Custom, Excise & Service Tax Tribunal
Kunal Travel (Carg) vs C.C.E. Noida on 18 September, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
Division Bench
COURT NO. 2
Appeal No. C/665/2009-CU[DB]. C/666/2009-CU[DB], C/29/2010-CU[DB]
(Arising out of Order-in-Original No. 26/Commissioner/2009 dated 17.9.2009 passed by Commissioner of Customs & Central Excise, Noida (U.P.)
Date of hearing: 28/5/2014
Pronounced on 18.9.2014
M/s PRINCE INTERNATIONAL
Shri Gyan Chand
Kunal Travel (CARG) Appellant
Vs.
C.C.E. NOIDA Respondent
Appearance:
Present for the Appellant: Shri G.L. Rawal, Shri Rajesh Rawal Sr. Advocate and Sh.Bipin Garg, Advocate Present for the Respondent: Shri Rakesh Puri, DR Coram: Honble Mr. D.N. Panda, Judicial Member Honble Mr. Manmohan Singh, Technical Member FINAL ORDER NO 53645-53647/2014 PER: MANMOHAN SINGH Appellants M/s Prince International, Shri Gyan Chand and M/s Kunal Travels (Cargo) has come in appeal against the Order-in-Original No. 26/Commissioner/2009 dated 16/9/2009 Passed by Commissioner, Customs & Central Excise, Noida.
2. A combined order has been passed by Commissioner of Customs & Central Excise Noida. In the order Non Basmati rice weighing 824.500 MT valued at Rs.4,59,80,285.00 (FOB) loaded in 34 containers, seized under panchnama dated 04.06.09 under section 113(d) of the Customs Act, 1962 were confiscated with a option to redeem the goods on payment of redemption fine of Rs.68 lacs (Sixty eight lacs only) The option to redeem was required to be filed within thirty days from the date of receipt of the order. In addition to above a penalty of Rs.10 lacs (Ten lacs only) was on imposed M/s Prince International under section 114 (i) of the Customs Act 1962. Further, a penalty of Rs.2.5 lacs (Two lacs fifty thousand only) was also imposed upon Shri Gyan Chand, partner of M/s Prince International, under section 114AA of the Customs Act, 1962.
3. A penalty of Rs.75,000/- (Seventy five thousand only) was also imposed upon M/s Kunal Travels (Cargo) under Section 114 AA of the Customs Act 1962.
4. To appreciate the issue, brief facts are recapitulated. As per Notification No. 39 (RE-2008)/2004-09 dated 16/09/2008, as amended, issued by the director General of Foreign Trade, non basmati rice, is notified as a prohibited item for export, and not permitted to be exported. Only the Basmati Rice is permitted to be exported freely, subject to the conditions/specifications contained in the said notification.
5. Acting upon intelligence that M/s Prince International i.e. Party No. 1 was engaged in exportation of prohibited goods namely non-Basmati rice in the guise of Basmati rice, 34 containers, said to contain basmati rice, cleared for export by the exporter from CFS Albatross, and waiting for loading in ship at JNPT, Nhava Sheva Port, Mumbai, were called back for detailed examination at CFS Albatross.
6. On visual examination of the contents of the said containers by the customs officers at CFS Albatross, in presence of Party No.1, and representative of the CHA (Party No.3), it was observed that only the bags in front rows were containing basmati rice and rest of the bags in all the containers were containing non-Basmati rice. On visual inspection of the said rice grain, it was observed that the grain of rice did not conform to the specification of Basmati Rice as provided in DGFT Notification no. 39 (RE-2008)/2004-2009 dated 16.9.2008 (as amended) wherein it was stipulated that grain of rice shall be more than 7mm of length and ratio of length to breadth of the grain shall be more than 3.6. Under the reasonable belief that the exporter had fraudulently attempted to export the prohibited goods i.e. non-Basmati rice in the garb of Basmati rice, all the 34 containers were placed under seizure under Section 110 of the Customs Act, 1962 Simultaneously, three sets of representative samples were also drawn from all 34 containers and sent for testing to Shriram Institute of Industrial Research, 19, University Road, Delhi (hereinafter referred as SRI) under cover of test memo No. 39/EXP/CHALB/09 to 72/EXP/CHALB/09 all dated 04.06.09 to ascertain whether:-
(i) Grain of rice is more than 7.0mm of length and ratio of length to breadth of the grain is more than 3.6 and
(ii) Quality of rice whether was Basmati rice or not.
7. The test reports were received from SRI vide test certificate no. 000133274 to 000133300 & 000133326 to 000133332 all dated 29.06.09 reported that all the given samples except sample of test memo no. 45, conformed to the requirement of average length and length/breadth ratio as specified in the partys specification. As per report, all samples except sample covered by test memo no. 45, Agmark specifications of Basmati Rice were matching. However samples of test memo no 45, SRI did not conform to requirement of average length and length/breadth ratio as per Agmark specification.
8. Culpatory statement of Shri Gyan Chand, Partner M/s Prince International recorded under section 108 of the Customs Act dated 09.6.2009 revealed that goods loaded in the said containers were actually non-basmati rice and not basmati rice as claimed by them. It came out that the samples except sample no. 45 sent for testing to SRI were tampered with during the process in order to affect the test results. Therefore, to ascertain the actual facts, four sets of representative samples of rice from each container were again drawn by the officers in the presence of Sh. Gyan Chand partner M/s Prince International and independent witnesses. Two sets of such representative samples containing specific test memo no. were simultaneously sent to two different testing laboratories namely M/s SRI and M/s SGS, Gurgaon for testing.
Details of test Samples drawn covering container wise is as under:-
Sl.
No. Shipping Bill No. & Date Container No. Test Sample No. & date 1 105828 dt.26.03.09 MOAU 6716752 TGHU 3064650 MOAU 0666870 MOAU 0612827 73 dt.14.7.09 74 dt.14.07.09 75 dt.14.07.09 76 dt.14.07.09
2.
1052832 dt.26.03.09 MOAU 6532652 MOAU 0724051 MOAU 0515637 MOAU 0421986 77 dt.14.7.09 78 dt.14.07.09 79 dt.14.07.09 80 dt.14.07.09
3. 105283 dt.26.03.09 MOGU 2601935 MOAU 0111023 81 dt.14.7.09 82 dt.14.07.09
4. 1053033 dt.27.03.09 TGHU 0650770 GLDU 3356737 83 dt.14.7.09 84 dt.14.7.09
9. Test reports were received from SRI vide Test certificate No. 000135569 to 000135574, 000135602 to 000135608 & 000135630 to 000135650 all dated 17.07.09 in respect of samples collected form all the said container (RUD-06). All these test reports categorically confirmed that representative samples do not conform to requirement of average length & length/breadth ratio as prescribed by the DGFT Notification and is contrary to the specifications of rice, declared by the appellant No. 1&2, also it was reported that the said samples do not meet the specifications of Basmati rice as per the Agmark specification.
10. Similarly test reports received from M/s SGS, Gurgaon vide No. GUR/AG/AR/1495 to 1528/2009 dated 20.7.09 also indicated that the sample does not conform to the requirement of average length & length/breadth ratio as specified and is non-basmati.
11. The perusal of the Test Reports received from the notified testing laboratories, i.e. SRI and M/s SGS in respect of representative samples drawn from the contents of the 34 containers, containing the said products, it was conclusively proved and confirmed that the rice covered by the said shipping bills were Non-Basmati rice which was classified as a prohibited item, for export purposes.
12. Based on test reports adjudicating authority specifically concluded that the Basmati Rice having size specifications as provided in the said notification were freely exportable and in any case export of non-basmati rice was absolutely prohibited. He also observed that Section 50 of the Customs Act 1962 provided that the exporter of any good shall make entry thereof by presenting to the proper officer in the case of goods to be exported, a shipping bill/bill of export and shall subscribed to a declaration as to the truth of its content.
13. Ld.Counsel appearing for the appellant contended that the department after finding mis-handling of samples and likely involvement of certain official to defraud the Revenue, drawn 3 sets of samples and sent for testing to Shriram Institute of Industrial Research. Also samples were sent to another testing house namely, SGS, Gurgaon for testing length to breadth ratio of subject goods and quality of rice (Basmati or non-Basmati). In their subsequent report dated 17.7.2009, SIIR opined that samples do not conform the length/breadth ratio and samples do not meet the requirements of basmati rice as per Agmark specifications. Similarly, SGSs report dated 20.7.2009 opined that the samples do not conform the length/breadth ratio and samples do not meet the requirements of basmati rice as per Agmark specifications. Ld.Counsel contested that once shipping bills were permitted for export as let export order had been passed that amounted to an order of adjudication and review of said order was not permissible in law. He further submitted that the first report of SRI, New Delhi dated 29.6.2009 were in favour of the appellant except one sample. Copies of the same were not supplied to the appellants, despite repeated requests. It was further contended that the department could not go on drawing samples for testing merely because reports of those samples were in favour of the appellant. He also submitted that their request for cross examination of Shri S.K.Chib was not accepted. Appellant also raised the issue that redemption fine of Rs.68 lakhs was on higher side and required modification. Appellant contested imposition of penalty of Rs.10 lakh on M/s.Prince International and penalty of Rs.2.5 lakh imposed on Shri Gyan Chand, partner as impersonable.
14. On the other hand, ld.DR reiterated the findings as contained in the adjudication order. He also pointed out that it is clear case of suppression of facts and mis-declaration and attempt to export non basmati rice made in the guise of basmati rice contained in 34 containers. Mensrea is proved because containers have been sent to Nhava Sheva port Mumbai with the connivance of the officers and those containers were called back for detailed examination at CFS Albastross alongwith original TR. Re-examination results, details of shipping bills and containers is given in the preceding paragraphs.
15. Ld.DR pointed out that on examination of such containers in the presence of CHA representative, it was revealed that front row in their containers contained only basmati rice and also further rows in behind first row contained non basmati rice. On visual inspection of the rice, it was observed that the rice grain did not satisfy the requirement of length and length and breadth ratio as per DGFT Notification NO.39/(RE-2008)/2004-2009 dated 16.9.2008 as amended, that is, grain rice to be exported shall be more than 7 mm of length and ratio of length/breadth of the grain shall be more than 3.6 mm.
16. Manipulations were done with intent to defraud revenue and effort was made to substitute the samples with the connivance of officials. If rice would have been basmati rice, there would have been no need to tamper with sample. Thus it was pre-mediated effort to export prohibited goods i.e. non-basmati rice.
17. Heard both sides and gone through the records.
18. We find that this is the case where in the guise of basmati rice, attempt has been made to export non-basmati rice adopting a questionable modus operandi. Actually 34 containers were cleared from a port CFS Albatross. It came out that the containers were stuffed in such way that front row contained basmati rice and second row contained non-basmati rice. Samples were manipulated to gain favourable report confirming that the rice being exported was basmati rice. It was only on receipt of information and subsequent test report, questionable modus operandi of appellants, connivance of certain departmental officers as well as laboratory staff of SIIR, New Delhi came to light. Such practice was followed to defraud the revenue. Only one sample in respect of test memo no.45 failed the specification and did not conform to the requirement as laid down by DGFT Notification No. 39/(RE-2008)/2004-2009 dated 16.9.2008 as amended, that is, grain of rice to be exported shall be more than 7 mm of length and ratio of length/breadth of the grain shall be more than 3.6 mm.
19. When the containers were called back from Nhava Sheva Port, Mumbai and detailed examination was done at CFS Albatross, it was found that all the test reports were manipulated. Therefore, fresh samples were again sent to SIIR, New Delhi and SGS Gurgaon. Test report, therefore, proved that the consignments were of non-basmati rice which were prohibited to be exported by DGFT Notification No. 39/(RE-2008)/2004-2009 dated 16.9.2008 as amended. These results demolish the defence of appellants that there were mixing of consignment and some non basmati rice were wrongly loaded in the containers. There could have been force in their arguments, if out of 34 containers had there been 5 to 6 containers have been loaded under mistake. But majority of containers contained non-basmati rice. There was deliberate intention to export prohibited goods.
20. We further observe that Commissioner in her OIO No. 26 /Commissioner/2009 dated 17.9.2009 brought out that every container was loaded with 55 bags of Basmati rice and 430 bags of non basmati rice. She concluded that this could not be coincidence or mishandling of goods during loading. In fact to conceal the real identity of non-basmati rice, appellant as a part of well organized strategy kept basmati rice bags in the front row to avoid the detection of non-basmati rice during examination. She rightly disagreed with the proposition of learned Counsel that once let export order was given by the Customs Officers, the department has no right whatsoever to review their order, and the show cause notice could not be issued to them holding their contention as untenable. We also find no force in the contention of learned Counsel in this regard because fraud vitiates every solemn act. If contention of appellant is allowed, fraud shall perpetuate and non-basmati rice shall be exported out of India freely. There was no reopening of the proceeding at all when fraud surfaced, that was to be combated. Judgement of Honble High Court of Calcutta in the case of Euresion Equipments & Chemicals vs. CC-AIR 1980 Cal 188 holds that proper officers satisfaction for confiscation proceedings shall remain unaffected by the order of the proper officer permitting the clearance of goods under section 51 of the Act on the belief that goods have been improperly imported or exported.
21. In view of above, we find no force on the submissions of learned Counsel that Customs Authority were not right in recalling containers and subjecting them to retesting and unearthing smuggling racket. We fully agree with confiscation of the goods and imposition of redemption fine of Rs.68 lakhs in the circumstances of the case. This is exemplary case where higher penalty is warranted and no leniency is deserved. We do not consider it proper to interfere with order of redemption fine as it is appropriate and justified. Similarly, there is no scope for reduction of penalty of Rs.10 lakh imposed on the appellant as their modus operandi proved that they were consciously involved in the export of non-basmati rice which were prohibited goods.
22. As regards to the imposition of penalty of Rs.2.5 lakh on Shri Gyan Chand, partner of M/s. Prince International who has admitted his willful involvement in attempt to export of non-basmati rice in the guise of basmati rice, that calls for penalty on him. Considering non-basmati rice weighing 824.500 MT total value amounting to Rs.4,59,80,285.00 (FOB) rice attempted to be exported, a very high penalty was required to be imposed. However in absence of revenue being in appeal, we do not interfere to amount of penalty imposed on Shri Gyan Chand, partner M/s Prince International.
23. Similarly role of CHA was contrary to the CHALR 2004. Attempt to export non-basmati rice in the guise of Basmati rice would not have been possible without CHAs involvement. Their conduct and contradictory stand by Shri Sunil Bhatia CHA and his manager Shri Sushil Malik regarding physical verification proves their active involvement. Same CHAs name has also come in appellants other company M/s Vaibhav Overseas where similar modus operandi was noticed. We are convinced that CHA has rightly been imposed penalty. Considering amount of penalty being low but revenue not being in appeal, we do not interfere to the penalty imposed in adjudication and uphold the same.
24. In view of above, appeals filed by all the three appellants are rejected.
(Pronounced on 18.9.2014) (Manmohan Singh) (D.N. Panda) Technical Member Judicial Member k. Gupta
Appellants M/s Prince International, Shri Gyan Chand and M/s Kunal Travels (Cargo) has come in appeal against the Order-in-Original No. 26/Commissioner/2009 dated 16/9/2009 Passed by Commissioner, Customs & Central Excise, Noida.
2. A combined order has been passed by Commissioner of Customs & Central Excise Noida. In the order Non Basmati rice weighing 824.500 MT valued at Rs.4,59,80,285.00 (FOB) loaded in 34 containers, seized under panchnama dated 04.06.09 under section 113(d) of the Customs Act, 1962 were confiscated with a option to redeem the goods on payment of redemption fine of Rs.68 lacs (Sixty eight lacs only) The option to redeem was required to be filed within thirty days from the date of receipt of the order. In addition to above a penalty of Rs.10 lacs (Ten lacs only) was upon imposed M/s Prince International under section 114 (i) of the Customs Act 1962. Further, a penalty of Rs.2.5 lacs (Two lacs fifty thousand only) was also imposed upon Shri Gyan Chand, partner of M/s Prince International, under section 114AA of the Customs Act, 1962.
3. A penalty of Rs.75,000/- (Seventy five thousand only) was also imposed upon M/s Kunal Travels (Cargo) under Section 114 AA of the Customs Act 1962.
4. To appreciate the issue, brief facts are recapitulated. As per Notification No. 39 (RE-2008)/2004-09 dated 16/09/2008, as amended, issued by the director General of Foreign Trade, non basmati rice, is notified as a prohibited item for export, and not permitted to be exported. Only the Basmati Rice is permitted to be exported freely, subject to the conditions/specifications contained in the said notification.
5. Acting upon intelligence that M/s Prince International i.e. Party No. 1 was engaged in exportation of prohibited goods namely non-Basmati rice in the guise of Basmati rice, 34 containers, said to contain basmati rice, cleared for export by the exporter from CFS Albatross, and waiting for loading in ship at JNPT, Nhava Sheva Port, Mumbai, were called back for detailed examination at CFS Albatross.
6. On visual examination of the contents of the said containers by the customs officers at CFS Albatross, in presence of Party No.1, and representative of the CHA (Party No.3), it was observed that only the bags in front rows were containing basmati rice and rest of the bags in all the containers were containing non-Basmati rice. On visual inspection of the said rice grain, it was observed that the grain of rice did not conform to the specification of Basmati Rice as provided in DGFT Notification no. 39 (RE-2008)/2004-2009 dated 16.9.2008 (as amended) wherein it was stipulated that grain of rice shall be more than 7mm of length and ratio of length to breadth of the grain shall be more than 3.6. Under the reasonable belief that the exporter had fraudulently attempted to export the prohibited goods i.e. non-Basmati rice in the garb of Basmati rice, all the 34 containers were placed under seizure under Section 110 of the Customs Act, 1962 Simultaneously, three sets of representative samples were also drawn from all 34 containers and sent for testing to Shriram Institute of Industrial Research, 19, University Road, Delhi (hereinafter referred as SRI) under cover of test memo No. 39/EXP/CHALB/09 to 72/EXP/CHALB/09 all dated 04.06.09 to ascertain whether:-
(iii) Grain of rice is more than 7.0mm of length and ratio of length to breadth of the grain is more than 3.6 and
(iv) Quality of rice whether was Basmati rice or not.
7. The test reports were received from SRI vide test certificate no. 000133274 to 000133300 & 000133326 to 000133332 all dated 29.06.09 reported that all the given samples except sample of test memo no. 45, conformed to the requirement of average length and length/breadth ratio as specified in the partys specification. As per report, all samples except sample covered by test memo no. 45, Agmark specifications of Basmati Rice were matching. However samples of test memo no 45, SRI did not conform to requirement of average length and length/breadth ratio as per Agmark specification.
8. Culpatory statement of Shri Gyan Chand, Partner M/s Prince International recorded under section 108 of the Customs Act dated 09.6.2009 that goods loaded in the said containers were actually non-basmati rice and not basmati rice as claimed by them,, it came out that the samples except sample no. 45 sent for testing to SRI were tampered with during the process in order to affect the test results. Therefore, to ascertain the actual facts, four sets of representative samples of rice from each container were again drawn by the officers in the presence of Sh. Gyan Chand partner M/s Prince International and independent witnesses. Two sets of such representative samples containing specific test memo no. were simultaneously sent to two different testing laboratories namely M/s SRI and M/s SGS, Gurgaon for testing.
Details of test Samples drawn covering container wise is as under:-
Sl.
No. Shipping Bill No. & Date Container No. Test Sample No. & date 1 105828 dt.26.03.09 MOAU 6716752 TGHU 3064650 MOAU 0666870 MOAU 0612827 73 dt.14.7.09 74 dt.14.07.09 75 dt.14.07.09 76 dt.14.07.09
2.
1052832 dt.26.03.09 MOAU 6532652 MOAU 0724051 MOAU 0515637 MOAU 0421986 77 dt.14.7.09 78 dt.14.07.09 79 dt.14.07.09 80 dt.14.07.09
3. 105283 dt.26.03.09 MOGU 2601935 MOAU 0111023 81 dt.14.7.09 82 dt.14.07.09
4. 1053033 dt.27.03.09 TGHU 0650770 GLDU 3356737 83 dt.14.7.09 84 dt.14.7.09
9. Test reports were received from SRI vide Test certificate No. 000135569 to 000135574, 000135602 to 000135608 & 000135630 to 000135650 all dated 17.07.09 in respect of samples collected form all the said container (RUD-06). All these test reports categorically confirmed that representative samples do not conform to requirement of average length & length/breadth ratio as prescribed by the DGFT Notification and is contrary to the specifications of rice, declared by the appellant No. 1&2, also it was reported that the said samples do not meet the specifications of Basmati rice as per the Agmark specification.
10. Similarly test reports received from M/s SGS, Gurgaon vide No. GUR/AG/AR/1495 to 1528/2009 dated 20.7.09 also indicated that the sample does not conform to the requirement of average length & length/breadth ratio as specified and is non-basmati.
11. Adjudicating authority specifically concluded that the Basmati. Rice having size specifications as provided in the said notification were freely exportable and in any case export of non-basmati rice was absolutely prohibited. He also observed that Section 50 of the Customs Act 1962 provided that the exporter of any good shall make entry thereof by presenting to the proper officer in the case of goods to be exported, a shipping bill/bill of export and shall subscribed to a declaration as to the truth of its content. The perusal of the Test Reports received from the notified testing laboratories, i.e. SRI and M/s SGS in respect of representative samples drawn from the contents of the 34 containers, containing the said products, it was conclusively proved and confirmed that the rice covered by the said shipping bills were Non-Basmati rice which was classified as a prohibited item, for export purposes.
12. Ld.Counsel appearing for the appellant contended that the department after finding mis-handling of samples and likely involvement of certain official to defraud the Revenue, drawn 3 sets of samples were and sent for testing to Shriram Institute of Industrial Research and also samples were sent to another testing house namely, SGS, Gurgaon for testing length to breadth ratio of subject goods and quality of rice (Basmati or non-Basmati). In their subsequent report dated 17.7.2009, SIIR opined that samples do not conform the length/breadth ratio and samples do not meet the requirements of basmati rice as per Agmark specifications. Similarly, SGSs report dated 20.7.2009 opined that the samples do not conform the length/breadth ratio and samples do not meet the requirements of basmati rice as per Agmark specifications. Ld.Counsel contested that once shipping bills were permitted for export as let export order had been passed that amounted to an order of adjudication and review of said order was not permissible in law. He further submitted that the first report of SRI, New Delhi dated 29.6.2009 were in favour of the appellant except one sample. Copies of the same were not supplied to the appellants, despite repeated requests. It was further contended that the department could not go on drawing samples for testing merely because reports of those samples were in favour of the appellant. He also submitted that their request for cross examination of Shri S.K.Chib was not accepted. Appellant also raised the issue that redemption fine of Rs.68 lakhs was on higher side and required modification. Appellant contested imposition of penalty of Rs.10 lakh on M/s.Prince International and penalty of Rs.2.5 lakh imposed on Shri Gyan Chand, partner.
13. On the other hand, ld.DR reiterated the findings as contained in the adjudication order. He also pointed out that it is clear case of suppression of facts and mis-declaration as attempt to export of non basmati rice has been made in the guise of basmati rice contained in 34 containers. Mensrea is proved because containers have been sent to Nhava Sheva port Mumbai with the connivance of the officers and those containers were called back for detailed examination at CFS Albastross alongwith original TR. Re-examination results, details of shipping bills and containers is given in the preceeding paragraphs.
14. Ld.DR pointed out that on examination of such containers in the presence of CHA representative, it was revealed that front row in their contains contained only basmati rice and also further rows in behind first raw contained non basmati rice. On visual inspection of the rice, it was observed that the rice grain did not satisfy the requirement of length/length and breadth ratio as per DGFT Notification NO.39/(RE-2008)/2004-2009 dated 16.9.2008 as amended, that is, grain rice to be exported shall be more than 7 mm of length and ratio of length/breadth of the grain shall be more than 3.6 mm.
15. Manipulations with intent to defraud revenue, effort has been made to substitute the samples with the connivance of officials. If rice would have been basmati rice, there would have been no need to tamper with sample. Thus it was pre-mediated effort to export prohibited goods i.e. non-basmati rice.
16. Heard both sides and gone through the records.
17. We find that this is case where in the guise of basmasti rice, attempt has been made to export non-basmati rice by adopting modus operandi. Actually 34 containers were got cleared from a port CFS Albatross. Though as per stated facts, it has clearly come out that the containers were stuffed in such way that front row contained basmati rice and second row contained non-basmati rice. Samples were drawn in deliberate way which resulted in manipulation to gain favourable report confirming that the rice being exported were non-basmati rice. It was only receipt on information that a modus operandi has been adopted with connivance of certain officers as well as laboratory of SIIR, New Delhi to defraud the revenue by faking the draws of samples. Favourable. Test Reports were obtained from the SIIR and also Agmark specification for basmati rice. Only one sample in respect of test memo no.45 failed the specification and did not conform to the requirement as laid down by DGFT Notification No. 39/(RE-2008)/2004-2009 dated 16.9.2008 as amended, that is, grain of rice to be exported shall be more than 7 mm of length and ratio of length/breadth of the grain shall be more than 3.6 mm. When the containers called back from Nhava Sheva Port, Mumbai, were taken up for detailed examination at CFS Albatross, it was found that all the test reports were manipulated as fresh sample which were drawn and sent to SIIR, New Delhi and SGS Gurgaon clearly indicated that consignments were of non-basmati rice which were prohibited by DGFT Notification No. 39/(RE-2008)/2004-2009 dated 16.9.2008 as amended. Once these results came out, it clearly demolished the whole defense argument that there were mixing of consignment and some non basmati rice were wrongly loaded in the containers. There could have been force in their arguments, if out of 34 containers if 5 or 6 containers would have manifested this type of mistake. But however, majority of containers were found to be non-basmati rice showing clear intention to export prohibited goods. Further modus operandi manifested from the test report, received from SIIR vide Test certificate No.000135569 to 000135574, 0001355602 to 0001355608 & 0001355630 to 000135650 all dated 17.07.09 in respect of samples collected from all the said containers which categorically confirmed that representative samples did not conform to the requirement of average length & length/breadth ratio as prescribed by the DGFT Notification. That was contrary to the specifications of rice, declared by the Party No.1 & 2, also samples did not meet the specifications of Basmati rice as per the Agmark specifications. Similarly test reports received from M/s.SGS, Gurgaon vide No.GUR/AG/ASR/1495 to 1528/2009 dated 20.07.09 also indicated that the sample did not conform to the requirement of average length and length/breadth ratio as specified for basmati rice.
18. The Commissioner in her OIO No. 26/Commissioner/2009 dated 17.9.2009 brought out that every container is loaded with 55 bags of Basmati rice and 430 bags of non basmati rice. She concluded that this could not be coincidence or mishandling of goods during loading. In fact to conceal the real identity of non-basmati rice, appellant as a part of well organized strategy kept basmati rice bags in the front row to avoid the detection of non-basmati rice during examination. She rightly disagreed with proposal of learned Counsel that once let export order was given by the Customs Officers, the department has no right whatsoever to review their order, and the show cause notice could not be issued to them holding their contention as untenable. We also find no force in the contention of learned Counsel in this regard. If their views were to be upheld, then the appellant by indulging in manipulation and conspiracy with the officers could lead to smuggling of non-basmati rice out of India taking the defence that the proceedings could not be opened. We agree that any attempt to export goods of prohibited nature under section 51 is not a bar on penal proceeding under section 114.
19. Commissioner has rightly relied upon the judgement of Honble High Court in the case of Euresion Equipments & Chemicals vs. CC-AIR 1980 Cal 188 wherein Honble High Court has held that such proper officers satisfaction for confiscation proceedings shall remain unaffected by the order of the proper officer permitting the clearance of goods under section 51 of the Act belief that goods have been improperly imported or exported and such belief being in relation to the goods in rem, it will not be correct to read in the orders under section 47 of section 51 of the Act any inhibition upon the jurisdiction or the proper officer to act under section 110, 111 and 113 of the Act.
20. In view of above, we find no force in the submissions of learned Counsel that Customs were not right in their action of recalling containers subjecting them to retesting and unearthing smuggling racket. We fully agree with findings of the Commissioner relating to confiscation of the goods and imposition of redemption fine of Rs.68 lakhs in the circumstance and modus operandi explained as above, this is exemplary case where higher penalty is warranted and no leniency could be considered. We are unable to interfere with order of Commissioner to reduce redemption fine as it is appropriate and justified. Similarly, there is no scope for reduction of penalty of Rs.10 lakh imposed on the appellant as their conduct clearly shown that they were consciously involved in the export of non-basmati rice probated goods, the modus operandi of which has been discussed in the proceeding paragraphs. As regards to the imposition of penalty of Rs.2.5 lakh on Shri Gyan Chand, partner of M/s. Prince International who has admitted his knowledge about willful involvement in attempt to export of non-basmati rice in the guise of basmati rice. Considering non-basmati rice weighing 824.500 MT total value amounting to Rs.4,59,80,285.00 (FOB) rice attempted to be exported, a very high penalty was required to be imposed. However in absence of revenue being in appeal, we do not interfere in amount of penalty imposed by the Commissioner on Shri Gyan Chand, partner M/s Prince International. Such attempt would not have been possible without his knowledge and active involvement.
(Pronounced on.............................)
(Manmohan Singh) (D.N. Panda)
Technical Member Judicial Member
k. Gupta
Misc. Para
Details of test Samples drawn covering container wise is as under:-
Sl.
No.
Shipping Bill No. & Date
Container No.
Test Sample No. & date
1
105828 dt.26.03.09
MOAU 6716752
TGHU 3064650
MOAU 0666870
MOAU 0612827
73 dt.14.7.09
74 dt.14.07.09
75 dt.14.07.09
76 dt.14.07.09
2.
1052832 dt.26.03.09
MOAU 6532652
MOAU 0724051
MOAU 0515637
MOAU 0421986
77 dt.14.7.09
78 dt.14.07.09
79 dt.14.07.09
80 dt.14.07.09
3.
105283 dt.26.03.09
MOGU 2601935
MOAU 0111023
81 dt.14.7.09
82 dt.14.07.09
4.
1053033 dt.27.03.09
TGHU 0650770
GLDU 3356737
83 dt.14.7.09
84 dt.14.7.09
Test reports were received from SRI vide Test certificate No. 000135569 to 000135574, 000135602 to 000135608 & 000135630 to 000135650 all dated 17.07.09 in respect of samples collected form all the said container (RUD-06). All these test reports categorically confirmed that representative samples do not conform to requirement of average length & length/breadth ratio as prescribed by the DGFT Notification and is contrary to the specifications of rice, declared by the appellant No. 1&2, also it was reported that the said samples do not meet the specifications of Basmati rice as per the Agmark specification.
Similarly test reports received from M/s SGS, Gurgaon vide No. GUR/AG/AR/1495 to 1528/2009 dated 20.7.09 also indicated that the sample does not conform to the requirement of average length & length/breadth ratio as specified and is non-basmati.
9. Adjudicating authority specifically concluded that the Basmati. Rice having size specifications as provided in the said notification were freely exportable and in any case export of non-basmati rice was absolutely prohibited. He also observed that Section 50 of the Customs Act 1962 provided that the exporter of any good shall make entry thereof by presenting to the proper officer in the case of goods to be exported, a shipping bill/bill of export and shall subscribed to a declaration as to the truth of its content. The perusal of the Test Reports received from the notified testing laboratories, i.e. SRI and M/s SGS in respect of representative samples drawn from the contents of the 34 containers, containing the said products, it was conclusively proved and confirmed that the rice covered by the said shipping bills were Non-Basmati rice which was classified as a prohibited item, for export purposes.
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