Custom, Excise & Service Tax Tribunal
4. Whether Order Is To Be Circulated To ... vs Unknown on 16 December, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
COURT-II
Appeal No.C/576-579, 582-584, 599/09 & C/01-11/10
Arising out of OIO No.05/Commr./Hira Bourse Surat/Import/2009, dt.26.11.09
Passed by: Commissioner of Customs, Ahmedabad
For approval and signature:
Honble Mrs. Archana Wadhwa, Member (Judicial)
Honble Mr. B.S.V. Murthy, Member (Technical)
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 Yes
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/s Shri Prakash Sancheti, Shri Rakesh Premchand Tater, Shri Dinesh Birawat, M/s. Manan Exports Pvt. Ltd., Shri Sushil Kumar Babel, M/s. Multistar Gems & Jewellery P. Ltd., Shri Abhay Singh Jain, Shri Sushil Kumar Jain, M/s. Prakash Diamonds P. Ltd., Shri Manish Kumar Jain, M/s Dianish Exports P. Ltd., Shri Mehul Girish Tanna, Shri Manish Pravinbhai Kheni, Shri Himmat Mohanbhai Kheni, Shri Hiren Sanat Kumar Bhindi
Represented by Shri V.S. Nankani (Adv), Shri J.C. Patel (Adv),
Shri Anil Balani, Adv
Vs.
Respondent/s CC Ahmedabad
Represented by Shri R. Nagar, SDR CORAM:
MRS. ARCHANA WADHWA, MEMBER (JUDICIAL) MR. B.S.V. MURTHY, MEMBER (TECHNICAL) Date of Hearing :16.12.10 Date of Decision:
ORDER No. /WZB/AHD/2010 Per: MR. B.S.V. Murthy:
Shri Mehul Girish Tanna sole proprietor of S & S International and an authorised signatory (constituted attorney) of one Shri Hiren Sanat Kumar Bhindi sole proprietor of M/s. Lucky Star Jewels, M/s. Golden Dragon Traders, M/s. Pacific Gems and Elements Trading Company (hereinafter collectively referred to as exporters) exported 28 consignments of rough diamonds on the basis of an oral order from Shri Prakash Sancheti in the name of following four consignees namely M/s. Prakash Diamonds P. Ltd., M/s. Manan Exports Pvt. Ltd., M/s Dianish Exports P. Ltd. and M/s. Multistar Gems & Jewellery P. Ltd. between 22nd November and 24th November 2008. The said consignments were detained by the officers of Directorate of Revenue Intelligence and were subsequently seized on the ground that the value of the rough diamonds were mis-declared and the value declared was highly exaggerated. Another consignment of cut and polished diamonds was also seized on the ground of over valuation. After investigation and issue of show cause notice and observance of principles of natural justice, the impugned order has been passed whereby the rough diamonds as well as cut and polished diamonds under seizure have been absolutely confiscated and penalties have been imposed on various firms and persons involved. All these firms and persons are in appeal before us.
2. The issues to be decided in this case have been outlined in the impugned order and for convenience we adopt the same.
(a) Whether the goods under reference i.e. 28 consignments of rough diamonds were mis-declared in terms of value and whether the value of the same was highly exaggerated and required to be re-determined under Section 14 of the Customs Act, 1962 read with Customs Valuation (Determination of value of the imported goods) Rules, 2007;
(b) Whether one consignment of cut and polished diamond imported by M/s. Prakash Diamonds P. Ltd. was mis-declared in terms of value and required to be re-determined under Section 14 of the Customs Act, 1962 read with Customs Valuation (Determination of value of the imported goods) Rules, 2007
(c) Whether the 28 consignments of rough diamonds are liable for absolute confiscation under Section 111(d) of the Customs Act, 1962.
(d) Whether the goods i.e. 784.28 carats of cut and polished diamonds of foreign origin totally valued at US$ 11,25,445.50 (re-determined value) are liable for confiscation under Section 111(d) and (m) of the Customs Act, 1962.
(e) Whether all the appellants are liable to penalty under Section 112(a) of the Customs Act, 1962.
3. From the case records and from the arguments advanced from all the parties concerned, we find that even though there are 28 consignments of rough diamonds and there are four importers and four exporters yet the issues involved and the facts are very similar and are covered by a single order treating the issues as common. The only variations are in the quantity and value of rough diamonds imported/exported by the respective firms. Therefore the entire case of import of 28 consignments of rough diamonds is being dealt with as one issue and the issue of importation of cut and polished diamonds is treated as another issue and dealt with separately. For convenience sake, the name of the importer, quantity and value declared are as under:
Sl. No. Name of the Importer Number of Consignments Weight of Rough Diamonds in Carats Value in US$
1.
M/s. Multistar Gems & Jewellery P. Ltd.
16105238 5,56,52,403
2. M/s. Manan Exports Pvt. Ltd.
06 37562,17,50,437
3. M/s Dianish Exports P. Ltd.
0322604 1,15,08,817
4. M/s. Prakash Diamonds P. Ltd.
0316220 1,00,39,836
4. In all 28 consignments of rough diamonds weighing 1,81,608 carats were sent by the exporters in Hong Kong by declaring the value as US$ 9,89,51,493. As already mentioned earlier all the exporting firms are owned by Shri Hiren Sanat Kumar Bhindi and managed by authorised representative/constituted attorney Shri Mehul Girish Tanna. Even though all the importing companies have separate directors, Shri Prakash Sancheti is alleged to be the de-facto owner of all the importing firms and Shri Himmat Mohanbhai Kheni is alleged to be actual owner of the impugned goods and these allegations have been upheld in the impugned order.
5. All the 28 consignments of rough diamonds arrived in India between 22.11.2008 to 24.11.2008 from Hong Kong and were detained on 27.11.08. All the exporting firms faxed letters dated 24.11.08 to the Assistant Commissioner of Customs, Surat which were received on 28.11.08 stating that there was a mistake in preparing the invoice and they are in the process of getting the relevant amendments in the Kimberley Process Certificate. Subsequently on 03.12.08, the concerned agent applied for amendment in the IGM based on the letters dated 03.12.08 seeking to amend the declared value to US$ 352328.45. Further Hong Kong exporters on 13.12.08 sought permission to re-export the goods on the ground that the same had been sent without prior confirmed orders and the importing firms were not willing to accept the consignments.
6. Shri V.S. Nankani, learned advocate on behalf of the exporters in Hong Kong submitted that the consignments were accompanied by Kimberley Process Certificate as required by foreign trade policy. He submitted that the importing firms informed the exporters on 24.11.08 about the value and therefore exporters wrote letters to the Assistant Commissioner, Customs on 28.11.08 indicating that there was a mistake in indicating the value. The exporters in Hong Kong promptly applied for obtaining fresh Kimberley Process Certificate (KPC) and accordingly obtained the same on 01.12.08 and the same were submitted. Since the importers refused to take delivery and no bill of entry had been filed, the appellant exporters sought re-export of the consignments which was refused, consignments were absolutely confiscated and exporters penalized. He submitted that since the KPC originally submitted was found to be wrong as per the exporters themselves which was duly intimated and another KPC obtained and submitted within a week, the requirements relating to KPC as per the Circular issued by the Board vide 53/2003 dated 23.06.03 have been fulfilled. According to the circular, if the consignments are received without a valid KPC, the same can be submitted within a week thereafter. Since the revised KPC has been submitted within seven working days, their case is clearly covered by the circular by the Board and therefore Commissioner was duty bound to allow re-export. Instead of doing so she has absolutely confiscated the consignment. Further he also submitted that the details in KPC are based on declarations made by the exporters and basically the KPC procedure has been evolved to prevent use of proceeds of the trade in rough diamonds by rebel movements and their allies to finance conflicts aimed at undermining legitimate governments. He submits that even though value is required to be declared since it is based on the declaration made by the exporter himself, if a mistake is committed, the exporter would be free to get the same amended and this would not be against the KPC scheme at all. He also submits that even though the Commissioner has spoken of the trading of earlier consignments and has mentioned about circular trade, that is not really relevant in view of the fact that the decision to confiscate the goods and impose penalty have not been made on the basis of such evidences. He fairly admits that the show cause notice did contain these details. He also submits that the Commissioners observation in para 74 that the goods do not fulfill the condition for valid import namely the requirement of a proper valid KPC, they are deemed to be prohibited is not correct in view of the above observations. Further he also submits that learned Commissioner has observed in her order that on the date when application for amendments was submitted, the goods were not available in Hong Kong nor copies of all the certificates. However he submits that nowhere in the KPC scheme it has been stated that KPC would be issued only after verification of the goods. Therefore this observation cannot be sustained. He also submits that appellants live in Hong Kong and therefore they cannot be punished under Customs Act, 1962.
7. Shri J.C. Patel, learned advocate on behalf of the four importing firms and the directors submitted that the firms and the directors cannot be penalized for misdeclaration of value in view of the fact that the importing firms and directors were not part of misdeclaration. Therefore they cannot be said to have rendered the goods liable to confiscation. He submits that no bill of entry was filed by the appellant firms.
8. Shri Anil Balani, learned advocate on behalf of Shri Prakash Sancheti submitted that the departments case is that he is the de-facto owner of the four importing firms. On this ground separate penalties have been imposed on him in respect of polished diamonds as well as rough diamonds. He submits that departments contention is contradictory. On the one hand department says that the owner of the goods is Shri Himmat Mohanbhai Kheni and on the other hand the department is saying that he is the de-facto owner of the importing firms. He also submitted that there was contradiction between para 57 and para 72 of the adjudication order.
9. The learned DR on behalf of the Revenue submitted that this is a case of huge over valuation and the value declared was 3.6% of the actual value. But for the detention of the goods by the DRI, the appellants would have successfully used the transactions for Hawala purposes and conversion of Indian currency into foreign currency and delivery of the same to Hong Kong. He sought permission to file written submissions which are reproduced as under:
1. Brief Facts of the case:
Trade based Money Laundering; with specific reference to diamond industry in India has emerged as a major concern for National and International agencies. In this case import of low quality rough diamonds purposefully used, for disgusting the true nature of transaction for nefaracious activities. In the process of Money Laundering they violated the provisions of the Customs Act, 1962 and the Foreign Trade (Development & regulations) Act and Rules. The brief facts are as under:
(i) M/s Prakash Diamonds, M/s Multi Star Gems and Jewellery, M/s Danish Exports and M/s Manan Exports Imported 28 consignment of rough diamonds from 4 Exporters of Hong Kong by over valuing abnormally (the value declared in the import documents, i.e. KPC certificates, Import invoices, Airway Bills and IGM, etc. is US$ 9, 89, 51,493 = Rs. 488 Crore as against the actual value US$ 3, 92,494 = Rs.1.74 Crore, to remit the excess Foreign Exchange Overseas for unlawful activities. The defecto-owner of these importing firms is Shri. Prakash Sancheti, who helped Shri. H.M.Kheni, partner of M/s Kantilal and who is the king pin and master mind. Shri Prakash Sancheti allowed the importing firms to facilitate the import of over-invoiced Rough Diamonds, which in fact are pertaining to Shri. H.M.Kheni only. The owner of 4 Exporting firms is Shri. H.S.K. Bhindi an ex-employee of M/s Kantilal, resident of Surat and Shri. M.G. Tanna is the authorized signatory. Both are Indian PassPort holders. The exporting firms, their owner their authorized signatory, the importing firms, the defacto-owner of the importing firms, and their Directors and Partners of M/s Kantilal are hand in glove with each other and each of them activity participated in the import of over-invoiced, prohibited Rough Diamonds which are liable for confiscation U/S 111 (d) of CA62 and thereby attracted penalty on them U/S 112 (a) of CA62. They arranged and devised this modus operandi for remitting excess Foreign Exchange because Rough Diamonds were Duty free under Noti. No. 21/2002-Cus DT. 01/03/02.
(ii) M/s Prakash Diamonds filed one BE DT. 26/11/08 for cut and polished Diamonds wherein value declared was US$ 10, 74, 923.50 as against actual value US$ 11,25,445.50 hence goods were confiscated U/S 111(m) of CA62, Redemption Fine and Penalty was imposed U/S 112 (a) of CA;62.
(iii) Honble High Court of Gujarat vide order dated. 09/04/09 directed to release the goods and permit re-export of the goods. Department filed SLP in Honble Supreme Court. Honble Supreme Court vide order dated 01/05/09, 08/05/09 and 12/06/09 stayed the operation of the order dated 09/04/09 of Honble High Court and also directed to adjudicate the case within 4 months
(iv) SCN dated 26/10/09 has been issued proposing confiscation U/S 111(d) of CA62 and penalty U/S 112(a) of CA62. Further, a request for obtaining caveat free draments under the mutual legal assistance in criminal matter ordinance of Hong Kong Government was sent. The result of which was not available till the issue of SCN. However, in view of order of Honble Supreme Court investigation was finalized without waiting for same.
2. M/s Prakash Diamonds, M/s MultiStar Gems and Jewellery, M/s Danish Exports and M/s Manan Exports are the importers of Rough Diamonds:
The above firms denied to be the importers of Rough Diamonds, however, as per Law as well as per the facts on record they are the Importers of Rough Diamonds for the following reasons:
(i) As per defence reply submitted before Commissioner by M/s Lucky Star, M/s Golden Dragon Traders, M/s Elements Trading Company and M/s Pacific Gems (Exporters) the order was orally placed by Shri. Prakash Sancheti for four importing firms in Novemember, 2008.
(ii) There goods were Imported by above importers under Precious Cargo Transfer Manifest DT. 22/11/08, 24/11/08 and 25/11/08 (Para 2 Page No.9)
(iii) DRI detained 28 consignments of Rough Diamonds and one consignment of cut and polished diamond on 27/11/08 on receipt of Intelligence that these consignments are over-invoiced.
(iv) Overseas Exporters sent 14 letters all dated 24/11/08 through Fax Dated 28/11/08 (after detention of goods by DRI) stating that there was a mistake in preparing the invoices and they are in the process of getting the relevant amendment in KPC. They did not say that the goods are not imported by above buyers. The excuse of mistake is evidently after thought to save importees from legal action.
(v) Shri. A.K.Kakkad, CHA, B.K.Freight Forwarders Stated vide his statement dated 10/12/08 that Shri. Sushil Jain and Shri. Prakash Sancheti approached him for clearance in the last week of November 2008 as their regular CHA had refused to file the document. All firms gave him authority letter dated 04/12/08 along with IEC copies for the clearance of goods, hence they can not say that they are not importies.
(vi) Shri Sunil Kumar Jain Director of M/s Danish Exports and M/s Prakash Diamonds vide statement dated 13/05/09 stated that the order for consignment was placed by Shri. Prakash Sancheti, that on arrival of the consignments he told him that consignment was grossly overvalued and DRI is aware about the value and is investigating, therefore, goods are not to be cleared. About cancellation of the order since consignment is overvalued and DRI is investigating they sent letters to the overseas suppliers to escape from the legal action on them.
(vii) As per Shri. Sushil Kumar Babel, Director of M/s Multi Star Gems & Jewellery and M/s Manan Exports, the order was placed by Shri. Prakash Sancheti and goods were not cleared because DRI was aware about the overvaluation and investigating the case.
(Viii) Shri Prakash Sancheti accepted that he approached CHA, Shri. A.K.Kakkad on 04/12/08 for the clearance of goods. He had arranged the parcels of Rough Diamonds from Hong Kong in the name of companies owned/controlled by him, named as M/s Multi Star Gems Jewellery, M/s Manan Exports, M/s Prakash Diamonds and M/s Danish Exports.
(ix) Under section 2(26) Importer in relation to any goods at any time between their importation and the time when they are cleared by Home Consumption, includes any owner or any person holding himself out to be importer.
(x) In the following documents they are declared to be importers:
1. In the original invoice as well as in the amended invoice
2. In the original KPCs as well as in the amended KPCs
3. Master air way Bill
4. House air way Bill and amended house Air way Bill
5. CHA collected delivery order
6. CHA paid charges towards delivery orders
7. CHA collected documents
(xi) No other persons can claim to be the importer except the person shown in the manifest originally.
(xii) Air way Bill is not merely a document for carriage of goods but is also universally recognized in international trade and commerce as a document of title during the voyage of goods. Thus, where Air way Bill, import documents, I.e. invoice, KPC s are in the name of importer any disclaimer of the goods by him after their importation can not absolve the importer for any commission or omission which may render the goods liable to confiscation, and importer to penalty Chaudhary International V/s Collector of Customs, Bombay 1999 (109) ELT 371 (T.)1
3. Valuation Aspect:
(i) Under section 2 (41) value in relation to any goods, means the value there of determined in accordance with the provisions of section 14(1) or 14 (2) of CA62.
(ii) Under section 14(1) of CA62 for the purpose of the Customs Tariff Act or any other Law for the time being in force, the value of the imported goods and exports goods shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods where sold for export to India for delivery at the time and place of importation, or as the case may be, for export from India for delivery at the time and place of exportation, where the buyers and seller of the goods are not related and the price is the sole consideration for the sale subject to to such others conditions as may be specified in the rules made in this behalf.
(iii) As per Para 2.2 of EXIM 2004-2009 No Import of rough diamonds shall be permitted unless accompanied by Kimberley Process (KP) certificate as specified by Gem & Jewellery EPC (GJEPC).
(iv) KPC scheme for rough diamonds is implemented by CBECs circular No. 53/2003-Cus dated 23/06.03. As per Para 3 the KP certificate is a forgery resistance document. The KPC contains the following details: Country of origin, the certificate number, date of issunance, date of expiry, issuing authority, the details of importer and exporter, Carat weight/Mass, value in US$, etc. Further, as per Para 4(a) on or before arrival of the consignment, the importer shall present a copy of the KP Certificate and other related documents, such as Air way Bill, invoices, P/L, etc to the GJPEC for verification and certification. The GJPEC unit scrutinized the documents and if found in order, will make the following endorsement on the copy of KP certificate. Verified and signed the documents and the declaration in the invoice and K.P.Certificate are found in order.
(v) In this case DRI received the intelligence of over invoicing the consignment of rough diamonds. The valuation of detained Rough diamonds was carried out by the panel of the GJPEC, Surat under panchnama. The value evaluated for 28 consignments of rough diamonds was found to be US$ 3, 92,494 (Rs. 1.74 Crore) as against original value declared in the KPC and invoices as US$ 9, 89, 51,493 (Rs. 488 Crore) and amended value US$ 3, 52,328.45 declared by the suppliers. In the case of cut and polished diamond US$ 11, 25,445.45 as against declared value US$ 10, 74,923.50. Thus, the declaration (in respect of value) in the invoices and the KP certificate was not found in order by the GJPEC in terms of Para 4(a) of the CBEC circular, therefore, the KP certificates were not valid and were fasified with respect to the valuation. Since the valuation given by the panel of GJPEC is approximately same as that of amended value hence valuation given by GJPEC is reliable and acceptable for the purpose of R/F for mis-declaration of value and penalty for ITC violation. Shri Prakash Sancheti and Shri K.M. Kheni admitted that value is mis-declared. They accept the value given by GJPEC. Their statement in respect of valuation is corroborated by the statements of Directors of importing firms, amended KPCs and amended Invoices, of the overseas suppliers and the GJEPC panel.
(vi) In assessing Fine and Penalty, it is not only relevant but crucial to have regard to the value of goods which have been imported without a proper license. A proper determination of fines and penalties is not possible without a proper assessment of the values of the infringing items of import Dynamic Hydraulics Ltd V/s Collector of Customs 1992 (58) ELT 553 (SC).2
4. Amendment of IGM:
(i) As per section 30(3) of CA62 if the proper officer is satisfied that the import manifest or import export is in any way incorrect or incomplete, and that there was no fraudulent intention, he may permit it to be amended or supplemented.
(ii) Subsequent to detention of consignments and detection of incorrect value in the invoice and KPCs by the DRI the cargo handlers, i.e. M/s Malca Amit Logistics Pvt Ltd applied for the amendment in the IGM (based on the amended relevant house Air way Bills and sought to amend the declared the value from US$ 9,89,51,493 to US$ 3,52,328.45 to the A.C., which was rightly turned down by him in terms of section 30(3) of CA 62 as the same was originally false with respect to valuation.
(iii) When fraud was detected, amendment therein was not allowed U/S 30(3) of CAs62 Biren Shah V/s Collector of Customs, Bombay 1994 (72) ELT 660 (T)3
5. Request For Re-Export:
(i) The Foreign suppliers applied to AC vide their letter dated 13/12/09 to re-export the rough diamonds which was rejected by AC. Vide his letter dated 02/01/09.
(ii) Foreign suppliers and importers in their appeals prayed to allow them to re-export 28 consignments of rough diamonds in terms of Boards circular and the Tribunals order in case of Sahil Diamonds Pvt Ltd V/s Commissioner of Customs, Ahmedabad 2010 (250) ELT 310 (T.Ahmedabad).4 Facts in this case are distinguishable.
(iii) Para 6 of CBEC circular No. 53/2003 Cus, dated 23/06/03 reads as under:
In case a rough diamond consignment is not accompanied by a KP certificate, but otherwise in order, the importer in India may be given seven working days to arrange for the original KP certificate for the clearance of the said import consignment. If the importer is not able to submit the original KP certificate within the said period of seven working days, the goods would be sent back to the exporting authority (i.e. the certifying authority) of the country of origin. All formalities in this regard should be completed by the GJPEC and the cost of such shipment would also be force by the GJPEC.
(iv) The careful reading of Para 6 clearly shows that re-export of the rough diamonds will be permitted only if the consignment is otherwise in order. The word otherwise in order should be read as the goods are in order in other respects i.e. as per declaration in the import documents, i.e. invoice, PIL, Airway Bill, IGM, etc when not accompanied by KPC. In this case they are accompanied by KPC and other import documents in which the value is incorrectly declared or falsified with a motive to remit excess foreign Exchange, which is a offence not only under the Customs Act, but also an offence under the foreign Trade (Development and Regulation) Act 1992 rules 1993 and the Prevention of Money Laundering Act, 2002. Therefore, the facility of re-export will not be available to them when the same is detected by the department.
(v) Para 7 make it clear that in case of import of rough diamonds through personal baggage, the above said procedure (mentioned in Para 6) will apply mutates mutandes. In case the rough diamonds become liable for confiscation U/S 111 of CA62 for any contravention, the goods should be absolutely confiscated by Customs. Since they did not have a valid KPC with them goods are prohibited for import as per Para 2.2 of EXIM 2004-09 and are liable for confiscation U/S 111(d) of CA62 and the goods being not otherwise in order in terms of Para 6 of CBEC circular, the re-export cannot be permitted and the same are liable for absolute confiscation U/S 111(d) read with Para 7 of CBEC circular.
(vi) The facts of this case are distinguishible with the facts of the case in case of Sahil Diamonds because in that case the basic dispute was regarding declaration of value which according to Honble Tribunal could not be established by the department and accordingly mis-declaration of value in the KP certificate could not be established, therefore, Honble Tribunal considered the KP certificate valid. In this case the value arrived by the GJPEC is US$ 3,92,494 (Rs. 1.74 Crore) as against original value US$ 9,98,51,493 (Rs.488 Crore) and amended value submitted by the overseas supplier is US$ 3,52,328.45 (difference 3,92,494 3,52,328.45 US$ 40,165.55 only i.e. approx 10% difference). This clearly shows that the value arrived by the department on the basis of GJPEC and the value subsequently declared after the detection of the case by the supplier is approximately same, hence mis-declaration of value in the invoice as well as in KP certificate is successfully established by the department.
(vii) Honble Supreme Court in the case of Commissioner of Customs, Kolkata V/s Grand Prime Ltd 2003 (155) ELT 417 (SC)5 held that import of the consignments being contrary to the Law, the goods are liable to confiscation U/S 111 of CA62 and not agreeing with Tribunals order permitting the Re-export of goods.
6. Absolute Confiscation of Rough Diamonds U/S 111 (d) of CA62:
(i) As per section 111(d) of CA62 any goods which are imported or attempted to be imported or are brought within the Indian Customs water for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other Law for the time being in force.
(ii) Under section 2(33) prohibited goods means any goods the import or export which is subject to any prohibition under this act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with.
(iii) Under section 11(a) Illegal Import means the import of any goods in contravention of the provision of this act or any other Law for the time being in force.
(iv) As per Para 2.2 of EXIM 2004-09 No import of rough Diamonds shall be permitted unless accompanied by KP Certificates. In this case the consignment of rough Diamonds are not accompanied by valid KP Certificates as original KP Certificates are false in respect to valuation and the amended KP Certificate is invalid because it was issued when the rough Diamonds were not available for ascertaining the correct value in Hong Kong. In the absence of valid KP certificates the imported rough Diamonds falls in the category of Prohibited Goods and import fall under the category of Prohibited and Illegal Import.
(v) Import of rough Diamonds is subject to condition that it should be accompanied by KP Certificate. When it is prescribed that it should be accompanied by KP Certificate it means it should be accompanied by a valid KP certificate. Since this condition is violated hence it is prohibited import and this makes goods liable for confiscation U/S 111(d) of CA60. Honble Supreme Courts decision in case of Om Prakash Bhatia V/s Commissioner of Customs, Delhi 2003 (155) ELT 423 (SC) 6 is relied.
(vi) The import of rough Diamonds in this case is in contravention of section 11 of Foreign Trade (Development and Regulation) Act, 1992 and rule 14 of Foreign Trade (Regulation) Rules, 1993.
(vii) Import and export of cut and polished Diamonds are subject to prohibition under erstwhile Foreign Exchange Regulation Act, 1973 and Foreign Trade (Development & Regulation) Act, 1992 and rules made there under, thus bringing them under per view of prohibited goods. Mis-declaration and over-invoicing of such goods makes confiscation sustainable Shree Corporation V/s Commissioner of Customs, Mumbai 2004 (166) ELT 471 (T.Mumbai).7 Goods detained by Customs before submission of Fax message of foreign supplier regarding mix up of consignment. Mis-declaration of goods is intentional. Confiscation of goods is sustainable - S.K.Bose V/s Collector of Customs, New Delhi 1997 (96) ELT 686 (T.).8
(viii) As per Para 7 of CBEC circular No. 53/2003-Cus, dated 23/06/03 in case the rough Diamonds become liable for confiscation under section 111 of CA62 for any contravention, the goods should be absolutely confiscated by the Customs.
7. Redemption Fine on cut and polished Diamonds:
(i) M/s Prakash Diamonds filled BE dated 26/11/08 wherein value declared was US$ 10, 74,923.50. However, GJPEC panel assessed the value of these goods US$ 11, 25,445.50. Shri Prakash Sancheti and Shri H.M Kheni admitted that value is mis-delared. They accepted the value given by GJPEC. Since the value was mis-declared hence the same were held liable for confiscation U/S 111 (m) of CA62 and R/F of Rs. 25, 00,000/- was imposed.
8. Penalties U/S 112 (a) of CA62:
(i) Under section 112 (a) of CA62 any person who in relation to any goods, does or amits to do any act which act or omission would render such goods liable to confiscation U/S or abets the doing or omission of such an act shall be liable to penalty.
(ii) The acts of importers, Directors of importing firms, the defecto-owner, overseas supplying firms, owner and authorized signatory and partners of M/s Kantilal Exports rendered the rough diamonds/cut and polished Diamonds liable to confiscation U/S 111 of CA62, therefore, the penalty is liable on them U/S 112 (a) of CA62.
(iii) The role played by them is based on the documentary as well as on the oral evidences recorded in the form of statements of these persons U/S 108 of CA62. The details in this respect are as under:
1. Intelligence was received by DRI that importers have imported consignment of rough Diamonds/ cut and polished Diamonds by over valuing to remit the excess Foreign Exchange aboard for their unlawful activities.
2. These goods were imported under precious Cargo Transfer Manifest dated. 22/11/08, 24/11/08 and 25/11/08. Value declared in import documents was US 9, 89, 51,493.
3. DRI detained 29 parcels (28 of Rough Diamonds and one of cut and polished Diamonds) on 27/11/08
4. For one consignment of cut and polished Diamonds M/s Prakash Diamonds filed B/E dated 26/11/08. For 28 consignments of rough Diamonds overseas exporter sent 14 letters all dated 24/11/08 through fax on 28/11/08stating that there was a mistake in preparing the invoices and they are in the process of getting the amendment in KPCs (Para 4 Page No.11). From the date of these letters it is clear that as on 24/11/08 the overseas exporters as per their own admission were very well aware about the incorrectness of valuation in the KPCs and invoices , however, they admitted this incorrectness only when the intelligence was already received and goods were detained by DRI on 27/11/08. Therefore, their letters dated 24/11/08 sent by fax on 28/11/08 were after thought and were declared only after knowing that this fact has already come into the knowledge of the DRI.
5. AC vide letter dated 03/12/08 informed that exporters through Cargo handlers applied for amendment in the IGM and sought to amend the declared value US$ 9,98,51,493 to US$ 3,52,328.45 (app. 3.56%) Para 5 Page No.11 [the initiation to amend the declared value in IGM was done only after detention of consignment by the DRI].
6. Shri A.K.Kakkad, CHA, vide statement dated 10/12/08 stated that Shri. Sushil Kumar Jain, Director and Shri, Prakash Sancheti approached him for the clearance as their regular CHA had refused to file the documents. All firms gave him authority letter dated 04/12/08 Para 7.1 Page No.15/16, 17. [Importers conduct to approach a new CHA instead of their regular CHA raises the doubt of about the genuiness of their conduct and genuineness of their consignment].
7. Addresses of all firms are same. The report of consulated general of India, Hong Kong revealed that Shri. H.S.K.Bhindi of Surat, was the owner of all exporting firms Para 8 Page No.17/18.
8. GJPEC panel valued the rough Diamonds at US$ 3, 92,494, as against US$ 9.89.493 Para 10.1 Page No.19.
9. Shri. Sunil Kumar Jain, Director of M/s Danish exports and M/s Prakash Diamonds vide statement dated 16/12/08 stated that Shri Prakash Sancheti is the real owner of M/s Prakash Diamonds and M/s Danish Exports and he was getting a monthly salary of Rs. 30,000/- (Para 11.1.2 Page No.21). Further, vide statement dated 13/05/09 he stated that the order of the consignment was placed by Prakash Sancheti, that on arrival of the consignment he told that consignment was grossly overvalued and DRI is aware about the value and investigating, therefore, goods are not to be cleared. Since consignment is overvalued and DRI is investigating they sent letters to the overseas supplier to escape from the legal action on them (Para 11.1.3 Page No.22).
10. Shri. Sunil kumar Babel, Director of Multi Star Gems and Jewellery and M/s Manan Exports vide his statement stated that Shri Prakash Sancheti is the real owner of M/s Manan Exports & M/s Multi Star Gems & Jewellery order was placed by Shri. Prakash Sancheti and goods were not cleared because DRI was aware about the overvaluation and investigating the case. He was getting a monthly salary of Rs. 15,000/- and Shri Kumar Bisawat Rs. 10,000/-. Shri Abhay Singh Jain Directors of M/s Prakash Diamonds, Shri Dinesh Bisawat, Director of M/s Manan Exports Pvt Ltd, Shri Manish Kuamr Jain, Directors of M/s Danish Exports Pvt Ltd and Shri R.P.Tater, Directors of M/s Multi Star Gems and Jewellery failed to respond to summons issued by DR.
11. Shri. Prakash Sancheti admitted that he is actually managing and controlling the importing firms. He approached Shri.A.K.Kakkad, CHA on 04/12/08 for the clearance of the goods. For the 28 consignment of rough Diamonds and one consignment of cut and polished Diamonds he negotiated with Shri. M.Tanna. The value of import consignment was overvalued. He agreed with panchnama dated.27/11/08 and 24/12/08 vide which Diamonds were overvalued Para 14.2 Page No.29. vide statement dated 14/05/09 he stated that the practice of mis-declaration was done as there was no Duty on the import of rough Diamonds & cut and polished Diamonds. He interacted with Shri. Sushil Babel and offered him to import the said goods in his companys name on commission basis to which he gave his consent. He would pay commission of Rs.10000/- per Crore. He started his offer and started clearing the goods (Rough Diamonds owned by Shri. Himmat Bhai). The consignment of rough Diamonds imported in the name of Shri. Sushil Babel & Shri. Sushil Kumar Jain were owned by M/s Himmatbhai of M/s Kantilal Exports who had arranged the said parcels of rough Diamonds from Hong Kong in the name of Companies owned/controlled by him draments were arranged by Shri. HimmatBhai. He was acting merely as an agent of Shri. HimmatBhai of M/s Kantilal. He admitted the valuation done by the panel. The purpose of such practice of import by declaring the inflated value was to send the illegal Money outside India through Banking Channel. Imported Diamonds were handed over to Shri.Himmat Bhai or his representative and the Bills/Invoices were signed on his instruction when the cheques were received from the buyers the same was remitted to the overseas suppliers. Shri. HimmatBhai was the person who was representing the overseas supplier.
12. Shri. H.M.Kheni, Partner of M/s Kantilal Exports vide his statement agreed with the valuation. He instructed Shri. Praksah Sancheti to get the goods cleared form the Customs and when he came to know about DRI he instructed him not to file B/E. The over Valuation was as per his instructions. Shri H.Bhindi was employed earlier in his firm. He knew Shri. M.Tanna through him Shri.M.P.Kheni, Partner of M/s kantilal Exports is his nephew. Shri. H.M.Kheni is the main perpetrator of the fraud and imported Diamonds belongs to him. In order to fulfill his evil design he takes the help of Shri Prakash Sancheti. In his statement dated 30/09/09 had categorically admitted that 28 consignments at inflated value were imported from Hong Kong and channeled in India through 4 firms owned by Shri. Prakash Sancheti. He was the person who instructed Shri.M.Tanna A/S of supplying firms to overvalue the goods. He was the key link between the Hong Kong based exporter and Indian based importers with a motive to send illegal Money through Banking channel.
13. Circular Trading: Originally rough Diamonds were imported by 6 Indian firms to M/s S.S.International (Hong Kong) at US$ 0.8389 per Carat. Subsequently part consignment were imported back in India at US$ 544.86 per Carat. Investigation revealed that proprietor of M/s S.S.International is Shri. M.Tanna who is also A/S of the 4 Hong Kong based exporting firms. Shri. M.Tanna initially imported the goods from India and subsequently exported to India after overvaluation in the name of the firms floated in the name of Shri. H.S.Bhindi. intelligence also revealed that Shri.Tanna is working for M/s Kantilal. M/s S.S.Internation was first got registered on 16/06/1997 in the name of Shri. M.P.Kheni and later on Shri. M.Tanna becomes its proprietor wef. 24/03/1999. This is the case of Re-routing Diamonds. KP Certificates are signed by Shri. M.Tanna for exporting supplier. It is who manipulated KP Certificates at his end. 50% of Diamonds imported under KP Certificate dated 30/07/08 has been exported on 04/09/08 under KP Certificate dated 04/09/08 as rejected. On 17/11/08 under KP Certificate dated 17/11/08 the remaining 50% were exported as rejects. Thus, the entire quantity originally imported was exported as rejected. Thus, clearly shows the modus operandi of circular Trade.
14. The Hong Kong based firms had deliberately given false declaration, certifying the correctness of the details in the invoices used by them. Giving false declaration or submitting false documents in the transaction of any Business relating to Customs is an offence U/S 132 of CA62 and is prohibited under regulation 14 of Foreign Tade (Regulation) Rules 1993.
15. The exporter on oath before Honble Gujarat High Court has stated that Commission agent in Hong Kong had approached them for the shipment of rough Diamonds to buyers in India. This clearly indicates that goods were meant for export to India.
16. They contravened the provisions of section 11 of Foreign Trade (Development and Regulation) Act, 1992 and rule 11 and 14 of Foreign Trade (Development and Regulation) Rules, 1993 by misdeclaring the value in the KPC, Invoice, Airway Bills, etc.
17. Import made by the firms on the strength of false declaration of Hong Kong based firm by suppressing the actual value falls under the category of illegal Import in contravention to the provisions of section 111(d) of CA62 on their part tantament to smuggling U/S 2 (39) and therefore, they are liable to penalty U/S 112 (a) of CA62.
18. The Directors of 4 importing firms aided and abelted in the fraudulent importr of highly over invoiced goods by allowing Shri. Prakash Sancheti to use the IEC of their firms. Hence they are liable for penalty U/S 112(a) of CA62.
19. Shri. Prakash Sancheti and Shri. H.M.Kheni admitted that they mis-declared the value. Their statements are corroborated. They accepted the value given by GJPEC. Therefore they are liable to penalty. Shri. M.Kheni is the partner of M/s Kantilal Exports and is the nephew of Shri. H.M.Kheni who was the earlier the proprietor of M/s S.S.International which is owned by Shri. M.Tanna the A/S of exporting firms hence he is also liable for penalty.
20. The owner of overseas supplying firms Shri.H.S.K.Bhindi, the resident of Surat and Shri.M.Tanna, A/S of their firms were knowingly involved in the over-invoicing of the goods and supplying false import documents i.e. KPC Certificates, import Invoices, etc. are liable for penalty U/S 112 (a) of CA62. Penalty is imposable on them U/S 112 (a) of CA62, because
(i) Shri. Bhindi is the resident of Surat
(ii) The offence is committed in India
(iii) They have accepted the jurisdiction of Gujarat High Court
(iv) They are Indian Nationals
21. The reliance made on the Suraj Diamonds(I) Ltd V/s CC (Airport) Mumbai 2008 (227) ELT 471 (T) 9 is misplaced as the facts of the case are different .In that case goods were found to be semi-precious stones, instead of rough Diamonds declared. It was held therein that in view of the valid REP Licenses, the goods would have been exempted from duty. The emphasis in this case is on the prohibited nature of goods.
22. For evidential value of Co-accused the following case Laws are Relied:
(i) Kolkata Abbas Haji V/s Government of India and others 1984 (15) ELT 129 (Ker)10
(ii) Ganesh M. Verma Collector of Cus(P) Mumbai- 2001 (137) ELT 628 (T-Kol)11
23. Confessional statement made before Customs officer through retracted is admissible Surjeet Singh Chhabria V/s Union of India 1997 (89) ELT 646 (SC).12
24. What is admitted need not be proved Commissioner of C.Ex, Madras V/s Systems & Components Pvt Ltd 2004 (165) ELT 136 (SC).13
25. Department is not to prove its case with mathematical precision but only to establish a degree of probability, on the principales of pre-ponderence of probability Collector of Central Excise, Madras and others V/s D.Bhoormull 1983 (13) ELT 1546 (SC).14
26. Penalty is imposable on the directors for their indulgence in the manipulation and the import of prohibited goods Orson Electronics Pvt Ltd V/s Collector of Customs Bombay 1996 (82) ELT 499 (T). 15
27. Penalty imposable on the foreign suppliers for issuing invoices and KPCs showing incorrect value Mahalaxmi International Exports V/s Commissioner of Customs Jaipur- 2004 (169) ELT 68 (T-Delhi).16
9. The distinguishable facts of the present case and in the case of M/s Sahil Diamonds Pvt Ltd are as under:
(1) Three Valuation V/s Single Valuation In the case of M/s Sahil Diamonds, the valuation of the goods was done on three occasions by three different panels. The CESTAT had observed that the second and third valuations were done without any basis and the same were done by unqualified members. The valuation done by 1st panel was not accepted by department as information was received form Mumbai DRI that the valuation done by the members of first expert committee was not correct. This necessitated the need of second valuation and the opinion of the second panel was diagonally opposite to that of the first panel. In order to have a fair and neutral view and also to give justice to the importers, the third valuation of the subject goods was resorted to. The result of the third valuation substantiated the valuation given by the second expert committee and the intelligence received by DRI. There is no such dispute in the instant case as single valuation was done by a committee appointed by GJEPC and the finding of it was in conformity with the request made by exporting firms for amending the value of the goods in IGM.
(2) Unanimity among valuation panel members The CESTAT in the case of M/s Sahil Diamonds had observed that the panel members of the second and third committee, who were appointed by the Gem and Jewellery Export Promotion Council (GJEPC), were not qualified enough to opine in the subject matter. There is no dispute as regard to the constitution of the panel or its findings as regard to the value in the present case and it also finds support from the value sought for amendment by the overseas supplier.
(3) Evidence of Circular Trading.
These cases involve circular trading which was not the case in M/s Sahil Diamonds Pvt Ltd and M/s Suraj Diamonds India Ltd.
In the instant case, Investigation was carried out regarding the movement of the goods, it is fact that the previous imports were not the consideration in the instant case, yet the investigation into the matter was found relevant as the complex and systematic scheme of Circular Trading was brought on record and a link between present imports and earlier exports were also discovered and brought on record. The Investigation has categorically brought on record that the 28 consignments of rough diamonds weighing 181608.00 carats, under seizure, found to be over-valued, were in fact part of the consignments of rough rejection diamonds weighing 478908.99 carats, collectively exported by M/s Evershine Exports, M/s Fine Diamonds Pvt Ltd, M/s Hira Exports, M/s Pramukh Gems, M/s Shree Ramkrishna Exports, M/s Hari Gems of Mubai/Surat to M/s S.S.International. Further the investigation has also established M/s Kantilal Exports, its partners Shri Himmatbhai M. Kheni, Shri Manish P. Kheni and Shri Mehul Tanna, proprietor of M/s S & S International, Hong Kong and authorized signatory of the four Hong Kong based exporting firm were actively involved in circular trading of rough diamonds at a very exorbitant price to siphon out money from India and park it abroad for some other considerations. A request for assistance for obtaining caveat free documents under the Mutual Legal Assistance in Criminal Matter Ordinance of the Hong Kong SAR Government was made. The additional Director (Pol) DRI, New Delhi vides his letter DRI F. No. XIIC/62-POL/09 dated 06/07/10 has forwarded the caveat free documents sent by Department of justice, Hong Kong SAR which clearly establishes overvaluation to the extent of 64900% as well as circular trading.
(4) In keeping with the disclosures made, referred at Para 8 of the OIO about the Mutual Legal Assistance (MLA) in Criminal Matter ordinance (CMO) of the Hong Kong SAR Government, the consul, consulate General of India, Hong Kong, Vides his DO F. No. HON/CUS/HK/01/2009 dated 9th June 21 received through the Additional Director General (Pol) DRI; New Delhi vides his office letter DRI F. No. XIIC/62-POL/09 dated 06/07/10 forwarded a detailed report indicating Circular Trading along with the statements dated 28/07/09 and 06/08/09 of Shri Mehul Girishbhai Tanna, Prop. of M/s S & S International, Hong Kong and statement dated 14/08/09 of Shri Gandhi Vijay Vinodchandra, Sales Manager of Malca Amit Far East Ltd, Hong Kong (5) In his statement Shri Tanna stated that:
1. That he was the authorized signatory to the 4 companies of Mr. Bhindi (Page 4 of statement dated 06/08/09)
2. The source of the 28 consignments of RD shipped to India on 22 & 24 Nov. 09 were from M/s S & S International, Hong Kong who in turn had imported the same from India.
3. The value of the RD sold by M/s S & S International to the four companies of Mr. Bhindi was as per the initial value declared and it was only later that the same was revised. (Page 12 & Page 4).
4. He admitted that the purchase rate of RD was @ US$ 1 per carat and that the sale price of the same was @ US$ 572 per carat.
5. He sent a letter dated 24/11/2009 to the Indian Customs regarding the mistake in the value of the 28 consignments shipped by them but he could not produce a copy of the letter to the Hong Kong Customs authorities.
(6) In his statement Shri Gandhi Vijay Vinodchandra stated that:
1. All the shipments were booked by Mr Tanna with four companies declared as importer.
2. The liability cost (insurance) was on the initial amount declared of the 28 consignments of RD sent to India from Hong Kong on 22/24 of Nov. 09 and no downward revision of the same has been made as the same cannot be amended as per their company rules.
This aspect has already been dealt with in the O-I-O at Para 25 and the above facts based on the report of the Hong Kong Customs are merely an extension of the evidences already discussed in details in the said Para. (The copy of the received form the Consul. Consulate General of India, Hong Kong Attached).
(7) Instant imports without a valid KP Certificate and so prohibited U/S 111 (d).
The goods imported in the case of M/s Sahil Diamonds were accompanied by valid KP Certificates whereas the goods imported in the instant case were without valid KP Certificate. It is so as one of the basic requirements of the KP Certificate was incorrectly/falsely given i.e. the value. It therefore implies that the earlier document was incorrect and therefore, this document would then be invalid.
10. Before we proceed, it is necessary to make it clear that even though the learned DR has relied upon the investigations conducted in Hong Kong and the statements recorded on a request made by India, since these investigations were not part of the show cause notice and the details were not before the original adjudicating authority, we would not be considering any evidence forthcoming from these investigations for deciding the issues involved.
11. The first issue to be considered is whether the over invoicing as claimed by the department is to be upheld and whether the value revised as per the provisions of Section 14 of Customs Act, 1962.
Before we proceed to re-determine the value, it is necessary to see whether the value declared can be rejected. In this case import invoices are dated 17.11.08 to 19.11.08. The 28 consignments were sent on 22.11.08 and 24.11.08 from Hong Kong and reached India on the same day. After all the consignments left Hong Kong, invoices, house air way bills, KPC were faxed to Indian importers on 24.11.08.
12. It is revealed from the records that on 27.11.08 goods were detained. The Assistant Commissioner of Customs received faxes on 28.11.08 stating that there was a mistake in preparing the invoice and appellants were in the process of getting the relevant amendments in the KPC. Thereafter the cargo handlers M/s. Malca-Amit Logistics Pvt. Ltd. applied for amendment in the IGM reducing the value to US$ 3,52,328.45. On 13.12.08 exporting firms sought permission to re-export the goods on the ground that importers were not willing to accept the consignments. It is on record that Shri Prakash Sancheti and one of the directors approached M/s. B.K. Freight Forwarders Pvt. Ltd., Mumbai Customs House Agent for clearance of the impugned goods detained on 27.11.08 and all the relevant documents and authorisation were executed with him on 04.12.08. In his statement Shri Kakkad CHA stated that he was approached in the last week of November 2008 by the importers since their regular CHA had refused to file the documents for clearance. This would show that importers were ready to accept the goods till 04.12.08 if not later. Nevertheless by 13.12.08, exporters in Hong Kong sought re-export. By this time the department had already taken steps to get the goods revalued and experts nominated by GJEPC valued the rough diamonds on US$ 3,92,494 as against US$ 3,52,328.45 being the revised value of the exporters. During the investigation, Shri Shri. Sushil Kumar Babel, Director of M/s Multi Star Gems & Jewellery and M/s Manan Exports Pvt. Ltd. in his two statements dated 05.02.09 and 13.05.09 admitted that he was only an employee; Shri Prakash Sancheti was the real owner. The order had indeed been placed by Shri Prakash Sancheti and after the consignment arrived Shri Sancheti had never informed him that DRI was aware about over valuation and has started investigation and therefore the goods are not to be cleared. The cancellation letters were sent according to him because of DRI investigation only. A similar statement was given by Shri Sunil Kumar Jain and in respect of M/s. Prakash Diamonds Pvt. Ltd. and M/s. Dianish Exports Pvt. Ltd. Further it is also on record that it was Shri Prakash Sancheti who had approached Shri Ajay Kakkad the CHA. Prakash Sancheti himself in his statements dated 13.05.09 and 14.05.09 corroborated the statements of the directors and further stated that Shri Himmat Mohanbhai Kheni of M/s. Kantilal Exports was the real importer and he had arranged parcels of rough diamonds from Hong Kong in the name of companies owned/controlled by him for Shri Himmat Mohanbhai Kheni and he was getting a commission of Rs.10,000/- per crore and was only acting as an agent. Shri Himmat Mohanbhai Khenis role came to be known only because Shri Sancheti gave the details. Shri Himmat Mohanbhai Kheni in his statement dated 13.09.09 corroborated the statement of Shri Prakash Sancheti and admitted that he had telephonically instructed Shri Mehul Girish Tanna authorised signatory of the Hong Kong to over value the goods and Shri Prakash Sancheti was to get the same cleared through customs. He also admitted that he had instructed not to clear the goods and file the bill of entry and on his instructions only revised invoices were submitted to Customs Authority. The corroborated statements, the fax messages to Assistant Commissioner, Surat, fresh KPCs obtained by the exporting firms revising the value downwards to 3.56% of original value declared, the statements of the concerned persons and an independent CHA would all go to support the conclusions of the learned Commissioner. This was a case of a failed attempt to import rough diamonds at an exaggerated value to facilitate repatriation of foreign exchange from India. The facts and circumstances can be interpreted in two ways. The first one is that the consignments received in India were not covered by the KPC at all and there was another consignment which was worth the price indicated in these 28 consignments and there was a mistake. The second one would be the conclusion reached by the Commissioner in the impugned order. It has to be noted that the buyers and the sellers and all the persons involved in the trade are experienced in the diamond trade and it cannot be said that either the buyer or the seller is ignorant. Further it is also a known fact that in diamond trade the trust placed a big role. That is the reason why verbal orders are placed and on that basis goods are sent. In this case also admittedly the orders placed were verbal only, till 20 days from the date of receipt of the goods, the buyers were willing to receive the goods. It cannot be said that the buyers were not aware of the price because invoices were raised from 17.11.08 to 19.11.08 and dispatch took place on 22.11.08 and 24.11.08. There was already a gap of 5 to 7 days between the invoice and the dispatch. When the orders were being placed verbally and the amount involved is about Rs.485 crores, it is strange that neither the buyer nor the seller thought it fit that there was something wrong. Further it is to be noted other than making blank statement that there was a mistake, no other explanation is forthcoming as to how the mistake occurred. It is not the case of the exporters that they had exported several consignments to India at the same time and to several other countries and there was a mix up and because of that there was wrong mention of value. If this was correct, there should be other consignments during the same time. There is not even a hint of another consignment sent to someone else during the relevant time or even an order placed on the Hong Kong exporters by someone else causing the confusion. One can understand marginal difference that may occur between the consignments but a uniform mistake happening in the case of 28 consignments to four exporters by four companies in Hong Kong is something which is unbelievable and cannot be a co-incidence or an accident. Mistake can be made by one exporter while dispatching the consignment to another importer. Four exporters in Hong Kong exporting to four importers in India committing the same mistake in respect of 28 consignments is impossible to believe and therefore this was the only conclusion learned Commissioner could have reached and this was a deliberate attempt to send rough diamonds at an inflated value.
13. The learned advocate argued vehemently that value is not an important element in KPC. It is only required to be mentioned. Further the authorities also rely upon the traders declarations only and no physical verification is done. He played down the importance of value in the KPC and also played down the fact that the over invoicing was an accident from one dollar to about 572 US$. It would be appropriate to look into circular No.53/2003-Cus. dated 23.06.03 at this juncture. The circular says India is a signatory to the Interlaken Declaration. The scheme (KPC scheme) has been evolved to deal with the issue of conflict diamonds which are basically rough diamonds whose trade is prohibited by the United Nations Security Counsil because, the proceeds of that trade are used by rebel movements and their allies to finance conflicts aimed at undermining legitimate governments. The circular goes on to say KP Certificate is a forgery document with a particular format which identifies a shipment of rough diamonds as being in compliance with the requirements of the scheme. The certificate has details like country of origin, certificate number, date of issue, date of excpiry, issuing authority, details of importer and exporter, carat weight/mass, value in US$, number of parcels in shipment, relevant HS code and validation of certificate by the exporting authority. It further says it may also have additional details such as quality, characteristics of rough diamonds in the shipment etc.
14. From the above it can be seen that value is one of the essential components of the certificate and not a detail which may or may not be given. Unimportant details which may not be required have been identified and option has been given to the parties to mention them or leave them. There is no doubt in the KPCs value is an important aspect. Further the very purpose of the scheme would show the importance of the value because the proceeds of the trade can be used by rebel movements. The inflation of value can help repatriation of excess funds to rebel movements and can be used to finance them. Rebel movements would be interested in money and not in mere diamonds. Therefore when such exaggerated over invoicing takes place it is clearly in conflict with KPCS and no country can ignore such excessive over invoicing being signatory to the scheme. Therefore we are unable to agree with the contention of the learned advocate for the exporters in Hong Kong that it was a genuine mistake.
15. As already discussed, in this case it is not only the exporters in Hong Kong who are responsible for mis-declaration of value in the relevant documents such as invoice, air way bill, KPC etc. but also the Indian importers as brought out from the statements. In view of the fact that the value was revised down by the exporters themselves to 3.56% of the original value and the value so declared by the exporters is very near to the value arrived at by the expert panel of GJEPC, the mis-declaration is clearly established.
16. According to Section 111(d) of Customs Act, 1962, any goods which are imported or attempted to be imported or brought within the Indian Customs waters for the purpose of being imported, contrary to any prohibition under this act or any other law for the time being in force are liable to confiscation. The import of rough diamonds is in contravention of Section 11 of Foreign Trade (Development and Regulation) Act 1992 and Rule 14 of Foreign Trade (Regulation Rules, 1993). According to the provisions of these enactments and rules, any declaration in the documents relating to import or export would render the goods prohibited. Para 2.2 of Exim Policy 2004 to 2009 which reads as under:
2.2. Every exporter or importer shall comply with the provisions of the Foreign Trade (Development and Regulation) Act, 1992, the Rules and Orders made thereunder, the provisions of this Policy and the terms and conditions of any licence/certificate/permission granted to him, as well as provisions of any other law for the time being in force. All imported goods shall also be subject to domestic Laws, Rules, Orders, Regulations, technical specifications, environmental and safety norms as applicable to domestically produced goods. No import or export of rough diamonds shall be permitted unless the shipment parcel is accompanied by Kimberley Process Certificate required under the procedure specified by the Gem & Jewellery Export Promotion Council (GJEPC).
17. From the above paragraph once it is shown that the KPC did not reflect the correct details of the consignments, it cannot be said to cover the consignments at all. Therefore as on 24.11.08 when the goods reached the Indian soil, they were prohibited goods having not been covered by a proper KPC as per the requirement of the law. According to Section 30 of Customs Act, 1962, the amendment in the import manifest or import report can be permitted only if the proper officer is satisfied that the import manifest or import report is in any way incorrect or incomplete and that there was no fraudulent intention. Therefore the effort made by the exporter and the console agents to get the IGM amended on 03.12.08 by producing a new KPC or amended KPC or revised KPC has been rightly disallowed. Once the amendment is disallowed and the revised documents have not been accepted and during the subsequent adjudication process and as per the above discussion by us, the fraudulent intention is established, the question of allowing any amendment in the IGM does not arise. Further as rightly pointed out by the learned DR as per the decision of the Honble Supreme Court in the case of Grand Prime Ltd. reported in 2003 (155) ELT 417 S.C., re-export cannot be permitted when the import itself is contrary to the law. Therefore the action of the Commissioner and the authorities in not allowing the re-export was also in line and in accordance with the existing law of the country.
18. The discussion above very clearly shows that the transaction value is not the real transaction value in this case and therefore has been rightly rejected by the Commissioner in her order. The evidences gathered during the investigation which continued for more than nine months and elaborately discussed by the learned Commissioner in her order and briefly discussed by us would clearly show that all the persons concerned and the firms in India and in Hong Kong joined together and there was an attempt to import rough diamonds at highly exaggerated value. Since the KPC or the invoices do not specify the grade or quality etc. which facilitate comparison with other diamonds, the learned Commissioner has rightly relied upon the value arrived at by an expert panel nominated by GJEPC which is an independent organization meant for promotion of Gems & Jewellery export of the country and is meant to lookafter the interest of the trade and not of the investigating agency. All the statements corroborate each other. Retractions have been rightly rejected since statements have revealed facts which could have been known to only the persons who gave the statement. Shri Pakash Sanchetis name as de-facto owner here has come from Directors and an independent witness CHA. Similarly name of Shri H.M. Kheni has come out from Shri Prakash Sancheti which could not have been known to others. Several other facts known only to individuals have emerged. Honble Delhi High Court in the case of Vishnu Kumar reported in 2010 (260) ELT 356 (Delhi) has held that statements can be used against the person himself as well as other parties referring to the decision of Apex Court in Naresh J. Sukhawani Vs. UOI reported in 1996 (83) ELT 258 (S.C.). In the case of Indru Ramchand Bhavani Vs. UOI reported in 1992 (059) ELT 201 (S.C.) approves the view taken by High Court that by filing affidavits later burden of proof which shifts to parties does not get discharged. In this case, none of the appellants have rebutted the Revenues case and evidence effectively. Therefore learned Commissioner has rightly revised the value to the value arrived at by the panel and has rightly rejected the value declared by the exporters on both the occasions for the purpose of issuance of KPC. It is settled law that Revenue has to prove the case beyond preponderance of probability. In the recent decision of Honble Delhi High Court in the case of Vishnu Kumar (supra) has observed that it is a settled proposition of law that though the penalty proceedings under Customs Act, 1962 are quasi criminal in nature, the Department is not required to prove its case beyond reasonable doubt, as is required to prove commission of an offence in a criminal prosecution and it is sufficient if the guilt attributed to the charged person is established on a preponderance of probabilities. Honble High Court also observed As observed by the Supreme Court in Collector of Customs, Madras & others Vs. D. Bhoormull 1983 (13) ELT 1546 (S.C.), all that is required to be established is such a degree of probability that a prudent man may, on its basis, believe in the existence of the act in issue. Appellants also relied upon the decision of Apex Court in the case of Mahalaxmi Gems reported in 2008 (231) ELT 198 (S.C.) to submit that no contemporaneous evidence has been shown to prove overvaluation. Para 7 & para 8 of the said decision of the Honble Supreme Court are reproduced below:
7.?Assessee, being aggrieved, filed appeal before the Tribunal. Tribunal by its impugned order has set aside the findings recorded by the Commissioner (Customs) by observing that the value of the goods that was declared was the transaction value. The genuineness of the invoice that the assessee produced has not been questioned. It has not been alleged that it was fabricated or fake or that any relationship existed between the importer and the exporter. It was also held that there was no contemporaneous evidence to prove that the goods imported were overinvoiced. The Tribunal, without going into the question regarding the impartiality of the opinion of the two members of the trade panel, observed that they were the competitors. Tribunal, relying upon a judgment of this Court in the case of Eicher Tractor Ltd. v. Commissioner of Customs reported in 2000 (122) E.L.T. 321, held that the transaction value would have to be accepted until and unless it is shown by some contemporaneous evidence that the price declared in the invoice was not the correct price.
8.?In the present case, the department has failed to show from any contemporaneous evidence that the invoices were either fabricated or fake or that any relationship existed between the importer and the exporter. We entirely agree with the view taken by the Tribunal that the transaction value has to be accepted until and unless it is shown by some contemporaneous evidence that the price declared in the invoice was not the correct price. From the observations of the Honble Supreme Court in para 8, it may be seen that the decision went in favour of not only because the department had failed to show contemporaneous evidence about value but because of failure of the department that the invoices were either inflated or fake or that any relationship existed between the importer and the exporter. In this case sufficient evidence has been gathered to show that the price was inflated. Therefore this decision is not relevant.
19. The next issue to be taken up is the liability of 28 consignments to confiscation. The Commissioner has reached the conclusion that all the 28 consignments have to be absolutely confiscated under Section 111(d) of Customs Act, 1962.
20. We have already held that the value has been mis-declared and therefore the value declared has to be rejected. We have also taken note of the provisions of the Section 111(d) of Customs Act, 1962 and have already noticed that goods are to be treated as the ones which are prohibited for import under the Exim Policy. Therefore the goods are liable to confiscation under Section 111(d) of Customs Act, 1962.
21. At this stage, we have to take note of the submissions made by the appellants that in this case goods could not have been confiscated in view of the fact that no duty was leviable. It was also submitted that the value was not an important element and therefore it cannot be said that the value was mis-declared. As far as value is concerned we have already rejected the claim. The appellants relied upon the decisions of this Tribunal in the case of Sahil Diamonds Pvt. Ltd. reported in 2010 (250) ELT 310 (Tri Ahd.) to support their contention that absolute confiscation was not at all warranted. In fact it was submitted that Board itself in Circular No.53/03-Cus. dated 23.06.03 prescribed re-export of goods where no KP Certificate was produced. It was also urged that the submission of an invalid KPC is as good as equivalent to non submission of KP Certificate. Para 6 of the Circular was relied upon. Para 6 of the circular provides that in case a rough diamond consignment is not accompanied by KP Certificate but otherwise in order, the importer may be given seven working days to arrange for the original KPC for clearance of the import consignment. If the importer is not able to submit the original KPC within seven working days, the goods could be sent back. Unfortunately, the appellants failed to notice the words otherwise in order. The provision in this para applies only when diamond consignment is otherwise in order but a KPC is not available. The detailed discussion above clearly shows that in this case it is not the non availability of KPC but it is the mis-declaration value of value which is the reason for confiscation. Therefore unless the appellants are able to show that other than non availability or non applicability of KPC, consignments were otherwise in order, the circular cannot be applied. As regards the case of Sahil Diamonds, in that case the consignment was not accompanied by a KPC. However instead of requiring the importers to produce KPC, the department went on to constitute panel after panel to get the value decided. Three panels were constituted at the instance of the department. Further in that case the KPC was produced by the appellant which showed the value declared by them and there was no evidence to show other than the opinion of the panel constituted by the department to reject the KPC. In this case sufficient evidence is available to show that the value declared was wrong and exaggerated value was declared deliberately. Therefore the facts being entirely different, the conclusions reached in the case of Sahil Diamonds would not help the appellants in any manner.
22. The next question to be answered is whether absolute confiscation was warranted in this case. As submitted by the learned DR, in an omission on the part of exporters/importers to declare the details correctly and any omission to fulfill their obligations as per law, would result in goods becoming prohibited. In this connection we find the reliance of the learned DR on the decision of the Honble Supreme Court in the case of Om Prakash Bhatia Vs. CC Delhi reported in 2003 (155) ELT 423 (S.C.) relevant. In this case, Honble Supreme Court held prohibition of importation or exportation could be subject to certificate prescribed conditions to be fulfilled before or after clearance of goods. If conditions are not fulfilled, it may amount to prohibited goods. The Apex Court discussed the provisions of Section 2(33) and Section 113(d) of Customs Act, 1962. The Apex Court noted that Section 113(d) empowers the authority to confiscate any goods attempted to be exported contrary to any provision imposed by or under the Act or any other law for the time being in force. The Apex Court noted that according to Section 2(33) of Customs Act, 1962, prohibited goods are defined as any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with. The Apex Court from the definition concluded that if the conditions prescribed for import or export of goods are not complied with, such goods would be considered to be prohibited goods. Obviously in this case, the import of rough diamonds was made without complying with the requirements of Exim Policy, relevant Act and the Rules there under. Therefore the rough diamonds have to be held as prohibited under the law. Once the importation is held to be prohibited, the learned Commissioner has the discretion to decide whether the goods have to be absolutely confiscated or allowed to be redeemed on payment of fine. In this case it is not only that the parties concerned have attempted to import rough diamonds at highly exaggerated value but also they attempted to manipulate the records and mislead the department that there was a mistake in preparation of invoice. The effort stopped only when the appellants came to know that department has commenced investigation and the goods may not be released. The extent of over invoicing is so high that the actual value of the goods was found to be 3.56% of the actual. In fact the learned advocate on behalf of the Hong Kong exporters submitted that the Commissioner has discussed the earlier import and export but since she has not based her conclusions on those transactions, he did not contest those findings nor made any submissions thereon. It would not be fair on our part also to consider the past activity for the purpose of deciding whether goods have to be absolutely confiscated or not. But in our opinion the extent of over valuation which if allowed would have resulted in repatriation of foreign currency of more than Rs.485 crores itself would show that this is a case where no lenient view is called for. Therefore the decision to absolutely confiscate the rough diamonds under seizure has to be upheld.
23. The next issue that arises for consideration is whether penalties have to be imposed on all the persons concerned or not. In this case the penalties imposed on various appellants when totaled, would come to more than the revised value of the goods imported. In fact it was the submission of the appellants that since rough diamonds are not liable to duty at all, no penalty is imposable. It was submitted that the principle is no duty no penalty. For this purpose, the appellants relied upon the decision of the Tribunal in the case of Suraj Diamonds (India) Ltd. Vs. CC (Airport) Mumbai reported in 2008 (227) ELT 471 (Tri. Mum.). In fact both at the time of consideration of stay petitions requesting for stay of the penalties imposed and at the time of consideration for request of early hearing, this Tribunal had taken note of the submission that the identical issue was considered by the Tribunal in the case of Sahil Diamonds Pvt. Ltd. and Suraj Diamonds (India) Ltd. and accordingly had taken a view that appellants had made out a strong prima-facie case in their favour. As already mentioned earlier in the case of Sahil Diamonds the department had no evidence other than the opinion of the expert panel which was also not a single one but three to contest the KPC and there was no other evidence. Further the case of Sahil Diamonds Pvt. Ltd. was clearly covered by the circular since KPC was not available at the time of import. Further the very fact that three expert panels were set up made the departments case suspect. None of those elements are found in this case. Therefore the decision and the conclusions reached in the case of Sahil Diamonds Pvt. Ltd. cannot be applied to this case.
24. Now we come to the decision of the Tribunal in the case of Suraj Diamonds (India) Ltd. The facts in Suraj Diamonds case were as under:
The relevant fact that arises for consideration are on 29-2-99, the appellant Suraj Diamonds (India) Ltd., (appellant company) imported a parcel of rough diamonds from Sharjah and declared the same as rough diamonds. The said goods were imported as per IGM No. 5768 Line No. 1 dated 24-4-99 under Airway Bill No. 16068163620 dated 24-4-99 and the goods were shipped vide Invoice No. R0002/9990 dated 24-4-99 by M/s. Viraj Holdings Ltd., Sharjah. The duty free clearances of said goods was sought under Customs Tariff No. 7102.31 and under exemption Notification No. 20/99-Cus. dated 28-2-99 against REP Licence. The consignment was ordered for first check examination. On examination of the goods by the officers, it was noticed that four pieces, declared as rough diamonds do not appear to be diamonds. Hence, the goods were shown to Trade Panel Members and on their verification, the said consignment was found to be only semi precious stones. On a reasonable belief that there was a misdeclaration of the goods, the said consignment was seized and investigation was conducted.
25. The Tribunal also analysed the facts and the submissions in paragraphs 9 to 11 which is reproduced as under:
9. It can be seen from the reproduced portion of the order at para 3 that the adjudicating authority has come to the conclusion that there was an over valuation and it has been done with an intention to remit extra foreign exchange by importing worthless goods under the guise of diamonds. It is also seen from the reproduced portion of the order that the adjudicating authority has come to the conclusion that the claim of Chairman of the Company, they were cheated is only to alleviate the responsibility of overvaluation. We are unable to accept these findings. We find from the statements, which were read out by both sides, clearly indicate that the Director of the appellant company i.e. Shri Jatin Mehta (the appellant in the proceedings) has clearly stated to the authorities, that he was not aware that the semi precious stones are being supplied in the guise of rough diamonds. It is also on record that Shri Jatin Mehta has never seen the diamonds but entered into transaction for importing the said diamonds on a belief and the word of Shri Ranjeet R. Parekh and Laxman Patel. The statements of Laxman Patel and Ranjeet R. Parekh also do not indicate that they were aware of the fact that semi precious stones will be shipped in place of rough diamonds. In the above background, it is to be seen whether the appellant company and the Chairman of the company were under the bona fide belief as to the consignment imported by them is of rough diamond or not.
10. It can be seen from the order of the adjudicating authority that the appellant company filed the bill of entry, submitted the documents like invoices, airway bill, IGM No and more specifically the following REP licences.
(a) 0109283 dated 6-10-98 (b) 03333790 dated 5-11-98 (c) 0109284 dated 6-10-98 It can be noticed from the above that the appellants herein were under the bona fide belief that they were importing rough diamonds, if it would not have been the case, the appellant company would not have given the above referred REP licence for importing of consignment of value of Rs. 2,35,28,388/-. This was done by the appellant company when the goods landed in India, before inspection and this fact is undisputed. It is also on record the Chairman of appellant company on examination of consignment, noticing that they were worthless semi precious stones, straightaway disowned the same by intimating the authorities that they had not contracted for import of these goods.
11. On careful perusal of the various statements of the Chairman of the appellant company as well as others, we find that they do not bring out any categorical averment that the Chairman of appellant company had knowledge that the import is of semi precious stones instead of rough diamonds. Further, it was submitted by the ld. Consultant that this matter was referred to FERA and FEMA authorities and on conclusion of an investigation, the case was closed, as there were no remittances of Foreign Exchange. It is an undisputed fact that the appellants had not remitted any foreign exchange.
26. The conclusion in the para 11 reached by the Tribunal would clearly show that the department could not show that the appellant company had knowledge of the nature of the goods sent to them and the cases referred to FERA and FEMA were also closed. Further the Tribunal also noted that the appellants were under a bonafide belief that they were importing rough diamonds and not semi precious stones which had been sent to them. It was keeping the facts and the conclusions summarized above in mind that the Tribunal reached the conclusion that penalty imposed on the company and the chairman was liable to be set aside.
27. However in para 14 of the same order, the Tribunal had also discussed the decision of the Tribunal in the case of Jay AR Enterprises reported in 2007 (210) ELT 459 (Tri. Chennai) and Shree Subadhra Industries reported in 2001 (137) ELT 1405 (Tri. Chennai). The relevant observations of the Tribunal are contained in para 14 of Suraj Diamonds case and reproduced below:
14.We find ourselves in agreement with the ratio of the co-ordinate Bench of the Tribunal in the case of JAY AR Enterprises (supra), wherein it is held that Goods when exempted from full payment of duty are not dutiable goods but are goods not chargeable to duty. Hence penalty under Section 112 of Customs Act, 1962 not imposable when the goods misdeclared goods are not dutiable. We also find that the ratio of the coordinate Bench in the case of Shree Subadhra Industries (supra), it was held that penalty - Customs - Importer not deriving any benefit from illegal import of copper scrap in the guise of steel turning scrap - Invoice describing the goods as steel turning scrap received by them and sold to another party as such imposition of penalty on them not sustainable . The ratio of the decision of the Honble High Court of Andhra Pradesh at Hyderabad, in the case of Boddu Ramaiah (supra) Penalty - Imposition valid only if possessor had knowledge of goods being liable for confiscation under Section 111 of the Customs Act, 1962 - In the absence of proof of such knowledge penalty not imposable, will be squarely applicable in this case.
28. These observations that were brought to our notice especially the observation taken note of by the Tribunal in the case of Jay AR Enterprises that Goods when exempted from full payment of duty are not dutiable goods but are goods not chargeable to duty, penalty under Section 112 of Customs Act, 1962 not imposable. The other two decisions also show that the appellants did not get any benefit and therefore penalty was not imposable. The underlying assumption is that if there was no evasion of duty, imported would not get benefit of mis-declaration and therefore no penalty would be imposable.
29. It becomes necessary to consider the three decisions relied upon by the Tribunal since we have already observed that the ratio of the decision in the case of Suraj Diamonds was totally different. Therefore if the other three decisions cannot be applied to the facts of the case, the decision of Suraj Diamonds also would not be applicable since the facts in the case of Suraj Diamonds were entirely different and the Tribunal had reached a conclusion there that importer had a bonafide belief that it was importing rough diamonds and there was no intentional import which is not the case here.
30. In Jay AR Enterprises case, the appellant was manufacturer of leather and they had exported four consignments of leather to USA out of which one consignment was sent back. However while filing bill of entry, the appellant declared origin of the country as USA and thereafter an offence case was registered. The Tribunal took note of the provisions of Section 112 of Customs Act, 1962 and it was urged by the Revenue that clause 2 of Section 112(b) would be applicable on the ground that the goods were dutiable. During the relevant time, it was noted by the Tribunal that finished leather was fully exempt under Notification No.21/2002-Cus. and therefore a view was taken that goods were not dutiable. Accordingly it was held that where the goods are not dutiable, the penalty in terms of clause (ii) under Section 112(a) of Customs Act, 1962 is not liable to be imposed on the importer of the goods. The Tribunal also noted that learned DR had not claimed further under Section 112. The perusal of the order would clearly show that the Tribunal had considered only whether imported goods were dutiable or not and in terms of Clause 2 of Section 112, penalty was imposable in the case of non dutiable goods other than prohibited goods. Therefore in Jay AR Enterprises case, the question whether penalty was imposable under Section 112 of Customs Act, 1962 in respect of prohibited goods was not at all considered. Therefore the observations of the Tribunal that penalty under Section 112 of Customs Act, 1962 are not imposable when the mis-declared goods are not dutiable does not follow from the decision of the Tribunal in the case of Jay AR Enterprises in our respectful opinion. It has to be noted that the Tribunal in the case of Suraj Diamonds also did not consider or discussed as to which goods exactly can be called as prohibited goods. Again the Tribunal was considering dutiability and declaration without looking at prohibition.
31. We have gone through the decision in the Subadhra Industries. In that case Shree Subadhra Industries imported steel turning scrap from Singapore which they sold on high sea sales basis to M/s. Shree Jagannath Steels Ltd. who filed bill of entry and only when the containers were opened in the factory of Jagannath Steels, one of the containers was found to contain copper scrap instead of steel scrap. The Tribunal took a view that the importers were engaged in the manufacture of steel scraps, they had purchased the goods on high sea sale basis and had acted in good faith and bonafide. Even in that case, the Tribunal still held that goods were liable to confiscation and redemption fine was also upheld. With regard to penalty imposed on Subadhra Industries, it was observed that there was no evidence to show that Subadhra Industries had derived any benefit from the legal import or they had attempted to clear copper scrap in the guise of steel scrap. The Tribunal also observed that there is no evidence to show that any extra amount was received by Subadhra Industries. To sum up the conclusion of the Tribunal seems to be that Shree Subadhra Industries had no hand in rendering the goods liable to confiscation since they had sold the goods on high sea sale basis. As regards Jagannath Steels Ltd. also the same view was taken since there was no evidence to show that they were aware of existence of copper scrap in one of the containers and they had willingly cooperated with the departmental authorities and had given all the facts. Therefore penalty on manager of Jagannath Steels was also waived. It has to be noted that penalty on M/s. Shree Jagannath Steels Ltd. was upheld. To sum up in that case even though there was no evidence to show that M/s. Jagannath Steels was aware of existence of copper scrap in a container, the confiscation and penalty was upheld. The upholding of penalty would mean that M/s. Jagannath Steels Ltd. was considered to have rendered the goods liable to confiscation. In that case mere possession of copper scrap which had not been declared was sufficient for confiscation of the goods and imposition of penalty. In that case penalty was imposed on the importer and therefore the exoneration of Shree Subadhra Industries who was not an importer in terms of Customs Act, would be of no help to the appellants.
32. As regards reliance on the decision of Boddu Ramaiah reported in 1987 (32) ELT 355 (A.P.), the case related to seizure of foreign goods such as cassette recorders etc. in Visakhapatnam. This was a town seizure. In that case the Honble High Court observed that the goods were confiscated and penal action upheld on the ground that the goods were kept in the shop for sale and this was not the subject matter of the charge. On that ground only the order was quashed. The Honble High Court also had observed that in the absence of any evidence that goods were imported in contravention of the provisions of the act, penalty cannot be imposed. In that case the issue was whether the appellant was having knowledge of liability of goods for confiscation. In this case the offence is not of mere possession of foreign goods in a town seizure. Therefore the facts of the case are also not relevant.
33. The above discussions show clearly that the three decisions which have been relied upon by the Tribunal are not applicable to the present case. Similarly the conclusion reached by the Tribunal in the facts of Suraj Diamonds case also cannot be applied to the present case.
34. At this juncture, it would be appropriate to consider whether the decisions cited above have laid down any ratio which can be applied to the facts in this case. The Tribunal had considered the issue of applicability of a ratio of a decision and also how to come to the conclusion as to what exactly is the ratio of a decision in detail in the case of Spie Capag S.A. Vs. CCE, Mumbai reported in 2009 (243) ELT 50 (Tri. Mum.). The Tribunal in the above case in para 27 observed as below:
27.?We have considered the submissions both oral and written from both sides and perused the records. We are not going into the merits of the case, as the appellants are not disputing the same but are contesting the demand on limitation only. The appellants main plea is that once the Revenue has come to know about the activity of manufacture of RCC pipes through the statement of their legal and fiscal advisor recorded on 2nd September 1987, the extended period cannot be invoked thereafter and the show cause notice should have been issued within the normal period from the date of such knowledge and since the show cause notice was issued on 10-2-1989, it was clearly time barred. In this regard heavy reliance has been placed on the Supreme Court decision in the case Nizam Sugar Factory cited supra and Karnataka High Court decision in the case of Bripanil Synthetics (cited supra). We will therefore have to consider the ratio of decision of Supreme Court in the case of Nizam Sugar Factory as well Karnataka High Court decision in the case Bripanil Synthetics. For culling out the ratio of these two decisions it will be relevant to consider the various case laws cited by ld. DR which clearly brings out that the ratio of a decision must be culled out from the facts involved in a given case. A decision is an authority for what decides and not what can logically be deduced therefrom. The ratio of any decision must be understood in the back ground of the facts of that case. A case is only an authority for what it actually decides and not what logically follows from it. Even a difference in one fact can make a world of difference and the outcome may be totally different. An opinion of the court on any issue, not necessary for deciding the dispute, cannot be considered as ratio of that case. Ratio decidendi is a rule deductible from the application of law to the facts and circumstance of a case and not some conclusion based upon facts which may appear to be similar.
35. Further before the Tribunal, submissions made by the Revenue were reproduced in para 13 & 14 which are reproduced by us hereunder:
13.?It was submitted that Honble Supreme Court in the case of CC v. Toyota Kirloskar reported in 2007 (213) E.L.T. 4 had an occasion to examine the scope of ratio decidendi. It observed in para 30 as under :-
30.?The observations made by this Court in Essar Gujarat Limited (supra) in Paragraph 18 must be understood in the factual matrix Involved therein. The ratio of a decision, as is well-known, must be culled out from the facts involved in a given case. A decision, as is well-known, is an authority for what it decides and not what can logically be deduced therefrom. Even in Essar Gujarat Limited (supra), a clear distinction has been made between the charges required to be made for pre-importation and post-importation. All charges levied before the capital goods were in ported were held to be considered for the purpose of computation of transaction value and not the post-importation one. The said decision, therefore, in our opinion, is not an authority for the proposition that irrespective of nature of the contract, licence fee and charges paid for technical know-how, although the same would have nothing to do with the charges at the pre-importation stage, would have to be taken into consideration towards computation of transaction value in terms of Rule 9(1)(c) of the Rules.
14.?He also referred to the decision of the Full Bench of the Gujarat High Court in the case of Ahmedabad Manufacturing reported in 1982 (10) E.L.T. 821 (Guj.). After referring to the Supreme Court decisions in the case of Sales Tax Officer v. Kanhiayalal - AIR 1959 SC 135 and D. Cawasji and Co. - 1979 (2) E.L.T. (J154) and Supreme Court in the case of Madhava Rao - AIR 1971 SC 539 and ADB Jabalpur v. S. Sukla - AIR 1976 SC 1287 it was observed that the court must necessarily examine the precise question or the precise issue which arose before the court and identify the principles of law, applied by the court in resolving the issue and make further effort to find out what is a proposition of law which emerges from the decision of the court. Recently in the case of Ambika Quarry Works v. State of Gujarat - AIR 1987 SC 1073 the Supreme Court has observed as under :
The ratio of any decision must be understood in the background facts of that case. It has been said long time was that a case is only an authority for what it actually decides, and not what logically follows from it.
36. The submissions made by the Revenue above and the decisions cited by the Revenue before the Tribunal, support our view that the ratio of decision in the case of Suraj Diamonds was entirely different and not what was submitted before us i.e. that if there is no duty liability no penalty can be imposed.
37. Section 112(a) of Customs Act, 1962 provides for penalty on any person who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act shall be liable to penalty.
38. Before we proceed further to consider liability of penalty of the parties concerned in this case we find the observations of the learned Commissioner in para 75 of her order relevant and appropriate and hence we reproduce the same.
Before discussing the penalty individually I would like to discuss the motive behind such imports. In the recent past import/export of zero duty goods is a common modus operandi for hawala/money laundering activities. Diamonds are highly susceptible to such activity as, in addition to being zero duty items, they are high value as well, thus allowing huge transfers of funds with minimal number of transactions, unlike other trade goods. It is not out of place to mention that trade based money laundering, with specific reference to the diamond industry in India, has also emerged as a major concern area for international agencies. As brought out above through the detailed financial investigation, etc. in this case also, the import of low quality rough diamonds has been purposefully used for disguising the true nature of the transactions for covering up other nefarious activities. There is a clear attempt to disguise the origin and movement of funds, as well as the origin and movement of goods, by using multiple levels of firms, bank accounts, paper sales/purchases, imports/exports, etc. Since last many years the nation is facing great stress and strain because of economic offences. Various Acts were enacted to contain the white collar crimes which are capable of producing deleterious effect on national economy. The economic offences are committed with cool calculations and deliberate design with an eye on personal benefits regardless of the consequences on the national economy and national interest.
39. In addition to the above observations, we would like to take note of the gravity of the offence in this case. Prima-facie it would look as if there is no duty liability and therefore there is no gain to the importers in India. However when we look at the menace of black money in this country and if one import/export activity, black money of more than Rs.480 crores could be repatriated legally and legitimately, the benefit black money holders and the black market in India gets from this kind of activity can be imagined. At this juncture, even though it is not the subject matter of this proceedings, it would be relevant to note the conclusions reached with regard to past transactions. She has referred to a financial investigation which revealed that the diamonds imported at a cost of about Rs.93 crores were shown to have been sold locally to non existent firms and when the transactions were scrutinized at length it was found the money was routed from one account to another account in a single day to fund the remittances sent abroad. She has also noted that in the funds so collected for sending remittances, no money was received from the so called buyers of diamonds.
40. Shri Sushil Kumar Babel, Director of both M/s. Multistar Gems & Jewellery P. Ltd. and M/s. Manan Exports Pvt. Ltd. Shri Dinesh Birawat, Director of M/s. Manan Exports Pvt. Ltd., Shri Rakesh Premchand Tater, Shri Sunil Kumar Jain, Director of both M/s. Prakash Diamonds P. Ltd. and M/s Dianish Exports P. Ltd., Shri Abhay Singh Jain, Director of M/s. Prakash Diamonds P. Ltd., Shri Manish Kumar Jain, Director of M/s Dianish Exports P. Ltd. in reality were employees of Shri Prakash Sancheti and were getting monthly salary from him. All these persons aided and abetted Shri Prakash Sancheti in the fraudulent imports of over invoiced diamonds and allowed him to use IEC of the firms knowingly. Therefore all of them are liable for penal action under Section 112a of Customs Act, 1962.
41. There were no submissions for reduction of penalty on any of the firms probably on the ground that the issue is covered by earlier decisions and therefore confiscation may not be upheld. However it would be unfair to ignore the facts on record and also consider circumstances before deciding the quantum of penalty. All these persons are admittedly employees of Shri Prakash Sancheti and were only working for salary ranging from Rs.10,000/- to Rs.30,000/-. We find that penalties imposed are running into lakhs and in respect of each firm separate penalty has been imposed on the directors also. We cannot definitely find fault with the learned Commissioner for imposition of separate penalty in respect of each firm since the consignments imported by each firm has to be considered separately for the purpose of penalty. For example in the case of M/s. Multistar Gems & Jewellery P. Ltd., the declared value was 5.57 crore US$ which is more than 50% of the imported value. In this case penalty of Rs.10 lakh each has been imposed on Shri Sushil Kumar Babel and Shri Rakesh Premchand Tater. If they were only employees for a salary and has been admittedly working as per the directions of Shri Prakash Sancheti, the penalty of Rs.10 lakhs each on them looks very high and it would be beyond their means to pay unless there is evidence to show that they have benefited substantially from the activities. There is no evidence to show that they were getting any commission in relation to the transactions entered into. While Shri Prakash Sancheti was supposed to get Rs.10,000/- per crore in this case for facilitating imports in the name of firms, the directors were supposed to get only their salaries and there is no evidence to show that they got any other benefit. At the same time as observed by the learned Commissioner, these appellants in their capacities as directors have knowingly participated in illegal activities. Therefore imposition of penalty under Section 112 of Customs Act, 1962 is definitely warranted but the penalty imposed needs substantial reduction. This would be finally quantified in the conclusion portion.
42. As regards penalty on Shri Prakash Sancheti, he was instrumental in formation of the companies; was the de-facto owner; directors were acting as per his directions; he was the one who approached the CHA after the original CHA refused to file documents. He was well aware of the conspiracy and the very fact that he was to receive Rs.10,000/- per crore would show that he had knowingly allowed Shri H.M. Kheni to use name of his firms to import rough diamonds at highly inflated value. Therefore he is also liable to penalty under Section 112a of Customs Act, 1962.
43. As regards Shri H.M. Kheni and Shri Manish Pravinbhai Kheni partners of M/s. Kantilal Exports, Shri H.M. Kheni was the mastermind and was the owner of the imported goods; he used the names of firms owned and controlled by Shri Prakash Sancheti; to fulfill his desires of converting of the excess foreign exchange he was instrumental in arranging the rough diamonds to be sent to Hong Kong and re-routing the same as imports at highly inflated value. Shri Manish Pravinbhai Kheni actively assisted him. Therefore both are liable to penalty under Section 112a of Customs Act, 1962.
44. We have already rejected the contention that when there is no duty no penalty is imposable. We find that all the importing firms are Pvt. Ltd. Companies and even though Shri Prakash Sancheti is the owner and had controlling interest, yet it is settled law that the person who is controlling interest is not the owner of a Pvt. Ltd. Company. It was submitted that none of these firms can be called as importers since they did not file bill of entry and had rejected the consignments on the ground of excess valuation. We find that following portion of written submissions clearly show that appellants have to be treated as importers and we find that on the basis of law & facts, it is so.
(Viii) Shri Prakash Sancheti accepted that he approached CHA, Shri. A.K.Kakkad on 04/12/08 for the clearance of goods. He had arranged the parcels of Rough Diamonds from Hong Kong in the name of companies owned/controlled by him, named as M/s Multi Star Gems Jewellery, M/s Manan Exports, M/s Prakash Diamonds and M/s Danish Exports.
(ix) Under section 2(26) Importer in relation to any goods at any time between their importation and the time when they are cleared by Home Consumption, includes any owner or any person holding himself out to be importer.
(x) In the following documents they are declared to be importers:
8. In the original invoice as well as in the amended invoice
9. In the original KPCs as well as in the amended KPCs
10. Master air way Bill
11. House air way Bill and amended house Air way Bill
12. CHA collected delivery order
13. CHA paid charges towards delivery orders
14. CHA collected documents
(xi) No other persons can claim to be the importer except the person shown in the manifest originally.
(xii) Air way Bill is not merely a document for carriage of goods but is also universally recognized in international trade and commerce as a document of title during the voyage of goods. Thus, where Air way Bill, import documents, I.e. invoice, KPC s are in the name of importer any disclaimer of the goods by him after their importation can not absolve the importer for any commission or omission which may render the goods liable to confiscation, and importer to penalty Chaudhary International V/s Collector of Customs, Bombay 1999 (109) ELT 371 (T.)
Therefore the importing companies are separately liable for penalty.
45. Shri H.S. Bhindi and Shri M.G. Tanna have been instrumental in over-valuing the exports; in obtaining KPCs at highly inflated value; in obtaining revised KCPs after coming to know of detention of the goods exported by them and have also assisted the Indian importers by sending rough diamonds without insisting on any letter or any document in spite of the fact that the invoice was for such a high value. A claim was made that no offence was committed in India and both being residents abroad can not be penalized what is to be seen is where the offence was committed and in this case it was in India. Therefore irrespective of their nationality, they can be penalized. In any case, investigations have shown that both are Indians. Therefore they are also liable to penalty under Section 112. The firms abroad are ownership firms and therefore no separate penalty can be imposed on the firms owned by Shri H.S. Bhindi.
46. Now we consider the issue relating to one consignment of cut and polished diamonds weighing 784.28 carats. In respect of this consignment bill of entry has been filed and the value declared was US$ 10,74,923.5. Value determined by the members of expert panel was US$ 11,25,445.5. The learned Commissioner has taken note of the submission by M/s. Prakash Diamonds Pvt. Ltd. that there is no evidence to show that the consignment imported by them from M/s. Michael Trading Company, Hong Kong was over valued and they relied upon the decision of Mahalaxmi Gems reported in 2008 (231) 198 (S.C.). She has observed that because of heterogeneous nature of cut and polished diamonds, an expert panel was appointed by GJEPC and the panel had come to the conclusion that the value declared by the importer was lower than what it should have been and thereby found that value should be higher by about 5%. It was contended by the learned advocate that the difference between the value arrived at by the expert panel and the declared value is very marginal and such differences can easily arise in the case of a commodity like diamonds. It was also submitted that in the case of rough diamonds, the revised value of US$ 3.52 lakh which was revised to 3.92 lakh by the expert pael thereby showing a difference of about 10%. It was submitted that the difference of 5 to 10% is very marginal and in the absence of any evidence to show that it was not the transaction value, the transaction value cannot be rejected. Other than experts opinion there is nothing else in this case. There is no clear cut observation by the Commissioner in our order that there was an admission about over-valuation in respect of cut and polished diamonds. Further we also take note of the fact that in this case all the 29 consignments arrived almost together. On 26.11.08, M/s. Prakash Diamonds Pvt. Ltd. filed bill of entry in respect of only cut and polished diamonds. Further in respect of this consignment, the regular CHA filed the bill of entry whereas he refused to take up other consignments. This coupled with the fact that the very next day all the consignments were detained would show that probably in the case of cut and polished diamonds, the transaction was above baord. In the absence of any concrete evidence as in the case of rough diamonds and in view of the fact that the difference between the declared price and the price arrived at by the expert panel is very marginal would also go in favour of the appellants. As regards admission of Shri Prakash Sancheti and Shri H.M. Kheni, in the absence of other evidences and in view of the reasonableness of the price, the benefit of the doubt has to go to the appellant in this case. Accordingly we hold that in respect of cut and polished diamonds, the benefit of doubt would go to the appellants and therefore the impugned order is set aside as regards confiscation as well as penalties on all the persons concerned. We are conscious of the fact that normally when statements are recorded, it has to be accepted either in full or rejected in full. In this case we have relied upon the statements of Shri Prakash Sancheti and Shri H.M. Kheni in respect of rough diamonds and therefore it would appear that when we set aside the confiscation on the ground that other than these two statements there is nothing else, it would amount to acceptance of the statement in part and rejection in part. We make it clear that we are going by the circumstantial evidence and the marginal difference and the interest of justice. We also take note of the fact that in this case the importation is covered by KPC and just only other than two statements there is no other evidence.
47. We had observed before we started discussion about the case that the learned DR had submitted the details of further investigation taken by and also the results of efforts made by DRI which resulted in forwarding of statements recorded by department of justice International Law Division, Mutual Legal Assistance Unit, Hong Kong in the form of a certificate dated 07.06.10. The authorities in Hong Kong have sent two statements of Shri Mehul Girish Tanna recorded by Shri K.C. Leung, Trade Control Officer of Customs and Excise Department of Hong Kong. The two statements recorded from Shri Tanna which are all based on tabulated statements of rough diamonds covered under various KPC and declarations etc. show that he was the authorised signatory to the four companies of Shri Bhindi who were the exporters to India; the source of 28 consignments of rough diamonds shipped to India on 22nd & 24th November 09 were from S&S International Hong Kong who had in turn imported the same from India; the value of the rough diamonds sold by M/s. S&S International to the four companies of Shri Bhindi was as per the initial value declared and only later the same was revised ; Shri Tanna admitted that the purchases rate of rough diamonds sent by him to India was US$ 1 per carat and the sale price on an average was US$ 572 per carat; while he stated that he had sent a letter dated 24.11.08, Indian Customs regarding mistake in the value of 28 consignments shipped by them but he could not produce a copy of the letter or the original to the Hong Kong Customs Authorities.
48. The statement of Shri Tanna also revealed that the companies of Shri Bhindi were established in April 2008 and started shipping goods to India only in September 2008. The first KPC was Hong Kong 8202129. In October 2008 they had made another small scale shipment. The third shipment was on 19th November and a total of 14 KPCs were involved. The fifth shipment was the one which was detained by DRI. Shri Tanna was specifically asked how he could sell rough diamonds purchased at one dollar from India to Indian importers at US$ 572 per carat. To this Shri Tanna stated that they were making profit but not huge profit. He explained that when he had imported rough diamonds from the mine, the batch of gems were of different quality and some were of high quality and some were of low quality. The statement recorded on 06.08.09 also revealed that as of April 2009, the Bhindis four companies had received remittances only to the extent of 74% of the total consideration. The total consideration according to the Annexure accepted by Shri Tanna was 5.14 crore US$ and sum received was about Rs.3.79 crores US$ roughly 74%. Shri Tanna admitted that out of this not a single dollar was paid to S & S International who had sold the goods to the companies of Bhindi. Further he also admitted before the officer that he had turned up to the counter of trade and industry department on 28.11.08 to apply for amendment to revise the value of the consignments sent on 22nd and 24th November. He was also asked why was he revising the value after the goods were detained by Indian customs. When he was asked whether he could produce a copy of the letter dated 24.11.08, Shri Tanna stated the he did not have a copy. The discussion above shows that the comments about circular trading and the misuse of import/export of diamonds for other purposes are clearly established. It is strange that the four companies of Shri Bhindi did not consider it necessary to pay a single US$ out of 74% consideration received by them. It has to be noted that the amount is not small by any means. The total consideration would more than Rs.200 crores and the amount already received by the four firms would be about Rs.150 crores. A single ownership firm not asked for a single paisa out of the consideration received from the purchaser and not received it when he happens to be not only owning the firm which sold the diamonds but also the authorised signatory and the constituted attorney for the four firms who purchased the diamonds from him. This is a question for which the obvious answer is all of them are together and the money received in Hong Kong did not reflect the transaction value of diamonds in respect of the past consignments and the obvious conclusion would the present consignments also were meant for the same purpose. We have deliberately brought this out in the end after considering all the issues and coming to the conclusion about the impugned consignments. We make it clear that these observations have not influenced the decision that we have reached. But these have been made only to show the gravity of situation; the damage this type of transactions can cause to the countrys economy and the need for the provisions like the one we have which required that whether the duty is payable or not, goods can be confiscated and penalty can be imposed.
Final Conclusion:
49. We uphold reduction of value of rough diamonds imported by M/s. Multistar Gems & Jewellery P. Ltd. and the revised value determined by the Commissioner. We also uphold the order of absolute confiscation under Section 111(d) of Customs Act, 1962.
50. Penalties on the importing firm and other persons under Section 112(a) of Customs Act, 1962 shall be as under:
NAME OF THE FIRM/PERSONS PENALTY IMPOSED
(i) M/s. Multistar Gems & Rs.1,00,00,000/- (Rs. one
Jewellery Pvt. Ltd. crore only)
(ii) Shri Sushil Kumar Babel Rs.20,000/- (Rs. Twenty
thousand only)
(iii) Shri Rakesh Premchand Tater Rs.20,000/- (Rs. Twenty
thousand only)
(iv) Shri Himmatbhai Mohanbhai Kheni Rs.1,00,00,000/- (Rs.
One Crore only)
(v) Shri Manish Pravinbhai Kheni Rs.50,00,000/- (Rs. Fifty
Lakh only)
(vi) Shri Prakash Sancheti Rs.50,00,000/- (Rs. Fifty
Lakh only)
(vii)Shri Hiren Sanat Kumar Bhindi Rs.50,00,000/- (Rs. Fifty
Lakh only)
(vii)Shri Mehul Girish Tanna Rs.50,00,000/- (Rs. Fifty
Lakh only)
51. We uphold rejection of the declared value of US$21750437.00 of the rough diamonds totally weighing 37546.00 carats, imported under various Air Way Bills by M/s. Manan Exports Pvt. Ltd., 204, Atawale Bhavan, 2nd Floor, D.D. Sathe Marg, JSS Road, Opera House, Mumbai 400 004, and re-determination of the same as US$ 83512.60 (Rs.42,21,562.00 as per the applicable rate) and uphold order for absolute confiscation of the same under Section 111(d) of the Customs Act, 1962.
52. Penalties on the following firm/persons under Section 112(a) of the Customs Act, 1962 will be as under:
NAME OF THE FIRM/PERSONS PENALTY IMPOSED
(i) M/s. Manan Exports Pvt. Ltd. Rs.40,00,000/- (Rs. Forty
Lakh only)
(ii) Shri Sushil Kumar Babel Rs.8,000/- (Rs. Eight
Thousand only)
(iii) Shri Dinesh Birawat Rs.8,000/- (Rs. Eight
Thousand only)
(iv) Shri Himmatbhai Mohanbhai Kheni Rs.40,00,000/- (Rs. Forty
Lakh only)
(v) Shri Manish Pravinbhai Kheni Rs.20,00,000/-(Rs. Twenty Lakh only)
(vi) Shri Prakash Sancheti Rs.20,00,000/-(Rs. Twenty Lakh only)
(vii)Shri Hiren Sanat Kumar Bhindi Rs.20,00,000/-(Rs. Twenty Lakh only)
(vii)Shri Mehul Girish Tanna Rs.20,00,000/-(Rs. Twenty Lakh only)
53. We uphold rejection of declared value of US$ 1,15,08,817.00 of the rough diamonds totally weighing 22604.00 carats, imported under various Air Way Bills by M/s. Dianish Exports Pvt. Ltd., 12/A, Ranchhod Bhuvan, 55 JSS Road, Opera House, Mumbai 400 004, and re-determination of the same as US$ 45466.40 (Rs.22,98,326.00 as per the applicable rate) and uphold order for absolute confiscation of the same under Section 111(d) of the Customs Act, 1962.
54. Penalties on the following firm/persons under Section 112(a) of the Customs Act, 1962 will be as under:
NAME OF THE FIRM/PERSONS PENALTY IMPOSED (i) M/s. Dianish Exports Pvt. Ltd. Rs.20,00,000/-(Rs. Twenty Lakh only) (ii) Shri Sunil Kumar Jain Rs.4,000/- (Rs. Four Thousand only) (iii) Shri Manish Kumar Jain Rs.4,000/- (Rs. Four Thousand only)
(iv) Shri Himmatbhai Mohanbhai Kheni Rs.20,00,000/-(Rs. Twenty Lakh only)
(v) Shri Manish Pravinbhai Kheni Rs.10,00,000/-(Rs. Ten Lakh only)
(vi) Shri Prakash Sancheti Rs.10,00,000/-(Rs. Ten Lakh only)
(vii)Shri Hiren Sanat Kumar Bhindi Rs.10,00,000/-(Rs. Ten Lakh only)
(vii)Shri Mehul Girish Tanna Rs.10,00,000/-(Rs. Ten Lakh only)
55. We uphold rejection of the declared value of US$ 10039836.00 of the rough diamonds totally weighing 16220.00 carats, imported under various Air Way Bills by M/s. Prakash Diamonds Pvt. Ltd., 418/A, Panchratna, Opera House, Mumbai, and re-determination of the same as US$ 39474.50 (Rs.19,95,436.00 as per the applicable rate) and uphold order for absolute confiscation of the same under Section 111(d) of the Customs Act, 1962.
56. Penalties on the following firm/persons under Section 112(a) of the Customs Act, 1962 will be as under:
NAME OF THE FIRM/PERSONS PENALTY IMPOSED
(i) M/s. Prakash Diamonds Pvt. Ltd. Rs.19,00,000/-(Rs. Nineteen Lakh only)
(ii) Shri Sunil Kumar Jain Rs.4,000/- (Rs. Four Thousand only)
(iii) Shri Abhay Singh Jain Rs.4,000/- (Rs. Four Thousand only)
(iv) Shri Himmatbhai Mohanbhai Kheni Rs.19,00,000/-(Rs. Nineteen Lakh only)
(v) Shri Manish Pravinbhai Kheni Rs.8,50,000/-(Rs. Eight Lakh Fifty Thousand only)
(vi) Shri Prakash Sancheti Rs.8,50,000/-(Rs. Eight Lakh Fifty Thousand only)
(vii)Shri Hiren Sanat Kumar Bhindi Rs.8,50,000/-(Rs. Eight Lakh Fifty Thousand only)
(vii)Shri Mehul Girish Tanna Rs.8,50,000/-(Rs. Eight Lakh Fifty Thousand only)
57. We set aside the impugned order as regards confiscation of cut and polished diamonds imported under bill of entry No.9080 dated 26.11.08 by M/s. Prakash Diamonds Pvt. Ltd. The penalties imposed on various appellants in respect of the import of this consignment are also set aside.
All the appeals and cross objections get disposed of in above terms.
(Pronounced in Court on ___________________)
(Archana Wadhwa) (B.S.V. Murthy)
Member (Judicial) Member (Technical)
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