Custom, Excise & Service Tax Tribunal
Hi-Tech Engineers vs Commissioner Of Customs (Acc & Import), ... on 12 February, 2018
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. C/348 to 362/09 (Arising out of Order-in-Original No. 181/2008/CAC/CC/KS dt. 26.12.2008 passed by the Commissioner of Customs (ADJ.) Mumbai, OIO No. 186/2008/CAC/CC/KS dt. 30.12.2008 passed by the Commissioner of Customs (ADJ.) Mumbai, OIO No. 182/2008/CAC/CC/KS dt. 30.12.2008 passed by the Commissioner of Customs (ADJ.) Mumbai, OIO No. 187/2008/CAC/CC/KS dt. 30.12.2008 passed by the Commissioner of Customs (ADJ.) Mumbai, & OIO No. 185/2008/CAC/CC/KS dt. 30.12.2008 passed by the Commissioner of Customs (ADJ.) Mumbai) Hi-Tech Engineers Kirit Kamdar Hemant C. Sheth B.K. Industrial Corporation Kirit Kamdar Hemant Sheth B.K. Industrial Corporation Kirit Kamdar Hemant Sheth B.K. Industrial Corporation Kirit Kamdar Hemant Sheth B.K. industrial Corporation Kirit Kamdar Hemant Sheth : Appellant VS Commissioner of Customs (ACC & Import), Mumbai : Respondent
Appearance Shri Nikhil Rungta, Advocate for Appellant Shri Ahibaran, Addl. Commr. (A.R) for respondent CORAM:
Honble Mr. Ramesh Nair, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical) Date of hearing : 12/02/2018 Date of decision : 28/02/2018 ORDER NO.
Per : Ramesh Nair Brief facts of the case are that M/s. B.K. industrial Corporation had imported several consignments of engineering goods and the goods were cleared at nil rate of duty under Section 90 of the Customs Act, 1962 by showing in shipping Bill the SSK Controller of Procurement, Naval Dockyard, Lion Gate Mumbai as consignee. Subsequently it revealed that the goods were diverted in local market. The officers recorded statement of Shri Hemant Sheth, Partner of M/s Hi-Tech Engineers wherein he stated that he and Shri Kirit Kamdar were partner in M/s B.K. Industrial Corporation and later on they were running one more firm M/s Hi-Tech Engineers in which Shri Kirit kamdar, Deepak Kamdar and Shri Natwarlal Kamdar were partners. That both firms imported several consignments of parts, spares, equipment etc and they filed Bond Bill of Entries for these imports. That M/s Motiwala was their CHA and Shri Suryakant Motiwala, Partner of said firm looked after the clearance of goods; that the goods imported by them were storehoused in CWC Warehouse at Marol, Goregaon & Cotton Green; that whenever the goods were cleared from CWC warehouse for delivery of Lion Gate, he always used to accompany the cargo to Lion Gate or Tiger Gate and used to get the signature of stores keeper for having received the goods, that the store used to come at the gate to see the goods and he used to show him copy of purchase order whereupon storekeeper used to tell him to take back the goods and deliver to the ultimate consignee mentioned in order, that the goods never used to be taken inside the Tiger or Lion Gate and he used to take back the goods from the gate. That the storekeeper used to sign on the shipping bill as received and thereafter he used to take back the goods without the Customs, Preventive Escort, that only he once delivered the duty free goods taken out from the CWC warehouse to the Naval authorities inside the Lion Gate; that on all other occasions he used to take back the goods from the Tiger gate. Shri Kirit Kamdar used to negotiate and import all the consignments and the Naval procurement orders were given in the name of Shri Kirit Kamdar only. During investigation it was also revealed that goods imported under exemption notification No. 150/94 Cus dt. 13.07.94 for intended supply to Indian Navy were diverted in open market and were never consigned for intended purpose. It was also revealed during investigation that Shri P.R. Sheshadri, Storeekeepr in Naval Dockyard has falsely certified that the imported goods were meant for use on Board Indian Naval Ship and has also given receipt on the reverse of the shipping bill without physically receiving and storing the goods in the Naval Stores or supplying them on the Indian navy Ships. Accordingly a show cause notice dt. 12.08.1998 for the period 1989 to March 1997 were issued to M/s B.K. Industrial Corporation, Shri Kirit Kamdar, Shri Hemant Seth and Shri P.K. Sheshadri. It was proposed to confiscate the goods so diverted, demand of duty on goods so diverted and to impose penalty upon Shri B.K. Industrial Corporation. Further it was proposed to impose penalty upon Shri Kirit Kamdar, Shri Hemant Sheth and Shri P.K. Sheshadri. Also show cause notice dt. 08.07.1998 were issued on same allegations to M/s B.K. Industrial Corporation, Shri Kirit Kumar, Hemant Sheth and P.K. Seshadri for the period June 93 to July 93 for confiscation of goods, demand of duty and imposition of penalties. A show cause notice dt. 19.12.1997 for the period December 92 to Jan 93 was issued on the same allegation for confiscation of goods, demand of duty and imposition of penalty to M/s B.K. Industrial Corporation, Shri Kirit Kamdar and Shri Hemant Shah. A show cause notice dt. 10.03.1998 on same allegations for the period February 93 to April 93 was issued for confiscation of goods, demand of duty and imposition of penalties to M/s B.K. Industrial Corporation, Shri Kirit Kamdar, Shri Hemant Shah and Shri P.R. Seshadri. A show cause notice dt. 04.02.1999 on the same allegation for the period November 92 to May 1994 was issued to M/s Hitech Engineers, Shri Kirit Kamdar, Shri Hemant Sheth and Shri P.R. Seshadri wherein it was proposed to confiscate the diverted goods, to demand duty and to impose penalty upon them.
2. The Appellant approached the Settlement Commission who vide Misc. order dt. 09.04.2007 sent the case back to the proper officers for necessary action under Section 127 I of the Customs Act. The proposals towards confiscation of diverted goods, demand of duty and penalties were confirmed by the adjudicating authority vide the impugned Orders. Aggrieved, the Appellants has filed the present appeals.
3. Shri Nikhil Rungta, Ld. Counsel appearing for the Appellants submits that the adjudicating authority has not considered the submissions made in reply and additional submission. He submits that the concerned authorities of the Navy had provided the receipt of the goods consigned by the Appellant M/s B.K. Industrial Corporation and M/s Hi-Tech which shows that the goods were used for intended purpose in terms of Notification No. 150/94. That there is no other consignee of goods and hence it cannot be said that the goods were diverted. The statements of partners regarding diversion of goods were obtained under threat. They were eligible for benefit of Notification No. 195 - Cus dt. 02.08.1976 as amended for supplies to Indian Navy. The goods were imported based on order of Indian Navy and the Appellant was authorized to supply the same, hence the benefit of the notification is available to them. He submits that in case of SCN dt. 12.08.1998 the portion of demand is beyond period of five years and hence not sustainable. That some of the goods were received by the Indian Navy. That the findings of the diversion was based upon statement of Partners which is untenable. The demand has been confirmed that the storekeeper in Indian Navy Shri P.K. Seshadri was not authorized to certify that the stores were meant for Indian Navy supplies but no basis has been specified in the impugned order for arriving at this findings. That section 72 has been wrongly invoked for removing of goods from warehouse in contravention of section 71. That when the goods were diverted locally, it is not understood how section 71 or 72 of Customs Act would apply. He also submits that in respect of some of the Bills of Entry they are eligible for the alternate exemption. That there is no requirement of producing the exemption certificate for claiming benefit under Notification No. 154/94 from the Naval Authorities. He also submits that the goods were wrongly ordered for confiscation as the provisions of Section 113 and Section 111 (m) and (o) cannot be invoked as goods are not available for confiscation. He relies on judgments in case of Munjal Showa ltd. Vs. CCE 2008 (227) ELT 330 (TRI), CCU Vs. Raja Impex (P) Ltd. 2008 (229) ELT 185 (P & H). He also submits that penalty under Section 112 (a) is not imposable as there has been no contravention. That penalty under Section 114 (ii) is not imposable as it is applicable in case of dutiable export goods.
4. Shri Ahibaran, Ld. Addl. Commissioner (AR) appearing for the revenue reiterates the findings of the impugned order.
5. We have considered the submissions made by both the sides. We find that the revenue has carried out extensive investigation. It was found the modus operandi of the Appellants were to get the clearances documents consigned by the Store keeper of Naval Dockyard, Shri P.R. Seshadari who was coming to the gate of Naval Dockyard and certifying the receipt of the goods. It is absurd proposition that the Storekeeper used to come on the gate of the naval Dockyard to certify that the stores were meant for use on Indian Naval ships and thereafter the goods were delivered to the actual user of the goods. It is clearly appearing from the statement of Captain Allen Oleary (Controller of procurements Indian Navy) who in his statement dt. 03.02.98 stated that he is working as Controller of Procurement, Material Organization, that the shipping bills are always signed by the Controller personally and the Storekeeper who is civilian staff employee below officer rank is not authorized to sign any of these documents except giving receipt of items; there is no person having designation of SSK Controller of Procurement, Naval Dockyard Lion Gate. The storekeeper is not authorized to sign the shipping bills indicating the receipt of the goods when he is not physically warehousing the goods inside the dockyard. In his further statement dt. 06.021998 he stated that for entering the goods into Naval Dockyard gate the documents like copy of shipping bills/ invoice is held with the security at the gate. To take out the goods from the gate a signed gate pass is required at the gate which is signed by an officer from the controller of procurement. This statement of Captain Allen Oleary clearly proves that the signatures of the storekeeper Shri P.R. Seshadari on the shipping bills were obtained just to show the supply of the goods. It is coupled with the fact that the CHA Shri Suryakant Tribhovandas Motiwala in his statement dt. 24.10.97 has clearly stated that he was sent back from the gate of the Naval Dockyard by Shri Hemant Sheth, Partner of Appellant firm and that he never received the copy of Naval purchase order or procurement order and that he only used to get the signature of Navy dock yard storekeeper on shipping bills. It is also found that the officers during enquiry with the Director General, Naval projects office at Vizag and Commander Works Engineer received letter No. DG/0979/CWE (E)1/CON/BK/EB dt. 07.1197 giving details of supplies by the Appellant on perusal of which it was found that not in single case any exemption certificate was issued to the Appellant firms. On enquiry with the Indian Coast guard it was revealed that only in one case the exemption certificate was issued to M/s B.K. Industrial Corporation but in that case also the goods were cleared in procedure of Section 90. We also find that the diversion of goods under the garb of Naval clearance stands accepted by Shri Hemant Shah and Shri Kirit Kamdar in their statements dt. 28.10.97 and 04.11.97 wherein they have categorically stated that the diverted goods were sold in the open market. Further the goods are exempted from duty in terms of Notification No. 150/94 Cus only when the goods are procured by the Government of India or shipped on the order of the department of Govt. of India. None of the conditions of the notification has been followed by the Appellant firms. It is thus absolutely clear that the Appellant firms has diverted the goods illegally and the co-appellants Shri Hemnat shah and Shri Kirit Kamdar played active role in such evasion. We therefore find that this is a clear case of evasion of duty by frauds. However we find that the demands beyond the period of five years are not sustainable. We also find that the adjudicating authority has ordered for confiscation of diverted goods. However since the goods are not available therefore there is no ground to confiscate the same and therefore no redemption fine can be imposed. As regard penalty imposed under Section 112 (a) we find that all the Appellants have played active role in claiming illegal benefit of exemption by diverting the goods. Also penalty under Section 114 (ii) of the Customs Act is imposable for the violations committed by the Appellants. In view of our above findings we uphold the impugned order except setting aside the redemption fine and demands beyond 5 years against M/s B.K. Industrial Corporation and M/s Hi-Tech Engineers. The penalties imposed against them are also upheld. Penalties imposed upon Shri Kirit Kamdar and Shri Hemant Shah them are upheld, accordingly, their appeals are dismissed. The appeals filed by M/s B.K. Industrial Corporation and M/s. Hi-Tech Engineers are partly allowed in the above terms.
6. All the appeals are disposed off as above.
(Pronounced in court on 28/02/2018)
(C.J.Mathew)
Member (Technical)
(Ramesh Nair)
Member (Judicial)
SM.
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C/348 to 362/09