Custom, Excise & Service Tax Tribunal
Shri Girish M. Jain, Partner vs Cc (Exports), Chennai on 20 April, 2012
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH, CHENNAI C/334/2007 & C/346/2007 & C/CO/50/2007 (Arising out of Order in Original No. 6510/2007 dated 16.07.2007 passed by the Commissioner of Customs (Exports), Chennai). For approval and signature Honble Dr. CHITTARANJAN SATAPATHY, Technical Member Shri Girish M. Jain, Partner : Appellant/Respondent
M/s. Samrat International Vs. CC (Exports), Chennai : Respondent/Appellant Appearance Shri S. Venkatachalam , Adv., for the appellants Ms. Indira Sisupal, JDR, for the respondents CORAM Dr. CHITTARANJAN SATAPATHY, Technical Member Date of hearing : 20.04.2012 Date of decision: 20.04.2012 ORDER No.___________________ Heard both sides. These two appeals have been filed by the department and the appellant assessee M/s. Samrat International (SI) against the very same impugned order.
Appeal No. C/346/07
2. This appeal has been filed by the department. It is seen from the brief facts of the case recorded by the department in the departmental appeal that SI exported 17 consignments of Stainless Steel utensils earlier declaring the same to be of AISI304 grade under DEEC scheme. Subsequently, they entered for export two similar consignments which upon examination were found to be of different grade. The adjudicating Commissioner has imposed redemption fine and penalty in respect of the two consignments but has held the previous 17 consignments to have been correctly declared under DEEC Scheme vide para-27(e) of his order. In the departments appeal this portion of his order is challenged, on the ground that the same adjudicating Commissioner had taken different view in respect of two other cases of M/s. Charminar Exports and M/s. Shine Global Houseware Ltd.
3. A cross-objection has been filed by SI against the departmental appeal. The Ld. Advocate appearing for the respondent SI states the following:-
(a) SI had obtained three advance licences bearing Nos. 0410059031/5/03/00 dated 29.06.04, 12816/0410059033/05/03/00 dated 29.06.04 and 12697/04/21/040/00102/AM05 dated 25.05.04. But they have not made any imports under these three advance licences. These licences have lapsed long ago and they do not intend to import any goods under the same.
(b) The two cases cited by the department were different as imports were made under those advance licences and hence the duty demands and penalties were confirmed in those cases.
(c) Even in those cases, the orders were not sustained on appeal to the Tribunal and the matters were remanded for fresh adjudication.
(d) In respect of 17 Shipping Bills, the goods were already shipped and therefore, there can be no question of confiscating the goods for imposition of redemption fine.
(e) Adjudicating Commissioner has come to a correct finding in respect of these Shipping Bills that there was no misdeclaration and he has exonerated Mr. R. Sunder, CHA, against no appeal has been preferred by the department.
4. The Ld DR appearing for the department reiterates the grounds of appeal and submits that the matters should be remanded for fresh decision in respect of 17 Shipping Bills. There is no evidence that SI obtained any stainless steel of AISI 304 grade and therefore, they could not have manufactured and supplied the utensils of AISI 304 grade.
5. After hearing both sides , I find that the adjudicating Commissioner has come to the following conclusion in para-22, 23 and 24 of his order, which is reproduced below:-
22. As regards the past exports under 17 Shipping Bills, it has been argued that there is no material/documentary evidence to show that the goods were misdeclared. The charge has been made merely on the basis of statements recorded which have not been corroborated/ supported by any documentary or material evidence. Even the statements on which reliance has been placed have been retracted and denied as having not been made voluntarily. The charge of interchanging the samples has been made without any evidence. 23. I have perused the records, relevant test reports, depositions made by the Appraising Officer who examined the export consignment, drew the representative samples and gave the let export order and other relevant materials. I find a strong force in their arguments. The charge has been leveled on the basis of mere statements recorded from the notices themselves, the persons who allegedly supplied the goods. However, there is no material evidence in support of such statements. Also such statements have been denied, disputed and retracted. No test report for the past clearances have been produced which would show that the exported goods were not as per the declaration with reference to the Quality, Grade and Quantity. As a matter of fact the sample test reports of the past clearance conform to the declarations made by the exporter. It is seen from the test reports relating t the past exports vide TM/1739/2004, TM/1740/2004 & TM/1766/2004 which clearly stated that the sample is in the form of metallic utensil. It is composed of non-magnetic stainless steel confirming to AISI304 grade. Therefore, the test reports are very clear and categorical with regard to the grade of the SS used in the manufacture of utensils/ kitchenware that were exported in the past. In the absence of any report contrary to the findings of Metallurgical expert, the bald allegations, that goods exported in the past were not made of AISI 304 Grade are not sustainable. 24. Further as regards the charge of interchanging the samples, I find no material or documentary evidence has been put forth to support the charge. Neither any such duplicate/substituted sample has been seized nor any contrary test report has been produced. The Appraising Officer who examined the goods and took samples has very clearly detailed the procedure followed in sampling and testing. During cross examination Shri R. Viswanathan, Apprising Officer, Chennai Customs has stated that he worked in the Binny CFS during the months of June/July 2004 as an Appraising Officer and dealt with the export of Utensils. He also confirmed the signature found in Test Memo Nos. 1739/2004, 1740/2004 and 1766/2004 and stated that for drawal of samples and testing a set of procedure is followed and these Test Memos relate to the exports made by M/s.Samrat International. He also explained the procedure of drawing samples and sending it for testing as follows:-
When the shipping bill is filed, the Computer System generates Carton Numbers which need to be taken for examination and drawal of sample. Appraising Officer and Examining Officer along with the representative of CHA pick those cartons and take the sample. The Sample will be brought to the Customs Office which is located in the CFS for packing and sealing. After the packet containing the sample is sealed in the presence of Appraising Officer/Examining Officer and the representative of CHA, which is duly signed by all three persons present. The sample is carried physically by the Sepoy from CFS to the Docks Office for onward transmission for testing.
He further stated that the sample drawal procedure is strictly followed and virtually leaves no scope for any switching over/swapping when the same is being handled by the Custom Officers either in CFS or in the Docks Office. With regard to the present case he firmly denied the charge of sample interchanging/swapping and confirmed that no such sample change took place in the CFS where he was working. Therefore, I hold that charge of swapping of sample is not proved and I reject the same. Further, I find neither there is any rejection/complaint from the overseas buyer regarding the quality/grade of SS utensils exported nor any enquiry reports from foreign buyers have been produced which could prove that the goods exported were not made of required grade. In the course of investigations a number of statements were recorded. Such statements need to be supported with material evidence by way of seizure or documentary evidence contrary to the already existing test reports. It is a settled position of law that statements taken in the course of investigations a number of statements were recorded. Such statements need to be supported with material evidence by way of seizure or documentary evidence contrary to the already existing test reports. It is a settled position of law that statements taken in the course of investigations do not suo motto convert into evidence unless the same are substantiated and supported by the material and documentary evidence. In the absence of any contrary test reports for the past exports, any material evidence of sample changing, I find the charge misdeclaration of Grade/Quality for past 17 consignments and proposed to invoke penal provisions against the Managing Partner are not sustainable and therefore I do not hold that as proved and I reject the same.
6. The department has not challenged these findings. The only ground taken by the department is that the same adjudicating Commissioner has taken a different view in two other cases. As pointed out by the Ld. Advocate, the other two cases were different and in those cases, duty benefits were taken by making duty free imports under the respective advance licences, whereas in the present case, SI have not made import of any goods under the three advance licences listed earlier and since the said licences have expired, the same cannot be used. As a result, the finding of the adjudicating Commissioner that the goods exported under 17 Shipping Bills were correctly declared under the DEEC scheme is of no material consequences. The review order passed by the Committee of the Chief Commissioners did not provide any grounds on the basis of which a different view can be taken in respect of 17 Shipping Bills and besides, since the exports covered under these Shipping Bills have not been utilized, not taking any benefit under the impugned advance licences, there is also no loss of revenue. As such, the prayer of the Ld. DR to remand the matter in respect of 17 Shipping Bills for fresh adjudication could be merely of academic interest and therefore, would serve no useful purpose.
7. As such, the departments appeal against the impugned order is rejected. The crosss-objection filed by SI stands disposed.
Appeal No. C/334/07
8. This appeal has been filed by SI against the same impugned order challenging the confiscation of the impugned gods and imposition of fine and penalty. The Ld. Advocate appearing for the appellants states that those goods were entered for export under DEEC scheme describing the same as utensils of AISI 304 grade, the same were found to be of different grade. However, the mitigating circumstances are that the appellants requested the DRI authorities and the jurisdictional Commissioner (Export) for conversion of the DEEC Shipping Bills into free Shipping Bills and accordingly, the impugned goods were exported without claiming any duty benefit and as already stated earlier, the three advanced licences obtained by the appellants were not at all utilized, no imports were made under the same and the same have already lapsed. In this connection, he refers to page-134 of the appeal papers where the concerned AC (Exports) has recorded as follows:-
The above exporters request have been considered by the Commissioner (Exports) and the above Shipping Bills have been converted in to free Shipping Bills. Accordingly, goods allowed for export.
9. In the above noting, there is no mention of provisional conversion of shipping bills or provisional export as mentioned in the impugned order. He also states that since the goods were exported under the free Shipping Bills and there was no bond etc. executed, there is no question of confiscating the impugned goods which were not available and consequently no question of imposing any redemption fine or penalty. He cites the following two case laws in support of his claim:-
1. Shiv Kripa Ispat Pvt. Ltd. Vs. CCE & C, Nasik 2009 (235) ELT 623 (Tri.- LB)
2. Chinku Exports Vs. CC, Calcutta 1999 (112) ELT 400 (Tri.) He also cites the decision of the Honble Punjab and Haryana High Court in the case of CC, Amritsar Vs. Raja Impex (P) Ltd. 2008 (229) ELT 185 (P & H), which held that Section 125 of Customs Act, 1962, is applicable only in those cases which have been cleared by concerned authorities subject of furnishing undertaking/bond etc., and where goods were cleared without execution of any bond/undertaking by the assessee, redemption fine cannot be imposed.
10. The Ld. DR supports the order of confiscation and imposition of fine and penalty on the ground that the IE Code of SI was suspended consequent to the detection of misdeclaration and they could not have exported the goods without being allowed by the customs. The DGFT authorities restored the IE code of the appellants on the condition that they should only export under free Shipping Bills. This is the back ground in which the two impugned Shipping Bills were allowed under free Shipping Bills. However, that does not obliterate the fact of misdeclaration on the case for confiscation and imposition of fine and penalty.
11. I have considered the submissions from both sides in respect of two Shipping Bills. The fact that there was misdeclaration in respect of grade of the impugned stainless steel utensils in question is not in doubt. However, it is surprising that the DRI and Customs authorities have allowed the request of the appellants to convert DEEC Shipping Bills into free Shipping Bills even after the detection of misdeclaration. It is, therefore, also surprising that nowhere it is indicated that such conversion was on a provisional basis or that the exports are allowed on execution of undertaking or bond. Having allowed the conversion of DEEC Shipping Bills into free Shipping Bills, the authorities themselves caused the charge of misdeclaration in the DEEC Shipping Bills to get obliterated. Further, the goods have been allowed to be exported without taking any undertaking or bonds and hence, in view of the cited decisions of the LB of the Tribunal and the Honble P&H High Court, the goods which are not available cannot be ordered to be confiscated and no redemption fine can be imposed. Hence, I set aside the order of confiscation and imposition of redemption fine. As regards penalty, notwithstanding the fact that conversion of DEEC Shipping Bills into free Shipping Bills, the mischief of misdeclaration cannot be whished away. The appellants are, therefore, liable to penal action for such misdeclaration. The only point in their favour is that the misdeclaration has not led to any misuse of DEEC scheme or duty free import under the impugned advanced licences and there has been no consequent revenue loss. Taking the same into consideration, while holding that the appellants are liable for penal action, I reduce the penalty from Rs. Two lakhs to Rs. One lakh. The appeal filed by SI is therefore partly allowed by setting aside the confiscation and redemption fine and reducing the penalty to Rs. One lakh as indicated above.
(Order dictated and pronounced in the open Court) (Dr. CHITTARANJAN SATAPATHY) TECHNICAL MEMBER BB 9