Customs, Excise and Gold Tribunal - Mumbai
Commissioner Of Customs (Ep) vs Nitco Tiles Ltd. on 28 January, 2004
Equivalent citations: 2004(177)ELT505(TRI-MUMBAI)
ORDER C. Satapathy, Member (T)
1. None appeared for the respondents. There is also no request for adjournment. Heard Shri S.S. Bhagat, learned S.D.R. for the Department. The impugned order passed by the Commissioner of Customs (EP), Mumbai imposing redemption fine of Rs. 1 Lakh in each case and penalty of Rs. 10,000/- in each case was reviewed by the Board and the present appeal has been filed in pursuance of Board's Review order N0.153-R/ 2001 dtd. 26/07/2001.
2. It is seen that the Adjudicating Commissioner has recorded the following in the finding portion of his order:-
"On 14/7/2000 Shri Vivek Talwar, Director of M/s Nitco Tiles Ltd. attended the personal hearing. He stated that exports under the two S/Bills were being made towards fulfillment of export obligation against EPCG Licence No. 01500322/1/13/10/1/01 dt. 21/3/96 and that this fact was indicated on the S/Bills themselves. He also admitted that the declared value of US$ 650Pper Sq.mtr. was very high and frankly conceded that the market value would not be more than US$ 100 to US$ 150 per Sq.mtr. The officers however have indicated that the market value may be around US$ 30 to US$ 70 per Sq.mtr. Shri Vivek Talwar, Director of M/s Nitco Tiles Ltd. has further stated at the time of personal hearing that the goods were being exported to Dubai at 90 days credit from Bill of Lading date. His plea was that in case the value appeared to be high to the department, he may be allowed to take the goods back to town. It was offered to him that if towards of export obligation a realistic value was given whether he would like to export the goods. He submitted that he would not like that and the goods may be allowed to be taken back to town only. He also stated that the goods have already incurred demurrage and container detention charges approx. to the tune of Rs. 1 to 1.5 lakhs. I have carefully considered the records of the case and the submissions made by Shri Vivek Talwar at the time of personal hearing. In respect of both the S/Bills, the value of the goods has been declared as US$ 650 per Sq. mtr. which is extremely high, since the real value in the market of these goods is estimated to be not more than US$ 30 to US$ 70 per Sq.mtr. Even Shri Talwar conceded that the value would not be more than US$ 100 to US$ 150 per Sq. mtr. This shows that the exporter has attempted to the export goods at this inflated value primarily for the purpose of having their export obligation under the EPCG licence dtd. 21.3.96 fulfilled. The export of goods at such a highly inflated value is in contravention of Rules 11 and 14 of the Foreign Trade (Regulation) Rules 1993. Rule 11 ibid provides that an exporter shall state the correct value of the goods and Rule 14 ibid prohibits an exporter from employing a fraudulent practice while exporting goods. In respect of export of goods, where rules 11 and 14 of Foreign Trade (Regulation) Rules, 1993 are contravened the export is prohibited under Section 11(1) of the Foreign Trade (Development and Regulation) Act, 1992. Since, the export is thus prohibited the goods in respect of the two S/Bills become liable for confiscation under Section 113 (d) and also Section 113 (i) of the Customs Act, 1962, and I hold accordingly."
2. It is further seen that after giving a finding as above the Adjudicating Commissioner has confiscated the goods covered by the two Shipping Bills in question but has allowed the goods to be taken back on payment of redemption fine of Rs. 1 Lakh in each case. While fixing the fine he has mentioned that though the declared value in the two Shipping Bills are approximately Rs. 86 Lakhs and Rs. 94 Lakhs, the realistic market value could not be more than Rs. 8 to 10 Lakhs in each case. He has, however, not given any reason for imposing very low penalty of Rs. 10,000/- in respect of each of the Shippi9ng Bills. On review, the Board has found that while the Commissioner's order is just and legal as far as confiscation and imposition of penalty are concerned, the amounts of fine and penalty levied are quite low compared to the magnitude of the offence of gross over-valuation.
3. Shri S.S. Bhagat, learned S.D.R. arguing the case for the Department prays for setting aside the fine and penalty imposed and remanding the case to the Commissioner (Appeals) for imposition of proper amounts of fine and penalty. He also cites the decision in the case of K.R. Shenoy v. U.O.I. - 2003 (158) E.L.T. 812 (Kar.) and particularly draws attention of the Bench to the observations of the Hon'ble Karnataka High Court in paragraph 24 of the said decision which reads as follows:-
"The argument of the petitioner, at the outset is very attractive. However, on opening the veils of this attractive argument, it could be seen that the said attraction is not warranted on the facts of this case. The value has been defined Under Section 2(41) to mean the value thereof determined in accordance with the provisions of Sub-section (1) of Section 14. Section 14 provides for valuation of goods for the purpose of assessment. In the case on hand, the wordings used in Section 114 are the duty sought to be evaded on such goods or Rs. 1,000/- whichever is greater. Sub-section (1) of Section 114 says that penalty would be not exceeding five times the value of the goods or Rs. 1,000/- whichever is greater. The value of the defrauded goods cannot replace the value of the dutiable goods and five times is certainly not referable to an altered fraudulent goods as sought to be made out by the petitioner. Any such argument, if accepted would result in defeating the very object of levy of penalty and in arresting such fraudulent acts in terms of Section 114. Therefore, the argument of Shri Dinesh Kumar, learned Sr. CGSC has to be accepted in the larger interest of arresting revenue laws and in arresting such tendencies on the part of the unscrupulous elements. This submission of the petitioner stands rejected. In the result, I do not find any justifiable grounds to interfere with 3 well reasoned fact finding order confirmed by the Tribunal."
He further submits that in view of the decision of the Hon'ble Karnataka High Court, the fine and penalty have to bear a proportion to the inflated value so as to arrest fraudulent acts committed by the respondents.
4. After hearing the learned S.D.R. and perusal of case records including the cited case law, I find substance in the arguments advanced on behalf of the Department. The fine and penalty imposed by the Adjudicating Commissioner is very low considering the declared value of the goods, gravity of the offence and the extent of mis-declaration. As such, I set aside the impugned order in so far as it relates to the amounts of redemption fine and penalty imposed and remand the matter to the successor Commissioner for re-determination of appropriate fine and penalty. The respondents shall be allowed a reasonable opportunity of hearing before passing a fresh order.
6. Department's appeal is allowed by way of remand.
(Pronounced in court)