Customs, Excise and Gold Tribunal - Delhi
Jalanchand Mangilal vs Collector Of Customs on 16 July, 1991
Equivalent citations: 1992(41)ECR71(TRI.-DELHI)
ORDER G.A. Brahma Deva, Member (J)
1. This appeal arises out of and is directed against the Order No. SG/Misc/201/83A/S/10-12/84 LS 11B dated 13.1.1984 passed by the Collector of Customs, Bombay.
2. The appellants had imported a consignment declared to contain Brass Dross from U.K. and sought its clearance under the provisions of OGL, Appendix 10, Part-Ill, serial No. 2 of AM 84 Policy. Pursuant to certain intelligence received in the Custom House to the effect that trade is importing Brass Scrap under the guise of brass dross, a case was registered and the matter was taken up for detailed investigation by Special Investigation & Intelligence Department. The goods, on examination by the special investigation branch, were found to be 100% Brass Scrap in place of Brass dross declared in the relevant documents. Department observed that there was an attempt to evade duty amounting to Rs. 1,79,112.45 Paise, being difference between duty chargeable on Brass scrap weighing 18,676 M/T at the rate of Basic customs duty at 85% + 35% auxiliary + additional duty at the rate of Rs. 3300/- per M.T. and duly chargeable on brass dross weighing 18.676 M.T. at the rate of 40% + auxiliary duly 25% Ad-valorem. This matter was adjudicated by the Collector of Customs holding that the imported goods, i.e. Brass Scraps have been mis-declared as Brass Dross in the Bill of Entry Duty difference comes to Rs. 1,78,112.45 Paise. Accordingly, he ordered for confiscation of the goods under Section 111(m) of the Act. However, he gave option to redeem the goods on payment of fine of Rs. 55,000/-. He also imposed penalty of Rs. 50,000/- on the appellants and Rs. 10,000/- on the Indentors. Aggrieved by the said order, the appellants have come before us by way of this appeal.
3. We have heard Shri L.P. Asthana, learned Advocate for the appellants and Shri Prabhat Kumar, learned JDR for the respondent.
4. Shir L.P. Asthana, appearing for the Appellants, submitted that appellants placed an order with supplier M/s. Jacob Metals Ltd., London, through Indenting Agents M/s. Industrial Mettalics, Bombay under sales contract on 30lh August 1983 for 18/21 M.T. Brass Dross at the price of U.S. Cents 50 per Lb. CIF Bombay. In the terms of sales contract the letter of Credit was opened in favour of supplier on 7.9.1983. Hence, it is clear that they had ordered only for Brass Dross and further as can be seen from the Order-in- ' Original, the SIIB of the Customs had investigated the case thoroughly and after conducting searches of premises of various persons, nothing incriminating was found to indicate that the appellants had ordered or managed the wrong supply of Brass Scrap in place of brass dross. He said that since the appellants are regular importer of Brass Scrap for the past several years and further heard about supply of wrong goods to some other importers, sufficient precaution was taken by them to ensure that the goods as ordered were supplied. He referred to the copy of the letter dated 11.11.1983 addressed to the In-dentors asking for clarification about the consignment which is packed in 68 drums whereas in other suppliers' cases the goods are generally shipped in one container in 32 drums and such huge number of drums for packing the material was not required in their opinion. It was duly replied by indentors that they had telexed the Principal earlier who had replied that the number of drums are exactly the same as in this suppliers' other shipments. Since this was a high grade dross and specifically prepared it was packed in 68 drums. The suppliers have repeatedly assured that there was nothing except brass dross. He said that the appellants had come to know only on inspection of the goods that brass scrap was shipped instead of brass dross and the issue was taken up with the suppliers. The suppliers admitted that it was their mistake in sending the different quality and confirmed that in no way the appellants were responsible for such differences. Further, they agreed to compensate with sum of U.S. $ 5000 lumpsum in full settlement of all claims. He said that since the appellants were not satisfied with the initial settlement of U.S. S 5000, they sent a telex for initiating arbitration proceedings. As a result of further negotiations the suppliers agreed to pay a further sum of U.S. S 5(X)0. He contended that since the appellants were in no way responsible for the supply of wrong goods, they should not be penalised for the mistake of the suppliers. The mistake was not only admitted by them but reimbursed to the extent of U.S. S 10,0(X) in total as compensation. He said that this matter is similar to that of the decision in the case of Prahlad Industries v. Collector of Customs, Bombay and in the facts and circumstances, the charge of misdeclaration is not proved and the order of confiscation cannot sustain. He argued that Mens-rea is an essential ingredient for imposition of fine and penalties and since the said product was imported by the appellants on bona fide belief the penal action was not justified, relying upon the ratio of the decision in the case of Akbar Badruddin Jiwani v. Collector of Customs.
5. As regards valuation, he said that Collector erred in taking the invoice value for the purpose of assessment of goods in question as the invoice value represents brass dross. The price of the brass scrap is cheaper than that of brass dross and at the material time another Importer M/s. S.B. Metal Co., imported another consignment of brass scrap at 41 Cents per Kilo which was accepted by the Customs. Hence that prevailing rate should be taken in determining the valuation.
6. On the other hand, Shri Prabhat Kumar, learned JDR for the Revenue while countering the arguments submitted that decision in the case of Prahlad Industries (supra) is not applicable to the facts of this case, as there was only one consignment which was sent by mistake, but in the present case the same supplier consistently supplying the Brass scrap in the guise of Brass dross to various importers. Since there is a high premium for misdeclaralion and there have been a series of cases of Brass scrap mixed with brass dross supplied by the same supplier in organised way, the cases were thoroughly investigated by the Special investigation Department. This is one of the cases which was caught for misdeclaration of 100% Brass Scrap as against declared brass dross and this would have gone unnoticed but for the detection made by the S.I.I.B. He said that brass scrap is costlier than brass dross and supplier would not have sold the expensive item at a lower rate. Reliance was placed by him in the case of P.S. Metal Corporation v. Collector of Customs, Bombay 1987-27-ELT-172 : 1987 (13) ECR 415 (Cegat SB-B2) wherein il was held that brass metal containing more percentage of copper contents is costlier than brass dross. He said that it is a clear case of deliberate misdeclaralion with an intent to evade payment of duly more than 100%. Subsequent evidences adduced by the appellants on remittance of compensation will not reveal exactly for what action they were compensated. He contended that since this is not a case of genuine supply and the imported goods are different from the description of the goods and there was a deliberate attempt to import high priced goods, the Departmental action was justified in ordering for confiscation of the goods. He cited the decisions- in the case of International Watch Trading Company v. Collector of Customs and Fine Blanking Pvt. Ltd. v. Collector of Customs .
7. On point of valuation he submitted that there was no dispute of valuation before the Adjudicating Authority. The evidence adduced by the appellants before the Tribunal cannot be taken into consideration in view of the substantial difference between the two Bill of Entries. He said that they differ in quality, quantum, Country of origin and even in date of Bill of lading. He argued that though invoice price is different from the 'value' the Department was justified in adopting the declaration of value by Importer as 'means value' relying upon the decisions of the Tribunal in the cases of Macneil and Magor Ltd. Calcutta v. Collector of Customs and Poonam Plastic Industries v. Collector of Customs .
8. In reply, Shri Ashana submitted that the ratio of the decisions cited by the D.R. are not applicable to the facts of this case, as this case has got several distinctive features from the above judgments. In the case of PS. Metal Corporation the item was brass metal and not the Brass scrap and item was not tested in this case to ascertain percentage of content of copper. Nothing incriminating documents were found and suppliers not only admitted their mistake but also compensated the appellants with due consideration. These important features were absent in the cases cited by the D.R. Further the precaution taken by the appellants even before importation proves that their conduct was bona fide in importing the goods.
9. We have considered the arguments advanced on both sides and perused the records. It is an admitted fact that imported goods were Brass scrap as against declared item Brass Dross. But the point to be considered in the present case is whether the appellants have imported the goods knowingly with an intention to evade payment of duly to attract penal provisions. Sufficient evidence was brought on record by the appellants to show that it was mistake on the part of the supplier in sending the wrong goods which would clearly show that there was no intention on the part of the appellants. Not only the suppliers have admitted their mistake but also they compensated the appellants for discrepancies. Further nothing incriminating evidence was found against the appellants to implicate their involvement in importing the goods other than declared. The contention of the Department that supplier has been obliging in sending Brass Scrap in the guise of Brass Dross to various Importers cannot be taken as decisive factor to penalise the appellants in the absence of their involvement or connivance with Exporters in importing such wrong goods. In the facts and circumstances of the case we hold that it is not necessary to order confiscation and consequently fine and penalty.
10. As regards valuation, the point of dispute was neither raised by the appellants nor considered by the Adjudicating Authority at the original stage. We feel this aspect has to be examined a afresh. Accordingly, we are remanding the matter to the concerned Collector on this limited issue with a direction to re-determine the value of the goods in question, after giving an opportunity to the appellants to adduce evidence, if any, in support of their contention, in addition to the evidence produced before us which are on record. Since the goods are lying with the Customs Authorities, the Collector is directed to dispose of the matter at the earliest possible time on receipt of this order.
11. The appeal is, thus, disposed of in the above terms.