences under law. DIFFERENT APPEALS AGAINST ADJUDICATION CONSEQUENCES 2.1 Learned Adjudicating Authority examining various evidence on record completed adjudication against all the above concerns and persons by common adjudication order No. 37/Cus/05 dated 06.01.2006 dated 6.1.2006. 2.2 Appeals as depicted in the following Table-1 below were preferred by the exporter appellants as against order of adjudication: TABLE-1 S. No. Name of the Party (1) (2) 1. M/s Contessa Commercial Co. (P) Ltd. 2. M/s ASK Exports 3. M/s SRM (P) Ltd. 4. M/s Varun Enterprises 5. Shri Raj Kumar Kishorepuria 6. Shri Anil Kumar Kishorepuria 7. Shri Sunil Kumar Kishorepuria 2.3 Appellants in sl. No. 1 to 4 in Table-1 fraudulently claimed higher duty draw back on exports made by them. When such exports were questionable, draw back claim was denied and undue claim of drawback already availe....
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....OTAL 1,48,69,583 74,79,900 25,39,313 15,46,200 (ii) Aggregate duty drawback claim amounting to Rs. 81,09,720/- (Rs. 65,63,520+Rs.15,46,200 appearing in Column 5 of Table 2 and 3 above) made by M/s. Contessa Commercial Co (Pvt.) Ltd, M/s S.R.M. (Pvt.) Ltd. and M/s Varun Enterprises as mentioned in para 96(i) of adjudication order was disallowed. Gaskets valued at Rs. 2,92,31,936/- detailed in para 95(iv) of adjudication order were not confiscated and recovery of duty drawback of Rs. 38,00,000/- claimed and availed was dropped. Drawback claim of Rs. 7,98,000/- pending on account of Gaskets was ordered to be sanctioned, if otherwise admissible. (iii) Aggregate duty drawback amounting to Rs.2,30,31,323/- (Rs.155,51,423+Rs.74,79,900 appearing in Col.3 of Table 2 and 3 above) availed by Appellants 1 to 4 in Table-1 aforesaid viz., M/s. Contessa Commercial Co (Pct.) Ltd, M/s. A.S.K. Exports, M/s S.R.M. (Pvt.) Ltd. and M/s Varun Enterprises was ordered to be recovered alongwith interest under Rule 16 of Customs & Central Excise Duty Drawback Rules, 1995, read with section 75 not being admissible. Appropriation of Rs. 49.30 lakhs deposited by Noticee No. 1 to 7 (in SCN) was ordered to....
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.... represented by none. 4. Following appellants appearing in Table-5 below being concerned and connected with questionable exports, facing penalties of the quantum mentioned against each u/s 114 (iii) of Customs Act, 1962 came in appeal before Tribunal and they were represented by Shri Kamal Jeet Singh, advocate: TABLE-5 Sl. No. Name of the party Penalties imposed u/s 114(iii) of Custom Act 1962 1. Sh. Vinod Kumar Garg 8,00,000 2. Sh. N.D. Garg, 8,00,000 3. Sh. Sanjeev Kumar 1,00,000 4. Sh. Shambu Kumar 1,00,000 5. Sh. Vaneet Kumar 1,00,000 6. Sh. Manjit Singh 2,00,000 INVESTIGATION AND RESULT THEREOF Enquiry revealed that the 4 exporter appellants appearing in Sl. No. 1 to 4 of Table-1 aforesaid made false drawback claims on the basis of false, fictitious and fraudulent invoices/documents issued by the suppliers M/s. Garg Forging & Casting Ltd., M/s. Jyoti Steel, M/s. Jindal Alloys, M/s. Krishna Hardware & Steel, and M/s. Krishna Steel, showing that they had supplied the impugned goods. 5.2 Enquiry further revealed that appellants in Table 1 to 4 and 5 to 7 of Table-I and Appellants 1 & 2 of Table-5 had hand in glove to make export of inferior goods....
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....otal import turnover and allowing Sh. N.D. Garg to use the names of above four appellant concerns in the export and defrauded Revenue. He not only admitted the fraud committed but also surrendered all the pending claims of drawback (which was worked out to be Rs. 89,07,720/-) in column 5 of the Table appearing under Para 4.1 aforesaid. He admitted to pay back the drawback already claimed fraudulently on the mis-declared exports which was worked out to be Rs. 2,68,31,323/- (Ref: as appearing in Column 4 of the Table under Para 4.1 aforesaid) Admitting such fact, he also partly returned Rs. 49,30,000/- for the illegal claim of drawback amount received. (G). Sh. Vinod Garg and N.D. Garg actively colluded with Kishorepuria group to make export by aforesaid four appellant concerns tabulated in sl.No1 to 4 of Table-1 obtaining fake invoices and also manipulating bank transactions through a racket making mere paper transactions facilitating opening of benami bank accounts to accommodate receipt and payments relating fictitious transactions. (H). Four firms namely M/s Jyoti Steel, M/s Jindal Alloys, M/s Rama Krishna steel Traders, M/s R.K. Steel Traders were from Mandi Gobindgarh and M/s....
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....nt dated 06-08-2002 and 07-08-2002 he admitted that he was also getting the goods cleared from Customs on behalf of four concerns of Kishorepurias of Kolkata. (M). There was evidence of reverse payments to Sh. N.D. Garg by M/s Jyoti Steels through bearer cheques number 623535 and 623536 both dated 18-01-2000 for Rs. 4,83,800/- and Rs. 5,16,200/- respectively from their account number 20103 maintained in State Bank of Hyderabad, Ludhiana showing nexus between them. (N). Sh. Vinod Garg and Sh. N.D. Garg in collusion with S/Sh. Raj kumar Kishorepura, Anil Kumar Kishorepuria, Sunil Kumar Kishorepuria, Sanjeev Gupta, Vineet Kumar, Shambhu Kumar, Kumar Gupta, P.N. Pandy and Manjit Singh had exported mis-declared goods in the name of four concerns of Kishorepurias of Kolkatta over-invoicing such goods and managing Customs clearance to avail higher amount of drawback. Such fact was corroborated from the test reports of representative samples drawn from the consignments seized by DRI during May/June 2000 at Ludhiana and Mumbai, in respect of similar/identical export of goods of six fictitious firms of Vinod Garg of Ludhiana, which were earlier cleared by Customs staff of CFS (OWPL), Ludhi....
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....f export incentives and which on visual examination could not be confirmed as per declaration, the instructions for drawl of samples from each shipping bills as given in circular number 34/95-Cus dated 6.4.95 issued under F. No. 609/34/95-DBK by the Govt. of India, Ministry of Finance, Department of Revenue, New Delhi, were not followed. False claim of drawback by the exporters was abetted by Customs officers which was corroborated from the statement of Manjit Singh, an employee of Vinod Garg and N.D. Garg. (S). The claimants submitted fake Bill of Ladings to Customs authorities for claiming drawback payments as M/s IIC Container Line Pvt. Ltd. 2, Church Lane, Kolkatta confirmed the fake nature thereof. EXTENT OF EXAMINATION BY ADJUDICATING AUTHORITY 7. Against the aforesaid result of investigation, show cause notice was issued bringing home the appellants in Table-1 and Table-5 and Respondents in Table4 aforesaid to the fold of law for adjudication. On examination of reply to SCN and evidence, learned Adjudicating Authority dealt with the gravity of the matter involved in the aforesaid appeals elaborately in Para 83 of his adjudication order exhibiting his extent of examinati....
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.... Jindal Alloys, Plot No.11358, Gali No.3, Partap Nagar, Near Sangeet Cinema, Ludhiana 25037 15.02.2000 Vineet Kumar S/o Vasudev Saggar N.D. Garg 29.05.00 Jyoti Steels 684-Industrial Area-B, Ludhiana 20103 04.01.2000 Sanjeev Kumar S/o Gian Chand N.D. Garg 29.05.00 Rama Krishna Steel Traders, 11358, Gali No. 3, Partap Nagar, Near Sangeet Cinema, Ludhiana 25039 15.02.2000 N.G. Garg S/o Sh. Shri Ram Manjit Singh 29.05.00 Krishna Hardware & Mill Store, 11358, Gali No. 3, Partap Nagar, Ludhiana 250038 15.02.2000 Sanjeev Kumar S/o Gian Chand Manjit Singh 29.05.00 Krishna Hardware & Mill Store, Kanganwal Road, VPO Jugiana, Ludhiana 20124 28.07.2000 Paratap Nath Pandy N.D. Garg 29.05.00 7.5 Jindal Alloys was found to be floated by Shri Vineet Kumar sagar and its bank account was opened by the introduction of Shri N.D. Garg. That account was linked with the account of Jindal Alloys. It was found that Shri Vineet Kumar Saggar was Director in Garg Industries Ltd., Adhunik Alloys Ltd. & Kartik Overseas Ltd. whi....
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....ods meant for export were found to be inferior quality goods on testing technically. Which were subject matter of fictitious purchases from above concerns under fake invoices. Claiming the misdeclared goods purchased from fictitious firms, the exporting company/concerns procured inferior goods from different sources and those goods were meant for export to make undue claim of high rate of drawback. 7.12 Fictitious firm having been created by Vineet Kumar Garg and N.D. Garg they were master mind behind the fraudulent export. They extended their hands to Kishorepuria group of companies to make undue claim of high rate of drawback with hand in gloves of each other. 7.13 Shri Manjit Singh was conduit in processing the export documents. Shri Sambhu Kumar, Sanjeev Kumar and Vineet Kumar Saggar being name lenders to the fictitious firms were abettors to the fraudulent exports made to claim higher of drawback unduly. CRCL report proved that the goods meant for export were inferior and high rate of drawback was claimed falsely. 8. Learned Adjudicating Authority upon assessment of strength of evidence precisely determined the drawback disbursed to be recoverable and drawback pending sanct....
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.... thereof. All the export realisation were made and came through bank account. Even all the four suppliers of the exported goods appeared before the learned Adjudicating Authority to explain that the entire supply was bona fide and no inferior goods were supplied by them. Therefore all the appeals in sl. No. 1 to 7 of Table-1 to this order may be allowed. 9.4 So far as appeals of Revenue against Respondents in sl. No.1 to 3 of Table-4 of this order is concerned it was submitted that ld. Adjudicating Authority did not find anything wrong with these respondents in export of Gasketfor which he dropped proceeding against such export rightly with cannot be reopened by Revenues demerited appeal. 10.1 Shri Kamaljeet Singh, learned Counsel appearing on behalf of the appellants in Table No.5 of this order submits that they are not liable to penalty for no wrongful involvement in the exports. Neither they deliberately acted to defraud customs nor acted in defiance of law. They made genuine transactions with the exporters and goods of proper quality was procured from existing concerns. They did not deliberately supply any inferior goods to the appellant exporters. There were also no abatemen....
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....ity for which Revenue has been aggrieved. When there was export of inferior gaskets made by respondent exporters at sl. No.1 to 3 of Table-4 to this order learned Authority should not have dropped the proceedings against them. Similarly, exonerating Respondents 4 and 5 of that Table i.e., Shri Kumar Gupta and Shri P.N. Pandey from penal consequences of law was unwarranted as they were conduits to facilitate the misdeclared and fraudulent export of inferior quality goods to enable the exporters to make gain from the claim of higher drawback against inferior goods exported. They should have been penalised. 11.3 So far as appellants in sl. No.1 to 6 of Table-5 of this order is concerned it was submitted by Revenue that appellants at sl. No.1 and 2 of that Table were master minded persons who connived with the merchant exporter to procure inferior quality goods from market and facilitated export thereof. Appellants in sl. No. 3 to 6 were instrumental to appellant 1 and 2 of Table-5 to act on their instructions and open bank accounts to route black money to accommodate fake purchases from non existent dealers. They were name lenders to appellant No.1 and 2 of Table-5. All the 4 appella....
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.... has no physical connection with the offending goods, he is liable if he is interested or consciously takes any steps to promote an illegality. It has been held by apex Court in the case of RadhaKishan Bhatia V. UOI - 2004 (178) ELT 8 (SC) that it is immaterial what meaning be attributed to the word 'concerned'. It can have the meaning 'interested' and it may also have the meaning 'involved' or 'engaged' or 'mixed up'. It has further been laid down in the case of Bhagwanb Swarup and Others V. State of Maharashtra - AIR 1965 SC 682 that an agreement between the conspirators need not directly prove the offence of conspiration which can be established by either direct or circumstantial evidence. 14.2 In the present case, the Appellants in Table 1 and Table 5 resorted to fraud consciously by their ill design as was found by investigation and adjudicating authority. Their conscious knowledge of mis-declaration as to description of the goods as well as value of the export made from India was proved when they had intention to make ill gain from undue claim of DEPB. Motive of all these appellants was oblique to promote illegality. 14.3 Investigation discovering truth by extensive enquiry....
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....dence before them by applying the test of human probabilities. Human minds may differ as to reliability of a piece of evidence. But in that sphere the decision of the final fact finding Authority is made conclusive by law. The normal rule which governs civil proceedings is that a fact can be said to be established if it is proved by a preponderance of probabilities. A fact is said to be proved when the court either believes it to exist or considers its existence so probable that a prudent man ought, under the circumstances of the particular case to act upon the supposition that it exists. The belief regarding the existence of a fact may thus be founded on a balance of probabilities. A prudent man faced with conflicting probabilities concerning a fact situation will act on the supposition that the fact exists, if on weighing the various probabilities he finds that the preponderance is in favor of the existence of the particular fact. As a prudent man, so the court applies this test for finding whether a fact in issue can be said to be proved. When learned Adjudicating Authority followed principles of preponderance of probability in other cases, His failure to follow such principle m....
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.... of Commissioner of Customs, Kandla v. Essar Oil Ltd. - 2004 (172) E.L.T. 433 (S.C.) that by 'fraud' is meant an intention to deceive; whether it is from any expectation of advantage to the party himself or from the ill will towards the other is immaterial. The expression 'fraud' involves two elements, deceit and injury to the deceived. Undue advantage obtained by the deceiver, will almost always call loss or detriment to the deceived. Similarly a 'fraud' is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss. It is a cheating intended to get an advantage. (See S.P. Changalvaraya Naidu v. Jagannath [1994 (1) SCC 1]. 14.11 In a leading English case i.e. Derry and Ors. v. Peek (1886-90) All ER 1 what constitutes 'fraud' was described thus: (All ER p. 22 B-C) 'fraud' is proved when it is shown that a false representation has been made (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly, careless whether it be true or false. This aspect of the matter has been considered by Apex Court in Roshan Deen v. Preeti Lal [2002 (1) SCC 100] Ram Preeti Yadav v. U.P. Bo....