TaxTMI 
TaxTMI 
2009 (4) TMI 101
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....lement Pass Book [DPEB] Scheme, (ii) adopted the values alleged shown in the documents presented at Dubai [of US $ 3 per dozen for shirts and US $ 0.5 per dozen for handkerchiefs] for effecting clearance of the said goods, as the ex port value for the purposes of DEPB benefit, (iii) confiscated the goods in question under Section 113(d) and 113(i) of the Customs Act, 1962 [hereinafter referred to as "the Act"], (iv) imposed, in lieu thereof, redemption fine of Rs. 37,50,000/- under Section 125 of the Act, and (v) imposed the following penalties under Section 114(i) of the Act: (a) Rs. 75 lakhs on Viswajyoti Impex, (b) Rs. 25 lakhs on Jyoti Agarwal, (c) Rs. 25 lakhs on Sanjay Agarwal and (d) Rs. 25 lakhs on Kamal Malkani. 2. All the parties affected by the above order, viz. Viswajyoti Impex, Jyoti Agarwal, Sanjay Agarwal and Kamal Malkani, are in appeal before us. Viswajyoti Impex, Jyoti Agarwal and Sanjay Agrawal were represented by Mr. C. Hari Shankar, Advocate, while Mr. Sujay Kantawala, Advocate, represented Shri Kamal Malkani. The Revenue was represented by Mr. B.K. Singh, learned Joint Chief Departmental Representative. All parties were heard at leng....
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....mate and that the allegation of misdeclaration is without substance: (i) Viswajyoti Impex was, from the beginning, is maintaining all records, such as the RG 1 and Form IV register. Representative copies thereof were on record. (ii) At the time of allowing factory stuffing to Viswajyoti Impex, vide letter dated 27-1-90 addressed by the AC, Appraising Group VI to the AC, Range 05, Div. Chembur, Mumbai-II, a detailed mode of examination was prescribed, in the following terms: "VERIFY PARTICULARS AS PER INVOICE & PACKING LIST INSPECT CONTAINER NUMBER (AS DECLARED IN INVOICE). VERIFY CONTAINER IS EMPTY BEFORE STUFFING, INSPECT LOT, EXAMINE 10% AFTER SELECTION, CHECK DESCRIPTION, QUANTITY, WEIGHT, VALUE AND TECHNICAL CHARACTERISTICS OF EXPORT PRODUCT. VERIFY THE DESCRIPTION, QUANTITY, SPECIFICAL, TECHNICAL CHARACTERISTICS. VERIFY THE PARTICULARS AS PER INVOICE & PACKING LIST. INSPECT CONTAINER NUMBER (AS DECLARED IN INVOICE). VERIFY CONTAINER IS EMPTY BEFORE STUFFING. INSPECT LOT. EXAMINE AFFER SELECTION. CHECK DESCRIPTION, QUANTITY VALUE AND TECHNICAL CHARACTERISTICS OF EXPORT PRODUCT. VERIFY THE DESCRIPTION, QUANTITY, SPECIFICATION, TECHNICAL CHARACTERISTICS, ITEM NO. & FOR W....
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....ed this amount through M/s. Vishwajyoti Impex in order to show realization of their exports. The banking transactions revealed that the entire amount received by M/s. Vishwajyoti Impex has been credited thereafter to M/s. Ravraj Impex." Mr. Hari Shankar emphasizes that this allegation is entirely bald in nature, without any supportive evidence whatsoever. No document, supporting this allegation, is relied upon. The Commissioner, too, in the impugned order, merely confirms the allegation without any material to support the same. (x) On 6-7-99, the DGFT suspended the DEPB licences issued to Vishwajyoti Impex. The order of suspension reads thus: "The investigations conducted by our office and DRI revealed that M/s. Vishwajyoti Impex, Mumbai-71 has obtained DEPBs fraudulently on the basis of forged shipping bills and bank realization certificate. Hence, the following DEPBs issued to the above firm stand suspended with immediate effect till further orders." It is emphasized that though, as per this order, the DEPBs were suspended on the ground that the S/Bs and BRCs were forged, no such allegation has been levelled by the Department either in, the Show Cause Notice subsequen....
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.... and (e) cheap goods had, in fact, been procured by Viswajyoti Impex from local traders. On the basis of the above submissions, Mr. Hari Shankar would request that the impugned Order of the Commissioner be quashed. 10. Mr. Sujay Kantawala, appearing for Kamal Malkani, submitted that his client was entirely innocent, and had merely submitted all import documents to his buyer in Dubai, who had presented the documents and secured release of the goods. He, however, emphasized, without prejudice, that, as his client was situated outside India, the Act was not applicable to him, and no proceedings/penalty could be imposed on him thereunder. Reliance was placed, for this proposition, on C.K. Kunhammed v. C.C.E., 1992 (62) E.L.T. 146. 11. Opposing the above submissions of Mr. Hari Shankar and Mr. Kantawala, Mr. B.K. Singh, learned SDR, would contend thus: (i) Viswajyoti Impex appears to be a fly-by-night entity. It applied for a Central Excise licence on 9-1-99, was issued a licence on 18-1-99, got permission for factory stuffing on 27-1-99, issued export invoices on 1-2-99 and, after the exports were effected, discontinued business and surrendered its Central Excise licence....
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....is issue, Sanjay Agarwal had stated that, though there was no electric power supply, they had taken direct electric supply, bypassing the BSES electric meter, and had paid the penalty therefor. There was, however, no evidence of such payment. (viii) Mohd Israel Khan, a truck driver, had also deposed that part of the goods in question had not been loaded at Chembur [where the factory was located] but in a "gulley" at Juhu, and taken to Chembur, where the balance quantity was loaded. At Chembur, it is stated that some representative of the party arrived with two other persons. These two other persons, Mr. Singh would submit, must have been the Central Excise officers Mr. Hari and Mr. Shaikh, so that they could not have examined the contents of the containers, which were already loaded at Juhu. (ix) The fact that payment was made on D/A basis, and not on L/C basis, was cited as indicative of the fact that there was misdeclaration of value. (x) The Central Excise officers, Mr. Hari and Mr. Shaikh, on being questioned under Section 108 of the Act, admitted not having examined the export goods properly, but having merely seen the documents and tallied the invoices therewith. Dis....
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....es, and not that no samples had been received whatsoever. Rather, Mr. Hari Shankar contends, the statement, when holistically read, indicates that samples were, in fact, received by the Customs authorities. He further drew our attention to the ground plan showing the separate premises of Viswajyoti Impex, on the basis whereof Central Excise registration had been granted to them. Insofar as the decisions relied upon by Mr. Singh are concerned, he submitted that they were distinguishable, as there were, in each such decision, other corroborative material to support the findings against the party therein, whereas no such evidence exists in the present case. 13. We have anxiously considered the detailed submissions advanced by all parties. 14. We may notice, at the outset, that it is not disputed that (a) the goods in question had been exported to Dubai, and had been cleared at Dubai and that (b) full remittance has been received against such exports. The genuineness and veracity of the BRCs is not questioned at any point of time. 15. We also unhesitatingly reject the allegation of Hawala, which seems to have been raised almost in terrorem. Barring the bald allegation of the m....
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....ment which, on examination, has been found to be misdeclared. Rather, the examination reports unhesitatingly support the case of the exporter (as would be discussed hereinafter). The main ground on which this Tribunal proceeded, in Annapurna Yarn Fabrics (supra), therefore, is not available to the Revenue in the present case. 18. India Watch Parts Mfg (supra) has no parallel whatsoever with the case at hand. That was a case of undervalued imports, and the Revenue was relying on export declarations filed at the port of export. This Tribunal had taken adverse notice, in the said case, of the fact that the same foreign supplier had submitted two documents showing different prices-an invoice showing a lower price and an export declaration showing a higher price. There was no explanation why one person was showing two values in two documents. The manufacturer's invoice, when called upon, could not be produced by the importer, as is required by the Customs (Valuation) Rules, 1988. There was no evidence of contemporaneous imports at similar prices. The importer, for his part, admitted having declared a lower value, but credited it to the goods being defective, for which, too, no ....
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....uppliers of the export product, in their statements, denied having made any such supplies, (e) two of such suppliers were non-existent, (f) no evidence had been produced, by the exporter, to contradict this material, (g) neither did the appellant pray for cross-examination of the suppliers, (h) once it was found that the appellant had overinvoiced one item, it was legitimate to conclude that it had tasted blood and had, therefore, resorted to the said mod us operandi in its subsequent exports as well [for which reliance was placed on Annapurna Yarn Fabrics (supra)]. These factors, cumulatively seen, convinced this Tribunal to hold against the exporter in that case. Per corollary, their absence, in the present case, denudes the judgment in Sai Traders (supra) of all precedential value herein. 21. Olympia Overseas (supra) was, again, a case of overvaluation of DEPB exports. In that case, samples, drawn from the export goods, had been subjected to market enquiry, which clearly revealed that they were grossly overvalued. Chemical tests conducted on the said samples also supported this finding. This Tribunal, relying on Circular 77/2002-Cus dated 27-11-02 issued by the CBEC-which pre....
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....ntered on the export invoices, if accepted, clearly indicate that the goods were subjected to examination in respect of quantity, value and technical characteristics. In the case of handkerchiefs, the report goes to the extent of recording that burning test was also conducted. The submission, of the Revenue, that the reports were made by Sanjay Agarwal, cannot, in our view, discredit them; firstly, for the reason that Mr. Agarwal has merely stated that they were typed on his computer and, secondly, because they bear the signatures of the Central Excise inspector and Superintendent. Mr. Singh would, nevertheless, exhort us not to accept the said reports, on the ground that the said officers had, in their statements recorded under Section 108 of the Act, admitted not having examined the said consignments properly. We are not prepared to countenance this submission, as, if it were true, the Show Cause Notice should, unhesitatingly, have included the said officers as noticees, and penalty should also have been imposed on them. On the other hand, we find that neither of the said officers is even made a noticee in the present case. If the Revenue's case were to be accepted at face value,....
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....fact that representative samples thereof having been forwarded to the Customs authorities. 27. We may now refer to the statement of Shashikant, Appraiser, which, according to Mr. Singh, would indicate that no samples had been received by the Customs authorities. A holistic reading of the said statement, however, in our view, cannot support this submission. We may usefully reproduce the relevant extracts, from his statement, in this regard, thus: "... In reply I state that from the documents seen by me it is clear that samples were not seen by me. Procedurally, if samples were seen by me, there would have been endorsement of seeing the samples ... Since no such endorsement are appearing on the copies of S/Bills seen by me I say that representative samples stated to have been drawn by the Central Excise officers were not seen by me. In the case under reference I wish to clarify that in the export consignment where goods were stuffed in the factory premises of the exporters under the supervision of Central Excise officers, the simples were generally not seen by us before passing or assessing the S/B at that time ... I further wish to state that in respect of the above shipment o....
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....y belonged to G.B. Traders, (e) payment had not been made to G.B. Traders till date, against the material supplied by it, (f) Gopiram, the proprietor of G.B. Traders, had expired on or about April 1999, and (g) he was unwilling to state whether Gopiram was related to him or not. It may be that these depositions reflect an uncooperative attitude on the part of Sanjay Agarwal; on the other hand, it may also be that he actually did not remember the details sought. We cannot, obviously, enter any definite finding in this regard. We note, however, that there is no suggestion coupled with confrontation with any evidence whatsoever, by the Revenue, to Mr. Agarwal, in his statement, that what he has said is false. The professed inability, of Mr. Agarwal to remember the details of G.B. Traders, cannot go to buttress the case of the Revenue to any great extent. Neither can the fact that payment has not been made to G.B. Traders do so. It may quite possibly be that, as the proprietor of G.B. Traders has since expired, Viswajyoti Impex has decided not to make the payment. In any case, this would essentially be an issue between Viswajyoti Impex and G.B. Traders. 29. Mr. Singh has....
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....milarity, whatsoever, to the admitted signatures of Sanjay Agarwal, as they appear on the body of the statement recorded from him under Section 108 of the Act. Mr. Singh, too, was not in a position to make any statement that the two sets of signatures bore, even prima facie, any resemblance. There is nothing, barring the said signature to link the said invoices to Viswajyoti Impex. There is, significantly, nothing whatsoever to indicate that either Viswajyoti Impex or Sanjay Agarwal was aware of, or privy to, the alleged second set of invoices. Even the statements of Kamal Malkani do not show his awareness regarding this second set of invoices, and therefore the possibility of his buyer in Dubai fabricating the second set of invoice for saving Customs duty in Dubai cannot be ruled out. We are, in the circumstances, not willing to accept the said invoices as a conclusive proof of overvaluation of the goods in question, especially in the face of receipt of full remittance and absence of any proof of Hawala. 33. Insofar as the relationship between jyoti Agarwal and Kamal Malkani, of sister and brother, is concerned, in the absence of any influence, on the price of the goods, of suc....
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.... the applicability of the judgment in C.K. Kunhammed (supra). We do not, therefore, express any opinion thereon. 37. The appeals of the appellants, consequently, succeed, with consequential relief, if any. (Pronounced in court on.........) Sd/- (M.V. Ravindran) Member (Judicial) 38. [Order per : K.K. Agarwal, Member (T)].- I have perused the order proposed by my learned brother. Since I am not in agreement with the same, I am recording a separate order. 39. I must state that the facts have been clearly brought out by my ld. Brother as well as the rival contentions from both sides. As rightly stated by my ld. Brother, there is no dispute that the goods in question had been exported to Dubai and had been cleared at Dubai and that full remittance appears to have been received as per bank realization certificate produced by the appellants. The only dispute is regarding valuation which according to revenue was highly over-invoiced which fact is borne out from the invoice submitted by the importer at Dubai ....
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....atements have been retracted and are part of the relied upon documents annexed to the show cause notice. It is very strange that the appellants did not consider it proper to cross-examine any of these vital witnesses. A reference has been invited to some decision of the Tribunal in the case of Select Impex cited supra holding that the statement of the officers who were subject matter of vigilance enquiry were rightly rejected. In the present case, no evidence has been brought to show that these officers were under vigilance enquiry. On the other hand, the appellants have taken a stand that no action was initiated against the officers and therefore they cannot be considered as having aided and abetted them as otherwise, they would have been made a noticee in the show cause notice. I must state that even if it is presumed that vigilance enquiry has been initiated against officers for gross negligence, they would in their cross-examination make every attempt to deny the statement recorded by the departmental officers and would maintain that they properly examined the goods as contended by the appellants as that would absolve the officers from the charges levelled against them. Therefo....
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....rocured subsequently and therefore cannot be admitted as evidence. I further note that the handwriting expert has compared the signatures on the Xerox copy of the invoice with the Xerox copy of the statements recorded from Shri Sanjay Agarwal carrying his signature. Comparison of Xerox copy is not the correct method unless fresh signatures are obtained. Though the ld. Advocate for the appellant has submitted that the bare perusal of Shri S. Agarwal's signature on the export invoices and the invoices received from Dubai customs will itself show that the two signatures are totally different and will not require a handwriting expert's opinion as the court can draw its own conclusion by visual comparison. In this regard I may state that Shri S. Agarwal's signature as proprietor/authorized signatory on the proforma invoices submitted by them at pages 93 to 95 of the paper book and those on the invoices submitted to Dubai customs at pages 154, 156 and 158 resemble each other. In any case, I would not venture to comment on the handwriting which is the field of handwriting expert. All I say is that the admitted fact is that invoice was submitted for GB Traders to Dubai customs. The plea of....
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....oss stitching machine, cutting machine, tables and irons were installed in the factory there is no proof regarding their purchase, purchase price, payment particulars etc. (iii) There was no power supply to the unit and the appellants have admitted the same but have stated that they were stealing the power for which they were fined but no proof of such fine has been submitted. The fact that they were indulging in power theft shows the character/conduct of the appellants. (iv) The appellants purchased unfinished shirts and handkerchiefs from one GB Traders but they failed to give the address of the supplier GB Traders. GB Traders was stated to be a proprietary firm of one Gopiram, who is said to have expired in April 1999. As appellants own say, no payment could be made to GB Traders as he expired in April. Though the raw material register shows that unfinished sleeve shirts were purchased and handkerchiefs were purchased vide purchase order no. 48 dated 9-1-99 and purchase document no. 47 dated 9-1-99, the appellants could not produce the purchase documents which has been mentioned by them in their own Form IV register. (v) Though GB Traders have carried on the job work at....
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.... not establish that the goods have not been over-valued when totality of circumstances speak otherwise. In those cases also, the goods were already exported and no sample was available but even then over-valuation was established on the basis of live consignment detected later. Normally, a detection of over-valuation in a live consignment does not ipso facto mean that the earlier consignment must have also been over-valued. But looking in the totality of the circumstances, the Tribunal held them to be over-valued. The facts of the present case may not be identical but looking in the totality of the circumstances and preponderance of evidence, the charge of over-valuation has to be upheld and I accordingly uphold the findings of the Commissioner including that on extent of over-valuation and limiting the DEEP benefits to the value declared to Dubai customs. 48. As regards imposition of redemption fine of Rs. 37,50,000/-, I hold that since the goods were never available for confiscation nor seized, the redemption fine cannot be imposed as has been held by the Punjab & Haryana High Court in the case of Raja Impex, 2008 (229) E.L.T. 185 (P&H). 49. As regards penalty imposed on Vi....
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....sp; Sd/- M.V. Ravindran &n....
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....n that - "There is a strong belief that the money may not have been received through legal routes. I do not deny these possibilities". Ld. Advocate Shri Hari Shankar strongly contended that the use of above expression by learned Member (Technical) clearly reflects to one fact, that there is no cogent evidence on record so as to prove the allegation and the order stands passed by said Member against the appellant, on the basis of assumptions and presumptions. He submits, that the proceedings under the Customs Act are quasi criminal proceedings, the standard of proofs required to be produced by the Revenue, needs to be on the higher side and the matter cannot be decided on the preponderance of probabilities. He submitted that learned Member (Judicial) has taken into consideration the entire evidence on record and has discussed the same in detail examining each and every evidence produced by the Revenue. 56. I find that learned Member (Technical) has disagreed with the learned Member (Judicial) by referring to two set of facts. As regards the appellant's submission that the goods were examined by the Customs and Central Excise officers, who prepared the examination report without i....
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.... apparent even to the naked eye and does not need any handwriting expert opinion), I also note that the format of the two invoices is also different. This only takes us to the issue that either of the two invoices is correct. The question is which one. The appellants have strongly contested that the importer at Dubai had further sold the goods to a third party who had filed the import documents with the Customs authorities at Dubai and they are not in a position to explain the filing of such lower value invoices by the buyer. It may be a case where buyers at Dubai has sought to file the fabricated lesser value documents so as to evade duties arid avail the benefit from Dubai Customs. 58. I find that apart from the above evidence, all the other evidences on records, which are in the nature of examination report by the officers and receipt of full remittance by the appellant are tilting the weight of evidence in favour of the appellants. Learned JCDR fairly admitted that the evidence available on record does not prove Revenue's case beyond reasonable doubts but submits that the same can be decided on the basis of preponderance of probabilities. Though, it is true that there is no ....
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....rietor of the exporting firm, clinching the disputed issue in favour of the Revenue, the entire evidence on the record is in the nature of surmises and conjectures and may not be expected of reasonable prudent man's behaviour but cannot take the place of proof. There being no proof beyond the reasonable doubt in the present case, I am of the view that the balance of probability is more readily tilted against the Revenue. 60. In view of the above discussion, I agree with the learned Member (Judicial) that all the appeals are required to be allowed. The file is sent back to the original Bench to record the final order. &nbs....
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....nbsp; Sd/- Ashok Jindal &nb....