Customs, Excise and Gold Tribunal - Bangalore
G.M. Exports vs Commissioner Of Customs on 7 December, 2005
ORDER T.K. Jayaraman, Member (T)
1. These appeals whose details are given below arise out of Order-in-Original No. 30/2004-CUS. Adj. dated 30.7.2004 passed by the Commissioner of Customs, Bangalore.
_________________________________________________________________________________ Sl. Appeal Parties Name Value Duty/Fine Penalty No. No. of Goods __________________________________________________________________________________
1. C/399/04 G.M. Exports Rs. Differential Rs. 35,22,296/-
v. CC, Bangalore 68,83, 35,22,296/- [114A of Cus-
437/ Anti-dumping toms Act]
1,10,26,340/-
Redemption
Fine 10,00,000/-
___________________________________________________________________________________
2. C/400/04 Shri Anil Kothari v. Rs. 10,00,000/-
CC, Bangalore 112(a)of the
Customs Act]
___________________________________________________________________________________
3. C/431/04 Ganesh Ship Rs. 2,00,000/-
ping Agencies v. 112(n) of the
CC, Bangalore. Customs Act]
___________________________________________________________________________________
4. C/267/05 CC, Bangalore v.
G.M. Exports ___________________________________________________________________________________
2. M/s. G.M. Exports, a partnership firm imported three consignments of ceramic tiles through Bangalore. The main allegation against them is mis-declaration of quantity and value of the imported tiles. There is also allegation against the Customs House Agents M/s. Ganesh Shipping Agency with regard to tampering of documents. Some Customs officers appeared to have abetted them in the tampering of the documents. The DRI investigated the entire case and proceedings were initiated. Consequent to the proceedings against the various parties, the adjudicating authority passed the impugned order. The appellants have strongly challenged the findings of the adjudicating authority. The offending goods have been confiscated with option to redeem them on payment of a fine of Rs. 10,00,000/- has been imposed on M/s. G.M. Exports. The differential duty in respect of each bill of entry has been demanded. Penalties have been imposed on M/s. G.M. Exports, Shri Anil Kothari, M/s. Ganesh Shipping Agency, its manager and also two employees of M/s. Ganesh Shipping Agency under Section 112A of the Customs Act, 1962. Proceedings against the 4 Departmental Officers have been dropped. Anti-dumping duty in terms of Notification No. 73/2003-Cus., dated 1.5.2003 to the tune of Rs. 1,10,26,340/- has been demanded. Revenue also has filed an appeal against the impugned order on the ground that the adjudicating authority has not imposed redemption fine in respect of the goods not available for confiscation and also for non-imposition of penalties against the Departmental Officers. Since all the issues are inter-related, the appeals are taken up together for issuing a single order.
3. Shri V.M. Doiphode, learned Advocate appeared for M/s. G.M. Exports and Shri Anil Kothari, Shri S.K. Chowdhury, learned Consultant appeared on behalf of M/s. Ganesh Shipping Agency, Shri Ganesh Havanur, learned SDR appeared for the Revenue.
4. Shri V.M. Doiphode, learned Advocate urged the following points:
(i) The Commissioner relied on the test report dated 17.3.2004 of Geological and Meteorological Lab, Bangalore obtained subsequent to the issue of show cause notice. The Show cause notice dated 29.8.2003 was not at all amended incorporating this test report obtained subsequently.
(ii) The Commissioner erred in applying above mentioned test report in respect of tiles which were already cleared, when the samples were brought from the tiles seized lying in the godown of the appellants and which pertain to two bills of entry filed in December, 2002 and January, 2003.
(iii) Neither the show cause notice nor the Commissioner of Customs has given a categorical finding on the classification of the impugned goods under 6907 90 10 or 6907 90 90. If the classification was 6907 90 90, the question of imposition of Anti-dumping duty would not arise as the Anti-dumping duty was only on vitrified tiles.
(iv) The Anti-dumping duty Notification excludes vitrified industrial tiles. It was for the department to prove that the tiles imported by the appellants are not vitrified industrial tiles. This has not been done, therefore the impugned order is passed without application of mind.
(v) The Commissioner rejected the transaction value of US $ 5.50 per square metre under Customs Valuation Rules, 1988 and enhanced the value to US $ 8.5 under Rule 8 without letting any evidence. He has not appreciated the fact that the appellants had already imported large consignment from the same supplier and therefore, the foreign supplier had offered them discounted price because of the large quantity. Further, in the third consignment, quantity imported was larger than the earlier two consignment. Further the statement of Shri Anil Kothari confirms the correctness of the price of US $ 5.50 charged by the foreign supplier.
(vi) In terms of Supreme Court's ruling in Eicher Tractors Ltd. case reported in 2000 (122) E.L.T. 321 (SC) transaction value cannot be rejected in the absence of the circumstances mentioned in Rule 4(2) of the Customs Valuation Rules.
(vii) The Commissioner upholds US $ 8.50 per sq. metre based on contemporaneous imports of similar goods but Rule 5 or 6 of the Valuation Rules was not applied and was not referred in the show cause notice. But valuation has been proposed under Rule 8 and confirmed by the Commissioner. Thus there is contradiction as when the Commissioner apply Rules 5 & 6, there is no reason to consider that the valuation is based on contemporaneous import of similar goods.
(viii) There is no evidence of actual remittance of US $ 8.5 per sq. metre. He has failed to appreciate that the appellants had remitted through bank only at the rate of US $ 5.5 per sq. metre. The Commissioner has failed to appreciate that the tiles imported vide bill of entry dated 5.4.2003 were partly damaged.
(ix) The Commissioner has erred in fixing MRP of Rs. 950/- per sq. metre without conducting any market survey and merely based on earlier two imports. In view of the breakage, the practice in international trade is to send some higher quantity, even though the invoice may show lower quantity. This fact has not been appreciated.
(x) The demand of Anti-dumping duty is not correct for the reason that the provisional Anti-dumping duty imposed under Notification No. 50/2002 dated 2.5.2002 was effective till 1.11.2003 but all the consignments were imported in December, 2002 and January to April 2003, when there was no provisional Anti-dumping duty leviable. However, Notification No. 73/2003-Cus., was imposed on 1.5.2003 and this Notification stated that the Anti-dumping duty will be leviable with effect from the date of provisional Anti-dumping duty. The levying of Anti-dumping duty with retrospective effect is contrary to Section 9A in the Rules framed thereunder. In terms of Section 9A(i) provisional Anti-dumping duty may be levied on the basis of provisional estimate of the dumping margin. The said section also provides that if the dumping margin determined at the end of the investigation is lower than the provisional estimate made earlier, the provisional duty shall be reduced and the refund shall be made on the amount collected in excess. Further, in terms of Rule 20(2)(a) of the Customs (Identification, Assessment and Collection of Anti-dumping Duty and Determination of Injury) Rules, 1995, the final Anti-dumping duty may be levied from the date of imposition of provisional duty under the following circumstances:
(a) Where provisional duty has been levied.
(b) Where the designated authority has recorded a finding of injury or
(c) The authority has recorded a final finding that the imports would have let to injury in the absence of provisional duty in terms of Rule 21(1) of the said Rules, where the final duty is higher.
The learned advocate relied on the following case laws of this bench in respect of the (i) CC Cochin v. Akash Trading Co. vide Final Order No. 1508, dated 18.8.2005 (ii) CC Cochin v. Orient Impex & Raghav Enterprises vide Final Order No. 1290 & 1291 dated 28.7.2005.
(xi) In this case since no provisional duty was imposed on the date on which final duty was identified, the final duty could not have been imposed retrospectively and as provisional duty was charged as per Rule 21(1) the difference between higher final duty and the lower provisional duty cannot be levied and collected.
(xii) According to Rule 20(2)(a) final duty can be levied retrospectively only when provisional duty has been levied. Since there was no provisional duty after 1.11.2002, final duty would not have been levied retrospectively.
(xiii) The penalty under Section 114A of Customs Act is not justified, as there was a general practice to send higher quantity because of breakages and damages in transit, in view of the fragile nature of the goods.
(xiv) In respect of the earlier two consignments, the Commissioner has held wilful misstatement and suppression of fact but the importer declared the size of the tiles, total boxes, etc., and the goods were cleared only after examination by the Customs officers. Hence, Section 114A has been wrongly used. The third consignment was released provisionally. In the case of provisional assessment, Section 114A could not be applied.
5. In Appeal No. C/431/04 filed by M/s. Ganesh Shipping Agency, CHA, Shri. S.K. Chowdhary, learned Consultant urged the following points:
(i) For the alleged filing of generated invoice and packing list in the place of earlier ones by the appellants employees (since terminated) at the behest of importer's representative correcting the size of tiles from 400 x 400 x 10 mm to 500 x 500 x 10 mm, as found on examination without seeking prior permission from the proper officer whether the goods are rendered liable to confiscation under Section 111(1) and (m)/Customs Act and on that ground alone whether the CHA firm is liable for penalty under Section 112A of the said Act is the main issue to be decided,
(ii) No charge of abetment has been brought out in the show cause notice either against the employees of the appellants firm.
(iii) The proceedings against the appellant relate to bill of Entry No. 21416 dated 5.4.2003 only. The Commissioner has admitted that there has been mis-declaration of quantity and value, even at the time of initial filing of the bill of entry. The question that arises for the limited purpose of appellants liability to penalty is whether at the point of time, there is any act of omission or commission on CHA's part rendering the goods for confiscation.
(iv) The appellants had filed bill of entry on the basis of document/information furnished by the importer/his representatives in the normal course of their day to day business in good faith as CHA. While the importer has been charged for mis-declaring quantity and value of earlier two consignments as well. No such charge has been brought against the appellants, in respect of those consignments.
(v) There is no evidence to show that the appellants or any of his employees had prior knowledge before filing the bill of entry that the quantity and value declared therein, did not conform to the actual quantity imported or its value. There is no allegation like that also.
(vi) Several case laws have held that to hold a CHA for penalty, it is essential to establish that they had prior knowledge.
(a) U. Sivasubramanian v. CC, Tricky - Relying on various judgment it has been held "There was no allegation that the appellant (a CHA) had knowledge and he had abetted the committal of the offence. The Bench further observed "Some degree of knowledge of contravention of law on the part of the abettor must be shown for imposition of penalty under Section 112 of the Customs Act.
(b) Vetri Impex v. CC, Chennai
(c) V. Esakia Pillai v. CC, Chennai reported in 2000 (138) 802 (Tri-Chennai).
(vii) The acts of the appellants employees behind their back without authorization do not render the goods liable to confiscation. As the goods had already been rendered liable to confiscation, when the bill of entry was filed. It is not the Department's case that the substituted documents showed size lower than what was found on examination or what was declared initially in the bill of entry. The total area/value remain the same as declared initially in the bill of entry.
(viii) The Commissioner's finding on para 182 states that the description of the goods were modified from ceramic to vitrified tiles without filing an application, is factually not correct. An application was filed, as admitted on page 19 of the impugned order, where upon DC ordered first examination. In any case, vitrified tiles attract CV duty on MRP basis, which is higher than ad valorem rate of duty. Hence no mala fide can be attributed.
(ix) The Commissioner has traversed beyond the show cause notice in imposing penalty by invoking the provisions of the CHALR for alleged negligence. This ground was not taken in the show cause notice at all. The provision of the said regulation was not invoked in the show cause notice. This alone would vitiate the imposition of penalty.
(x) The Tribunal in the case of Shri Khullar v. CC has held that under Section 112A mere lack of proper care is not provided for as one of the grounds for attributing penal liability.
(xi) In the case of Express Cargo Forwarders Pvt. Ltd. v. CC, Bangalore, the penalty on CHA has been set aside even for admitted acts of repeated fraud by the employees without the knowledge of CHA.
(xii) The appellants had an unblemished track record as a CHA operating at different ports for about 25 years. The appellant had considerably suffered on account of suspension of their CHA license for nearly two months, in terms of Regulation 21(ii) of the CHALR, 1984 revokes subsequently on representations made by the appellants.
6. The learned departmental representative reiterated the Order-in-Original and also the grounds of appeal in Revenue's appeal.
7. We have gone through the records of the case and the submissions made at the time of personal hearing carefully. The first two appeals have been filed by the importers. The third appeal has been filed by the Customs House Agent. The last appeal is by the Revenue. We shall take up the appeals in Seriatem and decide the issues.
C/399/04 - G.M. Exports v. CC, Bangalore.
The main allegations against the appellant is mis-declaration of quantity and value of ceramic vitreous tiles imported by them vide three Bills of Entry dated 5.4.2003, 2.1.2003 and 28.12.2002. The mis-declaration as to the quantity was revealed while examining the consignment imported on 5.4.2003. The declaration by the importer indicated the size of the tiles as 500 x 500. But during the examination, the dimensions were 600 x 600. The main person concerned with the import of the tiles is Shri Anil Kothari. In his statements given under Section 108 of the Customs Act, he has admitted the mis-declaration in respect of the goods imported under the three bills of entry. The Commissioner has given a very detailed finding with regard to the mis-declaration of quantity. For example, with respect to Bill of Entry dated 28.12.2002, the declared quantity is 3745.28 Sq Metres but the investigation reveals a quantity of 7721.28 Sq metres. In respect of Bills of entry dated 2.1.2003. The declared quantity is 4280.32 Sq. metres whereas the quantity actually imported is 8834.32 Sq metres. In respect of the last consignment imported vide Bill of Entry dated 5.4.03 the declared quantity is 5662 80 Sq metres, whereas the actual quantity is 11094.60 Sq. metres. In the last consignment, it was revealed that the tiles actually imported were not of the same dimensions as per the declaration. Shri Anil Kothari also has categorically accepted this position in his statements. Hence, we are of the view that the mis-declaration in respect of quantity as established by the Commissioner in his findings is correct.
The next main allegation is mis-declaration of value. Infact, for the last consignment, an invoice has been generated in the computer with the help of the staff of CHA and the value is declared at 5.5 US $ per Sq metre. The Commissioner has not accepted this value for obvious reason. In respect of similar goods from the same supplier, the value declared for assessment was 8.5 $. The appellants have explained that in order to avoid Anti-dumping duty earlier, there was over-invoicing and consequently very high value was declared. They have also come up with the explanation that the foreign supplier had agreed for lower value in respect of the last consignment and also to supply more quantity for compensating the higher price in respect of the goods imported in the first two bills of entry. The Commissioner was not inclined to accept the above explanation. It is seen that the last consignment was originally consigned to ESS EMM Traders who were not in a position to accept the goods. They transferred the shipping documents to the appellant M/s. G.M. Exports. During investigation, bank attested invoice was recovered from the appellants for the goods consigned to ESS EMM Traders. The above invoice shows the value of the consignment at US $ 6.5 Sq Metre. The adjudicating authority has not given any finding on that invoice. It has not been proved by the Revenue that the bank attested invoice is a fake. Therefore, we are of the view that in respect of the last consignment, a value of 6.5 US $ per Sq metre can be adopted. Anti-dumping duty in terms of Notification No. 73/2003-Cus., dated 1.5.2003 to the tune of Rs. 1,10,26,340/- has been demanded. It is seen that when these consignments were imported, the provisional Anti-dumping duty imposed on the goods had already lapsed. This Tribunal in the case of Commissioner of Customs Cochin v. Raghav Enterprises in the Final Order 1290-1291/2005, dated 28.7.2005 has held that when the goods are imported after the provisional Anti-dumping duty notification lapses, no Anti-dumping duty can be levied retrospectively in respect of the goods on the basis of the notification levying Anti-dumping duty. We are reproducing the following extracts from the above mentioned Final Order (Paras 5 & 6).
5. The learned Advocate referred to the Rule 13 of the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, according to which the provisional duty would be in force only for a period not exceeding six months which may upon request of the exporters representing a significant percentage of the trade involved could be extended by the Central Government to 9 months. Further he referred to Rule 20(2)(a) which states as under:
20. Commencement of duty.-
(2)(a) where a provisional duty has been levied and where the designated authority has recorded a final finding of injury or where the designated authority has recorded a final recording of threat of injury and a further finding that the effect of dumped imports in the absence of provisional duty would have led to injury, the Anti-dumping duty may be levied from the date of imposition of provisional duty.
He said a harmonious reading of Rule 13 and Rule 20 would reveal that provisional Anti-dumping duty would have validity only for 6 months. But on request of the exporters, it can be extended to 9 months. In the present case, there was no extension of the provisional Anti-dumping duty at all. When the goods were imported, the provisional Anti-dumping duty has lapsed. When the requirement of Rule 13 is not satisfied, the Anti-dumping duty imposed under Rule 20 cannot be effective during the interregnum period. In other words, retrospective effect can be given only if the provisional Anti-dumping duty is chargeable during the interregnum period. Hence, the Commissioner's order is legal and proper.
6. We have gone through the records of the case carefully. As rightly held by the Commissioner (Appeals) during the interregnum period, there was no charging provision for levy of provisional Anti-dumping duty. To put in different words, there is no levy at all. The case would be different if the provisional Anti-dumping duty has not lapsed. Even though there is a provision to extent the provisional Anti-dumping duty to 9 months on the request of exporters, nothing has been done. Under these circumstances, the importers cleared the goods without payment of Anti-dumping duty. In these circumstances, we find that the Notification determining final Anti-dumping duty is repugnant to Rule 13 to Rule 20 of the above Rules. Hence, we do not find any merit in the Revenue's appeals and the same are rejected.
The ratio of the above case is squarely applicable to the present appeal also. In the present case, the Anti-dumping duty provisionally imposed under Notification No. 50/2002, dated 2.5.2002 was effective till 1.11.2003. The consignments were imported during December, 2002 and January-April 2003. During the above period no provisional Anti-dumping duty was leviable. Hence, during this period, Notification No. 73/2003 Cus., dated 1.5.2003 cannot be applied retrospectively. Hence, the order concerning Anti-dumping duty in Para g of the Order portion in the impugned order is set aside. Since, we have ordered that the value of the imported goods in the last consignment should be taken at 6.5 US $ on the basis of the Bank attested invoice, the assessable value and consequently the duty liability in respect of the goods imported under Bill of Entry dated 5th April 2003 is to be recomputed. Similarly, the MRP of the tiles imported should be recomputed for purposes of calculation of countervailing duty. The finding that the goods imported under the above-mentioned bill of entry are liable for confiscation is upheld. The confiscation in respect of the goods imported under the first two bills of entry is also upheld. The demand of differential duty of Rs. 9,04,162/- and Rs. 10,64,383/- in respect of the first two bills of entry are upheld. The confiscation of 8119.84 Sq metres of vitrified tiles seized from various godowns of M/s. G.M. Exports under Section 111(1) and 111(m) of the Customs Act is upheld. The imposition of redemption fine of Rs. 10 lakhs on the above goods is upheld. The penalty imposed under Section 114(A) of the Customs Act is reduced to Rs. 7 lakhs only taking into account the fact that the appellants paid an amount of Rs. 20 lakhs and executed a Bank Guarantee of Rs. 18 lakhs during the course of investigation of the case.
The OIO is modified as indicated above as far as the appellant M/s. G.M. Exports are concerned.
C/400/04 - Shri Anil Kothari v. CC Bangalore:
The Commissioner in para 178 of the Order-in-Original has dealt with the role of Shri Anil Kothari which is reproduced below:
I do not find any serious challenge to the findings of the Commissioner from the appellants hence, the liability of Shri Anil Kothari to penalty under Section 112(a) is upheld. However, in the facts and circumstances of the case, we reduce the penalty to him from Rs. 10 lakhs to Rs. 5 lakhs.
C/431/04 - Ganesh Shipping Agencies v. CC Bangalore M/s. Ganesh Shipping Agencies were in charge of the clearance of impugned goods. No doubt, the three employees of the agency helped the appellant in producing the computer generated invoice. It is seen that the CHA have terminated the services of the three employees. That apart, there is no evidence to show that the CHA themselves were involved in the generation of invoices in the computer for helping the appellants. The various case laws cited by the learned consultant are very relevant. The employees appear to have committed the improper acts without the approval and blessings of the CHA. Considering the submission that the CHA had a good track record in different ports for about 25 years we feel that the penalty on the CHA imported in para 'm' of the Order is not justified. The same is set aside.
C/267/05 - CC, Bangalore v. G.M. Exports:
Revenue is aggrieved over the impugned Order of the Commissioner on the following grounds
(a) The Commissioner has imposed a redemption fine of Rs. 10 lakhs in lieu of confiscation of 8119.84 Sq. metre of vitrified tiles seized from various godowns of importer. The Commissioner has not given any reasons for non-imposition of redemption fine in respect of the balance quantity of 16,545.60 Sq metres held to be confisable under Para 211E. The Apex Court in the case of Harbans Lal v. CCE & C has held that even where the seized goods are required to be returned for non-issue of SCN within 6 months also confiscation and penalty are imposable as Section 110 and Section 124 of Customs Act, 1962 are independent of each other. In the present case, goods seized were only provisionally released and in terms of the bond furnished, the redemption fine was imposable. Decision of CESTAT in the case of HB Fibres Ltd. v. CC is also relied.
(b) The Commissioner dropped the proceedings against M. Naushad Appraiser, Shri T.M. Gopinath, Appraiser, Shri Dharam Kumar, Appraiser and Shri Amit Choudhary on the ground hat investigation has not brought out any evidence in support of abatement/prior knowledge of the officer on an intentional lapse and relied upon the case laws as follows (Page 8 'b' to be type of the impugned order)(sic).
After examining their grounds, we are of the opinion that the Commissioner should have taken into consideration even the goods, which are not available for imposition of redemption fine. Hence we remand the issue to the Commissioner to impose a suitable fine in respect of the goods held liable for confiscation and not available with the department. As regards the non-imposition of penalty on the officers we find that the Order in review has not been served on the three officers. Therefore, deciding the issue without giving notice to them would be violation of principles of natural justice. Hence, Revenue's appeal on the second ground is rejected. Revenue's appeal is disposed of in the above manner.
(Pronounced in open Court on 7th Dec., 2005)