TaxTMI 
TaxTMI 
2020 (10) TMI 741
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....was the authorized signatory, looking after all the operations of the Company and its Bank Accounts and was also approving the policy matters of the Company. 2. Notice for final disposal, returnable on 01.11.2018." 2. In view of the aforesaid order, this appeal was heard finally. This appeal is filed by the original noticee of the show cause notice challenging the judgment and order dated 31st October, 2016 passed by the Customs, Excise & Service Tax Appellate Tribunal, Ahmedabad ("CESTAT" for short) raising the following substantial questions of law: "[a] Whether in the facts and circumstances of the case, the Hon'ble Appellate CESTAT was correct in upholding the penalty imposed on appreciation of the incorrect facts that the Appellate was a Promoter-cum-whole time evidences on record before the Appellate CESTAT proved that the Appellant was a nonexecutive Chairman of the Company even though the facts and evidences on record before the Appellate CESTAT proved that the Appellate was a non-executive Chairman of the Company and used to rarely visit the Company and used to participate very rarely in the Board's meetings? [b] Whether in the facts a....
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....the company had jointly diverted the goods in the local market which were meant for reexport. The competent authority therefore, primafacie, found the following breaches of the notification: "Therefore, from the above facts and narration it appears that M/s SSFPL has violated the following conditions of Notfn. No.140/87 dtd.27.3.97 (parawise) : (i) Para (1)(d) by not bringing the goods imported directly into the factory. (ii) Para (1)(e) by not exporting the products produced out of the imported material. (iii) Para (1)(f) by not using the imported goods for the specific purpose for which the same was imported i.e. for manufacturing packing materials. (iv) Para (1)(g) by disposing off the imported goods which was not allowed under this notification." 3.4) On the basis of above breached stated in the show cause notice, the company and its directors including the present appellant were called upon to show cause as to why:- "( 1) the imported goods i.e. HDPE granules / Moulding powder weighing 666.75 Mts and valued at Rs. 71,86,128/should not be confiscated under section 111(d) & 111(o) of Customs Act, 1962. ....
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....h the orders of penalty imposed on the appellant. The CESTAT also did not find any reason to reduce the penalty imposed by the adjudicating authority considering the facts and circumstances of the case and the amount of duty evasion of Rs. 89,61,999/along with equivalent penalty imposed on The company which is under liquidation. 3.8) The appellant thereafter, moved Rectification Application No. 10355/2017 in Customs Appeal No. 421 of 2007 on the ground that there was an apparent error in the order dated 31st October, 2016 pointing out that though the appellant had raised various issues in the appeal, however, all the facts and evidence were not properly analysed by the CESTAT and certain facts were being wrongly reported in the order. It was also stated that the order was a non speaking order and therefore, be recalled and appeal be heard again. However, the CESTAT after hearing the parties, came to the conclusion after taking note of the facts and circumstances of the case, evidences produced on record against the appellant and complicity in the offence committed, it had decided the case on merits and therefore, the plea of the appellant to reconsider all the facts and ev....
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....re not allowed to be cross examined, the statements involving the appellant had to be ignored and could not have been relied upon by the adjudicating authority. Learned advocate for the appellant further submitted that the CESTAT has passed the impugned order on incorrect appreciation of the facts which were neither part of the appeal nor urged by the respondent department and the impugned order is passed without appreciating the facts and evidence to the effect that the appellant was a Non-Executive Chairman and was never part of the transaction and ground on which penalty imposed is upheld by the CESTAT that the appellant was a promoter cum whole time chairman of the company is contrary to the facts and evidence on record. It was further pointed out that late Shri Ramakanth Naik who was father of Shri Srinivasa Naik was the founder and the Managing Director of the company. Learned advocate for the appellant further submitted that in the synopsis of written submissions submitted by the appellant before the CESTAT, the appellant had contended that not only the statements of Shri V.V. Kamath, Shri Srinivasa Naik and Shri Y.D. Gavadi were recorded but statements of other persons of t....
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....ssions relied upon the follwing decisions : i) HIM Logistics Pvt. Ltd v. Principal Commissioner of Customs reported in 2016(336) ELT 15 (Del). ii) Swadeshi Polytex Ltd. v. Collector of Central Excise, Meerut reported in 2000 (122) ELT 641 (SC). iii) Basudev Gard v. Commissioner of Customs reported in 2013 (294) ELT 353 (Del). iv) Lakshman Exports Limited v. Collector of Central Excise reported in 2002(143) ELT 21 (SC). v) Mulchand M. Zaveri v. Union of India reported in 2017 (52) STR 92 (Guj). vi) Commissioner of Central Excise v. Kurele pan Products Pvt. Ltd reported in 2017 (52) STR 218 (All). vii) Sushil Kumar Kanodia v. Commissioner of Customs, Chennai reported in 2007 (218) ELT 453 (TriChennai). viii) Prasanta Sarkar v. Commissioner of Customs (Prev.) Mumbai reported in 2007 (209) ELT 220 (TriMumbai). ix) Jagannath Premnath v. Commissioner of Customs, Mumbai reported in 2006 (198) ELT 104 (TriDelhi). x) Superintendent of Customs v. Bhanabhai Khalapabhai Patel and another reported in AIR 1992 SC 1583. xi) Pradeep Kumar v. Commissioner of CustomsLAWS( CE) 1999 12 119. xii)....
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....s are admissible in the evidence and therefore, the penalty levied on the basis of such statements cannot be interfered with. 12. Having heard the learned advocates for the respective parties and having gone through the material on record, it would be fruitful to refer to the findings arrived at by the adjudicating authority which were later on confirmed by the CESTAT by the impugned order. The adjudicating authority has arrived at the following findings : "9. Discussion & Findings : 9.1. I have carefully studied the facts of the case as well as the submission advanced on behalf of the noticees. 9.2. In this case, the main noticee M/s. SSFPL imported 666.750 HDPE granules/moulding power having CIF value of Rs. 71,86,128/at Kandla and cleared the same by filing three bills of entry Nos. F1048/ 8.3.1990, F1067/ 9.3.1990 and F1102/ 12.3.1990 and by availing exemption under Notification No.140/87Cus dated 27.3.1987 on the strength of Licence No. 0001145 dated 21.2.1990. After the clearance was permitted, it was found that SSFPL contravened the conditions of Notification No.140/87Cus dated 27.3.1987 and accordingly, SSFPL, Shri R.N.Shetty and Shri V.V. Kama....
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....Act, 1962 clearly revealed that SSFPL had not complied with the above conditions of the aforesaid Notification. It is further observed that there is nothing on record to demonstrate the factory of manufacture, its proper accountal, its utilization in the manufacture of export products and due export of such finished goods out of India and consequently, SSFPL cannot escape from its liability to pay duty totaling Rs. 89,61,999.00 on 666.750 MT HDPE granules/moulding powder having CIF value of Rs. 71,86,128/cleared by them under bill of entry Nos. F1048 dated 8.3.1990 (for 78.750 MT), No. 1067 dated 9.3.1990 (for 165.000 MT) and No.1102 dated 12.3.1990 (for 423.000 MT) as demanded in the show cause notice. As a corollary to the contravention of the conditions of the aforesaid exemption notification read with conditions of advance licence, I hold that SSFPL have rendered the goods liable for confiscation under section 111 (d) and section 111 (o) of Customs Act, 1962 and have rendered themselves liable for penalty under the provisions of Customs Act, 1962. 9.4. Coming to the aspect of penal action proposed against Shri R.N.Shetty and Shri V.V.Kamat, it is observed from the stat....
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.....Shetty with reference to minutes of the meeting of Board of Directors, filing of criminal complaint against Shri V.V.Kamat, etc. does not appear to have any bearing on the liability of confiscation of goods which resulted out of his various acts of omission and commission as narrated hereinabove. For these reasons, the various decisions cited by him are also found to be in-aplicable to the facts and circumstances of the case. These facts having been brought on record out of evidence gathered from a cross-section of responsible persons associated with the Company can be considered sufficient for rejecting the request made by Shri R.N.Shetty for cross-examination of various persons. Moreover, the request made by Shri R.N.Shetty for supplying him with a copy of defence reply filed by Shri V.V.Kamat was duly considered in keeping with the principles of natural justice and after supplying him with a copy of the said reply, the said notice was given sufficient opportunity to represent his case. Moreover, Hoh. CESTAT in case of Shivom PlyNwood reported in 2004 (177) ELT 1150 (TMum) has held that cross-examination cannot be claimed as a matter of right in Departmental proceedings and each....
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....s written statements and synopsis filed by the appellant held as under : "5. On careful consideration of the arguments, submissions of both sides including written submissions, case laws, and examination of records, it is observed that Shri R N Shetty was the whole time Chairman of the Company and Shri Vijay Venkatarao Kamat was Executive Director of the Company. It is not disputed that Shri Vijay Venkatarao Kamat made the application for the import license and signed all the documents. He was looking after day to day operations of the Company. From the evidences brought on records, it is clear that he was aware of the diversion of the imported goods to the local market. The plea of Shri Vijay Venkatarao Kamat is that he is only the Executive Director and an employee of the Company and that diversion of the goods were done by Shri R.N.Shetty, Chairman. Even if the same is accepted for arguments sake, it does not absolve him from his contraventions of the provisions resulting in defrauding the Public Ex-chequre. 6. As regards Shri R N Shetty, it is observed that Shri R N Shetty was the Promotor-cum-whole time Chairman of the Company. He was the Authorised Signatory....
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....and cleared under License No. 0001145 dated 21.02.1990 availing the benefit of exemption under Notification No.140/87Cus. Dated 27.3.1987, which prescribes certain conditions, according to which they were to use the imported goods for manufacture of specified goods which were to be exported. These conditions are in the nature of continuing obligation which would be satiated only on fulfilment of the conditions and the Bond and license are discharged. It is settled law that when the goods are imported under certain conditions are under Bond, limitation does not apply till the conditions are fulfilled and the Bond is discharged. 10. In view of the above, we do not find any reason to interfere with the impugned order wherein the penalties have been imposed on the appellants. We also do not find any reason to reduce the penalty imposed by the adjudicating authorities considering the facts and circumstances of the case, and the amount of duty evasion of Rs. 89,61,999/along with equivalent penalty of Rs. 89,61,999/alongwith equivalent penalty of Rs. 89,61,999/imposed on the Company which is under liquidation, thereby impoverishing Public Exchequer. 11. As a res....
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....oms Act, provides for penalty against the 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. In such a case, the penalty that could be imposed would be an amount not exceeding the value of goods or Rs. 5000/whichever is greater. Even if therefore, invoking this provision would require mens rea on the part of the noticee, the same was duly established on record. 12. No question of law arises. Tax Appeal is dismissed." 15.Learned advocate for the appellant tried to distinguish his case on the ground that the appellant was a NonExecutive Director having no knowledge about the import transactions made by the company. Learned advocate relied upon the various documents in support of his submissions including the statement dated 14th June, 1991 of Shri Srinivasa Naik which was said to be contrary to his further statement recorded on 14th July, 1997. He also referred to the statements of Mr. Y.D. Gavadi and Shri Sumati U. Naik dated 15th July, 1997 wherein it was stated by them that appellant rarely used to visit the company. But o....
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.... reference can be made to the observations made by the Honble Apex Court in a judgment reported in (1997) 3 SCC 721 in case of K.I. Pavunny v. Assistant Collector, (HQ), Central Excise Collectorate, Cochin decided by the bench of three Judges on very this point with regard to the statements recorded under Section 108 of the Customs Act. The Hon''''ble Apex Court has discussed on this very point and observed that a question considered by three Judges bench in the instant case on a reference from the two Judges bench was whether the confessional statement of the appellant made to Customs Officers under Section 108 of the Customs Act, 1962 though retracted at a later stage, is admissible in evidence and could form basis for conviction and whether retracted confessional statement requires corroboration on material particularly from independent evidence? While considering the object of recording statements under Section 108 of the Customs Act, it has been observed as under : "the object of the Act empowering Customs Officers to record the evidence under Section 108 is to collect information of the contravention of the provisions of the Act or concealment of the ....
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....o coercion or threat cannot be readily accepted. Further, as rightly submitted by the learned Counsel, Ms.Yagnik, no evidence has been brought on record on this aspect to primarily establish that it was not made voluntarily. Even the statements under Section 313 of the Criminal Procedure Code does not refer to this aspect, in Which, it was open for the accused persons to say or state before the Court. Therefore, such contention which has been raised at belated stage by way of defence cannot be readily accepted. 37. In the aforesaid judgment of the Honble Apex Court reported in (1997) 3 SCC 721, similar contention raised by the learned Counsel relying upon the judgment of the Apex Court reported in AIR 1970 SC 940 also have been considered. While considering this aspect, it is required to be considered that in a judgment reported in (2002) 1 SCC 155 while considering admissibility of the confessional statement recorded under Section 108 of the Customs Act visavis other procedure, the Hon'ble Apex Court has quoted earlier judgment of the Apex Court reported in AIR 1968 SC 832 in case of Abdulla v. State of Maharashtra and made following observations : "These sta....
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....have taken place leading to further recovery of the contraband articles and or money, for which, panchnamas are made. Therefore, observations have been made by the Apex Court in a judgment reported in (1997) 3 SCC 721 that such statements will lead to further evidence is required to be considered if on the basis of such revelation made in the statements leading to further evidence like recovery or discovery of the contraband articles, for which, panchnama have made would also be a relevant evidence. Again it is corroborated by the testimony of the Customs Officers as stated hereinabove. This aspect has to be considered in light of the provisions of Section 6 of the Evidence Act read with Section 10 and 11 of the Evidence Act. 41. Provisions of Section 6 of the Evidence Act refers to the relevancy of the facts forming part of some transaction, which reads as under : "6. Relevancy of facts forming part of same transaction. Facts which, though not in issue, are so connected with a fact in issue as to form part of the same transaction, are relevant, whether they occurred at the same time and place or at different times and places." 42. This aspect has to be c....
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....t be said that the impugned judgment and order recording conviction, which has been confirmed, is perverse or resulted into miscarriage of justice. It is also well settled that the provisions of Section 313 of the Criminal Procedure Code is specific for the purpose of pointing out circumstances with regard to the relevant evidence or incriminating evidence against him, which can be considered and opportunity is offered to give explanation or rebuttal even by preponderance of the probability. 46. Therefore, having regard to the aforesaid discussions, it cannot be said that the impugned judgment and order recording conviction, which has been confirmed by the lower Appellate Court is perverse or it is based only on the statements recorded under Section 108 of the Customs Act or even it is based on the statements of the co-accused recorded under Section 108 of the Customs Act as sought to be canvassed. Moreover, it is well settled that the scope of exercise of discretion is very limited as observed in a catena of judicial pronouncement including that judgment of the hon'ble Apex Court reported in (2008) 11 SCC 76 in case of Raj Kumar v. State of Himachal Pradesh, wherein r....
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....he Evidence Act, by reason of statutory compulsion of recording the statement or the accused giving voluntary statement pursuant to his appearing either after issuance of summons or after the appellant's surrender, such statement cannot be characterised to have been obtained by threat, inducement or promise. [5] The collection of evidence under Section 108 and other relevant provisions relating to search and seizure are only for the purpose of taking further steps for confiscation of contraband and imposition of penalty. [6] The self-same evidence is admissible in evidence on the complaint laid by the Customs Officer for prosecution under Section 135 or other relevant statutes. [18] It is true, as pointed out by Shri Thakur, that Public Witness 2 admitted in cross-examination that they treated the appellant as an accused and decided to prosecute the appellant. but the above evidence requires to be tested in the light of the above legal position. The assumption of Public Witness 2 that the appellant was an accused as on 6/12/1980, is erroneous, since as on that date on formal complaint had been laid against the appellant. Therefore, it cannot be consid....
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....and in the compound one would ensure that others having access to the compound may not indulge in digging and carrying away the same. As soon as the appellant and/or the members of his family had sight of such visitor or movement by others, they would immediately catch hold of such person or would charge them. Obviously, therefore, it would be the appellant who had concealed 200 gold biscuits of foreign marking in his compound at a place always visible from his bedroom window. Therefore, the High Court was right in its conclusion, though for different reasons, that Ex.P4 is a voluntary statement and was not influenced by threat duress or inducement etc. Therefore, it is a voluntary statement given by the appellant and is a true one." 18.In view of the above dictum of law with regard to the statement recorded under section 108 of the Act coupled with concurrent findings of fact arrived at by the adjudicating authority and the CESTAT, we are not inclined to interfere as no perversity is pointed out in such factual findings arrived at by the both the authorities. For the foregoing reasons and considering section 112(a) of the Customs Act which provides that penalty against....
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....nt to ascertain value of the goods manufactured by the assessee was considered to be just and proper. However, after considering the submissions made in pursuance of the rectification application, the CESTAT came to a different conclusion to the effect that the assessee company and the buyer of the goods were not inter-connected companies. Different conclusions were arrived at by the CESTAT because it reappreciated the evidence in relation to common directors among the companies and inter se holding of shares by the companies. Re-appreciation of evidence on a debatable point cannot be said to be rectification of mistake apparent on record. 17. Similarly, in pursuance of the rectifying application, the CESTAT came to the conclusion that an officer of the department, who was working as Assistant Director (Cost) and who was also a Member of an Institute of Cost and Works Accountants was not competent as a Cost Accountant to ascertain value of the goods. It is strange as to why the CESTAT came to the conclusion that it was necessary that the person appointed as a Cost Accountant should be in practice. We do not see any reason as to how the CESTAT came to the conclusion that th....