AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (9) TMI 1787
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....ed 31-3-2015 issued by the Additional Director General, DRI, Zonal Unit, Chennai answerable to the Additional/Joint Commissioner of Customs, Customs Commissionerate-II, Customs House, Chennai-600001. 1.2 The subject matter of the SCN is that the applicant imported 8 consignments of garment accessories at Nil rates of Customs duty and additional duty by irregularly availing the benefit of Notification No. 21/2002-Cus., dated 1-3-2002. The garment accessories imported vide 8 Bills of entry were neither brought to the factory premises of the applicant nor used in export production as mandated in the said Notification. Instead the imported garment accessories were sold in the domestic market. The SCN demanded differential Customs duty of Rs. 23,19,372/- and interest thereon. Shri Gupta and Shri P.R. Subramanian are also co-noticees in the SCN but are not Co-applicants in this case. 1.3 The applicant, imported garment accessories against the Import Certificate (IC) issued by the Apparel Export Promotion Council (AEPC) during the period from 15-6-2011 to 19-1-2012 from China, through Chennai Seaport vide 8 bills of Entry as detailed below : Sl. No B/E Number/Date ....
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....ved to import garments accessories at Nil rate of Customs duties by availing the benefit of the Customs Notification mentioned supra and have rendered the impugned goods liable for confiscation. Shri S. Kannan, Incharge, Imports, of the applicant company had played an active role in the said conspiracy and had actively colluded with Shri P.R. Subramanian to give the ICs of the applicant company enabling Shri P.R. Subramanian to import garment accessories for others, misusing the benefit of Notification No. 21/2002-Cus., dated 1-3-2002 and evade Customs Duties. 1.7 Hence, a Show Cause Notice in file F. No. VIII/26/2013 DRI-CBE, dated 31-3-2015 was issued to the M/s. Danavarshini Exports Pvt. Ltd. (main applicant) and Shri K. Tamizharasan, Director, Shri N. Sridhar, Managing Director and Shri S. Ramachandran, Director jointly and/or severally to show cause to the Additional/Joint Commissioner of Customs, Customs Commissionerate-II, Customs House, Chennai as to why : (a) the exemption benefit claimed and availed under the Customs Notification No. 21/2002-Cus., dated 1-3-2002 (Sl. No. 167 or 167A as the case may be) in respect of 8 Bills of Entry, as ....
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....f the availability of unused surplus quota in their IC and he in collusion with Shri P.R. Subramaniam supplied copies of the IC issued in the applicant's name without their knowledge to third parties and they imported garment accessories at Nil rate of Customs duty by misusing the Customs Notification; • they had no deliberate intention to evade payment of duty; • they admitted that it was wrong on their part in being careless which enables their staff to indulge in such acts of misuse and wrong availment of the benefit of customs Notification No. 21/2002, dated 1-3-2002; • the applicant requested for immunity from penalty and prosecution. Admissibility of the application : 3.1 The applications were filed in the Settlement Commission on 19-6-2015. The applicant vides a letter F. No. S.A. Cus./62-65/2015 S.C., dated 25-6-2015 was asked to explain as to why his application should be allowed to be proceeded under Section 127C(1) of CA, 1962 as items imported under Bill of entry No. 4572044, dated 7-9-2011 predominantly were zip fasteners which is a notified item covered under Section 123 of the CA, 1962. As per third proviso to sub-sec....
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.... (C) 7363/2014 & CM 17221/2014 = 2015 (323) E.L.T. 424 (Del.), filed by Shri Ram Niwas Verma. (iii) Instruction dated 1-10-2015 F.No. 275/46/2015-CX.8A issued by Legal Cell, Central Board of Excise & Customs, New Delhi. 3.4 The applicant vide his letter dated 27-10-2015 reiterated their earlier submissions made vide their letter dated 30-6-2015 and emphasized that there was no attempt to smuggle any goods and there was no seizure of goods. They further submitted that there was no proposal in the SCN invoking the provisions of Section 123(1) of the Customs Act, 1962 and SCN was not issued for recovery of Customs duties on grounds of clandestine imports. The demand of duty arose purely due to non-fulfilment of end use requirements as stipulated in condition No. 21 of Notification No. 21/2002-Cus., dated 1-3-2002 and not due to any smuggling/clandestine imports. Submissions by DRI dated 18-11-2015 & 20-11-2015 : 4.1 DRI vide its letter F.No. VIII/26/12/2013 DRI CBE, dated 18-11-2015 submitted that : • The importer/petitioner i.e. M/s. Danavarshini Exports Pvt. Ltd., Tirupur had imported 8 consignments of garment accessories at Nil rate of....
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....he instant case appears to be different from the facts in the case laws. • The zip fastener, an item under dispute was imported under the Bill of entry No. 4572044, dated 7-9-2011. The duty involvement on this import is Rs. 1,82,004/- out of the total duty liability of Rs. 23,19,372/-. The other items of import under dispute were relating to the imports of snap fasteners, elastic tape, lace, slider tags, hooks, fusible, plastic button, velcro takes, etc. Hence the major parts of the impugned goods, items are not covered under Section 123 of the Customs Act, 1962. • In view of the above, was submitted that the party's petition before the Settlement Commission under Section 127 may be considered for admission. Alternatively the Hon'ble Commission if deems fit may consider remanding that part of the notice pertaining to import under B/E No. 4572044, dated 7-9-2011 to the adjudicating authority for necessary action. Record of personal hearing held on 19-11-2015 : 5.1 This case was heard on 19-11-2015. Shri S. Ramachandran, Consultant appeared on behalf of the applicant and co-applicants and Shri S. Karunakaran, Senior Intelligence Officer, DRI, Chen....
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.... the applicant and the co-applicants, as provided in the Act. 5.6 The Learned Departmental representative, appearing on behalf of the Department, reiterated the submissions made by the DRI vide their letter F.No. VIII/26/12/2013 DRI CBE, dated 18-11-2015. The representative further stated that they are in agreement with the submissions made by the applicant's Counsel to the effect that the application is not hit by the prohibitions in terms of third proviso to Sec. 127B(1) of the Customs Act, 1962. 5.7 As regards merits of the case, he stated that the applicant has confessed to the charges in the show cause notice, he left it to the discretion of the Bench to pass appropriate orders on the immunities claimed. He further stated that as regards the applicant's claim regarding full discharge of the interest liability, the revenue will verify the claim and file its report in two days' time. Jurisdicitional Commissioner's report dated 9-2-2016 : 6.1 The jurisdictional Commissioner vide his letter C1/Misc.08/2015-Legal (Sea), dated 9-2-2016 has stated as follows : • The applicant had imported 8 consignments of garment accessories at Nil rate of dut....
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....are not settled. • It is felt that Settlement in respect of the imports made under these two Bills of Entry may be permitted only pursuant to payment of the Anti-Dumping Duty liable in these two Bills of Entry. • The Honble Commission may decide the issue about prosecution of the appellants on merits of the issue, given their culpability. Earlier order of the Bench on maintainability : 7.1 The Bench while deciding the case relied on the decision of the Hon'ble High Court of Delhi in W.P. (C) 7363/2014 & CM 17221/2014, dated 25-8-2015 in the case of Shri Ram Niwas Verma wherein the Hon'ble High Court concluded that it is not required to examine the provisions of Section 123 and its applicability while considering admissibility of a case under Section 127B of the Customs Act and that the mere fact goods are notified under Section 123 of Act is suffice to attract the prohibition contemplated under Section 127B ibid. Though the orders of the Hon'ble Court is in the context of gold that was concealed and smuggled into India, the law laid down by the Court will apply to all goods notified under Section 123 as what has been observed by the Hon'ble High....
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....is of the considered view that the matter requires to be considered so as to bring about a finality to the entire litigation. 8. In the light of the above, the writ petition is allowed, the impugned order is set aside and the matter is remanded to the Settlement Commission for fresh consideration by considering the conduct of the petitioner to proceed to settle the case by exercising the discretion and pass appropriate orders on the immunities claimed by the petitioner". 8.2 Based on the directions of the Hon'ble High Court, fresh proceedings were initiated in this case and hearing was held on 21-9-2017. Record of hearing held on 21-9-2017 : 9.1 The applicant was represented by Shri S. Ramachandran, Shri P. Kannabiran, SIO, DRI Coimbatore represented the jurisdictional Commissioner. 9.2 It was submitted by the Learned Consultant that the show cause notice is relating to misuse of import garment accessories duty free, and diversion of the same in contravention of actual user conditions as stipulated in Customs Notification No. 21/2002-Cus., dated 1-3-2002; that one of their staff without their knowledge has done this; however, they paid the entire ....
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....nd the Revenue. Customs duty and interest : 10.2 This is a case of misuse of benefits of Notification No. 21/2002-Cus., dated 1-3-2002 by the applicant who imported garment accessories at "Nil" rate of Customs duty but never used it in their export production but were sold in the domestic market. Based on intelligence, investigations were carried out by the Officers of DRI, Coimbatore Regional Unit, which culminated in the issuance of the instant show cause notice which proposed recovery of differential amount of duty of Rs. 23,19,372/- besides applicable interest thereon for the imports made vide 8 Bills of Entry. 10.3 The applications filed on 19-6-2015 were sent back to the adjudicating authority under Section 127-I(1) of the Customs Act, 1962 as not maintainable vide Final Order No. 11/2016, dated 29-2-2016 as "Zip Fasteners" one of the notified items under Section 123 of the Customs Act, 1962 was a part of the Bill of Entry 4572044, dated 7-9-2011. The applicant challenged the above order in the Hon'ble High Court of Madras and the Court vide Order dated 15-11-2016 ordered fresh consideration by considering the conduct of the petitioner to proceed to settle ....
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.... is not a proceeding pending before an adjudicating authority against which the applicant has filed settlement application and the applicant has approached the Settlement Commission in settling the issue arising out of SCN regarding the wrong availment of benefits of Notification No. 21/2002-Cus., dated 1-3-2002. Hence the Bench holds that the pendency of another SCN demanding Anti-Dumping Duty is not an impediment in settling this case. 10.7 Therefore, the Bench is of the opinion that the applicant has made full and complete disclosure of the duty liability, co-operated with the investigation and discharged their duty liability along with interest immediately on commencement of investigation (Rs. 15,89,544/- vide MCM 0300821, dated 8-3-2013, Rs. 7,29,828/- vide MCM 0500865, dated 8-5-2013 and Rs. 6,35,309/- vide MCM 0700871, dated 8-7-2013) i.e., over one year before issuance of SCN dated 31-3-2015. Accordingly, the Bench considers it as a fit case to settle the differential duty liability at Rs. 23,19,372/- along with interest amounting to Rs. 6,35,309/-. Fine : 10.8 In the impugned Show Cause Notice, there is a proposal for confiscation of the imported goods c....
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....tivities of their staff till it was detected by the DRI. The Directors of the applicant firm cannot wash their hands off saying that they were not aware of the said illegal arrangements. Shifting the blame on Shri Kannan will not absolve them of the act of evasion or duty. The applicant firm is equally responsible for actions of its employee and the Directors of the applicant firm equally responsible for the imports made in their name resulting in the revenue loss for the Government. The omissions and commissions of the three directors of the applicant company, viz., Shri K. Tamizharasan, Director - "the Co-applicant I", Shri N. Sridhar, Managing Director -"the Co-applicant II" and Shri S. Ramachandran, Director -"the Co-applicant III" have rendered the impugned goods liable for confiscation. But for the painstaking investigations carried out by the Officers of DRI, Coimbatore Regional Unit the fact of the matter would not have surfaced the act of the applicant attracts penalty under Section 114A and also under Section 114AA of the Customs Act, 1962 separately for having rendered the goods liable for confiscation under Section 111(d) and 111(o) of the Customs Act, 1962 as they have....
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.... to the applicant in excess of the above amount. The penalty should be paid within 30 days from the date of receipt of this order and compliance reported to the jurisdictional Commissioner. v. Taking into account the facts and circumstances of the case, the Bench imposes a penalty of Rs. 10,000/- (Rupees Ten thousand only) on Shri K. Tamizharasan Director - "the Co-applicant I"- under the provisions invoked in the show cause notice and grants immunity to the applicant in excess of the above amount. The penalty should be paid within 30 days from the date of receipt of this Order and compliance reported to the jurisdictional Commissioner. vi. Taking into account the facts and circumstances of the case, the Bench imposes a penalty of Rs. 10,000/- (Rupees ten thousand only) on Shri N. Sridhar, Managing Director - "the Co-applicant II"- under the provisions invoked in the show cause notice and grants immunity to the applicant in excess of the above amount. The penalty should be paid within 30 days from the date of receipt of this Order and compliance reported to the jurisdictional Commissioner. vii. Taking ....