Customs, Excise and Gold Tribunal - Mumbai
M.C. Desai And Anr. vs Collector Of Customs on 4 July, 1987
Equivalent citations: 1988(34)ELT277(TRI-MUMBAI)
ORDER K.S. Dilipsinhji, Member (T)
1. These four Revision applications to the Central Government under old Section 131(a) and (b) of the Customs Act have been transferred to the Tribunal in terms of Section 131-B ibid and these are to be treated as appeals to the Tribunal. These four appeals are filed by two appellants, Shri M.C. Desai and M/s. K. Hargovinddas & Co. against the two orders, viz., order-in-revision No. 2191-R, dated 18.12.1980 F.No. 389/13/78-Cus.-2-A and Order No. 2243A-2244A of 1980 dated 18.12.1980 F.No. 381/75-76/78-Cus. A passed by the Central Board of Excise and Customs under old sections 130 and 128 respectively of the Customs Act. Since these appeals arise out of the same order No. SG-108/73-A/S/10-112/76 LS1IB dated 4.3.1978 passed by the Additional Collector of Customs (P) Bombay and since these appeals involve common facts and law points, these appeals were heard together at the request of the learned Advocate Shri S.D. Nankani and are being disposed of by this common order.
2. The brief facts of the case are that 21 cases declared to contain seconds and fents of fabrics and Velveteens, Mohair and art silk mixed velveteen under two B/Es-1530/49 dated 6.3.1973 per s.s. Vishva Vir for 18 cases and B/E-236/126, dated 29.5.1973 per s.s. Hazelmoor for 3 cases, were imported in the name of M/s. K. Hargovinddas & Co. The goods were shipped from United Kingdom. On examination of the goods between 18.7.1973 to 22.9.1973 it transpired that the goods did not conform to the declared description of fabrics in the B/Es but were found to be other varieties of Synthetic fabrics in running lengths, as mentioned in para 3 of the Additional Collector's order. Thus the description of the goods was misdeclared in the relative B/Es. These two consignments were imported in the name of M/s. K. Hargovinddas & Co. against the import licences No. PU-263803, dated 15.6.1971 and PU-2639824, dated 20.9.1971 in their name. The Custom House conducted investigations which seemed to reveal that these two licences were purchased/acquired by M/s. Tulsidas V. Patel for a premium from M/s. Hargovinddas & Co. The investigations further disclosed misdeclaration in the value of the imported goods resulting in an attempt at evading Customs duty, amounting to Rs. 1,37,500/-. Accordingly, show cause notice was issued to various persons and the Additional Collector, after holding an enquiry, passed the order dated 4.3.1978 confiscating the consignments absolutely Under Section 111(d)(l)(m) of the Customs Act and imposing penalty of Rs. 1 lakh Under Section 112 of the Customs Act on Shri Mansukhlal C. Desai. In the aforesaid order the Additional Collector held that the importation of the goods was made by M/s. K. Hargovinddas & Co. which was the proprietory concern of Smt. Kamala M. Desai wife of Shri M.C. Desai, and that Shri M.C. Desai had ordered the goods from U.K. and had attempted to clear them under the licences which were not valid to cover the imports. Against this order of the imposition of penalty of Rs. 1 lakh,, Shri Mansukhlal C. Desai filed an appeal under old Section 128 of the Customs Act to the Board which was rejected by the Board in their order No. 2243-A - 2244-A of 1980, dated 18.12.1980. Hence the Revision application to the Government of India which is to be treated as an appeal to the Tribunal which has been registered under No. 454/1981. M/s. K. Hargovinddas & Co. also filed a petition to the Government of India against the same order of the Board which has been transferred to the Tribunal and registered under No. 412/81.
3. However, the Board, under powers vested in them under old Section 130 of the Customs Act proposed review of the order No. SG-108/73A, dated 4.3.1978 passed by the Additional Collector of Customs, Bombay and after due compliance with the procedures, passed the order NO.2191-R of 1980, dated 18.12.1980. In this order the Board confirmed the Additional Collector's order of confiscation of the two consignments Under Section 111(d)(l)(m) of the Customs Act and levy of penalty of Rs. 1 lakh on Shri M.C. Desai. In addition, the Board levied a penalty of Rs. 2 lakhs Under Section 112 of the Customs Act on M/s. T.V. Pate). In other words, in the order No. 2191-R, dated 18.12.1980 the Board did not take any additional penal action against the present appellants.
4. On behalf of the appellants Shri Nankani first briefly dealt with the facts of the case. Thereupon the Bench questioned Shri Nankani about the scope of the appeals filed by M/s. Hargovinddas & Co. Shri Nankani submitted that M/s. K. Hargovinddas & Co. were the licence holder and hence they had felt aggrieved by the Additional Collector's order of confiscation of the goods and hence they ultimately approached Government of India. So far as the appeals of Shri M.C. Desai were concerned, the same were against the imposition of penalty of Rs. 1 lakh on him and as against this amount Shri Desai had deposited a sum of Rs. 60,000/-. Shri Nankani added that though the Board levied the penalty of Rs. 2 lakhs on M/s. T.V. Patel under their order No. 2191-R, dated 18.12.1980 the Government of India in their order on Revision application, set aside the Board's order of penalty of Rs. 2 lakhs on M/s. T.V. Patel and exonerated them.
5. Shri Nankani submitted that Shri M.C. Desai had challenged the levy of penalty with regard to the confiscation of the goods Under Section 11 l(m) of the Customs Act. He submitted that as per the Additional Collector's findings M/s. K. Hargovinddas & Co. had sold their import licences to M/s. T.V. Patel and in the criminal proceedings before the Magistrate, Shri M.C. Desai was made the prosecution witness against M/s. T.V. Patel. Shri Nankani contended that when the Additional Collector held that M/s. Hargovinddas & Co. had sold the import licences, no penalty should have been levied on Shri Desai. In this behalf he drew our attention to para 12 of the Board's order No. 2191-R, dated 18.12.1980. Shri Nankani further contended that one of the pieces of evidence relied upon by the Additional Collector was the statement of Shri Subhash K. Patel which was recorded by Shri K. Srinivasan in London. This statement was not admissible in evidence and in support of his contentions Shri Nankani drew our attention to para 16 of the Board's order. Shri Nankani further submitted that the photostat copy of the statement was not admissible in evidence. He further argued that Under Section 139 of the Customs Act no presumption can be drawn on the basis of this statement, as the statement was not a document within the meaning of the aforesaid Section. Shri Nankani further contended that in the Review notice issued by the Board under old Section 130 of the Customs Act, the Board had proposed enhancement of penalty of Rs. 1 lakh levied on Shri M.C. Desai. The show cause notice alleged sale of licences by M/s. Hargovinddas & Co. Against this allegation the stand taken up by Shri M.C. Desai and M/s. K. Hargovinddas & Co. was just the same, ,viz., that they had sold the liecnces and were not concerned with the importation of the two consignments. They were, therefore, not concerned in the importation of the goods and no penalty could be levied on them. Referring to paras 27 and 28 of the Board's order Shri Nankani submitted that the Board had found that M/s. K. Hargovinddas & Co. had sold the licences to M/s. T.V. Patel who had actually imported the goods. Therefore, the Board's order of dropping the proceedings contemplated Under Section 111(d) was not correct so far as the sale of licences was concerned. In case only the goods had been sold, then there would have been no justification for the importation by M/s. K. Hargovinddas & Co. of importing goods of super quality and higher value for the benefit of M/s. T.V. Patel. In all probability, the difference in the declared value and the ascertained value would have been paid to the foreign supplier by M/s. T.V. Patel in an illegal manner. M/s. T.V. Patel's interest in the importation was not on account of purchase of the goods but on account of purchase of licences. Shri Nankani submitted that this had been fully brought out in the memo of appeal in the case No. 413/81. He also referred to the prayers of M/s. Hargovinddas & Co. in that appeal. As regard the appeals of Shri M.C. Desai, No. 411/81 and No. 454/81 Shri Nankani prayed that the penalty should be reduced compared to the gravity of the offence including the value of the goods.
6. On behalf of the Respondent Shri G.D. Pal also first explained briefly the facts of the two imports as contained in the Additional Collector's order dated 4.3.1978. Shri Pal stated that in this case the investigations were started on the basis of information received by the Custom House regarding the unauthorised import of velveteen fabrics. Referring, to the Additional. Collector's order, Shri Pal contended that the import licences were in the name of M/s. Hargovinddas & Co. and the two B/Es were also filed in their name and that both the consignments bore their initials as shipping marks on the bales. In the relative B/Es the goods were described as velveteen fents and seconds but actual examination disclosed that the goods were not fents or seconds, but were good fabrics in running length. Shri Pal drew our attention to the description of the goods as ascertained on examination as mentioned in para 3 of the Additional Collector's order dated 4.3.1978. Shri Pal .further submitted that the goods were tested in the Custom House Laboratory and their composition was also found to be that contained in para 3 of the Additional Collector's order. He further observed that the test report had not been challenged. The Additional Collector inter alia held that the charge of misdeclaration attracting penal provisions of Section 111(m) had been proved. The original charge was both with regard to the quality and value of the goods and this had not been disputed. The two import licences submitted for clearance of the goods were issued in the name of M/s. K. Hargovinddas & Co. and B/Es. had also been filed in their name. Similarly, they had given the necessary declaration in the B/E in their own name. Besides, the letter of credit was also opened by M/s. K. Hargovinddas & Co. Shri Pal further contended that this was a case of deliberate misdeclaration and in this behalf he drew our attention to para 7 of the Additional Collector's order which brought out the fact that two sets of invoices had been prepared. In case M/s. K. Hargovinddas & Co. had sold the licences, they could have abandoned the goods. Referring to Shri Subhash K. Patel's statement dated 6.2.1974, Shri Pal contended that even if the statement were to be discarded the fact remained that the goods were shipped to M/s. K. Hargovinddas & Co. and the B/Es were filed in their name. The Additional Collector held that the licences in the name of M/s. K. Hargovinddas & Co. had not been sold to M/s. T.V. Patel. But still the appellant Shri M.C. Desai's liability to panel action was upheld by the Additional Collector and the Board. The penalty of Rs. 1 lakh was not harsh in the circumstances of the case. Similarly, the order of confiscation was also correct. Shri Pal submitted that there was no ground for modifying the Additional Collector's and Board's orders of penalty.
7. In reply Shri Nankani submitted that as per para 28 of Board's findings in their order No. 2191-R, dated 18.12.1980 the Board had held that there was a sale of licences by M/s. K. Hargovinddas & Co. to M/s. T.V. Patel. As per the statement of Shri Subhash Patel the amount of difference in the declared and ascertained cif values had been debited to the account of M/s. T.V. Patel. The goods had, therefore, been imported by M/s. T. V. Patel and not by Shri. M. C. Desai or M/s. K. Hargovindas & Co. The shipping marks had to have relationship with the licencee's "name but this would not alter the facts of import. Shri Nankani, therefore, prayed for relief.
8. We have examined the submissions made on both the sides. Taking up both the appeals of Shri M. C. Desai, first we' find that they are against the Addl. Collector's order of levy of penalty of Rs. 1 lakh on him Under Section 112 of the Customs Act. The Addl. Collector held that Shri Desai was concerned in the misdeclaration of the imported consignments which he ordered to be confiscated inter-alia Under Section 111(m) of the Customs Act. Accordingly he held that Shri Desai was liable to penalty Under Section 112 of the Customs Act and he levied a penalty of Rs. 1 lakh on him. On behalf of the appellant, Shri Nankani has mainly contended that the import licences belonging to M/s. K. Hargovinddas & Co. had been sold by them to M/s. T. V. Patel and importations had been made by that firm. Shri Nankani, therefore, contended that Shri M. C. Desai was not concerned with the importation of the goods against these licences and therefore no penalty should be levied on them. However, in case this plea is not accepted he prayed that a token penalty should suffice. Having been responsible for the sale of licences, Shri Desai had to help the importers M/s. T. V. Patel with the presentation of the Customs documents and the clearance of the consignments through the Customs. Shri Nankani has argued that Shri Desai's role was quite subsidiary in the matter and therefore the high penalty of Rs. 1 lakh is out of all proportion to the part played by. Examining the contentions of Shri Nankani it is seen that Shri Desai has played a very prominent and important role in the import of the two consignments which had been confiscated and that it was not an incidental part any way of helping M/s. T. V. Patel with the clearance of the goods. Shri M.C. Desai, as per the Collector's findings, was the power of attorney holder of the firm M/s. K. Hargovinddas & Co. which was owned by Shri Desai's wife, Smt. Kamala M. Desai. The licences against which the two consignments were imported were issued in the name of M/s. K. Hargovinddas & Co. These were sold by Shri M. C. Desai to M/s. T. V. Patel through a person named Shri Hirubhai who was known to Shri Desai. Thereafter Shri Desai has been concerned with the imports of the goods like opening of the Letter of Credit, retiring the import documents, filing of B/Es. and arranging for the examination and clearance of the goods. But his efforts were frustrated by the Customs authorities who detected the misdeclaration in the quality and value of the imported goods which resulted in their confiscation ultimately. These facts would show that Shri Desai had played an active role in the import of the goods and also in their misdeclaration in the B/Es. Accordingly the goods were correctly confiscated also Under Section 111(m) of the Customs Act. This fact has been challenged by Shri Mansukhlal C. Desai, but we find no justification in the plea of the Advocate that Shri Desai should be exonerated from the charge Under Section 112 of the Customs Act as we find that he is deeply involved in the import of the two consignments. The next plea of Shri Nankani is for relief in the amount of penalty levied on Shri Desai. In this behalf we find that but for Shri Desai's role in the import of goods, the licence holder M/s. K. Hargovinddas & Co. or M/s. T. V. Patel would not have been able to import the two consignments. Considering the part played by Shri Desai and also the value of the two consignments the penalty of Rs. 1 lakh levied by the Addl. Collector on Shri Desai is neither harsh nor excessive. Accordingly we confirm the Additional Collector's and the Board's order for levy of penalty of Rs. 1 lakh on Shri M. C. Desai and reject his appeal No. CD(T) (Bom)A.No. 454/81- So far as his second appeal No. CD(T)(Bom)A.No. 411/81 is concerned, it is purported to be against the Board's Order No. 2191-R dated 18.12.1980. Under their order, the Board refrained from taking any penal action against Shri M. C. Desai or enhancing the penalty imposed on him. Therefore there was no reason for Shri Desai to feel aggrieved with such a decision. The appeal No. 411/81 is, therefore, not competent and we dismiss it accordingly.
9. So far as the two appeals of M/s. Hargovinddas & Co. are concerned, the prayers in both these appeals are identical. Inter-alia these prayers are that the Board's orders No. 2191-R., dated 18.12.1980 and No. 2243A - 2244A of 1980, dated 18.2.1980 be set aside so far as they relate to dropping of the proceedings regarding the sale of licences and that the appellants be exonerated from the charge of misdeclaration Under Section 111(m) of the Customs Act and consequently the penalty of Rs. 1 lakh imposed on Shri M. C. Desai should be set aside. Examining this request, it is seen that in answer to the show cause notice issued by the Custom House asking the appellants M/s. K. Hargovinddas & Co. to show cause to the Addl. Collector of Customs as to why the two consignments imported in their name should not be confiscated, the appellants replied that they were not concerned with the goods under seizure as the same did not belong to them. They added that they did not have anything further to say except what was contained in their statements which had been earlier recorded. They did not ask for the personal hearing before the case was adjudicated by the Addl. Collector. They further prayed for a lenient view so far as action Under Section 112 of the Customs Act was concerned. After holding the due enquiry the Addl. Collector confiscated the goods but did not levy any penalty on M/s. K. Hargovinddas & Co. In the Board's review order No. 2191-R, dated 18.12.1980 the Board did not adjudge any liability against M/s. K. Gargovinddas & Co. Therefore they had no reason to approach the Govt. of India by way of Revision petition under old Section 131 of the Customs Act, as they had disowned the goods and no penalty was imposed on them. This observation would be more valid when it is considered that Shri M. C. Desai had filed separate Revision Application to the Government against the penalty of Rs. 1 lakh levied on him. As held by us above the Addl. Collector's order for levying penalty of Rs. 1 lakh on Shri M. C. Desai was quite in order and it does not call for any modification. Accordingly we have ordered rejection of the two appeals filed by Shri M. C. Desai. In view of the foregoing circumstances, the prayers of M/s. K. Hargovinddas & Co. in the present two appeals are misplaced and not tenable, and their two appeals themselves are incompetent as they are not aggrieved persons. Accordingly we reject both these appeals.