Customs, Excise and Gold Tribunal - Delhi
Delhi Plastics vs Collector Of Customs on 11 February, 1988
Equivalent citations: 1990ECR602(TRI.-DELHI), 1988(36)ELT360(TRI-DEL)
ORDER K.L. Rekhi, Member (T)
1. Common facts and issues are involved in these 5 appeals. They were, therefore, clubbed together, heard together and hence this common order.
2. The appellant is a proprietary unit owned by Shri Arun Agarwal. The facts, In brief, are that on 21 -11 -1986, the appellant entered into a contract with M/s. De' Al' Dross of Singapore for purchase of 1000 M/Tons of High Density Polythelene Grade 55013 equivalent to Mariex 5502 of Hungarian origin at the price of US $ 530 per M/Ton. However, the goods actually came to India from the Hungarian supplier M/s. Chemolimpex. They were, in all, 220 M/Tons of High Density Polyethylene (HDPE) comprised in 5 lots. The appellant filed 5 Bills of Entry (Nos. 654 to 658) on 28-2-1987 for their clearance. The Bills of Entry were accompanied with the certificate of Origin, Bill of Lading and Invoice. The Invoice was issued by the Singapore party, M/s. De' Al' Dross and showed the price of US $ 530 per M/Ton. All the three documents were attested by the Canara Bank, Connaught Circus, New Delhi. Suspicion of the Customs House was aroused because the invoice number quoted in the BHI of Lading happened to be a different one. The authorities started enquiry Into the matter. The Canara Bank Branch wrote to them that the documents tendered by the appellant had not originated from their Bank and that the original documents of the consignment were still available with them (the Bank) as they had not been retired by the appellant. Later, the Bank gave the true documents to the Customs, including the Invoice No. K-5103, dated 31-12-1986 issued by the Hungarian supplier. It was in the name of M/s. Trimex Tradings(s) Pvt. Ltd.. Singapore, through the Bank of India. This was the invoice cited in the Bill of Lading of the consignment. It showed the sale price of $ 605 per M/Ton. It also came out that the Letter of Credit for the consignment had also been opened by M/s. Trimex, Singapore and not by the appellant or by M/s. De' Al' Dross. The BHI of Lading had, by successive endorsement, been transferred from M/s. Trimex to De' Al' Dross and then to the appellant. This showed as if the consignment had, from the very beginning, been meant for the appellant only. Among the documents tendered by the Bank to the authorities, there was a Marine Insurance Policy for the consignment also. It gave the insured value and other particulars of the consignment "as per invoice". The insured value stated in the Policy worked out to US $ 605 per M/ton, i.e., the same price as stated in the Hungarian supplier's invoice for the consignment. The Insurance Policy was in the appellant's name which lent support to the authority's conclusion that the consignment was really meant for the appellant only. The authorities collected evidence of other contemporaneous imports of the identical goods. These evidences showed that the other imports into India had been at the price of US $ 600 per M/Ton. The Indian indentor Of the Hungarian supplier confirmed to the authorities that the Hungarian supplier had no system of giving any quantity discount and that the price quoted was the net price. On adjudication, the Collector confirmed the value of US $ 605 per M/Ton, as per the true import invoice of the Hungarian supplier, for the purpose of assessment of customs duty.
3. The Collector also found that the appellant had wrongly stated in the Bills of Entry that the goods were covered by the Open General Licence. Later, the appellant produced import licences before the authorities for clearance of the goods. Two of the licences were found to be invalid. The appellant says that during the personal hearing before the Collector, he offered to submit more licences for clearance of the goods in lieu of those found invalid but the Collector did not accept his offer. The Collector, however, records in his Order-in-Original that the appellant did not actually submit any more licences and hence there was no question of examining other licences.
4. The Collector also found that the appellant had wrongly stated the customs duty classification in the Bills of Entry (3901.10 instead of 3901.20).
5. For mala fide mis-declaration of the value, which, if not detected, would have resulted in evasion of customs duty to the tune of Rs. 3.5 lakhs, and for violation of the Import Trade Control, the Collector ordered confiscation of the goods. He allowed the appellant to have the goods redeemed on payment of redemption fine of Rs. 3.5 lakhs in each of the four consignments comprising 45 M/Tons and Rs. 3.15 lakhs in the fifth consignment comprising 40 M/Tons. In addition, the Collector imposed a penalty of Rs. 1 lakh on the appellant in each of the 5 cases. The appellant is now in appeal against these orders.
6. We have heard both sides and have given the matter our earnest consideration. We cannot help observing that the appellant's case bristles with falsehoods from beginning to end. The phenomenon of goods being imported from Hungry but the sale invoice for them being issued from Singapore surprised us. The learned representative of the department stated during the hearing in the court that this subterfuge had become a common modus operandi for under-invoicing the goods. It could be so. The Hungarian supplier was a Government agency and was probably not willing to play ball In fudging the real value of the goods. This explains as to why the appellant chose not to contact the foreign supplier direct for the purchase or through his Indian agent and had to go in search of someone else in a third country - Singapore. The straight-forward course for the appellant should have been to contact the Indian agent of the Hungarian supplier as had been done by other importers of Hungarian HOPE. But the appellant did not do so and chose a devious net work to cloud the nature of the true transaction. We are told by the appellant that the Indian agent was not willing to forgo any part of his commission while the Singapore agent was willing and thus the appellant could get the goods cheaper through the Singapore agent. This explanation is unbelievable. The third party whom the appellant contacted in Singapore, M/s. De' AT Dross, was not an agent of the Hungarian supplier. We note that the foreign supplier invoiced the goods to M/s. Trimex and not to M/s. De' AT Dross. If De' AT Dross was the Asian agent of the supplier, why should he have needed a middle-man between him and his principal.
7. Secondly, there is absolutely no evidence in the supplier's invoice to M/s. Trimex of any commission having been paid or payable from the invoiced price of US $ 605 per M/Ton. The invoice mentioned the price of US $ 605 without any indication of discount or commission therefrom. The appellant would like us to believe that M/s. Trimex, after getting the goods at US $605 per M/Ton, was to sell the same to M/s. De' AT Dross and then M/s. De' AC Dross was to sell the goods to the appellant at US $ 530 per M/Ton. This i§ just incredible. M/s. Trimex or M/s. De' Al' Dross were not sitting in Singapore for the sake of charity. They were businessmen and were there for earning profits, not for liquidating themselves through deliberate losses.
8. The appellant's fraudulent conduct is further clear from his act of having filed the import Bill of Entry with incorrect invoice bearing Bank attestation of doubtful veracity. The appellant pleaded before us that it had not been proved that the Bank's seal and the Bank official's signatures on the invoice of M/s. De' Al' Dross were forged. We find from the Bank's letter dated 12-3-1987 that the Bank stated as under to the customs authorities:
"It does not appear that the round seal and initials put on the Bill of Lading, has originated from our office."
In their further letter dated 18-3-1987, the Bank again stated :-
"However, the rubber seals of Canara Bank affixed on the copies of the documents enclosed with your letter, does not seem to have eminated from this office."
The Bank's letters do disclose some foul play. The appellant's hand in it cannot be denied because he alone stood to benefit from it. Even if, for argument's sake, we were to accept that technically the documents were not forged with the Bank's seal and signatures, the other possibility could only be that the appellant arranged to get duplicate sets of invoices prepared at two different prices for the same goods and in collusion with some Bank official got the lower priced invoices attested and filed them before the customs. If this is not calculated fraud, we wonder what else it is. The appellant argued that he did not stand to gain by arranging two sets of documents. Well, he obviously did stand to gain by clearing the goods through customs on payment of lesser duty to the tune of Rs. 3.5 lakhs. The appellant said that in any case there was no requirement of submitting Bank attested invoices to customs. True. But the appellant on his own got the attestation done in order to lend credibility to the Singapore lower price invoices so that customs would pass the consignment without demur.
9. The appellant's further conduct also proves his mala fides. The Customs authorities sent him summons six times by registered post, by telegram and by affixture on his door under a Panchnama. The authorities wanted him to explain many things which baffled them. But the appellant did not appear even once. He did not appear till 1-5-1987 even when the Hon'ble Delhi High Court directed him to do so on 24-4-1987. The conclusion is inescapable that he had things to hide. The authorities raided his "office" premises. They found nothing there, not even the file containing correspondence and con-' tract about the present importations. The authorities were rightly surprised to see that a person doing business in goods worth lakhs of rupees had no business office worth the name; it was just a mailing address and nothing more.
10. During the hearing before us, the appellant placed reliance on the evidence of certain other importations of HOPE at prices ranging from US $ 540 to $ 560 per M/Ton. We find that these other documents were neither for HDPE of Hungarian origin nor for the particular grade as in the subject importations. The contracting in these other importations was also not contemporaneous with the contracting for the subject importations. On the other hand, the other importations chosen for comparison by the lower authority were identical in all respects, and also contemporaneous with the present importations. All of them showed the import at US $ 600 per M/Ton. So did the computer print-out of the Bombay Custom House in respect of the importations of HDPE made through Bombay Port. The appellant pleaded that he got a lower price because of his having contracted for a larger quantity -1000 M/Tons. But we have it from the Indian agent of the Hungarian supplier that his Principal did not give any quantity discount.
11. The appellant submitted that it was customary to insure the goods for a little higher value and, therefore, the price of US $ 605 per M/Ton given in the Marine Insurance Policy should not be taken as the real value. It is, no doubt, true that the goods are sometimes insured for a little higher values. We have seen some cases where insurance was done for 110% of the invoice value. But if the insurance is to be done for higher value, the contract terms provide for it. The appellant's contract dated 21-11-1986 with M/s. De' Al' Dross did not provide for it. Against the item "insurance" in the contract, the words "covered by buyer" had been typed. In the photo copy produced before us the word "buyer" is scored out and replaced by the word "seller" in hand. However, the correction has not been initialled by any party. In any case, the contract said nothing whether the goods were to be insured for a higher value. In the absence of any such stipulation, the only presumption was that they were to be insured for the full invoice value. And this is what really was done. The Marine Insurance Policy itself stated that the particulars given therein, including the value, were "as per invoice". It is, therefore, not true that the Marine Insurance Policy gave an inflated value. It gave the exact value as per the invoice. It is not a mere co-incidence that the value given in the Insurance Policy came to exact US $ 605 per M/Ton which was also the true price of the goods as per the Hungarian supplier's invoice to M/s. Trimex.
12. In the face of the aforesaid facts, we cannot but confirm the Collector's finding that the appellant deliberately mis-declared the value of the goods with intent to evade payment of a part of the customs duty due. -
13. So far as the Import Trade Control violation is concerned, the learned representative of the department very fairly submitted before us that even now if the appellant tendered valid import licences for clearance of the goods, they would be accepted But there was no evidence that the appellant had really submitted any such licences for consideration of the authorities.
14. We do not take a serious view of wrong citation of the classification heading for the goods in the Bills of Entry. Since the appellant had given description of the goods correctly as HDPE, the classification heading could have been corrected by the authorities themselves.
15. However, the charge of mis-declaration of value with intent to evade payment of customs duty stands established against the appellant beyond doubt. The fraudulent conduct of the appellant made the offence all the more serious. In the circumstances, we agree with the Collector that the case called for infliction of a deterrent fine and penalty. The appellant mentioned that heavy demurrage and container charges had accrued on the goods which were still under detention. If so, it is entirely due to the appellant's own fault in not having got the goods redeemed on payment of duty, fine and penalty. Redemption option had been given to him by the Collector. It is not the appellant's case before us that the fine imposed was more than the market value of the goods net of customs duty. Still, however, considering that some demurrage would have been unavoidable because of investigations and adjudication process, we would like to give some relief in the amount of redemption fine. Accordingly, we reduce the redemption fine to Rs. 2 lakhs (Rupees two lakhs only) in each of the five cases, i.e., Rs. 10 lakhs (Rupees ten lakhs only) in all. Except for this relief, we up-hold the lower orders and dismiss all the 5 appeals.