Customs, Excise and Gold Tribunal - Delhi
Sriyansh Woollen Mills (Pvt.) Ltd. vs Collector Of Customs on 10 October, 1988
Equivalent citations: 1990(46)ELT190(TRI-DEL)
ORDER Harish Chander, Member (J)
1. The above captioned appellants have come in appeal being aggrieved from the orders passed by the Additional Collector of Customs, New Delhi. Since the facts of both the appeals are similar and as such the same are disposed of by a consolidated order.
2. Brief facts of appeal No. C/2852/87-NRB in the case of M/s. Sriyansh Woollen Mills Pvt. Ltd. v. Collector of Customs, New Delhi, are reproduced below: In pursuit of an information that three containers No. SRIU 4167010, SRIU 1226252 and SRIU 2752912 shipped from Felixstowe by M.V. Lanka Amila V-12E of Ceylon Shipping Corporation and consigned to M/s. Sriyansh Woollen Mills Pvt. Ltd., G.T. Road, Ludhiana and shipped for Delhi from Bombay vide tranship permit No. 282 and 313 dated 24th September, 1985 and 25th July, 1985 respectively stated to be containing wool waste/Viscose staple fibre, but actually most of the bales containing polyester fibre, were lying at the internal container Depot Customs, Pragati Maidan, New Delhi on November 20, 1985. No bill of entry had been filed by the appellant in respect of these containers. However, the goods were examined by DRI officers on 20th November, 1985 and 21st November, 1985 in the presence of two independent witnesses and the representative of the Shipping Lines. On visual examination most of the bales were found to be containing goods other than those as declared and representative samples of each of the bales were drawn for chemical test and goods were seized by DRI officers under Section 110 of Customs Act, under a reasonable belief that the same were liable to confiscation under the provisions of the Customs Act, 1962.
As per the chemical examination report of the chemical examiner, Central Revenue Control Laboratory, the goods under seizure (as per representative samples of goods tested) were found to be as under :-
Sl. Containers No. No. of Description of goods
No. Bales Declared Found
1. SRIU 2752912 28 Wool Waste Wool Waste-7
bales
Poly fibre-21
bales
2. SRIU 4167010 48 Viscose Staple
fibre
3. SRIU 1226252 Viscose Staple
fibre-14 bales
Poly. fibre-34
bales.
Statement of Shri Ajit Kumar, Director of M/s. Sriyansh Woollen Mills Pvt. Ltd., Ludhiana and Finance Manager of M/s. Khazan Industries Pvt. Ltd., Ludhiana was recorded on 24th November, 1985 under Section 108 of the Customs Act, 1962 and he stated that both the companies were their family concerns and in respect of the goods imported in container No. SRIU 4167010 and SRIU 1226252, the contract for the import was signed by him with M/s. Walbrad Wool Trading Co. Ltd., Bradford (U.K.) and the goods were shipped through their agents M/s. Shakti International, Shraba Nagar, Ludhiana. The revenue authorities were of the view that the appellant had contravened the following provisions:
(a) Import of polyester fibre into India from any foreign territory without the cover of a valid import licence is prohibited under Rule 3 of I.T.C. order of 1955 (as amended) issued under Section 3 and Section 4(a) of Imports and Exports (Control) Act, 1947 read with Section 11 of Customs Act, 1962 as made applicable under Section 3(2) of Imports and Exports (Control) Act, 1947.
(b) As per provisions of Section 32 of Customs Act, 1962 no imported goods, required to be mentioned under the regulations in an import manifest or import report shall except with the permission of the proper officer be unloaded unless these are specified in such manifest or report.
(c) As per provisions of Section 46 of the Customs Act, 1962, the importer of any goods other than goods intended for transit or transhipment shall make entry thereof by presenting to the proper officer a bill of entry for home consumption or warehousing in the prescribed form.
(d) Any goods imported into India in contravention of the regulations and provisions cited above are liable to confiscation under Section 111(d) and 111(f) of the Customs Act, 1962. Any goods which do not correspond in respect of any particulars made as declared under Customs Act are liable to confiscation under Section 111(m) of the Act ibid.
(e) 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 of the Customs Act, 1962 or abets the doing of omission of such an act is liable to penal action under Section 112 of the Customs Act, 1962. It appeared that 21 bales of polyester fibre imported in container No. SRIU 2752912 and 34 bales of polyester fibre imported in container No. SRIU 4167010 and SRIU 1226252, collectively valued at Rs. 25,13,220/- (market value) have been imported into India without a valid import licence in contravention of the prohibitions cited above, by M/s. Sriyansh Woollen Mills, Ludhiana and by not getting the goods manifested and by not filing the bill of entry, contravened the provisions of Sections 32 and 46 of the Customs Act, 1962 respectively, rendering thereby the said goods liable to confiscation under Section 111(d) and 111(f) of the Customs Act, 1962. By stating and misdeclaring the contents of 55 polyester fibre bales as under import to be as wool waste and viscose staple fibre the importers rendered these goods liable to confiscation under Section 111(m) of the Customs Act, 1962. Further 7 bales of wool waste imported in containers No. SRIU 2752912 and 14 bales of wool waste imported in container No. SRIU 4167010 and SRIU 1226252 which was used to camouflage to cover the unauthorised import of polyester fibre, collectively valued at Rs. 2,03,232/- (market value) are also liable to confiscation under Section 118 of the Customs Act, 1962.
It appeared that Shri Ajeet Kumar knew and had reasons to believe that besides the wool waste, viscose staple fibre, the containers under import contained bales 6f polyester fibre which were attempted to be imported clandestinely without the cover of a valid import licence and as such M/s. Sriyansh Woollen Mills Pvt. Ltd., Ludhiana, Shri Ajeet Kumar, Shri Dinesh Kumar, Shri Kedar Nath of M/s. Sriyansh Woollen Mills Pvt. Ltd., Ludhiana, by their acts of omissions and commissions rendered themselves liable to penal action under Section 112 of the Customs Act, 1962.
As such M/s. Sriyansh Woollen Mills Pvt. Ltd., Ludhiana and S/Shri Ajeet Kumar, Shri Dinesh Kumar and Kedar Nath were called upon to show cause to the Collector of Customs, Central Revenue Building, New Delhi as to why the goods under import should not be confiscated under Section 111(d), 111(f), 111(m) and 118 of the Customs Act, 1962 and why penalty should not be imposed upon them under Section 112 of the Customs Act, 1962.
The appellant in their letter dated 27th January, 1987 submitted that the department had not disclosed any evidence to the appellant in support of the allegation that 21 bales of Wool Waste were used for camouflaging the 55 bales of polyester fibre; that the panchnama prepared at the spot did not contain any such indication; that no representative of the appellant was present at the time of examination; that each bale was a separate package; that those 21 packages had been found to contain goods as per suppliers' documents and the same were not liable to confiscation under Section 118 of the Customs Act, 1962; that it appeared that the suppliers had attempted to cheat the appellant by supplying partly cheaper stuff than that indented; that oh suspicion the suppliers might have sent goods other than indented; that the appellant had corresponded with the suppliers for clarification but no reply had been received from the suppliers and the appellant was yet to file the bill of entry and as such there was no statutory declaration on their behalf in respect of the contents of the consignment and the goods were still under the custody of the customs authorities and it was clear that the appellant did not take any steps to import the goods into India; that as such the appellant had not done any act or omission rendering the goods liable to confiscation and were, therefore, not liable to a penalty; that the import of polyester fibre was allowed under OGL to the actual users. It was further stated that out of. 76 bales, 55 bales were found to be different from what had been invoiced, so that 21 bales were in order, but in the show cause notice these 21 bales have also been proposed to be confiscated under Section 118 of the Customs Act. It was also mentioned that there was no evidence to indicate that these 21 bales were used to camouflage the other bales and there was no mention to this effect in the panchanama and Section 118 of the Customs Act was not applicable, inasmuch as each bale was a different package and container was not a package imported by them nor the 21 bales were found in any manner used to camouflage the remaining 55 bales and coming to the question of wrong shipment of the goods, it Was argued on behalf of the appellant that after the seizure of the goods, they had come to know about the same and the appellant had taken up the matter with the suppliers. It was also argued that the price of the polyester fibre was cheaper than the price of the wool waste and viscose staple fibre and the importers had actually suffered a loss. It was also argued that since the appellant had not filed any bill of entry and as such there was no misdeclaration and the bill of entry could not be filed by the appellant due to financial constraints and disturbances in Punjab. It was also argued that the polyester fibre and viscose staple fibre were both placed at OGL to actual users and they had a valid licence for wool waste and there was no mala fide on the part of the appellant and no penalty under Section 112 of the Customs Act could be imposed on the appellant.
3. The learned adjudicating authority after considering the reply and the arguments of the appellant had observed that as per declaration one container should have contained 28 bales of wool waste and two containers should have contained 48 bales of viscose staple fibre. But on examination by the DRI it was found that one container contained 7 bales of wool waste and 21 bales of polyester fibre and in the other two containers 14 bales of viscose staple fibre plus 34 bales of polyester fibre were found. The learned adjudicating authority had taken the view that M/s. Sriyansh Woollen Mills was an actual user of only woollen waste, acrylic fibre and viscose fibre and polyester fibre was not used by the appellants. Polyester fibre was allowed for import under OGL only for actual users and as such import licence was necessary. He was of the view that the import of 21 + 34 bales of polyester fibre was unauthorised tod was liable to confiscation under Section 111(d) of the Customs Act, 1962. Dealing with Section 111(m) of the Customs Act, 1962, the learned adjudicating authority had taken the view that no bill of entry was filed under Section 46 of the Customs Act and as such there was no misdeclaration under Section 111(m) of the Customs Act. However, he was of the view that the declaration in the import manifest was not correct and the conduct of the importers in the transaction had to be considered. In the bill of lading 21 bales of wool waste were mentioned. Actually the goods were found to be 21 + 34 bales of polyester fibre and 7 + 14 bales of wool waste and viscose staple fibre. In other words, the fact of shipment of polyester fibre was not mentioned in the import manifest as required under Section 32 of the Customs Act, 1962 and as such 55 bales of polyester fibre were liable to confiscation under Section 111(f) of the Customs Act, 1962. The learned adjudicating authority had agreed with the contention of the appellant that 21 bales of wool waste and viscose staple fibre were stacked to camouflage the remaining bales of polyester fibre. It was difficult to conclude at that stage that the contention of the DRI to camouflage all the 21 bales was established. He had ordered the release of 7 +14 bales of wool waste and viscose staple fibre as manifested and stuffed inside the containers and was of the view that only 21 + 34 bales of polyester staple fibre were not covered by the import licence and not mentioned in the import manifest were liable to confiscation under Section 111(d) and 111(f) of the Customs Act, 1962. The rate of duty on polyester fibre was 145% + 9/Kg. + 40% + Rs. 45/Kg. + 15% as against the rate of nil/100% + 40% + Rs. 37.50/Kg + 15% applicable on wool waste/viscose staple fibre. He was of the view that the duty difference was around Rs. 16 lacs. The value of the offending goods mentioned in the show cause notice for the entire lot appeared to be the estimated market value and the C.I.F. value was, therefore, much less and on rough estimate the CIF value of 21 + 34 bales was estimated to be around Rs. 6.50 lacs. He had confiscated 21 + 34 bales of polyester fibre under Section 111(d) and (f) of the Customs Act, 1962. However, an option was given to redeem the same after payment of a fine of Rs. 3,50,000/- only and had also imposed a personal penalty of Rs. 4,00,000/- on M/s. Sriyansh Woollen Mills under Section 112 of the Customs Act.
4. In appeal No. C/2853/87-NRB container No. SRIU 3817785 consigned to M/s. Khazan Industries Pvt. Ltd., Ludhiana, declared to contain 40 bales of wool waste. The said container was examined by the officer of DRI on 21st November, 1985 in the presence of two independent witnesses. On chemical examination, it was found that out of 40 bales, 13 were found to be of polyester fibre, 18 of acrylic fibre and 9 of wool waste, and the chemical examiner's report as under:
Container No. SRIU-3817785 Goods declared:
Commodity: Wool Waste.
Declared weight: 14,000 Kgs. net, 14080 Kgs. gross.
Declared value : £ 16,100/- (Rs. 2,74,505/-) CR 19.61.
Goods actually found as per chemical analysis:
Wool Waste: 9 bales. net weight 3132 Kgs. Market value @ Rs. 20 per
kg = Rs. 62,640/-
Polyester Fibre: 13 bales. net weight 4872 kgs. Market value @ Rs.80/- per
kg = Rs. 3,89,760/-
Acrylic fibre: 18 bales. net weight 5996 kgs. Market value @ Rs. 63/- per
kg = Rs. 3,77,748/-
Total value Rs. 8,30,148/-
No bill of entry was filed by the appellant. A show cause notice was issued and the appellant had defended. It was also contended, that as per invoice dated 17th December, 1986 from ETRA Trading Co., Japan in respect of polyester fibre indicating CIF value of US $ 1.04 per kg. Wool waste imported in these consignments had been invoiced at £ stg. 1.15 to 1.65 per kg. In other words, price of polyester fibre was cheaper than the woollen waste and as such there was no question of importing a cheaper variety when they had paid for a costly material.
5. The learned adjudicating authority was of the view that 13 + 18 bales of polyester fibre and acrylic fibre were not covered by any licence and not mentioned in the import manifest were liable to confiscation under Section 111(d) and 111(f) of the Customs Act. The rate of duty on polyester fibre was 145% + 9/Kg + 40% + Rs. 45/Kg. + 15% and that of acrylic fibre 110% + 40% + Rs. 9/- per kg. as against the rate of nil applicable on wool waste. The duty difference was around Rs. 14 lacs, and the value of the offending goods mentioned in the show cause notice for the entire lot was the market value. The CIF value would, therefore, be much less. On a rough estimate, the CIF value of 13 +18 bales was about Rs. 2.12 lacs. He ordered the confiscation of 13 +18 bales of polyester fibre and acrylic fibre under Section 111(d) and 111(f) of the Customs Act, 1962. However, he had given an option to redeem the same after payment of fine of Rs. 1,10,000/- and had also imposed a personal penalty of Rs. 3,50,000/- on M/s. Khazan Industries Pvt. Ltd. under Section 112 of the Customs Act, 1962.
6. Being aggrieved from the aforesaid orders, the appellants have come in appeal before the Tribunal.
7. Shri Harbans Singh, the learned advocate, has appeared on behalf of the appellants and has stated that since the facts of both the appeals are similar and as such he would advance common arguments. Shri Harbans Singh, the learned advocate, has reiterated the facts and stated that 7 bales of wool waste and 14 bales of viscose staple fibre fall under OGL and 21 +34 bales of polyester fibre are not covered under ITC regulations. Shri Harbans Singh, the learned advocate, pleaded that the appellant had not filed any bill of entry and there were three charges against the appellant under Section 111(d), under Section 111(f) and 111(m). The charge under Section 111(m) was dropped. Shri Harbans Singh, the learned advocate, has referred to the indent and the invoices which clearly show that the appellant had indented for wool waste and viscose staple fibre and the supplier had sent the goods wrongly. He has referred to the appellant's correspondence with the supplier from pages 125 to 139 of the paper book. Shri Harbans Singh has argued that the supplier had cheated the appellant. The goods had arrived from July, 1985 to September, 1985 and has further stated that the supplier had cheated the appellant and the receiver of the goods in India was not liable for the conduct of the supplier. He has stated that this plea was taken before the adjudicating authority and the learned adjudicating authority has mentioned the same at internal page 10 of the order-in-original in the case of M/s. Sriyansh Woollen Mills and internal page 9 in the case of M/s. Khazan Industries. He has referred to Section 37 of the Sale of Goods Act, 1930 and has pleaded that in terms of the provisions of sub-section (3) of Section 37 of the Sale of Goods Act "where the seller delivers to the buyer the goods he contracted to sell mixed with goods of a different description not included in the contract, the buyer may accept the goods which are in accordance with the contract and reject the rest, or may reject the whole". Shri Harbans Singh, the learned advocate, has argued that the appellant had been corresponding with supplier for the wrong supply of the goods and had been repeatedly stating that the appellant will not take the delivery of the goods as the supplier was fully responsible and liable for wrong shipment of the goods. He has again referred to pages 125 to 139 of the paper book in the case of M/s. Sriyansh Woollen Mills Pvt. Ltd. He has also drawn attention to the statement of Shri Ajeet Kumar which appears at page 57 of the paper book that as soon as he learnt that there was mixed up of the goods sent by M/s. Mainz & Co. U.K., he had immediately rang up Mr. Narendar Nath Sharma not to file the bill of entry till he learns the clear position from Mr. Khurana. Shri Harbans Singh, the learned advocate, has argued that the imposition of penalty under Section 112 was unwarranted as there was no evidence on record to the effect that the appellant was in conspiracy for the supply of wrong material with the supplier. The goods which were sent by the supplier were not ordered by the appellant. He has referred to the invoice which appears on page 3 of the paper book and the description given in the invoice is viscose staple fibre first quality and the invoice is from M/s. Walbrad Wool Trading Co. Ltd., Bradford. He has also referred to another invoice from M/s. Mainz & Co. Ltd., dated 20th June, 1985 which appears on page 9 of the paper book and the description of the goods has been given as 28 bales of soft wool waste (wool contents about 70%). He has also referred to the panchnama which appears on page 32 of the paper book and test report of the chemical examiner which appears on page 38 of the paper book. Shri Harbans Singh has argued that the charge under Section 111(m) was dropped and charges under Section 111(d) and 111(f) are also not applicable, though the same have been applied. Shri Harbans Singh, the learned advocate, has argued that the appellant has already suffered a lot. He has pleaded that in the case of M/s. Sriyansh Woollen Mills the redemption fine of Rs. 3,50,000/- is highly excessive, where the rough CIF value as per revenue's contention is Rs. 6.50 lacs and the fine in lieu of confiscation may be deleted or reduced and has also pleaded for the cancellation of personal penalty of Rs. 4,00,000/-. In the case of M/s. Khazan Industries Pvt. Ltd. he has made a similar prayer and has argued that the redemption fine of Rs. 1,10,000/- is highly excessive, where the CIF value as per revenue's contention is Rs. 2.12 lacs and there was no justification for the levy of personal penalty of Rs. 3.5 lakhs and the same should be deleted. For the cancellation of the penalty under Section 112 of the Customs Act, 1962, Shri Harbans Singh, the learned advocate, has argued that the appellant had placed the order in the normal course of the international trade. There is no evidence on record that the appellant had any connivance with the supplier, and as such no penalty is leviable. He has referred to the provisions of Section 112 of the Customs Act, 1962 and there is no justification for the levy of personal penalty. He has referred to indent No. 85116 dated 9th May, 1985 for the wool waste which appears on page 16 of the paper book. The indent was placed through M/s. Khurana & Company, Ludhiana. Shri Harbans Singh has argued that the appellant had written to M/s. Walbrad Wool Trading Co. Ltd., Bradford as to the mixing up of some synthetic material in the consignment of viscose staple fibre and the appellant had clearly intimated that he will not accept any other material except viscose staple fibre material. He has argued that unless there was some knowledge with the appellant, no penalty under Section 112-A of the Customs Act could be levied. The appellant's business as well as residential premises were also searched and nothing incriminating was found and at the time of search, statement of Shri Kedar Nath was recorded appears on pages 40 and 42 of the paper book. Statement of Shri Dinesh Kumar was also recorded. He has argued that the perusal of the statements of S/Shri Kedar Nath and Dinesh Kumar will show that the appellant had no knowledge of the mix up of the consignments and no act of omission on the part of the appellant is proved in any way and no penalty can be levied. He has referred to the judgment of the Hon'ble Supreme Court in the case of Badri Prasad and Others reported in AIR 1971 Supreme Court 1170 and it cannot be presumed that there was a conspiracy of the appellant with the supplier unless there is any evidence on record. He has argued that the appellant has already suffered too much. The goods arrived in 1985 and it is 1988. The appellant is incurring a demurrage of about Rs. 3500/- per week. The difference in the market price of the goods imported is not much. Redemption fine is highly excessive. He has pleaded for the deletion of the penalty and redemption fine. In the alternative, he has again pleaded that the redemption fine is highly excessive.
8. Miss Renuka Mann, the learned senior departmental representative who has appeared on behalf of the respondent has relied on the order-in-original and statements recorded by the revenue. In support of her argument she has referred to the judgment of the Hon'ble Supreme Court in the case of D.Bhoormull reported in 1983 (13) E.L.T. 1546 where the Supreme Court had held that the department was not required to prove its case with mathematical precision, but what was required was the establishment of such a degree of probability that a prudent man may on its basis believe in the existence of the facts in issue. She has argued that the revenue had discharged its burden of proof. In support of her argument she has referred to the statement of Shri Ajeet Kumar and Shri Khurana and has also argued that the appellant's conduct showed that the appellant did not file any complaint against Shri Khurana. She has also referred to the statements of Shri Narender Nath and Shri Dharampal that even after the knowledge of the wrong consignments the appellant was silent for almost two months. She has argued that no reliance can be placed on the correspondence with the supplier and the supplier has not filed any reply and the appellant is silent over it. The redemption fine and the penalty imposed is very reasonable. She has pleaded for the rejection of the appeals.
9. In reply Shri Harbans Singh, the learned advocate, states that the judgment of the Supreme Court in the case of D. Bhoormull is not applicable in the case of the appellant as the facts are different. He has pleaded for the acceptance of the appeals. Alternatively, he has pleaded that the personal penalty may be quashed and fine in lieu of confiscation may be reduced.
10. We have heard both the sides and have gone through the facts and circumstances of the case. The facts are not disputed by both the sides. As per indents and invoices, the appellant had placed order for wool waste 28 bales and viscose staple fibre 48 bales and on examination out of 28 bales, 7 bales were found of wool waste and 21 bales of poly fibre and out of 48 bales, 14 bales were found of viscose staple fibre and 34 bales of poly fibre. The Additional Collector on internal page 13 of his order in the case of M/s. Sriyansh Woollen Mills had observed as under :-
"It is a fact, as contended by the counsel for the noticees, that Panchnama does not give any indication that 21 bales of wool waste and viscose staple fibre were stacked to camouflage the remaining bales of polyester fibre. Going by the mode of stuffing of similar goods in containers as detected recently by the department in other cases, it might have been plausible to hold that in the present case also 21 bales of wool waste and polyester staple fibre were stacked in front of 55 bales of polyester fibre in the containers in such a manner that bales of polyester fibre would not be visible from outside. However, in the absence of any such mention in the Panchnama or any other corroborative evidence, it is difficult to conclude at this stage that the contention of the DRI in this respect is established. From the records also it is observed that the containers were not destuffed in the presence of the importers. On the other hand, as per panchnamas, the containers were first destuffed and then the bales examined."
Similar were the observations in the case of M/s. Khazan Industries Pvt. Ltd. Top para from internal page 12 of the order is reproduced below:-
"It is a fact, as contended by the counsel for the noticees, that Panchnama does not give any indication that 9 bales of wool waste were stacked to camouflage the remaining 31 bales of polyester and acrylic fibre. Going by the mode of stuffing of similar goods in containers as detected recently by the Department in other cases, it may be plausible to hold that in the present case also, 9 bales of wool waste were stacked in front of 31 bales of polyester and acrylic fibre in the container in such a manner that bales of polyester and acrylic fibre would not be visible from outside. However, in the absence of any such mention in the Panchnama or any other corroborative evidence, it is difficult to conclude at this stage that the contention of DRI in this respect is established. On the other hand, as per Panchnama, the container was first destuffed and then the bales were examined. From the records also, it is observed that the containers were not destuffed in the presence of the importers."
A simple perusal of the findings of the Additional Collector which have been reproduced above will clearly reveal that the arrangement of the bales was such that intention cannot be attributed to the mala fide conduct of the importers. It is also not disputed that in both the matters no bill of entry was filed. In terms of the provisions of Section 30 of the Customs Act, 1962, the person-in-charge of a conveyance carrying imported goods shall, within twenty-four hours after arrival thereof at a customs station, deliver to the proper officer, in the case of a vessel or aircraft, an import manifest, and in the case of a vehicle, an import report, in the prescribed form and in terms of the provisions of Section 32 of the Customs Act, it is provided that imported goods are not to be unloaded unless mentioned in import manifest or import report. Section 32 of the Customs Act, 1962 is reproduced below:-
"32. Imported goods not to be unloaded unless mentioned in import manifest or import report - No imported goods required to be mentioned under the regulations in an import manifest or import report shall, except with the permission of the proper officer, be unloaded at any customs station unless they are specified in such manifest or report for being unloaded at that customs station."
A simple perusal of Section 32 will show that no imported goods could be unloaded at a customs station unless they are specified in the import manifest for being unloaded at the customs station. This Section relates for preventing the unauthorised landing of goods. The filing of the import manifest is the obligation of the person incharge of the conveyance carrying imported goods. Therefore, the appellants cannot be indicted for rendering the goods liable to confiscation under Section 111(f).
We agree with the appellants herein that there is no direct evidence available against them which would indicate their culpability in wrongful importation of the goods. Nevertheless, there are certain circumstances which go against the appellants' innocence. Firstly, the appellants' plea that the suppliers have wrongly sent the goods and they themselves have been cheated is not borne out by the subsequent action taken by the appellants against the suppliers. Apart from writing letters to the suppliers, which alone have been brought forth on record by the appellants, no subsequent legal action has been taken by the appellants against the suppliers to prove their bona fides. It is yet another coincidental circumstance that the two different suppliers who sent the goods committed the mistake of sending them wrongly in identical manner i.e. polyester fibre being sent partly in lieu of wool waste by one supplier and again polyester fibre being sent by the other supplier partly in lieu of viscose staple fibre (see last but one question and answer in Ajit Kumar's statement dated 24-11-1985). Further it is also evident from the statement of Ajit Kumar Jain that the deal was struck by him directly with the suppliers although for the sake of formality, indentor was brought in.
It is well settled, as rightly pointed out by the learned SDR, in the Supreme Court's judgement in D. Bhoormul's case mentioned supra that in the clandestine activities like smuggling, department cannot be expected to prove the charge to the guilt or beyond all reasonable doubt. Guilt of an accused can be found on preponderance of probabilities. In view of this discussion, we hold that the appellants are liable to penalty under Section 112. The adjudicating authority has invoked the provisions of Section 111(f) of the Customs Act, 1962. Section 111(f) is reproduced below:-
"111. Confiscation of improperly imported goods, etc. - The following goods brought from a place outside India shall be liable to confiscation:
. . .
(f) any dutiable or prohibited goods required to be mentioned under the regulations in an import manifest or import report which are not so mentioned."
A simple reading of Section 111(f) will show that the penalty under Section 111(f) is to be imposed on the person who has filed the manifest under Section 30 of the Customs Act, 1962. The person incharge of the ship has not been made a party and no proceedings have been initiated against him. Under Section 111(f) no penalty can be imposed on the importer. In terms of the provisions of Section 111(d) of the Customs Act, 1962, 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 time being in force, the goods are liable to confiscation and in terms of the provisions of Section 112(a), penalty is leviable for improper importation of goods etc. 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. In the matter before us, it is not disputed that the appellant had placed order for 28 bales of wool waste and 48 bales of viscose staple fibre and out of 28 bales of wool waste, 7 bales were of wool waste and 21 bales of polyester fibre and out of 48 bales of viscose staple, 14 bales were of staple fibre and 34 bales were of polyester fibre. The rate of duty on polyester fibre was 145% + 97kg + 40% + Rs. 45/kg + 15% as against the rate of nil/100% + 40% + Rs. 37.50/kg + 15% applicable on wool waste/viscose staple fibre. The Additional Collector in his order has mentioned that duty difference in the case of M/s. Sriyansh Woollen Mills is Rs. 16 lakhs and the duty difference in the case of M/s. Khazan Industries Pvt. Ltd. was around Rs. 14 lakhs. Undoubtedly, the importation of polyester fibre bales is unauthorised and the appellant is not the actual user. The learned Additional Collector has observed that the appellant is the actual user only of woollen waste acrylic fibre and viscose fibre and polyester fibre was not used by the appellant. Accordingly, we agree with his conclusions that the importation of polyester fibre was unauthorised and liable to confiscation under Section 111(d) of the Customs Act, 1962. During the course of arguments, Shri Harbans Singh, the learned advocate for the appellants had mentioned that the importation was made in the year 1985 and the appellant is incurring a demurrage of Rs. 3500/- per week. The demurrage for three years will approximately work out to Rs. 5,46,000/-. In the case of M/s. Muddeereswara Mining Industries Co., Bangalore v. Collector of Customs, Bangalore, in appeal No. C/3531/87-A, order No. 197/88-A dated 9-3-1988 reported in 1989 (39) E.L.T. 630 (Tribunal) the Tribunal had reduced the redemption fine from Rs. 5,00,000/- to Rs. 25,000/- on the ground that the machine on its importation had remained under detention for well over a year incurring port demurrage. Para 8 from the said judgment is reproduced below:
"8. Since the goods are liable to confiscation, the appellants were liable to a penalty under Section 112 as well. The impugned order imposing fine in lieu of confiscation and penalty is legally quite in order. However, considering the fact that the machine, on its importation, has remained under detention for well over a year, incurring port demurrage, we feel that some reduction in fine and penalty is called for Considering all facts and circumstances, including the higher amount of depreciation allowed by us, we reduce the redemption fine from Rs. 5 lakhs to Rs. 25,000/- (Rupees twenty five thousand only) and the penalty from Rs. 2 lakhs to Rs. 10,000/- (Rupees ten thousand only)."
Similar view was taken by the Tribunal in other matters, M/s. Delhi Plastics v. Collector of Customs, Delhi, 1988 (36) E.L.T. 360 (Tribunal) = 1988 (12) ETR 144 (Tribunal) appeal No. C/3139 to 3143/87-A, order Nos. 137-141/88-A dated 11-2-1988. Some demurrage would have been unavoidable. Fine in lieu of confiscation reduced. M/s. Mirah Dekor, New Delhi v. Collector of Customs, New Delhi, 1988 (35) E.L.T. 357 (Tribunal) appeal No. C/2902/87-A, order No. 195/88-A dated 10-3-1988. Goods remained under detention. Demurrage Rs. 85,000/-. Fine in lieu of confiscation reduced from Rs. 1,00,000/- to Rs. 50,000/-. M/s. Godson Knitwear v. Collector of Customs, New Delhi, appeal No. C/3742/87-A, order No. 229/88-A dated 7-4-1988. Goods under dentention. No mala fides were established. Fine in lieu of confiscation of Rs. 2.5 lakhs reduced to Rs. 1000/-. Keeping in view the earlier judgments of the Tribunal cited above and the fact that the goods are under detention for the last three years, the appellant must have incurred a demurrage of about Rs. 5,46,000/-, we feel that the ends of justice require that personal penalties and fine in lieu of confiscation should be reduced. Accordingly, in the case of M/s. Sriyansh Woollen Mills Pvt. Ltd., we reduce the penalty under Section 112 of the Customs Act, 1962 from Rs. 4 lakhs to rupees one lakh and the fine in lieu of confiscation from Rs. 3,50,000/- to Rs. 87,500/- and in the case of M/s. Khazan Industries Pvt. Ltd., we reduce the penalty from Rs. 3,50,000/- to Rs. 87,500/- and fine in lieu of confiscation from Rs. 1,10,000/- to Rs. 27,500/-. The revenue authorities are directed to give consequential effect to this order. Except for this modification in the order, the appeals are otherwise rejected.