Custom, Excise & Service Tax Tribunal
M/S.A.V. Thomas & Co. Ltd vs Commissioner Of Customs, Coimbatore on 22 January, 2010
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal Nos.C/285, 292 & 301/2007
[Arising out of Order-in-Original No.02/2007 (Commissioner) dated 10.04.2007 passed by the Commissioner of Customs, Coimbatore]
For approval and signature:
Honble Ms.JYOTI BALASUNDARAM, Vice-President
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 the Member wishes to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
M/s.A.V. Thomas & Co. Ltd.
C. Selvaraj
B. Uday Patravali
Appellants
Versus
Commissioner of Customs, Coimbatore
Respondent
Appearance:
Shri Jai Shankar, Adv. (for S.No.1) Shri T. Ramesh, Adv. (for S.No.2) Shri M. Rajendran, Adv. (for S.No.3) Shri C. Dhanasekaran, SDR For the Appellants For the Respondent CORAM: Honble Ms.Jyoti Balasundaram, Vice-President Date of hearing : 20.11.2009 Date of pronouncement : 22.01.2010 Final Order No.____________
Vide the impugned order, the Commissioner of Customs has ordered recovery of drawback amount paid to M/s.Sivam Textiles on the ground that the value declared by them for export of T Shirts was highly inflated with a view to obtain higher inadmissible drawback the F.O.B. value declared was USD 4.5 and 5.65, while investigation revealed that the value would be only between USD 0.50 to 2.00, and imposed penalties inter alia on the partners of M/s.Sivam Textiles, penalty of Rs.5 lakhs on Shri Uday Patravali who has been treated as the main brain behind the illegal export, under the provisions of Section 114 (3) for abetment of the offence of misdeclaration of value so as to obtain inadmissible drawback, and penalty of Rs.1 lakh each on Shri C. Selvaraj, partner of the exporter-firm and upon M/s.A.V. Thomas & Co. Ltd., CHA under Section 117 of the Customs Act, 1962 for abetment of commission of the above offence.
2. The finding of the adjudicating authority is that Shri Uday Patravali was in possession of drawback cheque of Rs.14,93,932/- given to M/s.Sivam Textiles, that he was the main brain behind the illegal export and behind getting the ineligible drawback by creating and producing false documents; that he had actively involved himself in all the activities relating to the fraudulent export and that he had also received a sum of Rs.5,00,000/- from the drawback amount that clearly proved that he was the major beneficiary of the fraudulent export. The evidence relied upon for coming to the conclusion that Shri Uday Patravali was involved in the offence consists inter alia of his own statement dated 28.11.2001, where he admitted having attended to all the work of export right from the stage of purchase of raw material to the stage of stuffing of garments in the container for export; admitted that he had acted as a commission agent and admission that he was in possession of a drawback cheque for Rs.14.93 lakhs (approx.), and upon the statements of Shri Gowrisankar, partner of M/s.Sivam Textiles that all the arrangements for exports of T Shirts to South Africa under the relevant shipping bills were made by Shri Uday Patravali, who had also arranged to prepare a release deed in order to include Shri Gowrisankar and Shri S. Sivagurunathan as partners in M/s.Sivam Textiles; that the entire drawback amount which was received in the bank account was distributed by Shri Uday Patravali, on the statement of Shri V. Dechinamoorthy who also confirmed that Shri Uday Patravali did all the work of export for M/s.Sivam Textiles including opening of current account with the two banks, statements of manufacturers and suppliers of the exported goods, statement of Shri S. Saravanan of the CHA who confirmed that the documentation work was given to the CHA by Shri Uday Patravali and the drawback cheque was also received by Shri Uday Patravali. The Commissioner has also relied upon the investigation to the effect that Shri Uday Patravali has received Rs.5 lakhs under Cheque No.375782 dated 21.11.2001 from the account of M/s.Sivam Textiles out of the total drawback amount sanctioned by the department. The finding against Shri C. Selvaraj is that he along with one Shri S.P. Subramaniam had created a false document namely release deed in order to get ineligible duty drawback benefit by misuse of M/s.Sivam Textiles and their I.E. Code and hence by their above activities, they have abetted in the commission of offence of over valuation. The Commissioner has found that Shri S.P. Subramaniam and Shri C. Selvaraj failed to confirm changes in the partnership of M/s.Sivam Textiles to the concerned parties. The case against the CHA is that they did not obtain any authoritisation from the exporter, did not properly verify the genuineness of the exporter, did not take any steps to verify the genuineness of the details furnished in the shipping bills and that they had not taken any steps to deliver copies of G.R. forms or documents presented by them, resulting in contravention of the provisions of Rule 14 (a), (d) (e) and (l) of the Customs House Agents Licensing Regulation Act, 1984 and hence liable to penalty.
3. I have heard both sides.
4. Shri Uday Patravali was the main brain behind the entire episode of obtaining of ineligible drawback as he was actively involved in all the activities connected to the fraudulent export and obtaining of ineligible drawback. He had also received Rs.5 lakhs from the drawback amount which clearly proves that he was the major beneficiary in the fraudulent export. His role is clearly brought out by Shri N. Gowrisankar who stated that he was not aware of any of the procedures for export of goods and that all the arrangements for the export under the relevant shipping bills were made by Shri Uday Patravali as per the advise of Mr. Murthy that Shri Uday Patravali had attended to the documentation for export and for opening of bank accounts and that the entire drawback amount of over Rs.17 lakhs was distributed by Shri Uday Patravali. Shri V. Dechinamoorthy also confirmed that Shri Uday Patravali had done all the work relating to export for Shri Gowrisankar of M/s.Shivam Textiles. Statements of manufacturers and suppliers of the exported goods namely, Shri Velusamy of Amerdy Garments, Shri C. Selvaraj of M/s.Sumotex and Shri R.C. Chandrasekaran of M/s.Shobika Exports, further established the major role played by Shri Uday Patravali in the fraudulent export, the CHA also confirmed that documentation work was given to them by Shri Uday Patravali; that they were under the impression that Shri Uday Patravali was the person in-charge of M/s.Shivam Textiles and that the drawback was also received by Shri Uday Patravali. Therefore, penalty imposed upon him is sustained.
5. As regards Shri C. Selvaraj, against whom the charge is that he had created false documents namely, Release Deed, in order to get drawback benefits by misusing the name and IE code of M/s.Shivam Textiles, I note that the Release Deed releasing him and Shri S.P. Subramaniam from the partnership was not registered and was not brought to the notice of various authorities, such as Commercial Tax authorities, Income Tax authorities and the DGFT. The Partnership Deed continued to show S/Shri C. Selvaraj and S.P. Subramaniam as partners. It is, therefore, clear that Shri C. Selvaraj abetted in the commission of the offence of fraudulent export and obtaining ineligible drawback by S/Shri Gowrisankar and S.Sivagurunathan. Penalty imposed upon him also requires to be sustained.
6. M/s.A.V.Thomas & Co.Ltd. have been penalized as they failed to obtain necessary authorization, failed to advise their client to comply with the provisions of the Act and failed to bring the non-compliance to the notice of the department and failed to exercise due diligence to ascertain correctness of any information with regard to work relating to clearance of cargo and failed to ensure that all documents prepared or presented by them on behalf of the clients were strictly in accordance with the orders relating thereto and hence liable to penalty under Section 117 for violation of clauses (a), (d), (e), and (l) of the CHA Licensing Regulations, 1984. I note that failure to obtain authorization has been held not to be a violation of Regulation 14(a) of the CHALR 1984 as the shipping bills signed by the exporter have been accepted to be implicit authorization to a CHA who is admittedly employed by the exporter, in the case of Maruti Transports Vs Commissioner of Customs, Chennai [ 2004 (177) ELT 1051] and Trinity Forwarders Vs Commissioner of Customs, Chennai [2005 (192) ELT 407]. This is all the more so because they were under a bona fide belief that Shri Uday Patravali was the person in charge of M/s.Sivam Textiles (exporters) who was handing over the documents to them on behalf of the exporters. The CHA took steps to deliver copies of GR forms to the exporter for presenting the same to the bank for negotiation, as seen from their letter to the shipper requesting that the returned forms be collected and they also brought this fact to the notice of the Customs department. Contravention of clauses (d), (e) & (l) of the CHALR84 has also not been brought out on the basis of any evidence on record. I, therefore, set aside the penalty imposed upon the CHA for aiding and abetting the exporters in fraudulent export and claiming ineligible drawback, and allow appeal No.C/285/07.
7. In the result, Appeal Nos.C/292 & 301/2007 are dismissed while Appeal No.C/285/07 is allowed.
(Pronounced in open court on 22.1.2010) (JYOTI BALASUNDARAM) VICE-PRESIDENT Ksr/gs 05--01-2010 ??
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