Customs, Excise and Gold Tribunal - Delhi
M.D. International vs Collector Of Customs on 17 January, 1995
Equivalent citations: 1995ECR295(TRI.-DELHI), 1996(86)ELT293(TRI-DEL)
ORDER G.A. Brahma Deva, Member (J)
1. This appeal arises out and is directed against the Order-in-Original dated 17-7-1992 passed by the Collector of Customs (Preventive), Bombay.
2. The appellants had imported two consignments of EPO Locks from Japan and filed Bill of Entry No. 864/177, dated 20-4-1992 and Bill of Entry No. 743/127 dated 6-4-1992 covering each consignment of 2,000 pieces of EPO Locks for their clearance against REP Licence/Exim Scrips. Both the Bills of Entry were assessed in the Customs House and duty of Rs. 1,36,959/ was paid on Bill of Entry No. 864/177, dated 20-4-1992. The relevant details of both the Bills of Entry are as under :
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Sr. No. B/E Quantity Unit CIF Assessable Duty
Price Value Rs. Value Rs. Rs.
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US$
1. 864/177 2000 PCS. 1.50 92735.70 93663.06 136959/-
US $ paid 2. 743/127 2000 PCS. 1.50 94339.02 95283.02 139328/-
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3. In both Unit Price of EPO Locks had been declared as U.S $ 1.50 per piece. According to the Department on the basis of secret information received, that consignments of EPO Locks vide Bill of Entry No. 2890 dated 10-4-1992 and 2520, dated 7-5-1992, imported by the appellant M/s. M.D. International, Ahmedabad are underinvoiced, investigations were taken up by the officers of Marine and Preventive Wing, Bombay. Both Bills of Entry filed by M/s. Pratap, Clearing Agency were taken over from Shri Pratap Masrani Proprietor of M/s. Pratap Clearing Agency. The consignments were traced in Bombay Docks and subsequently seized. During the course of investigation statement of CHA, Shri Pratapbhai Masrani was recorded under Section 108 of the Customs Act. He stated that the import documents of both the above consignments were given to him by one Kishore Bhagat, another Customs House agent, who happens to be his relative also, on behalf of one 'Virjibhai' who was introduced to him by Kishore Bhagat; though the Bills of Entry prepared and filed by him, the actual follow up on assessment etc. was looked after by Kishore Bhagat; that after assessment on 16-6-1992, he paid duty of Rs. 1,36,959/-- on Bill of Entry No. 864/177, that he had no knowledge of the existence of M/s. M.D. International, Ahmedabad. Initially he denied the suggestion that Virjibhai named by him was in fact Biren Shah, but later in his statement dated 22-6-1992, he identified Biren Shah as the same person who was introduced to him as Virjibhai. Shri Biren Shah proprietor of M/s. M.D. International, Ahmedabad, appeared on 22-6-1992 when his statement was recorded under Section 108 of the Customs Act. He stated that he had imported two consignments of EPO Locks in the name of M/s. M.D. International of which he is the proprietor; that he was introduced to CHA Shri Pratap Masrani by Shri Kishore Bhagat; that correct Unit Price of EPO Lock is US $ 5 and not US $ 1.50 as declared; that he had made compensatory payment of Rs. 4,48,000/ for, this consignment for equivalent of US $ 14,000 at the rate of Rs. 32/ per US $ to one Shri Kumar Sachdev whose brother operates M/s. Taiyo Kokusai Boeki (shipper for impugned goods) for M/s. Conquest (Japan) Ltd., Osaka. He gave the address of Shri Kumar Sachdev, and accepted duty evasion and undertook to pay differential amount of duty unconditionally. Shri Kumar Sachdev was traced on 22-6-1992 and a diary was retrieved from possession of his employee Ms. Madhu Kapoor. Shri Kumar Sachdev was interrogated for obtaining clarification for certain entries contained in the diary and his statement was also recorded under Section 108 of the Customs Act, 1962. From the revelations made by Shri Kumar Sachdev it became amply clear that he had been regularly receiving and disposing of money received on account of compensatory payments. He had admitted that various entries relating to money received on account of Shri Biren Shah. Shri Kishore Bhagat another Customs House agent in his statement stated that since he was involved in the import of similar EPO Locks by one Shri Dhimbhai Seth and since he knew that the consignment imported by Shri Biren Shah was heavily underinvoiced. He refused to undertake the clearance himself, but on insistance of Shri Biren Shah, suggested the name of Shri Pratap Masrani, who is his relative; that since this was a new item for Shri Pratap Masrani he agreed to look after the appraisal of these Bills of Entry. The appellant in his letter dated 26-6-1992 addressed to the Assistant Collector of Customs, Marine & Preventive Wing, Bombay stated inter alia that they agree that unit price of EPO lock is US $ 5, that they agree to pay the differential duty on the undervalued amount; that they agree that there has been a contravention of the provisions of Customs Act, 1962. The appellant waived a show cause notice and personal hearing. However personal hearing was granted and the appellant appeared in person on 10-7-1992. He had admitted that there has been a lapse on their part and requested that a lenient view may be taken. He stated that he has no dispute that there has been misdeclaration of value in this case. When he was showed a fax message dated 30-12-1991 from M/s. Tomoe Sangyo Co. Ltd., Kobe, Japan which is in possession of department, showing the unit price of EPO Lock Model A-A543 as US $ 5.75 he stated that even though the quotation is showing the value of the EPO Lock as US $ 5.75 per piece, the actual value is US $ 5. Based upon the evidence and statement of persons including statements of the appellant, the Collector who adjudicated the proceedings observed that the impugned goods have been imported without proper licence to the extent of value not reflected in the invoice and there has been misdeclaration of the goods in respect of value and therefore the goods are liable for confiscation under Section 111(d) as well as 111(m) of the Customs Act. Accordingly he ordered that CIF value of EPO Locks be enhanced from US $ 1.50 per piece as declared, to US $ 5 per piece under Rule 8 read with Rule 11 of the Customs Valuation Rules, 1988 (as amended) and Section 14(1) of the Customs Act, 1962. He ordered for confiscation 4,000 pieces of EPO Locks total value at Rs. 6,23,584/- CIF value under Section 111(d) and under 111(m) of the Customs Act, by giving an option to redeem the goods on payment of Rs. 60,000/- (sixty thousands). He also imposed a penalty of Rs. 1,00,000/- (one lac) on the appellants under Section 112(a) of the Customs Act, 1962.
4. Shri B.B. Gujral, learned Advocate appearing for the appellants submitted that the impugned order suffers from for want of jurisdiction in as much as the adjudicating authority had no jurisdiction to adjudicate the proceedings in respect of the goods since the goods were already assessed to duty by the Appraising Section and in fact duty of Rs. 1,36,959/ was also paid in respect of Bill of Entry No. 864/177. When the goods were properly manifested and assessed to duty by the appraising Section of the Customs House, it was not open for the Collector of Customs (Preventive) to readjudl-cate the matter or reassess the Bill of Entry without setting aside the order and without taking recourse with the provisions under the Customs Act, relying upon the decision in the case of Sharad Himatlal Daftari v. Collector of Customs - 1988 (36) E.L.T. 468 (Calcutta). The goods were seized without issuing seizure memo and further it was mandatory to issue a show cause notice under Section 12 of the Customs Act but no such show cause notice was issued and even date of seizure was not mentioned. He said that various statements were recorded behind the back of the appellants and order was passed relying upon the such statements without supplying the copies of such statements and accordingly the order suffers from denial of principles of natural justice. Even if show cause notice was waived by the importer, evidence relied upon by the Revenue for enhancing the value of the goods still to be supplied as it was held in the case of Hi-Iron Electronics v. Collector of Customs - 1989 (42) E.L.T. 4 (Tribunal), the value of the goods cannot be enhanced based upon the statements of the importer unless contemporary evidence was brought on record since the burden lies on the Department to prove undervaluation and the similar goods were imported at higher price at the relevant time. The adjudication proceedings were initiated on the ground that the similar goods were imported in 1992 but without discussing the value of the similar goods, the value of the impugned goods was determined under Rule 8 of the Valuation Rules without any basis. He said that much was made out on the issue of compensatory payment in determining the value but the person who is said to have received such payments was not even made a party to the proceedings and no action has been initiated against co-accused but nevertheless his statement has been relied upon against the appellant without supplying the same. He said that in the impugned order it was observed that market enquiries revealed that retail price of each Lock in the market is approximately of about Rs. 400 and there will be no margin of profit left in this case when duty is assessed on the basis of CIF value of US $ 5 per piece. He requested that the matter may be remanded to the Collector of Customs (Appraising) who is having jurisdiction to determine the issue afresh since the impugned order suffers from deficiency in view of denial of principles of natural justice.
5. Arguing for the Revenue Shri B.K. Singh, learned SDR submitted that if there was a misdeclaration either of quantity or of value and the goods were not imported in accordance with law, like in the present case any Collector who is having jurisdiction was empowered to adjudicate the proceedings in respect of the goods irrespective of the fact that the goods were allowed to be cleared under Section 47 of the Customs Act. He said that it is a clear case of misdeclaration, as huge value was concealed and the importation was not in accordance with law. The term 'smuggling' as defined in the Act is in relation to the goods, means any act or omission which will render such goods liable to confiscation under Section 111 or Section 113. Since the goods are liable to confiscation in this case the Collector (Preventive) was right in assuming jurisdiction and ordering for confiscation of the goods, referring to the decision in the case of Ramnarain Bishwanath v. Collector of Customs, Calcutta - 1988 (34) E.L.T. 202 (Tribunal). He also said that the decision referred to by the appellants in the case of Sharad Himatlal Daftari (supra) is not applicable to the facts of this case as the goods are smuggled and they are liable for confiscation in view of misdeclaration of the value in this case. He submitted that sufficient evidence was brought on record to show that the goods were under-invoiced and the value was determined based upon the voluntary statements and quotation as can be seen from para 11 of the impugned order. He said that taking action or not against co-accused is not material in determining the value of the goods and the value was determined based upon the evidence and compensatory payment was not the basis in determining the value although it was substantiated. He said that it cannot be said that evidence was not disclosed but it was confronted by the adjudicating authority for enhancing the value during the course of personal hearing and the voluntary statement given by the party was not retracted. Hence observation made in the case HI-Tron Electronics (supra) referred to by the other side is not applicable and on the other hand the ratio of the decision in the case of Badjugar Kailash v. Collector of Customs (Preventive) - 1991 (51) E.L.T. 508 (Tribunal), is applicable, wherein it was clearly held that mandatory Section 124 was fulfilled as the appellants waived written show cause notice and orally told about the contravention of laws he had made in importing the goods without declaring the same. He said that valuation in each case depends upon the facts and circumstances and accordingly the decision referred to by the party are not applicable and further it was held in the case of Sharp Business Machines Pvt. Ltd. v. Collector of Customs - 1990 (49) E.L.T. 640 (SC) that there is nothing wrong if the value for the purpose of customs duty is determined on the basis of quotation.
6. In reply, referring to the decision in the case of Manindra Chandra Dey v. CEGAT - 1992 (58) E.L.T. 192 (Calcutta), Shri B. B. Gujral submitted that confessional statement, even if found admissible, should be treated as a light weight document needing independent corroboration and this decision is binding on the department since the matter lies with the jurisdiction of the Calcutta High Court. He said that the decision referred to by the Departmental Representative in the case of Ramnarain Bishwanath (supra) is totally irrelevant as it was concerned with the territorial jurisdiction relating to smuggled goods and further the ratio of the Sharp Business Machines Pvt. Ltd. is not applicable since the quotation was produced by the importer in that case. On the other hand, the Calcutta High Court has held in the case of Ghanshyam Chejra v. Collector of Customs - 1989 (44) E.L.T. 202 (Cal.) that higher quotation by itself would not lead to the inference of underinvoicing.
7. We have carefully considered the submissions made by both sides and perused the records. We are not convinced with the arguments [advanced] on behalf of the appellant that on the issue of jurisdiction since there was a specific charge of misdeclaration. The goods were either of undervaluation or the goods were not imported in accordance with law, there was no bar to adjudicate by any competent officer who is having jurisdiction although the goods were ordered to be under Section 47 of the Act as it was argued by the Departmental Representative. The fact and evidence brought on record clearly shows that there was a deliberate suppression on the part of importer and in the circumstance the confiscation proceedings shall not be controlled by a Section 47 of the Customs Act as it was held in the case of Madan Lal Steel Ltd. 1991 (56) E.L.T 705 (Madras) and in the case of Deepak Electronics 1994 (73) E.L.T. 817 (Tribunal), the Tribunal has taken the view even if the goods were already cleared by a proper officer under Section 47/51 of the Customs Act, 1962 and such order of clearance not reviewed under Section 129D is no bar to take action in respect of the goods which have been improperly imported and in the circumstances it will not be correct to read in the orders under Section 47 or 51 of the Act any inhibition upon the jurisdiction of the proper officer to act under Sections 110, 111 and 113 of the Act. Accordingly we hold the Collector of Customs (Preventive) was right in assuming the jurisdiction and to adjudicate the proceedings in respect of the impugned goods. The issue with reference to issuance of show cause notice, we find that the appellant had waived show cause notice. Once it is found that the statements given by the appellant is a voluntary statement and it is clear that the appellant had waived the issue of written show cause notice to him under Section 124, hence on the ground it cannot be said that there is infirmity in the order passed by the Collector of Customs (Preventive), Bombay. Under Section 124 even the written show cause notice is waived an oral show cause notice should be given to the appellant. Since the personal hearing was granted and the appellant had participated in the personal hearing and charges were known to him, it is clear that the mandatory provisions of Section 124 was fulfilled and this issue was precisely considered in the case of Badjugar Kailash (supra) as it was referred to by the Departmental Representative. Next question arises whether the evidence relied upon by the Department in enhancing the value was disclosed to the appellant before passing the order. There is no mandatory provision for supply of such evidence but natural law requires that should be disclosed and same should be known to the party before determining the value. In the instant case it is clear from the fact that evidence was not only disclosed but the same was made known to the party. During the course of personal hearing, he voluntarily stated that he has no dispute that there has been misdeclaration of value in this case when he showed a fax message dated 30-12-1991 from M/s. Tomoe Sangyo Co. Ltd., Kobe, Japan which is in possession of Department showing the unit price of EPO Lock Model A-A543 us US $ 5.75. He stated that even though the quotation is showing value of the Lock as US $ 5.75 per piece, the actual value is US $ 5. Further he requested that the value may be determined at the rate of US $ 5 per piece and leninet and sympathetic view may be taken as regards imposition of fine and penalty on the plea as he is left with no margin of profit. This statement was not retracted by the appellant as it was rightly pointed out by the Departmental Representative. Apart from this further on 26-6-1992 he has sent a voluntary letter after personal hearing in which it was categorically stated that actual piece of both consignment is unit price US $ 5 per piece and agreed that there has been contravention of Customs Act, 1962 and agreed to pay differential duty on undervalued amount. We are not convinced with arguments advanced by Shri B.B. Gujral that the statement of the appellant as well as evidence known to the party should be supplied to the appellant and otherwise it amounts to procedural lapse resulting in denial of principles of natural justice. It is true that burden lies on the Department to prove undervaluation. The facts and circumstances, evidence brought on record substantiate that the goods were underinvoiced and the invoice value was not the normal price under Section 14(1)(a) of the Act. After taking overall evidence and in the fact circumstances of this case, the Collector was right in determining the value at US $ 5 per piece based upon-the voluntary statement of the party that it was negotiated price against quotation price is at US $ 5.75 per piece. US $ 5 per piece is not the declared price but admitted by the party and difference in value was substantiated by way of compensatory payments and in the circumstances the burden shifts to the party to adduce the evidence that US $ 5 was not the normal price and the statements given by him with reference to the value was not voluntary. In the facts and circumstances, we do not find any infirmity in the impugned order passed by the adjudicating authority and accordingly we uphold the impugned order. In the result, the appeal is dismissed.