Customs, Excise and Gold Tribunal - Tamil Nadu
Peer Chemicals And Metallurty (P) Ltd. vs Cc on 31 August, 2001
Equivalent citations: 2001(99)ECR277(TRI.-CHENNAI), 2002(145)ELT96(TRI-CHENNAI)
ORDER Jeet Ram Kait, Member (T)
1. This is an appeal against Order-in-Original No. 23/97 dated 19.3.1997 by which the Commissioner of Customs has ordered for confiscation of sale proceeds amounting to Rs. 34,34,000/-. without imposing any penalty on the appellants on the grounds of unauthorised import of 60 MTs of Citric Acid by fictitious firm having no Import Export Code Number in contravention of provisions of the Foreign Trade (Development & Regulations) Act, 1992 read with the Customs Act, 1962.
2. The facts of the case are that M/s. Contfreight Shipping Agency India Pvt. Ltd., Madras (Container Agent), the Indian Agent of M/s. Hanjin Shipping, Singapore have filed Import General Manifest (IGM) through M/s. Shaw Wallace, Madras, Steamer Agent, for the goods covered by Line No. 273 to 343 carried by due vessel M.V. Kotaria Voy. 143 (IGM No. 497/96). Details were also furnished against line No. 275 of the said IGM for 2,400 bags STC Citric Acid MONO BP 88. The vessel arrived at Madras on 27.4.1996. the three containers were moved from the Madras Harbour to the Container Freight Station of M/s. Container Corporation of India at Tondiarpet, Madras on 4.5.1996 at the request of the Container Agent dated 30.4.1996. The Container Agent vide their letter dated 18.6.1996 requested for permission to re-export the containers on ground that "the consignee as per the Bill of Lading is not available". In the light of such a request after a very long time of the arrival of the cargo in India, the case was taken up for investigation.
3. On scrutiny of the documents, it was found that the goods were shipped by M/s. Da Hua International Trading Co., Hongkong from Shanghai (China) to M/s. Ganpati Trading Co. Pvt. Ltd., Madras. However, no specific address of M/s. Ganpati Trading Co. Pvt. Ltd. was available in the Bill of Lading. The Joint Director General of Foreign Trade, Madras was requested to verify and inform whether there was any firm by name "Ganpati Trading Co. Pvt. Ltd." registered with them and allotted Importer Exporter Code Number or not. The Jt. Director General of Foreign Trade, Madras after investigation has informed that no such company had been allotted any Importer/Exporter Code. The officers of the SUB visited the premises 112/1 Broadway, Madras on 21.6.1996 and found to be the office premises of M/s. Contfreight Shipping Agency Pvt. Ltd., and no company by name Ganpati Trading Company Pvt. Ltd., was functioning in the premises though the same address was indicated in the Import General Manifest. One R. Satyamoorthy, Junior Executive of the Container Agent Company had deposed to this effect before the investigating authorities vide his statement dated 21.6.1996. Since the goods were imported by a non-existing company, the same were examined in detail and seized in the presence of the representative of the container agent and independent witnesses on 1.7.1996. On calling the Container agents to produce the documents such as invoice, packing list and negotiation documents, etc., they have produced three pages of fax message said to have been received from one M/s. Peer Chemical & Metallurgy Pvt. Ltd., Singapore whole have affected the supply of the goods to India at the instance of one M/s. Ganpati Trading Co. Pvt. Ltd., Singapore. The Container agent has also produced certain documents said to have been received from one M/s. Peer Chemical & Metallurgy Pvt., Ltd., Singapore stating that M/s. Ganpati Trading Co. Pvt. Ltd., Singapore have opened a letter of credit through M/s. Habeeb Bank, Singapore, requesting M/s. Peer Chemical & Metallurgy Pvt. Ltd., Singapore to ship the goods covered by the notice to M/s. Ganpati Trading Co. Pvt. Ltd., Madras as to negotiate the documents through M/s. Overseas Union Bank Ltd., Singapore. It was also claimed that M/s. Peer Chemical & Metallurgy Pvt. Ltd. have affected the supply of these materials through M/s. Da Hua International Trading Co. Ltd., Hongkong. In the meantime, M/s. Ganpati Trading Co. Pvt. Ltd., Singapore had instructed their bankers not to honour the negotiable documents produced by M/s. Peer Chemical & Metallurgy Pvt. Ltd. without stating any reasons thereof. They had not identified the Indian importer to whom the goods were supplied. The Container Agents were informed by the Department vide their letter dated 5.7.1996 that the goods had been imported by a non existing company and hence, action was being taken under the Foreign Trade (Development & Regulations) Act, 1992 and the Customs Act, 1962.
4. As the import has been made by a non-existing and fictitious firm in contravention of the provisions of Section 7 of Foreign Trade (Development & Regulations) Act 1962, the importers were issued with a show cause notice stating as to why the 60 Mts. of Citric Acid Mono BP 88 valued at Rs. 25,23,600/- (CIF) imported by a non-existing and fictitious company should not be confiscated under Section 111(d) of the Customs Act, 1962 for the violations of the provisions of Section 7 of the Foreign Trade (D&R) Act, 1992 and why penalty should not be imposed under Section 112(a) of the Customs Act, 1962 on them for having rendered the goods liable for confiscation. However, the same was returned back without any one receiving it. Also there was no response when the same notice was displayed on the Notice Board for 15 days. Thereafter M/s. Rank Associates, Advocates, Madras have submitted a representation to the Additional Commissioner on 7.8.1996 as stated they represented M/s. Peer Chemical & Metallurgy Pvt. Ltd., Singapore and sought permission to re-export the goods and also requested for an opportunity to be heard personally.
5. During the personal hearing, Advocates contended that though the goods were exported by M/s. Peer Chemicals & Metallurgy Pvt. Ltd., Singapore to M/s. Ganpati Trading, Madras, the latter did not retire the documents. They, have obtained documents from Bank and approached with documents for permission to destuff the containers. The permission was however not granted. However, vide letter dated 19.8.1996 the Additional Commissioner informed that show cause notice was issued to the 'persons concerned'. Consequently, the Advocates submitted that they were the "persons concerned" as they held the documents for the import of the goods into India. Further, they have also informed that the goods have already been auctioned and the sale proceeds realised. In view of this they requested to hand-over the sale proceeds to them under the provisions of Customs Law, by citing the Tribunal judgment in the case of Sam-suddin Sheik .
6. After thoroughly examining the case, the Commissioner has recorded his findings as follows:
I have gone through the facts of the case and the submissions made by Peer Chemicals, exporters of the goods from Singapore and who have now sought permission to re-export the goods to Singapore.
The plea of Peer Chemicals is that once Ganapathy Trading who were the original consignee did not take delivery of the goods, Peer Chemicals have full right to take over the documents and claim to be the importers. The fact that Ganapathy Trading could not be located at the given address is not relevant to the issue.
I find that they have not contradicted the contention made in the notice that Ganapathy Trading are fictitious firm and were not available at the given address. In fact no address was mentioned in the Bill of Lading. The IGM did mention their address but when the address was visited it was found to be the address of Contfreight Shipping Agency India P. Ltd., forwarding agents mentioned in the Bill of Lading. The defence have also not contradicted the allegation that inquiries made with the DGFT indicated that no company in the name of Ganapathy Trading Pvt. Ltd., had been allotted any import/export code number. Since issue of an import/export code number is mandatory under Para 18 of the Import Export Policy, 1992 and Section 7 of the Foreign Trade (Development & Regulations) Act, it is established beyond doubt that the imports have been made contrary to law. Supreme Court in the case of Sampat Raj Dugar, have clearly held that in such cases the claim of the supplier does not remain bona fide. Based on this judgement the CEGAT in the case of Uniflex Cables Ltd. have held that where the goods are supplied by the foreign supplier to a fictitious firm, transfer of goods to another buyer in India would not be permissible. Such a decision would be equally applicable to the foreign supplier of goods even though the claims to be the importer in this case as he has retired the documents from the bank. The fact that the suppliers did not take precaution of enquiring about the import/export code number from the buyers shows their mala fide and render the goods liable to confiscation under Section 111 (d).
Mala fides of the suppliers are also confirmed from the fact that the import manifest is not complete and correct. The only source for preparation of IGM is Bill of Lading. In the present case the Bill of Lading does not have address of buyer. Inspite of that, address of the buyer appears against Line No. 275 in the IGM No. 497/96. There is therefore, a reasonable suspicion that the IGM is not correct in all respects. Under Section 30(3) of the Customs Act, there is no cases for allowing amendment of the IGM. On this ground also I find there are no case for allowing the amendment of the IGM and find the goods are liable to confiscation as mentioned above.
Since the goods have already been sold, I do not find a case for claim of the sale proceeds by the supplier namely, Peer Chemicals. Ganapathy Trading are not available and hence no penalty can be imposed on them even though in view of the liability of confiscation, penalty is imposable on them. As far as Peer Chemicals are concerned no penalty has been proposed on them. Therefore, I refrain from imposing any penalty on them.
7. Ld. Counsel for the appellants submitted that they are entitled to re-export the goods in the light of the following judgments:
(i) Union of India v. Sampat Raj Dugar .
(ii) Samsuddin Sheik v. CC
(iii) Savitri Electronics Co. v. CC
(iv) M.J. Exporters Ltd. v. CEGAT
(v) Pfaff Industria maschinen MBH v. Addl. Collector, Customs
8. Ld. DR reiterated the findings of the Commissioner and submitted that the order of confiscation of sale proceeds amounting to Rs. 34,34,000/- of the Commissioner of Customs is legal and proper and has to be upheld and the appeal of the appellants has to be rejected.
9. Heard both sides. We have carefully gone through the case records and the submissions made. In this case, the Commissioner of Customs vide his Order-in-Original No. 23/97 dated 19.3.1997 has ordered confiscation of sale proceeds amounting to Rs. 34,34,000/- on the grounds of unauthorised import of 16 M.T. of Citric Acid by a factitious firm who did not have Import/Export code number from the DGFT to prove their bona fide as a genuine importer and have thus contravened the provisions of Foreign Trade (Development & Regulation) Act, 1992 read with Customs Act, 1962. From the facts of the case it is seen that M/s. Contfreight Shipping Agency India Pvt. Ltd., Madras (Container Agent), the Indian agent of M/s. Hanjin Shipping, Singapore have filed Import General Manifest (IGN) through M/s. Shaw Wallace, Madras, Steamer Agent for the goods covered by Line Nos. 273 to 343 carried by the vessel M.V. Kotaria Voy. 143 (IGM No. 497/96). The vessel arrived at Madras Port on 27.4.1996. The three containers were moved from the Madras Harbour to the Container Freight Station of M/s. Container Corporation of India at Tondiarpet, Madras on 4.5.1996 at the request of the Container Agent dated 30.4.1996. The container agent vide their letter dated 18.6.1996 (that is to say that almost after two months of the arrival of the vessel) requested the Custom authorities for permission to re-export the containers on the ground that the consignee as per the Bill of Lading is not available. It was in the light of such unusual request, that too after a very long time of the arrival of the cargo in India, the case was taken up for investigation by the Customs authorities in India. To support the documents, it was found that the goods were shipped by M/s. Da Hua International Trading Co., Hong Kong from Shanghai (China) to M/s. Ganapathy Trading Co. Pvt. Ltd., Madras. No specific address of M/s. Ganapathy Trading Co. Pvt. Ltd. was furnished in the Bill of Lading as notifying party. In the Bill of Lading No. HJSC-SHA112961503 dated 13.4.1996 issued by M/s. Hanjin Shipping Co. Ltd., submitted by the Container Agent contained the following details among other things which are extracted herein below:
(i) Shipper/Exporter Da Hua International Trading Co. Ltd.
A. 7/F Kiu Fu Commercial Building, No.
300-306 Lockhart Road, Wanchat,
Hongkong.
(ii) Consignee To order of Habib Bank Ltd., Singapore,
(iii) Notify Party Ganpati Trading Co. Pvt. Ltd.,
(iv) Forwarding Agent Contfreight Shipping Agency Pte Ltd., 157,
Linghi Chetty Street, Madras-600 001.
From the scrutiny of these documents, it was found that the goods were shipped by M/s. Da Hua International Trading Co., Hong Kong from Shanghai (China) and consigned to the order of Habib Bank Ltd., Singapore and M/s. Ganpathi Trading Co. Pvt. Ltd. was to be notified about the above consignment. There was no address of Ganpati Trading Co. Pvt. Ltd. in the Bill of Lading. Therefore, the Container Agent vide his letter dated 18.6.1996 had requested for permission to export the containers on the grounds that the party to be notified, i.e. Ganpati Trading Co. Pvt. Ltd. is not available. The Customs authorities had therefore requested that Joint Director General of Foreign Trade, Madras to verify and inform as to whether there was any firm by name Ganapati Trading Co. Pvt. Ltd. which were registered with them as a manufacturer/importer/Export House or in any other capacity and whether they were allotted Exporter or Importer Code numbers or not. The Joint Director General of Foreign Trade, Madras after investigation informed that no such company had been registered with them as importer/exporter and no Importer/Exporter Code has been allotted to them by the Jt. DGFT. The officers of the SUB of the Custom House visited the premises as mentioned in the IGM 497, where the name of consignee/importer who was stated to be Ganapati Trading Co. Pvt. Ltd., 112/1, Broadway, Madras 600 108. This premises was found to be the office premises of M/s. Contfreight Shipping Agency Pvt. Ltd. and no company by name Ganapati Trading Co. Pvt. Ltd. was functioning in the premises though the same address was indicated in the Import Manifest. One R. Satyamoorthy, Junior Executive of the Container Agent Company had deposed to this effect before the investigating authorities vide his statement dated 21.6.1996. Since the goods were imported by a non-existing bogus company who were not genuine importer/exporter and who had not registered with the DGFT and were not allotted any import/export code to the effect that they were bona fide importer/exporter in India, the goods were examined in detail and were seized in the premises of representative of the Container Agent with independent eye witnesses on 1.7.1996. When the local agent of the Container Agency were asked to produce whether they have any invoice, packing list and other documents, etc., that too after almost two months from the date of import, they produced three pages of fax message said to have been received from M/s. Peer Chemical & Metallurgy Pvt. Ltd., Singapore who, as per the fax message, has effected the supply of goods to India at instance of one M/s. Ganapati Trading Company Pvt. Ltd., Singapore, the Container Agent on calling by the Customs authorities also produced certain documents said to have been received from one M/s. Peer Chemical & Metallurgy Pvt. Ltd., Singapore stating that M/s. Ganapati Trading Co. Pvt. Ltd., Singapore had opened a letter of credit through M/s. Habeeb Bank, Singapore requesting the Peer Chemical & Metallurgy Pvt. Ltd., Singapore to ship the goods covered by the notice to M/s. Ganapti Trading Co. Pvt. Ltd., Madras and to negotiate the documents through M/s. Overseas Union Bank Ltd., Singapore. It was also claimed that M/s. Peer Chemical & Metallurgy Pvt. Ltd. have effected the supply of these materials through M/s. Da Hua International Trading Co. Ltd., Hong Kong. In the meantime, M/s. Ganapti Trading Co. Pvt. Ltd., Singapore had instructed their bankers not to honour the negotiable documents produced by M/s. Peer Chemical & Metallurgy Pvt. Ltd. However, no reasons were stated for not allowing the documents to be negotiated by M/s. Peer Chemical & Metallurgy Pvt. Ltd. M/s. Peer Chemical & Metallurgy Pvt. Ltd. had also not reportedly identified the Indian importer to whom the goods were supplied.
10. The Container Agents were therefore, informed by the Department vide their letter dated 5.7.1996 that the goods had been imported by a non-existing company, hence action was being taken under Customs Act, 1962 read with Foreign Trade (Development & Regulation) Act, 1992. Since the goods have been imported in the name of a non-existing/bogus company and since there was no importer/exporter code registered and allotted to the alleged importer, Ganpati Trading Co. Pvt. Ltd. Madras, the importers were issued with a show cause notice as to why the 60 MTs of Citric Acid Mono BP88 valued at Rs. 25,23,600 (CIF) imported by a non existing fictitious company should not be confiscated under Section 111(d) of the Customs Act, 1962 and why penalty should not be imposed on them under Section 112(a) of the Customs Act, 1962 on them for having rendered the goods liable for confiscation. However, this show cause Notice was returned back without even receiving it. The show cause notice was later displayed on the notice board for 15 days and there was no response to this notice also. Thereafter, M/s. Rank Associates, Advocates, Madras submitted a representation to the Additional Commissioner on 7.8.1996 and as stated by them, they represented M/s. Peer Chemical & Metallurgy Pvt. Ltd. Singapore and sought permission to re-export the goods and also requested for an opportunity to be heard personally. During the personal hearing before the Additional Commissioner, the advocates had contended that though the goods were exported by M/s. Peer Chemical & Metallurgy Pvt. Ltd., Singapore to M/s. Ganapati Trading Co., Madras, the later did not retire the documents. They further submitted that they have obtained documents from the bank and approached with documents for permission to de-stuff the containers. Since M/s. Peer Chemical & Metallurgy Pvt. Ltd. Singapore were not figuring in the Bill of Lading as shipper/exporter and since the goods were exported by Da Hua International Co. Ltd., Honkong as per the Bill of Lading, therefore vide letter dated 19.8.1996 the Additional Commissioner informed that show cause notice was issued to the persons concerned though the Advocates claimed that M/s. Peer Chemical & Metallurgy Pvt. Ltd., Singapore were the persons concerned as they held the documents for the import of the goods into India, show cause notice also should have been issued to them before confiscating the goods. The Advocates were also informed that the goods were already auctioned and the sale proceeds realised. In view of this, they then requested to hand-over the sale proceeds to them under provisions of Customs law.
11. Thereafter, the Commissioner of Customs vide Order-in-Original No. 23/97 dated 19.3.1997 after going through the facts of the case and submissions made by Peer Chemical & Metallurgy Pvt. Ltd., (who claimed to be the exporter of the goods from Singapore and who had sought permission to re-export the goods to Singapore), ordered for confiscation of the sale proceeds amounting to Rs. 34,34,000/-. The Commissioner in his findings, which are extracted above, has found that M/s. Peer Chemical & Metallurgy Pvt. Ltd. has not contradicted the allegations made in the notice to Ganapti Trading Co. Pvt. Ltd., (a fictitious firm) that they were not available at the given address. In fact, no address was mentioned in the Bill of Lading. The IGM had mentioned their address but when the address was visited it was found to be the address of Contfreight Shipping Agency India Pvt. Ltd., Forwarding Agents, mentioned in the Bill of Lading. He has also found that M/s. Peer Chemicals, the appellants, have also not contradicted the allegations that the enquiries made with the DGFT revealed that no company in the name of Ganpati Trading Co. Pvt. Ltd. had been allotted any Import/Export code number. Issue of an Import/Export code is mandatory under para 18 of the Import/Export Policy, 1992 read with Section 7 of the Foreign Trade (Development & Regulation) Act so that valuable foreign exchange can be released against import made by genuine importers only. It was established beyond doubt that the imports had been made contrary to law and by a person who was found to be bogus/fictitious and who had not been allotted import/export code number by the DGFT. Those who were registered with the DGFT can only be issued with import licence and are also entitled to import any item from abroad as actual users and foreign exchange can be released against such import
12. The Supreme Court in the case of UOI v. Sampath Raj Dugar have held that in case the importers have not paid for the goods and abandoned them, the exporter continues to be the owner of the goods and is entitled to ask for their re-export provided he is a bona fide exporter/shipper and he is not proved to be a party to fraud or unless payment of price of the goods stands guaranteed to him by virtue of letter of credit or otherwise. In this case, the goods stand guaranteed by virtue of letter of credit to the shipper of the goods namely M/s. Da Hua International Trading Co., Hongkong.
13. It was only the version of Container Agent who produced certain documents to Custom authorities said to have been received from one M/s. Peer Chemical & Metallurgy Pvt. Ltd., Singapore stating that M/s. Ganapati Trading Co. Pvt. Ltd. Singapore have opened a letter of credit through M/s. Habeeb Bank, Singapore, and they had requested M/s. Peer Chemical & Metallurgy Pvt. Ltd., Singapore to ship the goods covered by the notice to M/s. Ganapti Trading Co. Pvt. Ltd., Madras and to negotiate the documents through M/s. Overseas Union Bank Ltd., Singapore whereas letter of credit was opened through M/s. Habeeb Bank, Singapore. It was also claim that M/s. Peer Chemical & Metallurgy Pvt. Ltd. have affected the supply of these materials through M/s. Da Hua International Trading Co. Ltd., Hongkong. We find from the Bill of Lading dated 13.4.1996 that goods have been shipped/exported by Da Hua International Co. Ltd. and the documents to be retired through Habeeb Bank Ltd., Singapore.
14. Therefore, there are a lot of contradiction and there is no record to show that they are the shipper/exporter and hence can be treated as owner of the goods within the meaning of Section 2(26) of the Customs Act, 1962. Be that as it may, the goods have been guaranteed to the exporter/shipper whoever he was or to the person who ordered the despatch of goods to M/s. Ganapati Trading Co. Pvt. Ltd., they cannot be held to be owner of the goods and are not entitled to ask for their re-export in view of the Supreme Court judgment in the case of UOI v. Sampat Raj Dugar supra. Therefore, they are not entitled to claim the ownership of the goods and are also not entitled for the return of the sale proceeds amounting to Rs. 34,34,000/-. The judgments cited by the appellants are clearly distinguishable and in all of them the facts were different and therefore, they are not applicable to the facts in the present case. We, therefore, do not feel it necessary to discuss each judgment in detail.
15. In the Import General Manifest only the name of consignee has been mentioned as Ganapati Trading Co. Pvt. Ltd., Madras and name of the shipper/exporter was nowhere mentioned in the IGM. It is also seen that M/s. Peer Chemical & Metallurgy Pvt. Ltd., Singapore did not figure anywhere in the whole transaction. Even M/s. Ganapati Trading Co. Pvt. Ltd., Singapore who are stated to have instructed their bankers not to honour the negotiable documents to Peer Chemical.& Metallurgy Pvt. Ltd. have nowhere stated that the goods have been shipped by/or on the instruction of M/s. Peer Chemical & Metallurgy Pvt. Ltd.
16. From the above facts and circumstances, it becomes clear that the goods have been imported by a non existing/bogus company in contravention of the provisions Section 111 of the Customs Act read with provision of para 18 of the Import/Export Policy, 1992 and Section 7 of the Foreign Trade (Development & Regulation) Act and they have been confiscated as per law, and sale proceeds of the auctioned goods have also been rightly vested in Govt. of India in the absence of any bona fide importer/owner of the goods within the meaning of Section 2(26) of the Customs Act, 1962.
17. We, therefore, find that the order of the Additional Commissioner having confiscated the goods under Section 111(d) of the Customs Act and of not entertaining and taking the appellants on records as concerned persons is a correct and legal order. Similarly, the order of the Commissioner of Customs ordering the confiscation of the sale proceeds amounting to Rs. 34,34,000/- and vesting the sale proceeds to the Govt. of India is legal and proper. The appellants not being the concerned persons in the whole transaction are not entitled for any relief whatsoever. Hence, we reject their appeals by confirming the impugned order. Ordered accordingly.
(Pronounced in Open Court on 31.8.2001).