TaxTMI 
TaxTMI 
2020 (9) TMI 387
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....ent consisting 320 packets was lying at godown No. 2C of Export Shed, ICD - Patparganj, New Delhi under Shipping Bills No. 37265412 dated 19 May, 2011. Upon enquiry it was found that further two more shipping Bill Nos. 3758850 and 3865786 (filed by M/s J.S. Designer Ltd.) were also lying pending for clearance at the same ICD. The goods under the three shipping bills were physically examined on 1st and 2nd June, 2011 in the presence of witnesses and representative of CHA. The consignment were found to contain fabrics under Panchnama. Since all the three consignments appeared to be highly over valued, the goods were provisionally released for export under bond and furnishing a bank guarantee of Rs. 2 crores, and representative samples drawn. 3. On the strength of search warrant, the officers visited the main office cum factory at D-222, Sector-63 Noida. Shri Vikas Mohan Singhal, Managing Director was present and submitted certain documents and his statement was also recorded on the spot on 1st June, 2011. One Apple I Mac computer was also resumed for further investigation. 4. In his statement Shri Vikas Mohan Singhal, Managing Director, inter alia stated that he was a textile engin....
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....at M/s Singla Apparels (P) Ltd., New Delhi and statement of Shri Gopal Aggarwal was recorded who inter alia stated that M/s J.S. Designer Ltd. was a buyer. They have sold cotton fabrics, polyester fabric and cotton and polyester mix fabrics and knitted fabric with polyester and cotton yarn to M/s J.S. Designer Ltd. Payment was received from M/s J.S. Designer Ltd. by cheque/RTGS. They did not maintain any documents except sales invoices. In his further statement dated 14 July, 2011, Shri Gopal Aggarwal modified his earlier statement and stated that they had supplied only cotton handloom to M/s J.S. Designer Ltd. from November, 2010 to December, 2010. In his further statement dated 29.9.2011, he stated that after verifying the invoices for sale to M/s J.S. Designer Ltd., that only cotton fabric had been supplied and reiterated that he had not supplied the polyester fabric to M/s J.S. Designer Ltd. Further the cotton fabric was costlier than polyester. The price of cotton fabric was in the range of Rs. 50/- to 80 per meter, whereas the polyester price was in the range of Rs. 25 to 40 per meter. 9. Search was also conducted at M/s Niharika Fabrics (India) Pvt. Ltd., Delhi-6. Statement....
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....he had sold Kiryana items, dry fruits and he would produce the documents in support of the same. 12. The officers also visited the premises of M/s G.K. International located at Fatehpuri, Delhi-6 on 28 July, 2011. However the shop was found locked. On enquiry, it was known from Shri Pawan Sharma, the landlord, that the said firm have been closed 18 months back and they were engaged in the business of dry fruits from the said shop. 13. In his further statement recorded on 11 July, 2011, Shi Chander Gauba, Managing Director of M/s V & S International Pvt. Ltd. inter alia stated that no purchase order was ever placed from M/s J.S. Designer on them. They had adopted the procedure of procuring purchase invoices of fabrics and then issuing sale invoices on some margins of profit, to increase the turnover of their company; that no fabric was supplied to M/s J.S. Designer Ltd. by them; that one Shri Deepak of M/s G.K. International was one of their provider of purchase invoice and they had tied up with M/s J.S. Designer Ltd. to accept their sale invoices; that the payments were routed through Shri Deepak. He further agreed to modification of his earlier statement in view of the subsequen....
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....ash Sharma 10. M/s Neotex Exim Pvt. Ltd. Uday Bhagat, Sunder Prakash Sharma 11. M/s Shivaji Trading Company Hemant Kumar, Sunder Prakash Sharma 12. M/s New Fashion Point Anil Saini 13. M/s Jagdish Fab Hemant Kumar, Ramesh Kumar Sharma 14. M/s Pyramid Tech Heights Pvt. Ltd. Parween Aggarwal, Sunder Prakash Sharma, Mahender Kumar & Uday Bhagat 15. M/s Surat Clothing Empire Rajinder Kumar 16. M/s Aroma Textiles Pvt. Ltd. Parveen Aggarwal, Sunder Prakash Sharma 17. M/s Nikhil Trading Co. Atul Kumar 18. M/s Indraprastha Trade Impex Pvt. Ltd. Mahender Kumar 19. M/s Kishore Exports Ramesh Kumar, Hemant Kumar 16. In his further statement Shri Deepak Goel- appellant recorded on 12 September, 2011, stated that he was given orders for supply of cotton fabrics i.e. cotton voil, cambric and grey polyester etc. to Shri Singhal of M/s J.S. Designer Ltd. Thereafter he passed on the orders for the supply of fabrics to firms/company like M/s Bhiwandi Cloth House, M/s Nitin Traders, M/s G.K. International etc. etc. who have supplied and issued invoices to M/s J.S. Designer Ltd. Shri R.P. Sharma used to procure orders of fabrics for these companies/f....
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.... stated that Shri Deepak Goel- appellant started firms/companies namely M/s Florance Textiles and Fabrics Pvt. Ltd., M/s Pyramid Tech Heights Pvt Ltd., M/s Shri Radha Cloth Gallery Pvt. Ltd., M/s Aroma Textiles Pvt. Ltd., M/s Giriraj Texturisers Pvt. Ltd. and M/s Raghavendra Apparel Pvt. Ltd. He knew that these companies were started actually by Shri Deepak Goel for doing business in fabrics and Shri Deepak Goel assured him that he would be getting 10,000/- P.M. in return. He did whatever Shri Deepak Goel told him, that the full control of these companies was with Shri Deepak Goel. The order of fabrics were being brought by Shri Deepak Goel, the bills etc. was prepared by Shri Deepak Goel and he had been asked to sign the documents. The cotton fabric were supplied to M/s J.S. Designer Ltd. by these companies. He did not know regarding source of purchase of fabrics, that he has never seen purchase invoices, and the bank account of these companies were operated as per direction of Shri Deepak Goel. The cheque books of these companies remained either with Shri Deepak Goel or the same were kept at 234, Main Road, Chandini chowk, Delhi-6. He did not know anything about the companies/ fi....
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....se of trading. On being shown the invoices which were submitted by Shri Vikas Mohan Singhal and M/s J.S. Designer Ltd. along with cost sheet in respect of Shipping Bill No. 4119009, he admitted that he had issued the invoice(s) to M/s J.S. Designer Ltd. 23. In the course of further enquiry at supplier - M/s Manoj Kumar and Sons at Fatehpuri, Delhi-6, on 8 September, 2011, the premises were found locked from inside and the person(s) present escaped from the terrace door. Subsequently in his statement dated 12 September, 2011 Shri Deepak Goel - appellant admitted that he was managing M/s Manoj Kumar and Sons and thereafter under Panchnama dated 7 October, 2011, premises of M/s Manoj Kumar and Sons was searched and documents were resumed under Panchnama. Shri Deepak Goel in his further statement dated 12 September, 2011 also stated that he had also been supplying fabrics to M/s Kamran Exports Pvt. Ltd., who had been further exporting polyester fabrics to M/s Pardes MulaKhail Ltd., Afghanistan, the same buyer of M/s J.S. Designer Ltd., exporting polyester fabrics. It appeared that M/s Kamran Exports Pvt. Ltd. was exporting at US $ 1.5 to $ 1.75 per meter whereas M/s J.S. Designer Ltd.....
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....h he had arranged to supply fabrics. He was not aware if there were any such adjustment invoices, as they treated all the invoices in a similar manner. 28. The officers also sent representative samples collected from export consignments for technical evaluation and price assessment, to Textile Committee, Mumbai, which is a statutory body created by Government of India, wherein after examining they submitted its report on 24 August, 2011, giving the composition of the fabrics, type and the price per meter. From the report, it appeared to Revenue, M/s J.S. Designer Ltd. have highly inflated FOB value of the export consignments. 29. Accordingly, show cause notice dated 11.7.2012 was issued on the main noticee/exporter M/s J.S. Designer Ltd. and also its Directors and other persons including the present appellant, proposing to reject the FOB value in respect of several shipping bills including three bills mentioned herein above, redetermination of the value under Rule 8 read with Section 14 of the Customs Act, proposing lower re-determined value and accordingly revising the lower DEPB amount with respect to the particular shipping bill(s) as mentioned in para 46 of the show cause not....
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....on inter alia stated that the firm is engaged in trading in all types of fabrics since last twenty years. They have been supplying polyester fabrics for more than five years to M/s J.S. Designers Ltd. on verbal orders raising invoices and payments were received by cheque or letter of credit, and polyester fabric is generally costlier than cotton fabric. Shri Govind Das Chanok, Proprietor of M/s Maya Fashions was cross examined on 11.10.2017 wherein he inter alia stated that they have supplied cotton and other type of fabric to M/s J.S. Designer Ltd. and received the full payment through cheques. Further stated that Shri Honey Baruah was doing clerical work for them, have left in the year 2012-2013. Shri Pawan Kanodia, Director of M/s Niharika Fabrics India Pvt. Ltd. was cross-examined on 11.10.2017 inter alia stated that they have been supplying polyester fabrics to M/s J.S. Designer Ltd. for seven years and they received the payment through cheques/banking channel. Shri Deepak Goel (appellant) was also cross examined on 27.10.2017 inter alia stated that he was being paid 10 to 15 paisa per meter of the fabric supplied to M/s J.S. Designer Ltd., by the supplier. He had supplied pol....
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.... Deputy Director, Textile Committee, Chennai was cross examined on 15.2.2018, inter alia stated that if laboratory can conduct various types of technical test such as composition of fabric, other parameter like warp, weft, GSM etc.; that there are no norms for the size of the sample and it all depends on parameters to be determined. As regards size of sample sent to the laboratory for testing, he stated that if any particular sample was insufficient in size, this fact would have been mentioned in their report; that at the request of the Customs Department they had given the average/approximate prices of the fabrics on the basis of survey in textile cluster, Surat. Some samples shown by the Advocate for M/s J.S. Designer Ltd. during cross examination and asked to recognize, Shri Patil stated that the samples were pasted on paper sheet bearing the name of M/s J.S. Designer Ltd., whereas samples they have received were not bearing the name of any firm and that they attached swatches cut from the sample pieces along with test report. 32. Show cause notice was re-adjudicated vide impugned order upholding the proposed rejection of FOB value and re-determination at the lower value and th....
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.... through banking channel. The department have failed to appreciate that the exporter - M/s J.S. Designer Ltd. have done further work on the fabric (value addition), and as such it cannot be alleged that this appellant has facilitated the enhancement in value of the export goods as the appellant is not directly concerned in the export business of M/s J.S. Designer Ltd., and the details/intricacies of the same are not in the knowledge of this appellant, nor fabricated any documents for being presented before the Customs, hence the provisions of Section 114AA of the Customs Act are not attracted. This appellant is not aware of the export values of M/s J.S. Designer Ltd. nor have participated in preparation of overvaluation export invoices. This in absence of condition precedent as required under Section 114AA, the penalty imposed is fit to be set aside. Further it is nowhere alleged that the ill gotten benefit of export proceeds/DEPB have been shared with the present appellant. It is further urged that penalty imposed is also grossly disproportional to the gravity of offence, if any. 34. Learned Authorised Representative for Revenue opposes appeal and reiterated the findings in the i....