Custom, Excise & Service Tax Tribunal
Hasmukh Ganatra vs Commissioners Of Central Excise on 7 December, 2015
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad -ooOoo- Appeal No. : C/61,62,92,93/2008 [ Arising out of OIO-32/MP/2007 dtd 23.11.2007 passed by Commissioners of Central Excise, Customs and Service Tax-SURAT-I ] 1. Hasmukh Ganatra ] 2. Nilesh Bansal ] 3. Ram Nivas Agarwal ] - Appellant(s) 4. Sunil Agarwal ] Vs Commissioners of Central Excise, Customs and Service Tax-SURAT-I - Respondent (s)
Represented by :
For Assessee : Shri G B Yadav, Advocate Shri P Patankar, Advocate For Revenue : Shri J Nair, Authorised Representative For approval and signature :
Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Honble 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? No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3 Whether their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes CORAM :
Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Honble Member (Technical) Date of Hearing / Decision : 07/12/2015 ORDER No. A/11882-11885/2015 dtd 7/12/2015 Per : Mr.P.K. Das, These appeals are arising out of a common order and therefore, all are taken up for disposal.
2. The relevant facts of the case in brief, are that one M/s Raj International claimed to be 100% EOU imported Ball Bearings and Polyester Fabrics. The Officers of Directorate General of Central Excise Intelligence (DGCEI), Mumbai, gathered information that the said M/s Raj International indulged in selling duty free imported materials in the local market and also forged the documents. After thorough investigation, it was found that the appellants herein were directly involved for evasion of duty. A show cause notice dtd 19.10.2005 was issued by the Asst. Director General of DGCEI, Zonal unit, Mumbai demanding duty, on import of duty free goods in term of license, which were not used for export purpose and diverted in the domestic market by M/s Raj International and to impose penalty on them amongst others including appellant herein. The Adjudicating Authority confirmed the demand of customs duty amounting to Rs 30,31,697/- on three lacs pieces of Ball Bearing and Rs 16,02,244/- another consignment of 27,989 mtrs of Polyester Fabrics alongwith interest and imposed penalty of equal amount of duty on M/s Raj Internationals. It has also imposed penalty on the appellants herein amongst others, are as under :
Sr No Name (Shri) Amount of penalty imposed (in Rupees) 1 Hasmukh Ganetra Twenty Lakhs 2 Sunil Agarwal Three Lakhs 3 Ramnivas Agarwal Three Lakhs 4 Nilesh Bansal One lakh
3. Shri Prashant Patankar, Ld Counsel, is appearing on behalf of Shri Sunil Agarwal and Shri Ram Nivas Agarwal. The Ld Advocate, Shri G B Yadav, is appearing on behalf of Shri Hasmukh Ganatra. None appears on behalf of Shri Nilesh Bansal. There is no application for adjournment of hearing on behalf of Shri Nilesh Bansal. The Ld. Authorised Representative on behalf of the Revenue submits that no appeal was filed by M/s Raj Internationals. As the matter is old one of 2008, we proceed to decide the appeals of the appellants.
4. The Ld. Advocate on behalf of the appellants raised a preliminary issue in so far as the import was taken place at Sachin, Surat, and the show cause notice issued by the Addl. Director General, DGCEI, Zonal unit, Mumbai, is beyond the territorial of jurisdiction under the Customs Act, 1962. It is submitted that as evident from the Bills of Entry, the goods were cleared for warehousing at Sachin, Surat and therefore, DGCEI Officers of Mumbai has no jurisdiction to issue the show cause notice. He relied upon the decisions of the Tribunal as under :
1. C K Geever vs CC (Seaports-Imports) Chennai 2009(235)ELT.304 (Tri Chennai)
2. Copier Force India Ltd Vs CC(I), Chennai 2009(235)ELT.282 (Tri Chennai)
3. Swami Fashions Pvt Ltd Vs CC, Tuticorin 2009(235)ELT.149 (Tri Chennai)
5. On the other hand the Ld. Authorised Representative on behalf of the Revenue submits in the preliminary issue that the goods were imported at Mumbai port, which were transhipped to Surat, warehouse of the said unit. Thus, the contention of the Ld Counsel cannot be sustained. He further submits that the DGCEI officers were appointed as Customs Officers by Notification No. 27/2009-CUS (NT) dtd 17.3.2009. He also referred to Section 28 of the Customs Act 1962, invoked for demand of duty in the show cause notice. He further drew the attention of the Bench to the provisions of Section 53 to 55 of the Customs Act. He relied upon the decisions of the Tribunal as under:
1. Mahindra & Mahindra Ltd vs CC(I), Mumbai 2014(312)ELT.545 (Tri. Mum.)
2. Skodab Auto India Pvt Ltd vs CC(I) JNCH, Nhava Sheva 2014(313)ELT.600 (Tri. Mum.)
6. After hearing both the sides and perusal of the records, on the preliminary issue we find that M/s Raj International purchased the goods on high-seas sales basis from M/s Sai Impex. It is revealed from the Bills of entry for warehousing as placed by the Ld Counsel on behalf of the appellants that the port of import was Mumbai JNPT. It is seen from the Adjudication order that Shri PT Hudda, proprietor of M/s ACA (Customs House Agent) in his statement dtd 4.12.2002 stated that he had undertaken the import clearance on behalf of M/s Raj Internationals, SEZ, Sachin Surat, since August 2002; that so far as he has handled only two import consignments, viz., one of ball bearings and the other of polyester fabrics; that the said consignments have been cleared from Mumbai port and Nhava Sheva port, respectively on behalf of M/s Raj Internationals, SEZ, Surat; that about the details of the said two consignments cleared, he stated that the first import consignment of 15 pellets of ball bearing having a net weight of 14,500 kgs was cleared from the Mumbai port, under a customs TP No 28 dtd 13.8.2002 and its job No 195/2002-2003; that the second imported consignment was cleared from the Nhava Sheva port consisting of 159 packages of polyester fabrics having a net weight of 10,143.30 kgs under a customs TP No 122 dtd 3.9.2002 and their job No.196/2002-2003; that upon the material reaching at Surat SEZ unit of M/s Raj Internationals, the Landing Certificate (LC) was obtained by the said importer which was handed over to him by Shri Rajendra Thakkar, the proprietor of M/s Raj Internationals; that they have in turn, submitted the LC to the Customs Import Dept., that he was introduced to Shri Rajendra Thakkar of M/s Raj Internationals by Shri Hasmukh Ganatra, who was known to one of his employee; that he received his agency commission partly in the form of pay orders and partly by cash.
7. Chapter VIII of Customs Act 1962 refers goods in transit; it was allowed to transit certain goods without payment of duty. Section 54 and 55 of the Act 1962 provide transhipment of goods without payment of duty and liability of duty on goods transited under Section 53 or transshipped under Section 54 of the Act. For the purpose of the appreciation of the case, Section 53, 54 and 55 are reproduced below:
53. Transit of certain goods without payment of duty. (1) Subject to the provisions of section 11, any goods imported in a conveyance and mentioned in the import manifest or the import report, as the case may be, as for transit in the same conveyance to any place outside India or any customs station may be allowed to be so transited without payment of duty.
54. Transhipment of goods without payment of duty. (1) Where any goods imported into a customs port or customs airport are intended for transhipment, a bill of transhipment shall be presented to the proper officer in the prescribed form: 2[Provided that where the goods are being transhipped under an international treaty or bilateral agreement between the Government of India and Government of a foreign country, a declaration for transhipment instead of a bill of transhipment shall be presented to the proper officer in the prescribed form.] (2) Subject to the provisions of section 11, where any goods imported into a customs station are mentioned in the import manifest or the import report, as the case may be, as for transshipment to any place outside India, such goods may be allowed to be so transshipped without payment of duty.
(3) Where any goods imported into a customs station are mentioned in the import manifest or the import report, as the case may be, as for transhipment
(a) to any major port as defined in the Indian Ports Act, 1908 (15 of 1908), or the customs airport at Mumbai, Calcutta, Delhi or Chennai or any other customs port or customs airport which the Board may, by notification in the Official Gazette, specify in this behalf, or
(b) to any other customs station and the proper officer is satisfied that the goods are bona fide intended for transhipment of such customs station, the proper officer may allow the goods to be transhipped, without payment of duty, subject to such conditions as may be prescribed for the due arrival of such goods at the customs station to which transhipment is allowed.
55. Liability of duty on goods transited under section 53 or transhipped under section 54.Where any goods are allowed to be transited under section 53 or transhipped under sub-section (3) of section 54 to any customs station, they shall, on their arrival at such station, be liable to duty and shall be entered in like manner as goods are entered on the first importation thereof and the provisions of this Act and any rules and regulations shall, so far as may be, apply in relation to such goods.
8. The expressions where any goods imported into a customs port or customs air port in Section 54 of the Act 1962 make it clear that the transhipment of the goods without payment of duty would be allowed after importation of the goods into a customs port. It provides that the importer shall file Bill of Transhipment to the proper officer for transhipment. The duty liability would arise after arrival of the goods at such customs station. Section 55 of the Act 1962 provides that the goods are liable to duty on their arrival at such station (customs station). On reading of the above provisions, it is clear that after importation of the goods into a customs port, it could be allowed to tranship to the customs station without payment of duty. In the present case, it is seen from the Bills of Entry for warehousing, the goods were imported at Mumbai Port and it was transhipped to the said unit at Surat, which is a customs station. Thus, in our considered view, as the goods were imported at Mumbai port, the DGCEI officers of Mumbai has jurisdiction to issue show cause notice. Hence, there is no need to look into the case laws cited by both the sides. In view of the above discussion, the preliminary issue raised by the Ld Counsel is overruled.
9. On merit, we find that the appellants filed these appeals against the imposition of penalties. The main noticee M/s Raj Internationals had not filed any appeal. The Adjudicating Authority had given findings, while imposing penalty on the appellants, are as under:
i) Penalty on Shri Hasmukh Ganatra of M/s. SFPL, The SCN brings out in detail, the key role played by Shri Hasmukh Ganatra in procurement, sale, and arrangement of fake export documents to cover up diversion of duty free goods. Further, the very fact that he stood as Surety for an amount of Rs. 1.5 crore for M/s. Raj international and then organized diversion of goods makes it clear that Shree Ganatra had laid out a premeditated plan to be the party to the economic offence involved herein. Since, he was concerned with the goods which were liable to confiscation, his acts attract penalty under Section 112 of the Customs Act 1962. However, since he is not the registered persons against whom duty can be confirmed under Section 28(b) ibid, I hold that no penalty under Section 114A of the Customs Act 1962 can be imposed on him. Accordingly a penalty shall be imposed on him under Section 112 of the Customs Act 1962.
ii) Penalty on Shree Sunil Agarwal of M/s. GB and Shree Ramnivas Agarwal of M/s. BD.
As mentioned at appropriate place herein, no reply has been filed by these persons and their counsels had informed that they would be filing reply, but no reply has been filed by them. The department has discharged the initial onus by raising the allegations that they had dealt with the goods, Ball Bearings involved in the instant case. Therefore I Have to hold that the allegations of their involvement in procurement and sale of goods locally which should have been exported stand proved and therefore a penalty has to be imposed on them under Section 112 of the Customs Act 1962. However, since they are not the registered persons against whom duty can be confirmed under Section 28(b) ibid, I hold that no penalty under Section 114A of the Customs Act 1962 can be imposed on them.
iii) Penalty on Shri Hemant Trivedi of M/s. SI As mentioned at appropriate place herein, no reply has been filed by him. Nor did he avail himself of the opportunities of being heard in person. The department has discharged the initial onus by raising the allegations that they had dealt with the goods, Ball Bearings involved in the instant case. Therefore I have to hold that the allegations stand proved and therefore a penalty under Section 112 of the Customs Act 1962 has to be imposed on him However, since he is not the registered persons against whom duty can be confirmed under Section 28(b) ibid. I hold that no penalty under Section 114A of the Customs Act 1962 can imposed on them.
iv) Penalty on Shri Nilesh Bansal, Partner, Ms Global Commodities Trading Impex, Kandla SEZ The notice seeks to impose a penalty under Section 112 and 114A of the Customs Act 1962 on him. He filed reply to the notice. His contentions have been mentioned in detail in earlier paras. I find that his contentions lack in conviction. His statement regarding sale of part shipment to M/s. PI, who exported the same through M/s. Kamla Exports had been found to be bogus as no such firm was found existing Then, regarding theft of some goods, the fact remains that it is not a natural cause. Therefore all liabilities including penalty shall accure in such eventualities. The contention regarding the sub-standard nature of fabric was also found to be self contradictory. Regarding the pseudo nature of transactions carried out only to show paper transactions in the instant case have been discussed and concluded in favour of the department at appropriate place herein. Hence I reject the contentions raised by him and hold that he is an interested party to the offence committed by M/s. Raj International and he knew the actual facts about those pseudo transactions in respect of polyester fabrics. Therefore I have to hold that the allegations stand proved and a penalty under Section 112 of the Customs Act 1962 has to be imposed on him. However, since Shree Nilesh is not the registered person against whom duty can be confirmed under Section 28(b) ibid. I hold that no penalty under Section 114A of the Customs Act 1962 can be imposed on them.
10. Shri G B Yadav, Ld. Advocate appearing on behalf of Shi Hasmukh Ganatra submits that he had given surety in respect of the bond executed by M/s Raj International. He had no knowledge of the alleged irregularities committed by M/s Raj Internationals. He further submits that he is not the beneficiary of the irregularities except furnishing of the surety for the bond and no penal provision should be invoked against the appellant. Shri Prashant Patankar, Ld Advocate, appearing on behalf of Shri Sunil Agarwal and Shri Ram Nivas Agarwal submits that the appellants are mere unregistered traders engaged in selling of ball bearings. He submits that during the normal course of trade one Shri Raju Mohatta of Kolkotta, proposed him to help him in selling imported ball bearings. He has assisted Shri Raju Mohtta for selling of the imported bearings. It is further submitted that the appellants had no knowledge from where the goods were procured by the said unit and sold in the open market illicitly. It is further submitted that the penalty was imposed on mere presumption and assumption. It is stated that even both the appellants are brothers but they have separate business identity. No statements of Shri Ram Nivas Agarwal was recorded. The penalty imposed on Shri Ram Nivas Agarwal on the basis of the statement of Shri Sunil Agarwal. It is further submitted that the Adjudicating Authority heavily relied upon the statement of Shri Hasmukh Ganatra. He further submits that the show cause notice proposed penalty under Section 114A of the Act and the Adjudicating Authority imposed penalty under Section 112 of the Act, which is beyond the scope of show cause notice.
11. On the other hand, the Ld Authorised Representative on behalf of the Revenue reiterates the findings of the Adjudicating authority. He particularly drew the attention of the Bench the relevant portion of the statements of the various persons involved in this case. It is submitted that M/s Raj International had not filed appeal and therefore, M/s Raj International had accepted findings of the Adjudicating authority. He further submits that show cause notice proposed penalties under Section 112, and/or 114A of the Act. It is seen from the Adjudication order that Shri Rajendra Thakkar, proprietor of M/s Raj International in collusion and connivance with Shri Hasmukh Ganatra, Shri Sunil Agarwal, Shri Ram Nivas Agarwal and Shri Nilesh Bansal and others had perpetuated the conspiracy to defraud the Govt. revenue by obtaining duty free import of ball beings and polyester fabrics, which were diverted in the domestic market and the corresponding export obligation thereon of its export were shown to have been fulfilled on the strength of fictitious/forged export and/or reported theft with the sole malafide intention of selling illegally in the local market. M/s Raj International had not filed appeal and therefore, the allegation against the import M/s Raj International has been established.
12. We find that the entire deal was financed by Shri Hasmukh Ganatra. He became surety for Rs 1.45 crores towards B17 bond executed by the importer. It is revealed from the statement of the various persons that the business activity of M/s Raj Internationals was carried out and managed by Shri Hasmukh Ganatra. Shri Ganatra was looking after business in so far as high-seas purchase, sale of goods in local market etc. We agree with the findings of the Adjudicating Authority that Shri Ganatra is the master mind of the entire episode and therefore the imposition of penalty is warranted. We have noticed that the importer had not filed appeal and there is no material available that the importer had paid the duty and therefore the quantum of penalty on Shri Ganatra is justified.
13. The penalty imposed on the other appellants ie., Shri Sunil Agarwal and Shri Ram Nivas Agarwal who were engaged in trading activity. We find that Shri Hasmukh Ganatra in his statement categorically stated that the purchase of imported goods were arranged by Shri Raju Mahotta of Kolkatta. The goods were delivered to Shri Sunil Agarwal and Shri Ram Nivas Agarwal who had arranged the finance and documents for the Bills of Entry in respect of high-seas sale agreements. All the documents were handed over by Shri Sunil Agarwal to M/s Raj International on the instruction of Raju Mahotta. The main grievance of the Ld Counsel that no statement of Shri Ram Nivas Agarwal was recorded. We find that both the appellants have common office and both are brothers. They have not disputed these facts before the Adjudicating Authority. So, the contention of the Ld. Counsel is without any substance.
14. The Ld Authorised Representative on behalf of the Revenue submits that Shri Nilesh Bansal is also trader of imported Polyester Fabrics. We find that the statement of the various persons would show Shri Nilesh Bansal knowing fully well involved in trading of the duty free goods in local market. Hence, imposition of penalty of all the appellants are warranted.
15. It is seen from the show cause notice that M/s Raj International and other noticees were called upon jointly and severely to show cause regarding the demand of duty and imposition of penalty under Section 112 and/or 114 of the Customs Act 1962, There is a specific proposal at Para 39 to the co-noticees for imposition of penalties under Section 117 of the Customs Act for the role played by each of them in this case of evasion of customs duty and diversion of the consignments of imported ball bearing and polyester fabrics. After considering the proposals in the show cause notice as a whole, we are unable accept the contention of the Ld. Counsels. However, considering the role of the dealers, the quantum of penalty is required to be reduced.
16. In view of the above discussion, we upheld the penalty on Shri Hasmukh Ganatra, and Shri Nilesh Bansal, and penalty imposed on the other appellants are reduced to Rs one lac each. The appeal filed by Shri Hasmukh Ganatra and Shri NIlesh Bansal are rejected. The appeals filed by other appellants are disposed of in the above terms.
(Dictated and pronounced in the Court)
(P.M. Saleem) (P.K. Das)
Member (Technical) Member (Judicial)
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