Custom, Excise & Service Tax Tribunal
M/S. Harsons Overseas vs Commissioner Of Customs on 23 August, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI PRINCIPAL BENCH, COURT NO. III Customs Appeal No. 722 of 2008-Cus (DB) [Arising out of Order-In-Original No 11/PKJ/Adjn/2008 dated 30.5.2008 passed by Commissioner of Customs & Central Excise, Faridabad Delhi IV] For approval and signature: Honble Ms. Archana Wadhwa, Member (Judicial) Honble Mr. Manmohan Singh, Member (Technical) 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2 Whether it should 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 Departmental authorities? M/s. Harsons Overseas Appellants Vs. Commissioner of Customs, Respondent
Central Excise Delhi IV Appearance:
Ms. Shikha Sapra, Advocate for the Appellant Shri V.P. Batra, AR for the Respondents CORAM:
Hon'ble Ms. Archana Wadhwa, Member (Judicial) Honble Mr. Manmohan Singh, Member (Technical) Date of Hearing : 09.05.2013 Date of Decision : 23.08.2013 ORDER NO .FO/ 57380 /2013-Cus(BR) Per Archana Wadhwa (for the Bench):
After hearing both sides, we find that the appellant which is a merchant exporter duly registered with the office of DGFT New Delhi, filed three shipping bills on 19.12.05 for export of the all items declared as metal fitted/ bonded/ unbonded rubber part door beading whose totally FOB value in the shipping bills was Rs.1,40,76,720/- under the claim of DEPB to the extent of Rs.11,26,137/-.
2. The Revenue took up the matter as regards the valuation of the same and conducted investigations. During the course of investigations, statements of various persons were recorded leading the Revenue to entertain a view that goods declared cannot be held to be door beading inasmuch as the same were of 15 length as against the requisite length of 2mts. As such, the same cannot be used for intended purpose. The value of the same was found to be much on the lower side.
3. Based upon the above investigation, the show cause notice was issued to the appellant for reducing the value of the declared goods and to decide the DEPB claim accordingly. It is seen that Shri Surinder Singh Chandhok, proprietor of the appellant, vide his letter dated 30.1.2006 addressed to the Superintended SSI Faridabad requested as under:
Since the goods are in your custody, we request that the same may be got examined and market verification may be made to ascertain the export price and the matter may be decided and export may be allowed.
4. Commissioner has observed that it was the noticee who had asked the department for examination of the goods and market enquiries. As such, by taking into account the result of the market inquiries, he hold that total value of all three consignments was to the tune of Rs.11,000/-. He accordingly confiscated the goods and gave an option to redeem the same on payment of redemption fine of Rs.5,000/-. In addition, he imposed penalty of Rs.1,40,76,720/- on the appellant in terms of Section 114 (iii) of the Customs Act.
5. Learned advocate appearing for the appellant submits that she is not disputing the Commissioners finding on the charge of undervaluation, though the appellant has serious grievance with the same. However, she submits that quantum of penalty imposed upon the appellant is much on the higher side and needs reduction especially when it is the appellant himself who had requested the Department to examine the goods in detail. As such, she prays for reduction of penalty.
6. Learned DR appearing for the appellant submits that it is the case of admitted fraudulent export with an intent to avail higher DEPB benefit. As such, he justified imposition of higher penalty.
7. After taking into account the overall circumstances of the case, we find that the adjudicating authority has imposed penalty equivalent to the declared FOB value of the goods to be exported. The said value has been rejected by the adjudicating authority himself. As such, the same may not be required to be taken as a criteria for adjudging the quantum of penalty required to be imposed upon the appellant. It is further seen that the total DEPB benefit claimed by the appellant was to the extent of Rs.11,26,137/-. As such, the maximum penalty required to be imposed upon the appellant would be to the above extent. We accordingly, reduce the penalty to Rs.11,26,137/- (Rupees Eleven lakh twentysix thousand one hundred thirtyseven only).
8. But for the reduction in quantum of penalty, the appeal is otherwise rejected.
(Pronounced in the court on )
( Archana Wadhwa ) Member(Judicial)
( Manmohan Singh )
Member (Technical)
ss
PER: MANMOHAN SINGH
9. Having gone through the order recorded by the learned Member (J), I proceed to record a separate order recording all material facts and evidence which are relevant for decision in this appeal, and do not agree with the reduction of the penalty to Rs. 11,26,137/- ordered by learned Member (J).
10. In this case, the appellant has filed appeal on the following points against the order of the Commissioner which are as under:
(i) The value has been re-determined as Rs.11,000/- @ Rs.5 per kg for each of the shipping bill under section 14(1) of Customs Act, 1962 resultantly no DEPB claim under Sr.No.499 of the Product Group 62 is available to the appellant.
(ii) The goods were confiscated and option to redeem the goods on payment of redemption fine of Rs. 5,000/- against each of the three shipping bill No.1039370 dated 19.12.2005, 1039369 dated 19.12.2005 and 1039371 dated 19.12.2005 was given.
(iii) The penalty of Rs.47,19,680/- (shipping bill No. 039370 dated 19.12.2005), Rs.46,92,240/- (shipping bill No. 1039369 dated 19.12.2005) and Rs.46,64,800/- (shipping bill No. 1039371 dated 19.12.2005) totalling to Rs.1,40,76,720/- has been imposed.
11. In this case, adjudication finding was that the appellant inflated value of consignment attempted to be exported to claim higher DEPB benefit while the goods were of sub-standard quality and were not fit to be part of any car. The exporters declared value of the goods was found to be between Rs.666 to Rs.674 per set on which DEPB credit claimed to be Rs.53 per set approximately. On examination the goods were found to be pack in a set of 2 pcs and unit price was appearing to be on higher side. The exporter proposed to reduce the value by 40% to 50% for DEPB purpose vide their letter dated 21.12.2005.
12. When the goods attempted to be exported was misdelcared including value thereof, investigation was conducted to find out value thereof. Investigation proved that rubber scrap/unserviceable non exportable rubber products were attempted to be exported, the value of which was worked out to be Rs.11,000/- against declared export value of Rs.47,19,680/-, Rs.46,92,240/- and Rs.46,64,800/-.
13. During the course of investigations as brought in the show cause notice, opinion of different manufacturers of the declared goods as well as traders or persons dealing in similar type of goods has been sought. Shri Vishnu Sharma, Assistant Manager (Commercial) M/s. Malzafer, Sahibabad, the manufacturer of Rubber Door Beadings given uncontroverted opinion as to quality of a Rubber Beading of a car and length thereof required to be approximately 2 meters whereas the length of goods attempted to be exported was found to be 15 inches. Obviously, such a small length of 15 inch cannot be fitted in a car door even of smallest size. Shri Kuldeep Singh, Deputy General Manager (Production) of M/s.ASP Sealing Products Limited another manufacturer of Rubber Door Beadings also gave similar opinion which remained uncontroverted.
14. Shri Surinder Singh Chandhok, proprietor of the Appellant went on changing his stand. Initially he promised to submit a copies e-mail and of fax messages relating to procurement of purchase orders from overseas buyers by 18.1.2006. He also undertook to submit purchase invoices of M/s. S. A. International, M/s. Universal Enterprises and M/s. Jain Durga Industries by 18.1.2006 under which goods attempted to be exported were procured by him. However, instead of submitting documents supporting the purchase from domestic manufacturers/traders and sale to overseas buyers, he took a plea that the goods found to be lying in the warehouse belonged to his father who had since been passed away on 27.08.2005. Every time changing his stand, he misled the investigation following dubious practice to hide the offence committed by him. Finally the appellant itself admitted the misdeclaration of goods and overvaluation of the spurious goods attempted to be exported deliberately. But merely challenged imposition of quantum of penalty stating that to be in very higher side, requiring reduction.
15. I have thoroughly examined the relevant facts, evidence, investigation outcome and adjudication findings as well as intention of the appellant behind attempted export with the argument made on behalf of the appellant on the only ground of reduction of penalty without rebuttal of evidence collected by investigation and adjudication findings. Investigation unmistakably proved deliberate attempted export of rubber scrap/unserviceable non exportable rubber products to make higher DEPB claim. It clearly comes out from the records that the items for export i.e. metal fitted/bonded/un-bonded rubber part- door beading were attempted to be exported vide 3 shipping bills on 19.12.2005 whose FOB value of Rs.1,40,76,720/- to claim of DEPB to the extent of Rs.11,26,137/-. Investigation clearly brought out that there was fraudulent attempt by the appellant to export Door Beading inasmuch as the same were 15 length as against the required length of 2 meters. The goods attempted to be exported could not be used for intended purpose. Only purpose of misdeclaration of value and length of door beading was to earn higher DEPB benefit. There was intention to defraud the Revenue to claim higher DEPB benefit by over valuation and misdeclaration. Such act of the appellant attracts penal provisions under section 114(3). For the ready reference section 114(3) is reproduced below:-
Section 114. Penalty for attempt to export goods improperly, etc. 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 113, or abets the doing or omission of such an act, shall be liable, -
(i) --------------------------------------------------------
(ii) --------------------------------------------------------
(iii) in the case of any other goods, to a penalty not exceeding the value of the goods, as declared by the exporter or the value as determined under this Act, whichever is the greater.
16. Section 114(3) of the above Act throws light that attempt to export goods improperly rendering such goods liable to confiscation invites penalty not exceeding the value of goods as declared by the exporter or the value as determined under the above Act whichever is the greater. Since in this case, the value declared by appellant was Rs. 1,40,76,720/- which is greater than the value determined in adjudication, penalty could be levied upto the above declared depending upon circumstances.
17. The appellant had no evidence to rebut the findings in adjudication and controvert the evidence collected during investigation, offence cannot be viewed lightly. Tribunal should not be liberal in imposing penalty to debtor. Rajasthan High court has held that cheating Revenue is a royal thievery which should visit with right amount of penalty required to be imposed by law to save honest citizens from bearing the burden of evaders.
18. It shall be appropriate to reproduce the principle of law laid down by Apex Court in para 20 to 23 of the Judgment in the case of Commissioner of Customs V. Mansi Impex 2011 (270) ELT 631 (SC) which is under:
20.?On appeal being filed before the Tribunal at the instance of the respondents, the tribunal has interfered with the aforesaid orders passed by the Commissioner only on the ground that in other cases, redemption fine has been reduced to 20% and the penalty has been reduced to 5% and following that order passed by the Tribunal in some other cases, an order was passed by the Tribunal in the present case also for reducing both the redemption fine as also the penalty to 20% and 5% respectively. We find that the said order passed by the Tribunal is arbitrary and whimsical, for no reasons have been recorded specifically as to why in these particular cases it should be reduced to 20% and 5% and determination of quantum to be paid as redemption fine and penalty should be dependent on the facts and circumstances of each case. In the case of Commissioner of Customs (Import) v. Stoneman Marble Industries, reported in 2011 (264) E.L.T. 3 (S.C.), it was held by this court that a standard formula cannot be laid down for imposition of redemption fine and penalty.
21.?At this stage, we may also appropriately refer to a three Judges Bench decision of this Court in Jain Exports Pvt. Ltd. v. Union of India, reported in 1993 (66) E.L.T. 537 (S.C.). In the said decision this Court held that the quantum of the redemption fine would depend on the facts and circumstances of each case and no hard and fast rule can be laid down in that behalf. While rejecting the contentions of the assessee/appellant in that case that the importers had acted in good faith and bona fide and therefore assessee is entitled to claim entire redemption fine to be waived, this Court held that even in such cases the fixation of quantum of redemption fine would depend on the totality of the facts and circumstances of the case.
22.?In the present case the importers i.e. respondents although were experienced people and well versed in the policies and procedures in regard to the import and export of goods brought certain goods in question without a licence, which was a prerequisite under the law. Whether in such cases absolute waiver or any waiver of redemption fine and also of fine would be justified? All these aspects are required considered and gone into considering the facts of each case. The Tribunal is required to give proper, valid and cogent reasons for passing orders with regard to the quantum of redemption fine as also the penalty.
23.?Having arrived at the conclusion that the orders passed by the Tribunal in C.A. No. 2658 of 2007 and 2659 of 2007 are arbitrary and whimsical, we remand these two appeals back to the Tribunal for reconsideration of the entire matter in the facts and circumstances of the case and in the light of the observations made herein. The Tribunal shall hear the matters as expeditiously as possible and pass appropriate orders within three months from the receipt of the records.
19. Considering the facts and circumstances of the case and spurious goods attempted to be exported which were scrap and not serviceable as well as malafide intention of the appellant to defraud Revenue making fraudulent claim of DEPB by deliberate misdeclaration, it clearly demands an exemplary penalty for this type of fraud. There are also issues of intent to transfer illegal money from abroad to India by way of over valuation of goods attempted to be exported. This results in illegal/irregular transaction in foreign currency. Imposition of higher penalty will definitely act as deterrent to the exporter and also discourage for future exporters indulging in fraudulent export with intent to make higher DEPB claim. I consider it proper that interest of Revenue will be served if a higher exemplary penalty amounting to Rs.50,00,000/- is imposed. Wrong doings have to be deterred by exemplary penalties, so that future frauds do not take place Revenue shall be in serious loss by such wrong doers.
20. In view of the above, I differ with the order recorded by Member (Judicial) wherein it has been held that penalty is to be limited to the total DEPB benefit of Rs.11,26,137/-
(MANMOHAN SINGH) MEMBER (TECHNICAL) In view of above difference in opinion of both the members in this appeal, under mentioned questions arise for reference to the Honble President to resolve the same. Registrar is required to place both the files before him:
DIFFERENCE OF OPINION
1. Whether there was fraud committed by appellant against revenue making intentional misdeclaration of description of goods as well as value and claim of higher DEPB with malafide intention
2. Whether on the facts circumstances as well as uncontroverted evidence recorded in adjudication, penalty of Rs.50,00,000/- u/s 114(3) of the Customs Act, 1962 is required to be imposed as held by Honble Member (Technical) or penalty to the extent of DEPB benefit of Rs.11,26,137/- claimed by the appellant shall be imposable as held by Member (Judicial)?.
(MANMOHAN SINGH) (ARCHANAWADHWA)
MEMBER(TECHNIAL) MEMBER(JUDICIAL)
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In my views, difference at Sr. No. 1 framed by Ld. M(T) does not arise as the fact of mis-declaration has not been held in favour of the appellant. Only difference is quantum of penalty as framed as Sr. No. 2.
(MANMOHAN SINGH) (ARCHANAWADHWA)
MEMBER(TECHNIAL) MEMBER(JUDICIAL)
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