Custom, Excise & Service Tax Tribunal
Gopalji Heavy Lifters vs Commissioner Of Customs (Import) on 17 May, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: C/89982/2014, C/90069/2014 & C/90143/2014
[Arising out of Order-in-Original No: CAO /2014/ CAC/ CC(I)/ AB/ GrV dated 04/09/2014 passed by Commissioner of Customs (Import), New Customs House, Mumbai]
For approval and signature:
Honble Shri Ramesh Nair, Member (Judicial)
Honble Shri C J Mathew, Member (Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
No
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
C/90069/2014
Gopalji Heavy Lifters
Appellant
Vs
Commissioner of Customs (Import)
New Customs House, Mumbai
Respondent
C/89982/2014 Madan Lalwani Vs Appellant Commissioner of Customs (Import) New Customs House, Mumbai Respondent C/90143/2014 Dhanlaxmi Cranes Appellant Vs Commissioner of Customs (Import) New Customs House, Mumbai Respondent Appearance:
Ms C Pujja Reddy and Shri Anil Mishra, Advocates for the appellants Shri M K Sarangi, Joint Commissionoer (AR) for the respondent CORAM:
Honble Shri Ramesh Nair, Member (Judicial) Honble Shri C J Mathew, Member (Technical) Date of hearing: 17/05/2016 Date of decision: __/11/2016 ORDER NO: ____________________________ The issues for determination in this appeal are the scope afforded by Customs Act, 1962 for disposition of amounts deposited by notices during investigations into misdeclaration of imported goods and re-determination of value of imported goods merely on the support of statements.
2. Appellant-importer, M/s Gopalji Heavy Lifters, is in the business of deploying used cranes on contract with clients for which cranes are imported from abroad. Investigations were taken up on imports of sixteen cranes (of which 15 were imported by M/s Gopalji Heavy Lifters and 1 by M/s Dhanalaxmi Importers) and one consignment of used accessories for crane of a particular specification which was yet to be landed in India. One other crane was seized while it was pending clearance and, having been cleared on provisional assessment, was also subject to the same proceedings as the other cranes already imported.
3. The investigation was commenced on receipt of intelligence that certain individuals were facilitating import of used cranes by crane operating agencies after substantial undervaluation. During investigation, M/s Goplaji Heavy Lifting paid Rs 1,00,00,000 by pay orders dated 20th November 2010 and 20th December 2010. The investigation alleged that one Madan Lalwani was the main executor of clearing of cranes and other machinery for clients of M/s M Dharamdas & Co and that he used to get cranes assessed at value computed on the rate of Rs 25-28 per kg of lifting capacity which had later increased to Rs 40 per kg at the time of import. Investigators also identified the illicit channel used to funnel the differential value payable on the undervalued imports. In the proceedings leading to the impugned order-in-original no. CAO/2014/CAC/ CC(I)/ AB/ GrV dated 4th September 2014, Commissioner of Customs (Import), New Customs House, Mumbai, invoked rule 10A/rule 12 of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988/2007 to reject the value of Rs 4,94,78,611 declared at the time of import of cranes by M/s Gopalji Heavy Lifters, re-determined the value at Rs 7,34,42,674 and confirmed the differential duty of Rs 51,27,658 on 12 of the cranes with revised value of Rs 6,07,37,674 under section 28 of Customs Act, 1962 along with interest thereon under the relevant provisions. All the 15 cranes were held liable for confiscation under section 111(m) of Customs Act, 1962 but not confiscated owing to not being available and penalty of Rs 51,27,658 imposed on importer under section 114A of Customs Act, 1962. Penalties of Rs 10,00,000 each under section 112 (a) and section 114A of Customs Act, 1962 and Rs 5,00,000 each under section 112 (a) and section 114A of Customs Act, 1962 was imposed on Jitesh Vador and Madan Lalwani respectively besides a further penalty of Rs 10,00,000 again under section 114A on the importer. Of the deposited amount, Rs 59,86,188 was appropriated towards the duty, interest, fine (sic) and penalty. In the proceedings against M/s Dhanlaxmi Cranes, rule 10A of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 was invoked to reject the value of Rs 22,62,000 declared at the time of import of the one crane, the value re-determined at Rs 49,76,400 and the differential duty of Rs 8,50,191 confirmed under section 28 of Customs Act, 1962 along with interest thereon under the relevant provisions. The crane was held liable for confiscation under section 111(m) of Customs Act, 1962 but not confiscated owing to not being available and penalty of Rs 8,50,191 imposed on importer under section 114A of Customs Act, 1962. Penalties of Rs 1,00,000 each under section 112 (a) and section 114A of Customs Act, 1962 and Rs 50,000 each under section 112 (a) and section 114A of Customs Act, 1962 was imposed on Jitesh Vador and Madan Lalwani respectively besides a further penalty of Rs 1,00,000 again under section 114A on the importer. In the matter of the one crane imported by M/s Goplaji Heavy Lifters that had been assessed provisionally, adjudicating authority invoked rule 12 of Customs Valuation (Determination of Price of Imported Goods) Rules, 2007 to reject the value of Rs 2,52,78,750 declared at the time of import, re-determined the value at Rs 2,78,77,500 and confirmed the differential duty of Rs 67,27,903 under section 28 of Customs Act, 1962 along with interest thereon under the relevant provisions. The bank guarantee of Rs 28,16,000 was directed to be enforced for recovery of confirmed amounts. The crane was held liable for confiscation under section 111(m) of Customs Act, 1962 but allowed to be redeemed on payment of fine of Rs 45,00,000 and penalty of Rs 67,27,903 imposed on importer under section 114A of Customs Act, 1962. Penalties of Rs 17,00,000 each under section 112 and section 114A of Customs Act, 1962 and Rs 5,00,000 each under section 112 (a) and section 114A of Customs Act, 1962 was imposed on Jitesh Vador and Madan Lalwani respectively besides a further penalty of Rs 17,00,000 again under section 114A on the importer..
4. We notice at the outset that there are some anomalies in the impugned order which, once dealt with, need not come in the way of scrutiny of the rest of the order which may, thereafter, be disposed off on merit. The imposition of penalties twice on the importer under section 114A of Customs Act, 1962 has no rationale. Likewise, the imposition of penalties on the individuals under section 114A of Customs Act, 1962 is without authority of law as that provision is liable to be invoked only against the person liable to pay the duty under section 28 which has been held by the adjudicating authority to be M/s Gopalji Heavy Lifters and M/s Dhanlaxmi Cranes. These are, therefore, set aside. We also observe that in dealing with the crane that was provisionally assessed, the adjudicating authority has invoked section 28 of Customs Act, 1962. In the scheme of Customs Act, 1962, goods entered for home consumption may be assessed finally under section 17 or provisionally under section 18 of the Customs Act, 1962. Just as the former accords a finality to assessment, the latter is a self-contained provision that allows for provisional assessment in certain enumerated circumstances with the assessment finally concluded upon attaining or not attaining the consummation of the deficiency that compelled recourse to section 18. Under section 28(3)(c) of Customs Act, 1962 which crystallizes the date for determination of the elapse of time to the deadline imposed therein, the relevant date in the event of resort to provisional assessment is the date of adjustment of duty after the final assessment thereof, implying that this special provision for recovery of short-paid duty shall be invoked only in the event of short-levy once the assessment has been finalized. In fact, there is no reason for resorting to section 28 when goods have been provisionally assessed as section 18 itself assures a mechanism for adjusting differential duty. It is also clear from section 28 that it is liable to be invoked only when duty has been shot-levied or non-levied and is to be invoked within the deadline specified; it is a special provision for remedying defects in assessment, either erroneous or deliberate. And as an assessment is characterized by the finality in section 17 or section 18, it is only liable to be invoked thereafter. This has been the stand of the Tribunal as is evident in Finolex Industries Ltd v. Commissioner of Customs [2003 (159) ELT 949 (Tri-Mumbai)] that relied upon the decision of Honble High Court of Bombay in Union of India v. Godrej & Boyce Manufacturing [1989 (44) ELT 3].
5. If the authority assumed by the adjudicating authority to resort to section 28 of Customs Act, 1962 were to be accepted, both section 17 and that clause of section 18 that empowers fiinalization of provisional assessment would be superfluous. To appreciate the distinction, and indeed the rationale for the enactment of both assessment and recovery proceedings as distinct and mutually exclusive provisions, we may gainfully hark back to that point in time when the proviso to section 28(1) of Customs Act, 1962 was to be invoked only by the Commissioner in the event that short-levy or non-levy arising from suppression, willful misstatement, collusion etc. and with the period of limitation thereby extended to five years from the relevant date. In such a situation, the normal period was irrelevant. Today, owing to the blurring of hierarchical distinction, the proviso is assumed to be an empowerment to extend the period of demand beyond six months from the relevant date. The legal position has not morphed: the proviso has to be invoked when the specified ingredients are present and not merely when the demand relates to duties assessed more than six months prior to issue of notice. Section 28 has a specific role which does not run parallel to the assessment provisions but is enacted for invoking when assessment has led to short-levy or non-levy of duty. A number of decisions of the Tribunal have held that, notwithstanding the subsistence of a provisional assessment, section 28 could be invoked but in all of these, it is found, the reasons for resorting to provisional assessment have no bearing or connection with the grounds upon which recovery is attempted under section 28. In the present appeals, there is no pretence to that effect. The impugned order makes so bold as to proceed to demand differential duty upon finalization of provisional assessment under section 28 of Customs Act, 1962 which is improper and liable to set aside. The process initiated under section 18 of Customs Act, 1962 needs to taken to its logical conclusion as provided in section 18.
6. In the matter of confirmation of demand of duty on the 14 cranes and one lot of accessories of a crane, it is admitted that three of the imports pertain to bills of entry filed prior to 12th July 2007, i.e., more than five years before the issue of show cause notice dated 11th July 2012. In the proceedings before the original authority, the notice for demand on imports effected before 12th July 2007 was challenged citing the decisions of the Tribunal in M Square Chemicals v. Commissioner of Central Excise, Ahmedabad [2002 (146) ELT (Tri-Mumbai)] upheld by the Honble Supreme Court, in Commissioner of Central Excise, Surat v. Nutan Texturisers [2007 (291) ELT 199 (Tri-Mumbai)] and Shilachar Electricals Ltd v. Commissioner of Customs, Airport, Mumbai [2006 (205) ELT 529 (Tri-Mum)] Despite this clear assertion in paragraph 30(iii) and (iv) of the impugned order, the adjudicating authority has, nevertheless and relying on the decision of the Tribunal in India Cements Ltd v. Collector of Central Excise [1984 (18) ELT 499 (Tri-Del)], gone on to find that:
(iii) out of the above short paid duty amount of Rs 77,54,761 in respect of 15 consignments (details as per Annexure A-1 to the show cause notice0, the short paid duty amount of Rs 26,27,103 in respect of cranes at serial numbers 1 to 3 mentioned in Annexure A-1to the show cause notice, is beyond the period of fice years, as prescribed under section 28 of Customs Act, 1962 but there is no legal bar in voluntary deposit of the same as discussed in sub-para below.
(iv) .. The limitation with respect to the time only bars the department from issuing demand notice under Section 28 of Customs Act, 1962, it does not bar the department from accepting the evaded duty deposited by importer voluntarily. Thus, the duty amount and interest deposited voluntarily by the importer is adjustable against the duty and interest recoverable even for the period beyond five years. This proposition has been upheld in the case of India Cements Ltd. V. CCE, Madras [1984 (18) ELT 499 (TRB)] We do not find ourselves in concurrence with the above proposition as it treads dangerously on the limits erected by the sovereign legislature on the powers of tax collectors under Customs Act, 1962. Under the scheme of Customs Act, 1962, the levy is in rem and every import, distinguished by separate bills of entry, stands on its own for assessment and collection of duty. Duty is paid in compliance with the assessment under section 17 or 18, as the case may be, and under no other provision.
7. There can be discounting of conscience among the good denizens of a nation and it is well within the realms of rational reality that importers may, of their own volition, come forward to pay duty that was short-levied without waiting for a demand under section 28 or seizure of offending goods under section 110 of Customs Act, 1962. Unfortunately, the temporal facet of the legislature shies away from foraying into the spiritual domain to acknowledge, by a special provision, a special enabler for conscience in duty collection. And that gap has ensured that there is no legal sanctity to voluntary payment of duty during the pendency of investigation. Such provisions do exist in Central Excise law and Finance Act, 1994; as yet, such does not under Customs Act, 1962 because, unlike the other two laws, each transaction is discrete and separate with no registration or status as assessee or importer except during the pendency of a consignment for clearance. Even the extant self-assessment regime, duty payment is a necessary pre-requisite for clearance of goods and is not amenable to self-critique followed by restitution at the pleasure of the importer. Clearly, remittance of any amount, as an earnest of rectitude, during investigations is naught more than a deposit. To enable that to pass into the coffers of the state, it must be appropriated towards duty demanded and confirmed under section 28 of Customs Act, 1962. Article 265 of the Constitution of India enjoins no less on a proper officer and this must, uncompromisingly, be adhered to on peril of being branded as having exceeded the powers invested by statute. That the adjudicating authority was not unconscious of this constitutional mandate is manifest in the articulated intent, in the paragraph cited supra, to adjust the amount. It having been admitted that the duty cannot be demanded under section 28, there is no scope for adjustment or for retention of such money that has not been paid by the appellant towards discharge of duty short-levied on those three specific assessments. Learned Counsel for appellant urged us to place reliance on the decision of the Tribunal in Crown Lifters v. Commissioner of Customs (Import), Mumbai [2005 (328) ELT 590 (Tri-Mumbai)].
8. We have perused the decision in re India Cements cited by the adjudicating authority in support of the adjustment. That decision was of a Special Bench which, consisting as it then did of three members, decided by a majority of two-to-one that the demand would sustain. The demand was against a Central Excise assessee who, as a manufacturer, was a regular payer of duties. The observations of the majority, recorded separately, would place the facts in true light.
15. The duty demanded was paid by the factory, albeit, as the counsel for India Cements said, under protest. The question thyat, therefore, arises is, should the Tribunal order the Central Excise to return this money as it was recovered under a demand that was time barred. We think not. The demand was quite right to the extent that the money demanded was due to the Central Excise revenue. The only flaw in the demand is that it was issued outside time.
17. . It is for the first time that during the course of arguments before us that it came out that the demand made by Central Excise for recovery of duty . from the appellants was time-barred. Earlier this point was not raised before any other authority. Even in the grounds of appeal this point was not taken. It is nowhere on records that the appellants were forced to pay this duty amount or that any coercive measures were adopted by the department to make the appellants pay that duty amount. What is apparent is, a demand was raised by the Department for payment of the duty amount which the appellants were to pay and in pursuance of that demand, the appellants paid that duty amount which might be barred in time.
9. It is apparent that the adjudicating authority has either not read the decision supra and was misguided into believing what was impressed upon him or, being aware of its inapplicability, deliberately avoided citing the relevant extract in the hope that the citation would pass suffice to convince. The facts could not be more startlingly at variance: a Central Excise assessee, on being served with a demand, paid the amount so demanded without ever raising the issue of limitation of time at any stage except in oral arguments before the Tribunal. It was, consequently, held that duty paid, with complete awareness, and acceptance, of a demand is not liable to be returned even if the mechanism for recovery was absent. Here no demand had been issued when the amount was voluntarily paid by M/s Gopalji Heavy Lifters and the notice had been contested on limitation before the original authority. So too before us and so assertively pressed by Learned Counsel for appellant. Consequently, we affirm the position in law that adjustment is but a euphemism for appropriation and, just as equally, without legal sanctity. We hold that adjudicating authority has exceeded his powers in adjusting Rs 26,27,103, and interest of Rs 13,86,709, from the voluntary deposit.
10. The decision in re Crown Lifters cited supra on behalf of appellant, according to Learned Counsel, is also supportive of her arguments that the re-determination of assessable value of the imports fails the test of law. We are informed that section 14 of Customs Act, 1962 and the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 (and its successor Rules of 2007) were complied in their breach. The rejection of declared values is based on statements recorded under section 108 of Customs Act, 1962 just as the adoption of new values is. The requirement that rejection of declared value must be followed by sequential application of rule 5 onwards appears to have been disregarded. We have perused the impugned order and find it to be as she has pointed out. The re-determination has not cited any rule that has been applied; nor do we perceive any attempt at determining the value in accordance with the prescription in the Rules.
11. Assessment is not an exercise in value judgment, serendipitous divination or inspired revelation. Specific Rules have been notified to ensure consistency and objectivity. These Rules are the distillate of experiences and wisdom of, not just a people but, peoples. Non- acquiescence of the propriety and sanctity of the Rules is to betray an ignorance or obduracy that does no credit to the organizational commitment to professionalism. Valiantly attempting to assure that the impugned order is legal and proper, Learned Authorized Representative contends that no such error has been committed. He relies upon the decision of the Tribunal in American Eye Light Pvt Ltd v. Commissioner of Customs (Import), Mumbai [2013 (290) ELT 720 (Tri-Mumbai)], Commissioner of Customs Chennai v. MR Associates [2013 (297) ELT 504 (Mad)], Amee Electronics & Ors v. Commissioner of Customs Preventive, Mumbai [2014-TIOL-2833-CESTAT-MUM], Sunrise Ente v. Commissioner of Customs, Mumbai [2011 (274) ELT 200 (Tri-Mumbai)], Kemtech International Pvt Ltd v. Commissioner of Customs, New Delhi [2013 (292) ELT 336 (Tri-Del)], Kanungo & Co v. Commissioner of Customs, Calcutta [1983 (13) ELT 1486 (SC)], KP Abdul Majeed v. Commissioner of Customs, Cochin [2014 (309) ELT 671 (Ker)], NS Mahesh v. Commissioner of Customs, Cochin [2016 (331) ELT 402 (Ker)] et al.
12. We cannot fail to be impressed by the sheer numbers of case law collated by Learned Authorized Representative but we would be failing in our duty if we do not make plain that too much of a good thing can be as tedious as too little being bereft of substance. Cascading avalanche of rulings may overwhelm but hardly substitute for a good, reliable decision that squarely fits the case in dispute. We take the liberty of drawing upon the wisdom of the Honble Supreme Court in Bharat Petroleum Corporation Ltd & another v. N R Vairamani and another [AIR 2004 SC 4778] thus Observations of courts are neither to be read as Euclids theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgment. They interpret words of statute; their words are not to be interpreted as statutes.
13. We can the plight of the Authorized Representatives who, more often than not, are obliged to defend that which are patently deficient adjudications, and appellate, orders wanting in comprehension, application and articulation and the only means at their disposal is to search out and impress by sheer numbers that the impugned order is proper. Advocacy cannot make up a lost cause lost, not because of inherent flaws, but because it fails to find the justification of the law. We are given to understand that Department of Revenue is cognizant of the faultlines in the first level of appellate hierarchy; such oversight of adjudications of Commissioners, we are certain, may render the life of citizens a little less burdensome. The bar, we are sure, would not grudge us a patient recollection of the memorable words of Lord Denning, MR, echoed by the Honble Supreme Court in M/s Ispat Industries Ltd v. Commissioner of Customs, Mumbai [2006 (202) ELT 561 (SC)] Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect. In deciding such cases ones should avoid the temptation to decide cases (as said by Cordozo) by matching the colour of one case against the colour of another. To decide therefore, on which side of the line a case falls, the broad resemblance to another case is not all decisive..
Precedent should be followed only so far as it marks the path of justice, but you must cut the deadwood and trim off the side branches else you will find yourself lost in the thickets and branches. My plea is to keep the path of justice clear of obstructions which could impede it. We now turns to assess the applicability of the decisions cited by Learned Authorized Representative which affirm that allowing of cross-examination is an exercise of discretionary authority and that legality of recovery of dues that are barred by limitation of section 28 of Customs Act, 1962 is not questionable. We have already addressed the second issue.
14. It would appear that Revenue prefers to ignore the test of relevancy of statements in section 138B (2) of Customs Act, 962 as it applies to adjudication proceedings; the truth of any statement that has not the support of any other corroborative evidence is ascertainable only when the authority concerned admits that as evidence after examining the deponent as a witness. The decisions cited in support of Revenue, in which self-incriminatory statements were found acceptable, have been rendered in the context of live consignments; in these, the importer has acquiesced in the alteration of declaration before the assessment was complete. Such a revision of declaration is with consent of importer and hence, if acceptable as transaction value, does not have to undergo sequential processing under the Rules. In the present dispute, appellant had already cleared the goods well before invoking of section 28 was even contemplated. The Rules will need to be applied for any revision and such application is sanctified only by legality of due process.
15. That the impugned order has failed to cite that particular rule adopted for valuation cannot be concealed. That the value arrived at is not in accordance with the due process of the sequential application required by the Rules is not in doubt. Had the adjudicating authority decided to supplement the declared value with the differential price payable, as deposed in the various statements, substantive compliance of rule 4 could not have been denied. On the contrary, we have on record a total disregard for the legal pre-requisites. The re-determination of value in the impugned order is nothing but an arbitrary act devoid of statutory foundation.
16. The statements recorded under section 108 of Customs Act, 1962, purportedly admitting to undervaluation, has, apparently, elicited the prevailing price and also essayed the manner in which the additional consideration has been routed to suppliers. These are valuable inputs acquire sanctity only in the tempering heat of challenge and survival. Credibility is accorded only in cross-examination which, though demanded by appellant at the adjudication stage, was refused on the ground that there was no need to do so. Indubitably, the Indian Evidence Act, 1872 has been interpreted to accord evidentiary value to statements recorded by officers of Customs in contradistinction to that recorded before police officers. That, however, is no claim to infallibility or imposition in the absence of corroboration. That the law deigns to allow introduction of a statement in proceedings does not whittle down the requirement to prove the contents in the deposition. Section 138B of Customs Act, 1962 mandates that each statement be proved in the proceedings. Having failed to do so, reliance on the statements is bereft of legal validity. A conclusion arrived at from invalidated statements suffers the stigma of invalidity.
17. The lack thereof requires rectification by the original authority for which purpose we set aside the impugned order. We direct that the matter be heard afresh with opportunity afforded to noticees for cross-examination of deponents. The original authority is also directed to bear in mind the specific acts of omission and commission that has been held to be outside the authority of law. With these directions, we allow the appeals by way of remand.
(Pronounced in Court on __/11/2016) (Ramesh Nair) Member (Judicial) (C J Mathew) Member (Technical) sp 18