Custom, Excise & Service Tax Tribunal
M/S Maiden Trading Co. Pvt. Ltd vs Cc, Icd, Tkd, New Delhi on 2 July, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram, New Delhi 110 066.
Date of Hearing : 3.6.2015
Date of Pronouncement: 2.7.2015
Appeal No. C/551/2009-CU(DB)
[Arising out of Order-in-Original No. 71/2008 dated 30.12.2008 passed by the Commissioner of Customs, New Delhi]
For Approval & Signature :
Honble Mr. Ashok Jindal, Member (Judicial)
Honble Mr. R.K. Singh, Member (Technical)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3.
Whether their Lordships wish to see the fair copy of the order?
4.
Whether order is to be circulated to the Department Authorities?
M/s Maiden Trading Co. Pvt. Ltd. Appellant
Vs.
CC, ICD, TKD, New Delhi Respondent
Appearance:
Shri S. Vasudev, Advocate - for the Appellant
Shri Amresh Jain, D.R. - for the Respondent
Coram : Honble Mr. Ashok Jindal, Member (Judicial)
Honble Mr. R.K. Singh, Member (Technical)
F. Order No. 52082/2015
Per Ashok Jindal :
The appellant is in appeal against the impugned order imposing penalty of Rs.20 lakhs under Section 112(a) of the Customs Act, 1962.
2. The brief facts of the case are that the appellant is a 100% EOU and on specific information that the appellant is engaged in large scale evasion of duty by way of under valuation of imported plastic scrap and mis-use of Export Oriented Unit Scheme. The office premises was searched on 28.11.2006 thereafter a show cause notice was issued on 25th May 2007. The said show cause notice is not in question in this appeal. The DRI vide letters dated 13th May 2007 and 3rd Jan., 2008 intimated that they were investigating the case of import of plastic scrap for violation of various provisions with the direction in view of modus operandi in the case of earlier consignments of the appellant. The containers lying in ICD, TKD, New Delhi for which no Bill of Entry was filed by the appellant.
3. The investigation was started by the Customs (SIIB), ICD, TKD, New Delhi and discovered that the appellant had imported 22 containers of the plastic scrap from M/s GDB International INC. USA and not filed any Bill of Entry for clearance of the said containers. However, a legal notice dated 29.3.2007 was received by ICD, TKD issued by Shri Pradeep Jain on behalf of the supplier of the goods wherein it is stated that the supplier has exported 22 containers containing plastic scrap to the appellant as per their order and that later on, it was learnt that there were certain investigations pending against the appellant by DRI and due to which some alert was issued to the said appellant by the Indian Customs, that the said facts were not disclosed to his client by the appellant and his client was unpaid seller as the document sent to the consignee have returned back unpaid. Accordingly, his client continues to be absolute owner of the said goods and the appellant has also given No objection Certificate that appellant was never the authorised consignee of these containers and the shipper has full authority to recall back to the country of origin. Thereafter, the goods were examined and found as plastic scrap of irregular size and shape and did not conform to the size as stipulated in para 2 of Public Notice No. 392 (PN) 92-97 dated 1.1.1997.
4. The result of the examination revealed that the appellant has imported 22 containers which contained not only plastic scrap which also restricted for import but also polythene bags and polythene sheets which were mis-declared as plastic scrap. The statement of Shri Jitender Jaspal, Manager of the appellant was recorded on 11.12.2007 and thereafter the said containers were seized and a Show Cause Notice was issued to the appellant for confiscation of the goods contained in those containers under Section 111(d) (m), (n) and (o) of the Customs Act, 1962 and for imposition of penalty under Section 112(a) and 114(a) of the Customs Act, 1962. The matter was adjudicated the goods contained in 22 containers were absolute confiscated and penalty under Section 112(a) of the Customs Act, 1962 was imposed on the appellant to the tune of Rs.20 lakhs. The appellant is against the said order before us.
5. The ld. Counsel for the appellant submits that in this case the appellant has not filed any Bill of Entry as they have not placed any order on the supplier and they are not the owner of the said goods. Therefore, penalty under Sections 112(a) of the Customs Act, 1962 is not imposable as the appellant has not rendered any act of omission or commission. He further submits that for confiscation the provisions of Section 111(d), (m), (n) and (o) were invoked in the show cause notice and from the provisions of 111 (n) and (o), it is clear that these provisions are not applicable to the facts of this case. Moreover, Section 111(m) of the Act is also not invokable in this case as no Bill of Entry was filed in the said case. Therefore, the goods might have confiscated under Section 111(d) of the Act which provides that the goods can be confiscated if they are attempted or are brought within the Indian custom waters, contrary to any prohibition imposed by the act or any other law time being in force. He further submits that if the goods are liable for confiscation under Section 111(d) of the Act, no penalty warranted on the appellant as they were not in any way connected with the shipment. To support this contention, he relied on the decision of CCE, Goa Vs. Kabul Textiles (LLC) 2006 (206) ELT 1173 (Bom.) which has been affirmed by the Apex Court in 2007 (218) ELT A 112 (SC), Arya International Vs. CC, Kandla 2010 (258) ELT 441 (Tri.-Ahmd.) and Rayal Impex Vs. CC, Chennai 2007 (211) ELT 71 (Tri.-Chennai). He further submits that the appellant came to know about these containers first time when they received intimation from their bankers regarding receipt of the shipping documents from the exporter. The appellant immediately informed the bankers that these goods have not been shipped as per their purchase order and they are not concerned with these goods. The bankers returned the document to the exporter, thereafter, the exporter requested to the appellant to issue No Objection Certificate which the appellant did. In the No Objection Certificate, the appellant has categorically stated that the appellant is not authorised consignee of the impugned goods and on the basis of said NOC issued by the appellant, the exporter applied for there export of the goods before the customs authorities. The appellant received first time intimation from the customs only on 11.12.2007 when the statement of Shri Jitender Jaspal, Manager of the appellant was recorded wherein he categorically stated that the impugned goods were never ordered by the appellant. Therefore, in this sequence of events, the appellant is nowhere concerned with the said goods. Moreover, the department has failed to produce any evidence to show that the impugned gods were ordered by the appellant. Therefore, merely because the shipping documents were sent in the name of the appellant cannot be presumed that the appellant has ordered for the supply of the impugned goods. In the absence of contrary evidence, the appellants were not in any way involved rendering the goods liable for confiscation. Hence, the penalty is not be imposable on the appellant. Revenue has failed to prove that the action of the appellant has rendered the goods liable for confiscation. To support this contention, he relied on the decision of Amba Woolen Mils CCE, Bombay 1998 (99) ELT 352 (Tri.) and CCE Vs. Freight Systems (P) Ltd. 2012 (286) ELT 231 (Tri.-Mum). He also took the support of the decision of this Tribunal in the case of Garima Trade Services Ltd. Vs. CC, Visakhapatnam 2002 (146) ETL 150 (Tri.-Chennai), Nalakath Spices Trading Co. Vs. CC, Cochin 2007 (213) ELT 283 (Tri.-Bang.) and CC, New Delhi Vs. Sewa Ram & Bros. 2003 (151) ELT 344 (Tri.-Del.), to say that once the title of the impugned goods is relinquished, no penalty is imposable.
6. On the other hand, ld. AR argued that on 28.11.2006, as the investigation was conducted in the premises of the appellant wherein it was felt that the appellant is involved in under valuation of imported plastic scrap and misusing EOU scheme and involved in large scale of evasion of duty, these goods in question were imported by the appellant during that time only. Therefore, it was the modus operandi of the appellant not to file Bills of Entry for these goods which were imported by the appellant through their regular supplier of the said goods. When the modus operandi of the appellant has been proved to evade duty by importing the said goods by not filing the Bills of Entry is a further act of the appellant to show that the appellant is involved in the act of omission and commission to let the goods liable for confiscation, therefore, the penalty on the appellant is rightly imposed. He also submits that case law relied upon by the appellant have no relevance to the facts of this case and Revenue has been able to prove modus operandi of the appellant. Therefore, the penalty is rightly imposed on the appellant. In these circumstances, it is prayed on behalf of the Revenue that penalty is imposable on the appellant.
7. Heard the parties. Considered the submissions.
8. In this case the short issue involved whether in the facts and circumstances of the case, the penalty can be imposed on the appellant under Section 112(a) of the Customs Act, 1962 or not.
9. In this case it is admitted fact the appellant has not filed any Bill of Entry for clearance of the impugned goods and it is also a fact that on examination of the goods, the goods were found other than the goods declared in the IGM. The case of the Revenue is that when the investigation against the appellant has been started In November, 2006, the appellant disowned the goods. Therefore, the penalty is imposable. But in this case, it is the contention of the appellant that they have not placed any order on the supplier of the goods to supply the said goods. Moreover, Revenue has not made any effort to ascertain truth of this fact that whether the appellant has placed any order on the supplier or not? Moreover, it is the contention of the ld. AR that when the bankers of the appellant informed of arrival of the goods in question and the documents thereof were presented to the bankers for payments, the appellant should have informed to the Revenue about the arrival of the said goods which the appellant failed to do so and rendered the goods liable for confiscation. It is seen in the Customs Act, there is no provision that if goods has not been ordered and the same has been arrived, the person (in whose name the documents are) is required to approach to Revenue to say that I am not the owner of the goods. In this case, when appellant is not owner of the said goods, the Revenue is at liberty to deal the goods in any manner by way of absolute confiscation or by confiscation and allow to be redeemed on payment of redemption fine who claimed the owner of the goods or without confiscation of the goods to be released to the person who claimed the owner of the goods. In this case, admittedly the appellant never owned the goods nor filed Bill of Entry.
10. In these set of facts, it is to be seen that the penalty can be imposed on the appellant under Section 112(a) of the Act for violation of Section 111(d), (m), (n) and (o) of the Act or not? Therefore, to impose penalty under Section 111(d), (m), (n) and (o), we have to see provisions of the Act which are reproduced herein under :
Section 111(d) in the Customs Act, 1962 (d) any goods which are imported or attempted to be imported or are brought within the Indian customs waters 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;
m) [any goods which do not correspond in respect of value or in any other particular] with the entry made under this Act or in the case of baggage with the declaration made under section 77 2[in respect thereof or in the case of goods under transhipment, with the declaration for transhipment referred to in the proviso to sub-section (1) of section 54];
(n) any dutiable or prohibited goods transisted with or without transhipment or attempted to be so transited in contravention of the provisions of Chapter VIII;
o) any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer; 3[(p) any notified goods in relation to which any provisions of Chapter IVA or of any rule made under this Act for carrying out the purposes of that Chapter have been contravened.] On analysing the above provisions, we find that from a plain reading of provisions of sub-section (n) and (o), it is clear that these provisions are not applicable to the case. In fact Section 111(n) deals with transit/transhipment of goods. Section 111(o) deals with a situation where certain claim is claimed subject to some condition and subsequently the said condition is not followed. In the present case, it is not a situation. In fact, the impugned goods were never cleared from Customs therefore claiming exemption does not arise. Consequently, the provisions of Section 111(n) and (o) are not applicable to the facts of this case.
11. Further, we find that to invoke Section 111 (m) of the Act which deals with a situation wherein any goods does not correspond in respect of value or in any other particular of the said gods as per Section 2(16) of the Act which defines the terms entry which means Bill of Entry. In the present case, it is a fact that the appellant has not filed any Bill of Entry, therefore, the provisions of Section 111(m) are not attracted in this case. The same view was taken by this Tribunal in the case of Kabul Textiles Mills (supra) wherein the Honble Bombay High Court has observed that the CESTAT was therefore right in concluding that even in any case where description was changed within in invoice or in the Bill of Entry or import manifest the same was sufficient to call for confiscation liability of goods under Section 111(m) of the Act as in that case the importer had not filed Bill of Entry which has been affirmed by the Honble Apex Court by holding that in such a situation where Bill of Entry is not the provision of Section 111(m) are not attracted. The only provision of Section 111(d) can be attracted in this case to say that the goods are attempted to be imported contrary in prohibition. We find that in this case, the ld. Counsel has relied on certain cases.
12. We find that in the case of Arya International (supra), this Tribunal has observed that in case the Bill of Entry was not filed declaring description or quantum of the goods and there is no other evidence on record showing the appellants involvement in loading the goods at the exporters end. Therefore, the penalty was not imposed. The same view taken in Royal Impex (supra), wherein Tribunal has held as under:
4.?After giving careful consideration to the submissions, we have to accept the appellants case. Any Bill of Entry was yet to be filed by the appellants to clear the subject import. The first occasion for an importer to declare or misdeclare particulars of the goods imported by him is at the stage of filing Bill of Entry. He cannot be held liable for any misstatement of particulars in Bill of Lading or Import manifest. Hence, as rightly contended by the appellants, the finding of misdeclaration against them is untenable. In this case, the investigating agency (DRI) also ventured into an inquiry as to what should be the assessable value of the goods and as to whether the importer had misdeclared the value of the goods. The importer never filed any Bill of Entry declaring the value and other particulars of the goods. Hence it is absurd for the DRI to have ventured to such an exercise. Surprisingly, this absurdity was sustained by learned Commissioner in the impugned order.
13. We further find that only ground for imposing penalty in this case by the adjudicating authority that the appellant was having the modus operandi and have placed the order on the supplier of the goods but no efforts were made to ascertain the fact that whether the appellant has placed the purchase order on the supplier of the goods or not? Moreover, when the Manager of the appellant was called for recording the statement, he has categorically stated that the appellant has not placed any order on the supplier of the goods and this fact has been confirmed by the act of the supplier when he sought re-export of the goods before the Revenue. If the supplier had supplied the goods at the request of the appellant, in that case, the supplier would have taken legal action against the appellant also but the supplier has asked for No Objection Certificate from the appellant. This act of the supplier shows that the supplier has supplied the goods without obtaining purchase order from the appellant but in regular course of business without any purchase order. Therefore, the act of the appellant does not attribute for imposition of penalty on the appellant under Section 112(a) of the Act, although the goods may be held liable for confiscation in the light of the decision of Amba Woolen Mills (supra) as the owner of the goods in this case is supplier of the goods and there is no connivance or involvement of the appellant with the supplier of goods has been proved by the Revenue with cogent evidence. Further, in the case of Garima Trade Services Ltd. (supra), this Tribunal has held that in case the importer is abandoned the goods and not opted to redeem the same, the penalty is not imposable. But this case is on better footing than the case of Garima Trade (supra), therefore we hold that as the appellant has not filed any Bill of Entry neither placed order for supply of the impugned goods to the supplier/exporter, the penalty under Section 112(a) of the Customs Act is not imposable on the appellant.
14. In these terms, we do not find any merit in the impugned order, the same is set aside. Appeal is allowed with consequential relief, if any.
(Pronounced in Court on 2.7.2015) (Ashok Jindal) Member (Judicial) (R.K. Singh) Member (Technical) RM 1