Custom, Excise & Service Tax Tribunal
4. Whether Order Is To Be Circulated To ... vs Cc Ahmedabad on 3 August, 2012
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
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Appeal No.C/401, 402/2011
Arising out of: OIA No.178 to 179/2011/Cus/Commr(A)/AHD, dt.06.05.2011
Passed by: Commissioner of Customs (Appeals), Ahmedabad
For approval and signature:
Mr.M.V. Ravindran, Honble Member (Judicial)
1. Whether Press Reporters may be allowed to see the No
Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the No
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen
the order?
4. Whether order is to be circulated to the Departmental Yes
authorities?
Appellant:
CC Ahmedabad
Respondent:
M/s ACX International, Shri Sujal Patel Represented by:
Shri Vipul Khandhar, Chartered Accountant: for Assessee.
Shri S.K. Mall, A.R.: for Revenue.
CORAM:
MR.M.V. RAVINDRAN, HONBLE MEMBER (JUDICIAL) Date of Hearing:03.08.12 Date of Decision:
ORDER No. /WZB/AHD/2012, dt.___________ Per: M.V. Ravindran:
These two appeals are directed against Order-in-Appeal No.178 to 179/2011/Cus/Commr(A)/AHD, dt.06.05.2011, vide which the first appellate authority has held in favour of the respondent-assessee. Since both the appeals are arising out of the same impugned order, these are being disposed of by a common order.
2. The brief facts that arise for consideration are that the respondent No.1 is an authorized courier company and had allegedly filed an unnumbered Bill of Entry in form CBE-IV dt.20.02.2009 as per the Regulation 5(3) of the Courier Imports & Exports (Clearance) Regulations, 1998, declaring the goods as Gift items, garments and chocolates imported on behalf of ten (10) consignees, supposedly his clients. The consignor of the said courier was M/s MEX Logistics, Dubai, UAE, who had shipped the aforesaid consignment of ten packages having gross weight 295.20 kgs and chargeable weight 296.3 kgs vide Airway bill No.157-62936871 dt.19.02.2009 declaring nature of goods as Courier Material and the same was consigned to M/s ACX International, Ahmedabad. The respondent No.1 claimed exemption from payment of duty under Notification No.171/93-Cus, dt.16.09.1993 as amended, by purported filing the prescribed Courier Bill of Entry in form CBE-IV for Samples and Free Gifts. However, based on intelligence, the detailed examination of the said 10 packages was carried out by SIIB section of H.Q. Ahmedabad and it was found to contain Richman Special Blend King Size Filter Cigarettes 2,00,000 Nos. classifiable under Tariff item 24022090. The said consignment of Cigarettes valued at Rs.7,00,000/- (LMV) and Rs.1,03,512/- (CIF) was seized under Panchnama dt.14.03.2010 on reasonable belief that the goods were liable for confiscation under Section 111 of Customs Act, 1962. The test report dt.13.05.2009 of the sample drawn from the consignment confirmed that the cigarettes were having total length 83 mm, the length of filter being 21 mm and it contained tobacco leaves.
2.1 Further investigation revealed that the respondent No.1 did not have any authorization to act as an agent of any of the ten consignees of the aforesaid import goods; all the addresses of the purported consignees given by the respondent were found incomplete/fake. To avail the benefit of Notification No.171/93-Cus, dt.16.09.1993, the imported goods were declared as gifts, whereas the consignment was in commercial quantity having value exceeding the value of Rs.10,000/-, the value defined for bonafide gift in the said notification and as per the definition of free gift in the Regulation 3(d) of Courier Imports & Exports (Clearance) Regulations, 1998. Holding, prima facie, that as the goods in question could not be classified as gift and were actually dutiable, the respondent No.1 was required to file Courier Bill of Entry CBE-V or CBE-X. However, it was alleged that they filed Courier Bill of Entry CBE-IV. After due investigation, a Show Cause Notice bearing F.No.VIII/48-06/SIIB/09, dt.18.08.2009 was issued to the respondent No.1 proposing to (a) confiscate the imported goods; (b) demand the duty amounting to Rs.5,22,488/- under Section 28 of Customs Act, 1962 along with interest under Section 28AA/28AB of Customs Act, 1962; and (c) impose penalty under Section 114A of Customs Act, 1962. The proposal to impose penalty under Section 112 and 117 of Customs Act, 1962 was also made on respondent No.2.
2.2 After following the due process of law, Show Cause Notice dt.18.8.2009 was adjudicated by the adjudicating authority and vide Order-in-Original No.12/Addl. Commr./ACC/O&A/2010, dt.28.05.2010 confirmed the demand of the duty, valuation of the seized goods and confiscation of the seized goods and penalty under Section 114A of Customs Act, 1962 on the firm and penalty under Section 112 on the proprietor of the firm Shri Sujal Patel. Aggrieved by such an order, the main assessee firm as well as the proprietor preferred an appeal before the first appellate authority and the first appellate authority, after considering the submissions made and following the due process of law, passed the following order:-
1. I do not interfere with the impugned order, so far as it relates to adjudging confiscation of the impugned goods. I, however, modify the order by setting aside the option given to the respondent to redeem the impugned goods on payment of redemption fine and thereafter, I further order for absolute confiscation of the impugned goods valued (LMV) at Rs.7,00,000/-.
2. In view of the absolute confiscation of the impugned goods, I further set aside the impugned order to the extent it demands duty under Section 28 along with interest under Section 28AB of Customs Act, 1962.
3. The impugned order, to the extent it imposes penalty on M/s ACX International under Section 114A of Customs Act, 1962 is set aside.
4. The impugned order, to the extent it imposes penalty under Section 112 of Customs Act, 1962 on Shri Sujal Patel, Proprietor of M/s ACX International is also set aside.
3. Revenue is aggrieved by such an order and hence is in appeal in both the appeals.
4. Ld.D.R. would submit that the impugned Order-in-Appeal is incorrect and is not based upon the facts and circumstances. He would take me through the Courier Imports & Exports (Clearance) Regulations, 1998 and reiterate the grounds of appeal, which are as under:
The appellate authority totally ignored the material facts that the courier booking receipt issued by M/s MEX Logistic, Dubai shows 10 consignee names without addresses. The CBE-II and IV filed by the said authorized courier before Customs authority also shows incomplete/fake address of the consignee. As per Rule 13 of the said regulation, the authorized courier has to obtain an authorization from each of the consignee of the imported goods. The details given in such authorization by the consignee such as the correctness of Importer Exporter Code (IEC) Number, identity of his client and the functioning of his client in the declared address by using reliable, independent authentic documents, data or information should be verified before filing Courier Bill of Entry in Form CBE-I, II, IV to Customs authority. Investigation by SIIB clearly found that they had not taken authorization from any of the consignees. It is not disputed that the consignees are fictitious entities and not traceable and the same fact was accepted by authorized courier. The Courier company has not placed on record any evidence that they had informed the authorities about their lack of knowledge about the consignees and about the absence of letters from authority etc. Contrary to this in CBE-IV filed by them, they declared that they have obtained authorizations from the consignees. In the absence of any information about the consignees as well as detailed invoices, M/s ACX International as an authorized courier agent should not have presented the Bill of Entry and should have sent back the consignment and should have informed Customs authorities regarding the situation as soon as the consignment arrived, which they failed to do. The fact brought out in the investigation is that the consignees are fictitious/non-existent/non-traceable. The stamp affixed on the CBE-I, II, and IV by the Customs Courier Baggage Cell shows that the CBE-I, II, and IV were duly presented along with proforma invoices, master airway bill and courier booking receipts issued by the consignor without waiting for the detailed invoices from consignor M/s MEX Logistics, for clearance of goods. All these acts on the part of authorized courier shows that they were attempting to clear the impugned goods by way of mis-declaration. The authorized courier and its proprietor Shri Sujal Patel, had meticulously planned to clear the smuggled goods. The sequence of events and all circumstantial evidences indicate malafide on the part of authorized courier and its proprietor Shri Sujal Patel. In the instant case, violation of Regulation 13(a), (b), (c), (e) and (i) of the Courier Imports & Exports (Clearance) Regulations, 1998 is clearly established against the authorized courier and its proprietor Shri Sujal Patel. Thus, the deliberate act of filing CBE-IV by mis-declaring the goods, giving incomplete/fictitious address of consignees and without obtaining authorization from consignees with the fraudulent intention to smuggle the impugned goods rendered the goods liable for confiscation.
5. Ld.Chartered Accountant on behalf of the respondent would take me through the Order-in-Original. It is his submission that the goods have been absolutely confiscated by the appellate authority and Revenue is not in appeal against such absolute confiscation. It is his submission that the respondent are not the importer but are courier and are working under Courier Imports & Exports (Clearance) Regulations, 1998. It is his submission that the first appellate authority was correct in coming to the conclusion and setting aside the demand raised against the courier company and also the penalties imposed.
6. I have considered the submissions made by both sides and perused the records.
7. The Revenue is aggrieved by setting aside the penalty and also setting aside of the confirmation of demand of the Customs duty on the Courier company. As is already reproduced by me, I find that the first appellate authority has modified the order of the adjudicating authority and has ordered for absolute confiscation of the goods. On such absolute confiscation of the goods, the Revenue has not preferred the appeal in their grounds of appeal. If that be so, in my considered view, no demand of duty arise as once there is absolute confiscation, the clearances of the goods do not take place from the Customs area.
8. Now, coming to setting aside of the penalties under Section 114A of Customs Act, 1962, the first appellate authority has recorded the following:-
15. The entire procedure relating to clearance of import cargo has been laid down keeping in mind that the authorized courier is merely an agent of the consignee in India, and that in the case of any mis-declaration, it is the consignee who will be charged for offence, and not the courier, provided an authorized courier follows the procedure prescribed for them and keep their obligations. The most important obligation or requirement of an authorized courier is to obtain authorization from the consignee.
16. As per the procedure, as specified in Para 10.4 of the aforesaid Public Notice:
Clearance of Courier Bill of Entry-IV (CBE-IV) In respect of bonafide commercial samples and bonafide gifts entitled to exemption from customs duty under various Customs notifications, the representative of the authorized courier shall file Form CBE-IV in quadruplicate. Single CBE-IV may be filed for the clearance3 of upto 10 consignments of such goods imported by the authorized courier on a particular flight.
After noting of CBE-IV, the authorized courier shall submit the same to the Superintendent of Customs (C.B.C.) in charge of assessment, for prima-facie assessment to ascertain that the goods are entitled to exemption as bonafide sample or gifts, as the case may be. After defining the scope of samples and free gift, it is further specified:
In case of any doubt regarding admissibility of duty exemption in the category of bonafide samples or gifts, the said Superintendent of Customs (C.B.C.) in charge of examination, may call for documents or any such information required for assessment of value of nature of goods.
Clearance of the goods shall be subject to the percentage of examination as prescribed by the Board vide Circular No.23/2006-Cus, dt.25.08.2006 as amended from time to time.
In case any duty liability is found to arise in course of assessment of the goods, the same may be assessed on CBE-IV itself. In respect of such Bills of Entry, the procedure prescribed under Para 10.5 below, mutatis mutandis, shall be followed. The courier bags covered under CBE-IV will be subjected to 100% X-ray scanning to ascertain the contents. Any discrepancy noticed during inspection/examination will be brought immediately to the notice of Deputy/Assistant Commissioner (C.B.C.). It is evident that the possibility of discrepancy has been anticipated. There are, however, no directions for taking action against an authorized courier in case of any discrepancy is found. Indeed, this goes without saying that if there is any evidence to prove complicity of an authorized courier in any contravention, action can be taken against them.
17.1 Action, if any, would lie against a consignee in whose name the courier material (goods) was imported. The provisions contained in Regulation 11 of the Courier Regulation 1998 also indicate this position. The relevant portion of regulation 11 is as under:
The condition of the said bond shall also be that the applicant shall agree to pay the duty, if any, not levied or short levied, with interest if applicable on any goods taken clearance by the authorized courier if the option of the Assistant Commissioner of Customs or Deputy Commissioner of Customs the same cannot be recovered from the importer or the exporter. Thus, in respect of demand of duty only, recovery can be made from an authorized courier, if in the opinion of Assistant Commissioner of Customs or Deputy Commissioner of Customs the same cannot be recovered from the importer or the exporter. In other words, there is no other liability of the courier company if the goods are not found as per description in the CBE-IV or there is (are) any other violation (s). This provision is invocable only if courier material was already cleared by respective consignee, and not to a case where importer of the material is not available and the goods are still in the Customs area.
17.2 In the present case, the respondent-department has held M/s ACX International as the real consignee and owner of the impugned goods on the grounds that they filed Bill of Entry on behalf of some unknown consignee, mentioned in the Airway Bill, having fake/incomplete address. If the respondent had actually filed Bill of Entry without authorization, it would be taken as one of the grounds for suspecting the respondent as actual owner/importer of the goods. Even this would not have become sufficient evidence, unless other corroborative evidence was brought on records to conclusively prove that the respondent was the actual owner of the goods. Since they had not filed the Bill of Entry, I am unable to hold the respondent as the real consignee/importer as well as owner of the impugned goods. The very first point, which the adjudicating authority has mentioned in his order as undisputed, has actually been disputed by M/s ACX International before me as well as before the adjudicating authority. In view of this, the following changes, though confirmed by the adjudicating authority, stand nullified:
i) Mis-declaration of the description and value of goods.
ii) Seeking benefit of Notification No.171/93-Cus, dt.16.9.93 by declaring value less than Rs.10,000/-.
iii) Failure to exercise due diligence to ascertain correctness and completeness of information which he submitted to Customs at the time of clearance.
iv) Goods were actually dutiable and CBE-V or CBE-X should have been filed.
v) Vilation of Section 7 of Foreign Trade (Development & Regulation) Act, 1962 and Rule 11 of Foreign Trade (Regulation) Rules, 1993.
9. As against the above recorded finding, the case of the Revenue is that the respondent had filed the courier bill of entry in form CBE-IV, itself is an acceptance of the fact by the Revenue authorities that the respondent herein is functioning as a courier. It is also undisputed and clear from the facts that the respondent had been functioning as a courier and has received the disputed consignment from the courier based in Dubai. The respondents action of filing the courier Bill of Entry with the other available material would itself indicate that the respondent had been functioning as a courier. Provisions of Section 114A of Customs Act, 1962 for imposition of penalty would arise only when the duty has not been levied or has been short levied and there is intentional evasion of duty, reason of collusion, willful mis-statement or of suppression of facts, on the person who is liable to pay duty or interest as the case may be, determined under the provisions of Customs Act, 1962. It is clear from the facts on record that the respondent did not import consignment and is not liable to pay the Customs duty as per the provisions of Customs Act, 1962, as he has filed courier Bill of Entry in proper prescribed format. This fact being undisputed, in my view, the penalty imposed by the adjudicating authority under Section 114A of Customs Act, 1962 was unwarranted and was correctly set aside by the first appellate authority.
10. As regards penalty under Section 112 of Customs Act, 1962, I find that said penalty has been imposed on the proprietor of the courier firm M/s ACX International. In the factual matrix of this case, I find that the adjudicating authority as well as the first appellate authority has ordered for confiscation of the disputed consignment of cigarettes. The first appellate authority has even ordered for absolute confiscation of the said cigarettes under Section 111 of Customs Act, 1962. As has already been pointed out and noted by me that the respondent being a courier company, has filed a courier Bill of Entry. The penal provision under Section 112 of Customs Act, 1962 can be invocable on the proprietor of the respondent firm, as it is undisputed that he has filed a courier Bill of Entry and the consignment which was sought to be cleared under courier regulations, is confiscated by the lower authorities. The respondent courier firm or its proprietor is not in appeal against absolute confiscation of the cigarettes by the first appellate authority. In such a situation, in my view, the provisions of Section 112(a) of Customs Act, 1962 can be invoked against the firm or its proprietor, as the proprietor and the firm are not different entities. Accordingly, I uphold the penalty imposed by the adjudicating authority under Section 112(a) of Customs Act, 1962 on the proprietor of the firm. However, in the facts and circumstances of the case, noting that the proprietor of the courier firm was not in India when the consignment was received and travelling abroad, ends of justice would meet if the penalty imposed on the said proprietor is reduced to Rs.25,000/- (Rupees Twenty Five Thousands only). Accordingly, I modify the order of the first appellate authority to the extent that Shri Sujal Patel, Proprietor of M/s ACX International is liable to be imposed by a penalty of Rs.25,000/- (Rupees Twenty Five Thousands only) under Section 112(a) of Customs Act, 1962.
11. Both the appeals are disposed of as indicated hereinabove.
(Pronounced in Court on _________________) (M.V. Ravindran) Member (Judicial) cbb 13