Custom, Excise & Service Tax Tribunal
Bhargav B Patel vs Commissioner Of Customs on 10 April, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. I Appln.No.C/MA(Ors)/92963, 93053/15 APPEAL No.C/181/10 & C/87679, 87757, 87758/13 (Arising out of Order-in-Original No. Commr/KPM/ ADJN/16/2005 dated 23/11/2005 & Order-in-Original No Commr/PMS/Adjn/ 20/2012-13 dated 28/03/2013 passed by Commissioner of Customs (Airport), Mumbai) For approval and signature: Honble Mr.M.V. Ravindran, Member (Judicial) Honble Mr. P.S. Pruthi, Member (Technical) 1. Whether Press Reporters may be allowed to see :No 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 :Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether Their Lordships wish to see the fair copy :Seen of the Order? 4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================
Bhargav B Patel Supaporn Viboonwetwanich@Kanchana Nilesh B Patel, Appellants Bhargav B Patel Vs. Commissioner of Customs, CST, Mumbai Respondent Appearance:
Shri.Prakash Shah, Advocate for appellant Shri.M.S.Reddy, Dy. Comm. (AR) for respondent CORAM:
Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. P.S. Pruthi, Member (Technical) Date of Hearing : 10/04/2015 Date of Decision : /2015 ORDER NO Per: M.V. Ravindran
1. These four appeals arise out of adjudication of common show cause notice dated 29/30.10.2005, which inter alia proposed confiscation of seized 623.13 carats of cut and polished diamonds valued at Rs.31,65,323.41 or US $ 96757.60 under section 111(d), (f), (i) and (m) of the Customs Act, 1962, and imposition of penalties on the Appellants.
2. Heard both sides at length and perused the records.
3. Two Appeals, filed by Ms. Supaporn Viboonwetwanich@ Ms. Kanchnaand Mr. Nilesh B. Patel, are against Order-in-Original dated 28.3.2013. This impugned Order imposes penalties on them of Rs. 1 Lac and Rs. 2 Lacs respectively under section 112(a) of the Customs act, 1962, while directing absolute confiscation of the said seized diamonds stating them as rough diamonds. Before the adjudicating authority Ms. Kanchna had requested for permitting her to redeem the goods on payment of fine, which was rejected. One Appeal filed by Bhargav B. Patel challenges earlier OrderinOriginal dated 22.11.2005 by which penalty of Rs. 5 lacs was already imposed upon him. Another Appeal filed by him challenges the aforesaid Order-in-Original dated 28.3.2013 passed under erroneous assumption that no appeal was preferred against Order dated 22.11.2005 by him and thereby confirming penalty of Rs. 5 Lacs on him.
4. In the earlier round, Appeals filed by said Ms. Kanchna and Nilesh B. Patel against the Order-in-Original dated 22.11.2005 imposing on them penalties of Rs.1 Lac and Rs.2 Lacs respectively, were allowed by way of remand by Tribunal. Thereafter, the impugned Order-in-Original dated 28.3.2013 is passed in de-novo adjudication.
5. We have carefully considered the rival submissions and the available records. The Ld. DR has supported the impugned Orders and submitted that the Appeals are liable to be dismissed by taking us through the findings recorded against the Appellants. He submitted that no case for either setting aside absolute confiscation or for setting aside or reducing penalty was made out by any of the Appellants.
6. The facts leading to issuance of show cause notice are as follows-
(i) On 12.04.2015, Officers of Customs found in the import courier packages brought for clearance by M/s. Jeena & Co., imported per Fedex Flight, a Yellow Pages book with a cavity made in it concealing different sizes of precious stones in three plastic pouches. The courier parcel for the said book was for the consignee named Ms. Shilpaben, showing address of the Appellant Shri. Bhargav B Patel.
(ii) During investigations, in his initial statement, Shri. Bhargav Patel stated that he was partner of M/s. Parvati Gems, Mumbai having workshop at Surat for cutting and polishing of diamonds and was importing and exporting diamonds through DPCC, Mumbai. His brother Nilesh Patel stayed in Bangkok and his sister Shilpaben was married and stayed in Surat. He had attended the Customs Office in response to summons issued in the name of his sister Ms. Shilpaben, pasted on door of his house. In his statement, he also admitted that the parcel was meant for his Company and his sister Shilpaben had nothing to do with it. M/s. Jeena & Co., submitted during the investigations that they have found similar 11 consignments sent by consignor Kanchanal / Som / Pannifer, Bangkok to Ms. Shilpaben. The value of the seized diamonds was worked out at US $72,433.03 equivalent to Rs.31.65,323.41.He stated that other 10 parcels had only magazines related to jewellery designing and advertising etc.
(iii) He was arrested thereafter, on 21.04.2005. In searches at his residence and office premises, nothing incriminating was found. He retracted his statement before the Magistrate, to which a rebuttal was filed before the Court by the Department. He was released on bail on 28.04.2005.
(iv) M/s. Fedex Express revealed that from 15.04.2005 to 25.04.2005 a person named Jimmy from Bangkok pursued M/s. Fedex telephonically for calling back the subject parcel, or re-routing to Hong Kong and later stopped communicating to M/s Fedex. From 25.04.2005, M/s. Fedex started contacting Ms. Kanchana on phone for shipment value and later informed her that the shipment cannot be returned due to attempted duty evasion by the shipper.
(v) In his further statement recorded on 03.05.2005, 09.05.2005, 10.05.2005, 12.05.2005, 13.05.2005, 16.05.2005, 24.05.2005, 07.06.2005, 13.06.2005. 09.08.2005, 02.09.2005, 15.09.2005, 23.09.2005 and 29.09.2005 Shri. Bhargav Patel stated inter alia that the seized diamonds did not belong to him and that he did not know as to why they came in the name of his sister. He stated that the diamonds were not called for by him. He did not know who were Som, Pannifer and Ms. Kanchana. He did not call for any diamonds and came to know about it only after getting the summons in his sisters name. He did not have contact with any person named Jadhav for helping him in his business. He did not make any calls to M/s. Fedex about anything for the delivery of the parcel under seizure, nor instructed anyone for the same. He did not misuse his sisters name for getting diamonds illegally. He did not give any instructions to Fedex for delivery of the seized parcel. He did not know the inter-relationship of Som, Pannifer or M/s. Bhargav Gems. His brother did not send parcels in his sisters name at Mumbai address. Neither he, nor his sister was telling lies about the parcel under seizure. His sister was not connected with the parcels and he did not know why the parcels were sent in her name. He stated that he was not aware of any such parcels arrival and hence there was no question of his calling Fedex and giving any instruction regarding its delivery. He did not know Thai language and was not aware as to why such book was sent in the seized parcel. His company never received any exported goods back due to any problem related to quality, etc.
(vi) Ms. Kanchana, in response to summons dated 27.09.2005 faxed a locally notarised letter to the Customs, inter alia, mentioning her real name and that she was employed with Shri Nilesh Patel in Bangkok and she sent the subject parcel valued @ FOB US$ 96,757.60 packed in a Thai directory for security reasons. That she knew the family members of Mr. Patel in India, as from office, regularly some magazines were dispatched to their residence. She had to communicate with his employers Indian residence about handing over the parcel to one Mr. Jimmy, who was to follow her instructions and collect the same in India. That, before the parcel could reach the addressee, it was detained by the Customs. The diamonds were not dutiable and no law has been violated by her and that the diamonds be handed over to her legal representative, as it was her first mistake. She gave the value of the seized goods which was in dispute. The value given by the expert was on lower side.
(vii) Statements of various personnel from M/s. Fedex were also recorded. After investigations, a Show Cause Notice dated 29.09.2005 was issued, proposing confiscation of the goods and imposition of penalty on the noticees, under Section 112A of the Customs Act, 1962.
7. The relevant list and dates summarized in the earlier order passed by this Tribunal while remanding the matter of Ms. Kanchna are as follows-
Dates Events 26.09.05 Applicant replied to the summons received requiring her presence before the office of AIU 29.09.05 Show Cause Notice was issued to the applicant amongst others 20.10.05 Applicant filed Settlement Application u/s 127B of the Customs Act, 1962 before the Settlement Commission.
29.12.05 Interim Order passed by the Settlement Commission interalia, directing the parties to submit names of approved assessors by 10.01.2006. The matter was accordingly adjourned to 17.1.2006 at 11.00 hours to appoint an approved assessor to determine the value of the diamonds. It was also observed that the adjudication order would become non est with the admission of the applications.
07.02.06 The respondent filed writ petition no. 821 of 2006, challenging the interim order passed by the Settlement Commission. It is submitted, without prejudice, that this writ petition was filed before expiry of time limit for filing appeal against the impugned order.
20.07.06 By an order passed by the Hon'ble Bombay High Court in writ petition no. 821 of 2006 filed by the respondent, further proceedings in the settlement application filed by the applicant, came to be stayed. Whereas the impugned order claims that goods were not dutiable, before the Hon'ble High Court the department claimed that duty leviable would be 1.58 lakhs.
07.11.07 During the pendency of this stay order by the Hon'ble Bombay High Court vide ex-parte final order passed by the Settlement Commission, the application filed by the applicant was rejected interalia for the reason that the SCN has been adjudicated by the competent authority on a specific direction to do so by the Hon'ble Bombay High Court, and no case is pending before any proper officer and hence the application merits rejection. The applicant was unaware about this order till 18.3.2010.
12.01.10 Ultimately the writ petition no. 821 of 2006 filed by the respondent came to be dismissed for want of prosecution as the applicant was represented by her advocate.
08.02.10 Vide letter dated 06.02.2010 the advocate for the applicant informed the Settlement Commission about the order dated 12.01.10 and requested for withdrawal of the application, so as to file appeal before this Tribunal.
18.3.10 The Settlement Commission informed that in the meanwhile the application filed by the applicant and others were already rejected vide order dated 07.11.07.
17.6.10 Appeal filed.
8. In the de-novo adjudication, the stand taken by Ms. Kanchna before the adjudicating authority is evident from para 3.7 of the impugned Order dated 28.3.2013 as follows-
3.7 That One Courier parcel, declared as documents (of no commercial value), was sent by her, vide Fedex Flight No. FX 0003 at C.S.I Airport, Mumbai, in the name of one 'Shilpaben', vide Airway Bill no. 8471 0932 6270; that Cut & Polished diamonds (623.14 carats) worth FOB US $ 96,757.60 were neatly packed inside a Thai directory, by making a cavity; that she agrees that she has deliberately mis-declared the goods covered vide the said courier parcel, for her own benefit as she wanted to encash the diamonds in the vast Indian Market by clearing Indian Customs without declaration; that she categorically says that though she works in M/s Bhargav Gems at Bangkok, neither Shri Nilesh B. Patel, nor Shri Bhargav Patel were aware of the fact that she had sent a courier parcel which contained diamonds. Nor any of them, or any of the other notices in the Show Cause Notice, is concerned with the seized diamonds; that she could not even inform them about having sent the parcel, as whiles she was about to make a call to India, she came to know that the courier parcel was seized by the Customs Authorities in India; that when Shri Nilesh Patel furiously inquired from her, she denied having any knowledge about the parcel, in the fear of losing the job, and or having mis-utilised the Indian residential address of Shri Nilesh Patel and the name of Ms. Shilpaben; that she has not conspired with M/s Fedex or M/s Jeena & Co. or any Customs officer; that she replied to the A.I.U. Summons No. AKS/229/05 vide letter dated 26-09-2005 and informed the factual position to the case wherein she has claimed the diamonds and also informed that she had invested her savings in these diamonds; that she made efforts to recall the consignment, but failed; that she chose to send the parcel at the Mumbai address of Shri Patel, in the name of "Shilpaben", as she knew Patel's brother and other family members in India; that she could have collected the parcel through Mr. Jimmy, immediately upon delivery of the parcel at their (Bhargav Patel's) residence or could have even collected the same at the office of the courier company itself that cut and polished diamonds seized by the department are not prohibited goods, for the purpose of importation into India; that she is the owner of the seized diamonds, and is claiming the release of the diamonds, by accepting her true duty liability; that it was the first courier consignment sent by her; that she is not a habitual offender and she will never indulge in such fraudulent practice in future; that she further prays that the said diamonds may kindly be released to her on a nominal redemption fine and leviable Customs duty.
9. It is also a matter of record that Ms Kanchna had earlier filed an application for settlement seeking immunities from imposition of any penalty or fine, and from prosecution by admitting her duty liability of Rs.2,11,415/- towards these seized goods before the Settlement Commission. This application is duly notarized. In this application she states that The facts leading to the filing of present Application are as mentioned hereunder:-
1. One Courier parcel was sent by me, vide Fedex flight No.FX 0003 at C.S.I Airport, Mumbai, in the name of one Shilpa Ben, vide Airway Bill no. 8471 0932 6270.
2. In this courier parcel, declared as documents (of no commercial value), Cut & Polished diamonds (623.14 carats) worth FOB US $ 96,757.60 were neatly packed inside a Thai Directory, by making a cavity.
3. I wanted the diamonds to be cleared from Indian Customs without declaration.
4. I agree that I have deliberately mis-declared the goods covered vide the said courier parcel, for my own benefit. However, the said act was to encash the diamonds in the vast Indian Market, for licit importation of which I was not having any infrastructure in India.
5. I categorically say that though I work in M/s Bhargava Gems at Bangkok, neither Shri Nilesh B. Patel, nor Shri Bhargava Patel were aware of the fact that I had sent a courier parcel which contained diamonds. Nor any of them, or any of the other notices in the Show Cause Notice, is concerned with the seized diamonds.
6. I could not even inform them about having sent the parcel, as while I was about to make a call to India, I came to know that the courier parcel was seized by the Customs Authorities in India and that Shri Bhargava Patel was therefore inquiring from Shri Nilesh Patel, about the mis-declared courier parcel containing the diamonds. When Shri Nilesh Patel furiously inquired from me, I denied having any knowledge about the parcel, in the fear of loosing the good job, for having mis-utilised the Indian residential address of Shri Nilesh Patel and the name of Mrs. Shilpaben.
7. Several persons including their family and the courier people faced a lot of problems, which I regret.
8. I say that I have not conspired with M/s FEDEX or M/s Jeena& Company or any Customs officer.
9. A summons bearing no. AKS/229/05 was received by me for appearance before the office of AIU, in connection with the said import of diamonds in a fraudulent manner. Vide letter dated 26-09-2005, I replied to the summons and informed the factual position to the AIU. A copy of the said letter is annexed hereto and marked as Exhibit-A. I claimed the diamonds and I also informed that I had invested my savings in these diamonds. I made efforts to recall the consignment, but I failed. I also informed that I chose to send the parcel at the Mumbai address of Shri Patel, in the name of Shilpa Ben, as I knew them.
10. I say that I could have collected the parcel through Mr.Jimmy immediately upon delivery of the parcel at their residence, or could have even collected the same at the office of the courier company itself.
11. Vide this letter dated 26-09-2005, I categorically informed the officers of the Customs department that it was the first courier consignment sent by me.
12. A Show Cause Notice bearing F.No.SD/INT/AIU/UNI-2/2005/STF dated 29/09/2005 has been received by me. The said Show Cause Notice is not annexed with any relied upon documents. Hereto annexed and marked as Exhibit-B is a copy of the Show Cause Notice bearing F.No.SD/INT/AIU/UNI-2/2005/STF dated 29/09/2005.
13. The imported diamonds have not been released, till the filing of the present Application, and continue to remain in seizure, since filing of the Bill of Entry no. 001330 dated 12-04-2005 filed by Jeena& Co. in Form Courier Bill of Entry-III.
14. I say that I am owner of the seized diamonds and I am claiming the release of the diamonds, by accepting my true duty liability before this Honble Commission. I say that I am not a habitual offender and I undertake that I will never indulge in such fraudulent practice in future.
15. I further say that in the true spirit of settlement I have disclosed my duty liability, which was not disclosed before the proper officer. I also say that the application fulfills all the parameters of section 127B of the Customs Act, 1962, and therefore this Honble Commission can consider this application for settlement of the issues mentioned herein.
10. Her application for settlement was dismissed as not maintainable. There is no dispute on the fact that the seized parcel was sent from Bangkok by said Ms. Kanchana and even the adjudicating authority says so in his findings. In these circumstances we do not find any merit in her challenge to the imposition of penalty alleging it to be excessive.
11. She has also challenged the absolute confiscation of the cut and polished diamonds (erroneously referred as rough diamonds in the impugned Order) on the ground that granting of option to redeem was mandatory in view of use of word shall in section 125 of the Customs Act, 1962, as the cut and polished diamonds are not amongst goods which are in the list of prohibited goods. It is seen that in the context of section 111(d) or 113(d), in several precedents, the definition of prohibited goods as contained in section 2(33) of the Customs Act, 1962 has been applied liberally, including in Om Prakash Bhatia vs Union of India, 2003 (155) E.L.T. 423 (S.C.) and Sheikh Mohd. Omer v. Collector, 1983 (13) E.L.T. 1439 (S.C.). However, in these precedents the issue whether in the context of section 125, the definition of prohibited goods under section 2(33) is applicable or not, was not the question. Honble Andhra Pradesh High Court in Shaik Jamal Basha vs. GOI, 1997 (91) ELT 277 (AP), after considering both section 111 as well as scheme of section 125 in a case of concealment was pleased to hold that attempt to import gold un-authorisedly will come under the second part of Section 125 (1) of the Act where the adjudging officer is under mandatory duty to give option to the person found guilty to pay fine in lieu of confiscation. Section 125 of the Act leaves option to the officer to grant the benefit or not so far as goods whose import is prohibited but no such option is available in respect of goods which can be imported, but because of the method of importation adopted, become liable for confiscation. Honble Madras High Court in T Elavarasan, 2011 (266) ELT 167 (MAD HC), was pleased to rely on the said Judgment of Honble Andhra Pradesh High Court and held that an option has to be given to the petitioner to pay the applicable customs duty and the redemption fine and to get the gold jewellery released, as per Section 125 of the Customs Act, 1962.A larger Bench of this Tribunal in Peringatil Hamza vs. CC Airport, Mumbai, vide Order dated 23.6.2014 in Appeal No.C/65/08-MUM held that currency beyond permissible limit are prohibited goods, however, without these binding precedents in the context of section 125 were not brought to notice of the larger bench.Further, in Asian Food Industries,2006 (204) ELT 8 (SC), the Honble Apex Court inter alia observed thatthe meaning of word prohibited will have to be construed in regard to the text and context in which it is used and the words prohibition, restriction and regulation are meant to be applied differently. Most importantly, the section 2(33), which is reproduced hereinafter, is with a rider unless the context otherwise requires 2. Definitions In this Act, unless the context otherwise requires (33) prohibited goods means any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with.
The above liberal definition of section 2(33)which is applied in the context of section 111 or 113 cannot be applied in the context of section 125.Under section 125 upon confiscation the Adjudicating Authority has two options. If importation or exportation of the goods of specified description is prohibited under the Act or any other law, upon confiscation he may give to the owner of the goods an option to pay in lieu of confiscation such fine as he thinks fit, and in the case of any other goods, he shall give to the owner of the goods an option to pay fine in lieu of confiscation, such fine as he thinks fit. If the same definition is applied in the context of section 125, it would result in absurdity rendering the word shall redundant and otiose, because there cannot be any situation where the goods would be liable to confiscation under section 111 or 113 as the case may be without there being any violation of the provisions under the Customs Act, 1962 or under any other law or rules, regulations made thereunder. Therefore in the context of section 125 if the word prohibited is construed as to apply in respect of every violation of any regulation or restriction or statutory procedural requirement, the word shall in said section would be rendered redundant and meaningless. In the context of the statutory provisions of section 125, so as to give a meaningful application to both words may and shall used in the said section, the definition of prohibited goods is inapplicable by application of settled principles of statutory interpretation as held in Ramesh Mehta vs Sanwal Chand Singhvi, (2004) 5 SCC 409. Under section 125 of the Customs Act, unless the importation or exportation of goods is expressly prohibited, the Adjudication Authority is obliged to offer to the Owner the goods an option to pay fine in lieu of confiscation. Since the import of cut and polished diamonds is not expressly prohibited under Section 11 of the Customs Act, 1962 or by any other statutory notification, we find merit in the ground that an option to redeem them on payment of fine in lieu of confiscation was mandatory. However, after conclusion of the hearing, on instructions, advocate for Ms. Kanchna informed that now she will not avail the option of redemption even if granted. Therefore, we are not interfering with the order of absolute confiscation.
12. Now, so far as Bhargava Patel and Nilesh Patel are concerned, it is seen that Bhargav B. Patel had filed Criminal Writ Petition No. 2478 of 2005 before the Honble Bombay High Court seeking directions to complete the adjudication proceedings expeditiously. The Honble Bombay High Court by order dated 14-10-2005 was pleased to direct the adjudicating authority to hear him in the adjudication proceedings and to dispose of the same qua him within a period of five weeks. In his Preliminary Reply to Show Cause Notice dated 29.9.2005 Bhargava Patel denied having any concern with the seized parcel. In this reply he stated that since the courier parcel was in the name of his sister, considering the gravity and penal consequences and due to natural love and affection he initially accepted under pressure the ownership and importation of the seized courier parcel. He categorically stated that he was not concerned with the seized goods and as such he was not opposing the confiscation of the seized goods. However, he strongly opposed imposition of any penalty whatsoever on him under the provisions of the Customs Act, 1962. However, adjudication qua him was not completed with five weeks and thereafter he filed application for settlement as co-applicant, which was dismissed. No admission was made by these brothers even before the Settlement Commission. It is seen that his subsequent statements, which were also recorded under section 108, do not incriminate him or Nilesh Patel. These statements cannot be ignored. His explanation therefore seems plausible. Bhargav Patel has also submitted that the subject Courier Bill of Entry contains a mandatory declaration, as reproduced in para 3.6 of the impugned order, to the following effect (i) I/we hereby declare that I / we have obtained the authorization from each consignee mentioned above to act as agent for the clearance of the goods described above
(ii) I/we declare that the goods imported as per Bill of Entry include only documents of No Commercial Value and do not include goods which are liable to duty or are prohibited or restricted for import into India under any Law for the time being in force. In respect of courier consignments it is mandatory to file this declaration that an authorization from the consignee to act as an agent for the clearance of the goods described in the Bill of Entry was obtained. However, no such authorization from Shilpa Ben or Bhargav Patel has been obtained in this case. We also find force in this submission that in absence of any such prior authorization for declaration, he cannot be held responsible for any mis-declaration of the contents or material particulars in the above facts. There is neither any proposal concerning any past importation of diamonds in similar fashion, nor any of the appellants admitted the allegation which is again based on suspicion. The courier parcels are screened at various points, by Customs, Courier Company or the Carrier. Although, the Adjudicating Authority observed that Bhargav Patel made conflicting and contradictory statements, however, there is no dispute on the fact that the parcel from which the diamonds under seizure were recovered was booked in the name of his sister Smt. Shilpaben without her knowledge, and was sent from Bangkok by Ms. Kanchana. Ms. Kanchana admitted in her Settlement Application that she could not even inform the Mr. Bhargav Patel or Mr.Nilesh B. Patel about having sent the parcel by courier which contained diamonds. The adjudicating authority has recorded that Ms. Kanchana appears to have been pressurized to file an affidavit giving untenable grounds such as non dutiability of the seized diamonds and conflicting reasons for sending concealed diamonds for collection by Jimmy who was not even known to Shri Bhargav Patel or his parents in India. We find that on the contrary she admitted her duty liability not only before Settlement Commission but also during the adjudication proceedings. There is no cogent evidence to show that she was so pressurized and this finding is based only on suspicion. There is no document or material or circumstantial evidence showing that Bhargava Patel had placed any order either verbal or written, or made compensatory payment, for the seized diamonds. In view of the above, we find that role of Mr.Bhargav Patel and Nilesh Patel in the smuggling of the diamonds under seizure is not established even on preponderance of probability and penalties imposed on them are set aside.
13. The appeal filed by Ms. Kanchna is therefore dismissed and the appeals filed by Bhargav B. Patel and Mr. Nilesh Patel are allowed.
(Pronounced in Court on ..) (P.S. Pruthi) Member (Technical) (M.V. Ravindran) Member (Judicial) pj 1 18