Custom, Excise & Service Tax Tribunal
M/S. Antoine & Becouerel vs Commissioner Of Customs on 6 April, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
C/41606,41607/2014
[Arising out of Order-in-Original No.232/2014-AIR, dated 28.03.2014 passed by the Commissioner of Customs (Airport & Air Cargo), Chennai]
M/s. ANTOINE & BECOUEREL
ORGANIC CHEMICAL CO.
K. RAMLAL JAIN
APPELLANT/S
Versus
COMMISSIONER OF CUSTOMS
(AIRPORT & AIR CARGO), CHENNAI
RESPONDENT
Appearance:
For the Appellant/s:
Shri N. Viswanathan, Adv.
For the Respondent Shri K. Veerabhadra Reddy, JC (AR) CORAM:
Honble Shri D.N. Panda, Judicial Member
Heard and reserved on: 06/04/2016
Pronounced on: 29/04/2016
FINAL ORDER NOs. 40676-40677 / 2016
Contesting the appeal of both the appellants, learned counsel precisely submitted that the drug what came to India was tested and found to be nothing questionable, for which, Customs allowed re-export thereof. The only point that brought the appellant to the fold of penalty and redemption fine is that the importer-appellant (at Sl.No.6 of cause list) was not a licence holder under Drug and Cosmetics Act, 1940. When the Drug Controllers report and also the Customs laboratory report is perused nothing questionable conduct of the appellant can be found. However, to reduce litigation, appellant considered it proper to send back the goods to the exporter. Customs also agreed for such export. But unnecessarily redemption fine and penalties have been imposed. There was neither absolute confiscation of goods nor goods were contraband. However, department acted hyper technically to question the goods bringing the consol agent M/s. DHL Logistics Pvt. Ltd., into the scene and confiscated the goods even though appellant had never filed bill of entry. Therefore, Appellant no way being concerned with the import and M/s. DHL Logistics Pvt. Ltd., having filed bill of entry, imposition of harsh redemption fine and penalty on the appellant is uncalled for and unwarranted. If at all penalty and redemption fine is imposable, appellant should not be dealt harshly.
1.2 It was further submission of learned counsel that the Drugs and Cosmetics Act 1945 was misconstrued by the authority overlooking sub-rule (2) of Rule 41 of the Drugs and Cosmetics Rules, 1945. That rule does not permit any harsh action against the importer. For no reason the Customs authorities considered that the drugimported was prohibitory in nature. The exemption granted under Rule 45 of the Drugs and Cosmetics Rules, 1945 requires no license for import of drug of the nature imported.
1.3 Arguing on the appeal of Shri K. Ramlal Jain, it was the submission of the learned counsel that department held him to be a beneficiary of the import and penalty of Rs.1,00,000/- was imposed on him unreasonably. So also in absence of absolute confiscation of the goods and re-export permitted by law, there is no contribution of this appellant at all to the allegation made by Customs.
1.4 On the above premises, it was prayer of both the appellants that if at all redemption fine is imposable that may not be done arbitrarily since margin of profit (MoP) was not considered by learned Authority below while imposing such fine. So also, penalty to the extent of Rs.5,00,000/- is not imposable when the appellant was neither an importer nor in any way connected with the import. Further, the penalty of Rs.1,00,000/- imposed on the appellant Shri K. Ramlal Jain may be waived.
2.1 On the other hand, Revenues submission is that the appellant M/s Antoine & Becouerel Organic Chemical Co., was the real importer which can be appreciated from page 6 of appeal folder because he was known to the bank. He used documents which were negotiated for import. The real importer cannot escape to avoid compliance to law, even though; he was on record all along from the date of negotiation with the bank. The appellant knowingly imported the prohibited goods, which is also on record from the two earlier consignments they imported in past. When the appellant importer was a frequent importer of the offending goods, it was aware of the provisions of the Drugs and Cosmetics Act, 1940 and application of that law as well as law of Customs. The appellant importer was master-mind and it was named as buyers in all documents that came to India from the time of export from the exporting country.
2.2 According to learned departmental representative, it is necessity of Rule 24A of the Drugs and Cosmetics Rules, 1945 for registration of the exporter in India. That was not done. He says that this is clear finding in para 43 of the Adjudication order. When the Drugs and Cosmetics Act, 1940 declared the goods to be prohibited goods whosoever brings that is liable to confiscation. Therefore, appellant being a real importer, it cannot escape from the penal consequences of law. Merely because Customs allowed re-export that does not grant immunity ipso facto to the appellant from the redemption fine as well as penalty.
2.3 Revenue filed a copy ofletter dated 24.03.2016 from the Commissionerate explaining the action taken by the Department against the same appellant in respect of the past consignments. This appellant was habitual offender being importer of the offending goods. Therefore, it does not deserve any leniency. He relied on page 69 of the appeal folder to emphasise that this importer deliberately induced file amended Bill of Entry when he was in the scene of importing offending goods from the date of export thereof from abroad. The misdeclaration of the appellant is an offence when he evaded and attempted to escape from the scrutiny of law.
2.4 Para 61 of the Adjudication order was relied by the departmental representative to bring to light that the appellant was involved in questionable imports of life saving drug, in violation of law, for which, the Commissioner has rightly held him guilt.
3. Against the appellant Shri K. Ramlal Jain, Revenue submitted that he was also one of the conduits in the import of the prohibitory goods being a beneficiary. In one way or the other, both the appellants were intimately connected and were successful bidders to importlifesaving drugs violating provisions of the Drugs and Cosmetics Act, 1940 as well as Customs Act, 1962 without Form 10 licences. Statements were recorded from these persons which are incriminating in nature and inculpatory. Therefore, they do not deserve any leniency for reduction of penalty and redemption fine.
4. Heard both sides and perused the records.
5. Present appeals arose against adjudication made in respect of import of tranexamic Acid, packed in 60 drums imported by the appellant company under Master Airways Bill (MAWB) No.043-57255590 and House Airway Bill (HAWB) 7DPW639 dated 31.03.2013 (Ref: Page 77 of appeal folder) accompanying IGM No.414601 and Invoice No.PRI20130321 dated 21.03.2013(Ref: Page 72 of appeal folder) declaring the consignee as M/s. Antoine & Becourerel Organic Chemical Co. The consignor of the goods was M/s. Prisun Pharmachem Co., of China. The export documents were negotiated through ICICI Bank Sowcarpet, Chennai.
6. These two appellants in this batch of appeal were brought to the fold of law by adjudication order dated 28.03.2014 along with 3 others finding them to be connected with the import of Tranexamic Acid from the period 2012. While the appellant M/s. Antoine & Becouerel Organic Chemical Co., was found to be the importer, as per invoices aforesaid issued by Chinese exporter, M/s. Prisun Pharma-chem Co. Ltd., the appellant Shri K. Ramlal Jain was found to be its proprietor. Other persons involved in the import were one Shri Sandeep Lalwani, Manager of the importer-appellant Sohan Chand, the benamidar of K. Ramlal Jain and M/s. DHL Logistics Pvt. Ltd., the pretender importer. All of them faced penal consequences under the law except Sohan Chand. But only these two appellants are before Tribunal. Both were heard analogous as well as their appeals disposed by this common order for the common cause involved in both the appeals.
7. While above MAWB and HAWBwas under scrutiny, Customs found that there were other two live consignments of same goods imported by the appellant concern, under Bills of entry bearing Nos.9746060, dated 02.04.2013 and 9760867, dated 04.04.2013 were awaiting clearance. Those Bills of Entrywere subject to scrutiny by Customs and it was informed by Revenue that these two Bills of entry have been adjudicated vide Order in Original No.266/2016, dated 30.03.2016.
8. After filing the aforesaid MAWB followed by HAWB, all on a sudden application was made by the M/s. DHL Logistics Pvt. Ltd., on 22.04.2013 to treat it as an importer of the impugned goods instead of M/s. Antoine & Becouerel Organic Chemical Co., appearing as importer of the offending goods in the MAWB and HAWB aforesaid. That raised question in the mind of Customs for which investigation proceeded to unearth the reason behind such filing and the truth behind that. They found that similar goods were imported from China by the appellant concern to India in the past vide bill of entry Nos.8845139, dated 24.12.2012, 9183769, dated 31.01.2013, 93317619, dated 14.02.2013 and 9694255, dated 29.03.2013.
9. According to Customs, the goods imported under the MAWB and HAWB aforesaid were drug and import thereof requires Form 10 licence under Drugs and Cosmetics Act, 1940. The appellant without having such a licence imported the same. When a detailed enquiry was made, appellant although stated that the goods are not drug it failed to provide the details of the buyers thereof for successive enquiry and ascertain as to whether those were meant for any other use other than the use as drug.
10. The appellant availed exemption under Notification No.12/2012-Cus S.No.148(A) and Notification No.012/2012-Excise S.No.108 in respect of the imports under appeal declaring the goods as drug. When samples of impugned live consignment were sent to testing laboratory for examination that proved to be drug (as recorded in para 37.2 of the impugned order at page 42 thereof) and requires drug licence for import. Investigation found that there were two consignors of the goods from China, one was M/s. Prisun Pharmachem Co. Ltd., and M/s. ITW Test and Measurement, of Shanghai.
11. Learned Adjudicating authority examined the matter framing the following issues in para 35 of his order as follows:-
(i) Whether live consignment of Tranexamic Acid packed in 60 drums valued at Rs.48,17,745/- (Rupees Forty Eight Lakhs Seventeen Thousand Four Hundred and Seventy Five only) USD 87750/- (US Dollar Eighty Seven Thousand Seven Hundred and Fifty only) covered under MDWSB NO.043-57255590/HAWB 7DPW639 and IGM NO.414601 and Invoice No.PRI20130321, dated 21.03.2013 with consignor name as M/s. PrisunPharmachem Co. Ltd. and consignee name as M/s. Antoine &Becouerel Organic Chemical Co., No.19, 1st Floor, V.O.C. Nagar, Anna Nagar (East), Chennai 600 102, seized from a truck bearing Regn. No.TN 22 BE 7952 which was found parked in Import Examination shed parking area of Air Cargo Complex, Meenambakkam, should be confiscated under section 111 (d) of the Customs Act, 1962 read with the provisions of the Drugs and Cosmetics Act, 1940 & Drugs and Cosmetics Rules, 1945; and
(ii) Penalty under section 112 (a) and/or section 114AA of Customs Act, 1962 should be imposed on the persons and entities named in the notice.
12. The Adjudicating Authority found that the Assistant Drug Controller (India), Air Cargo Complex, Chennai-600 027 vide his letter No.TOD/AIR/CHE/32/2013/652, dated 13.11.2013 informed that the imported item i.e.,Tranexamic Acid was a drug as per classification by Drug Control Department and the import thereof requires Form-10 licence. On examination of Shri P. Sohanchand, who was connected to the importer concern, admitted that the goods imported being drug, import thereof require licence. Even Shri K. Ramlal Jain (proprietor of appellant concern) also admitted that the import of the impugned goods require licence being drug. Adjudicating Authority found that Shri K. Ramlal Jain, was the real proprietor of the importer appellant and Sohanchand was benamidar. The importer influenced M/s. DHL Logistics Pvt. Ltd., to file application for amendment of the bill of entry holding outit to be importer of the impugned goods to escape scrutiny of investigation. However, such amendment was not permitted by the Customs authorities.
13. When a detailed investigation was carried out, the bank accounts of the importing concern in Union Bank of India, Sowcarpet Branch and ICICI Bank, Sowcarpet Branch revealed that those accounts were owned by Shri K. Ramlal Jainand crores of rupees were dealt in such accounts. That was corroborated from the statement of Shri P. Sohanchand, who was found to be a benamidar of Ramlal Jain and acted under his direction and instructions.
14. The Master Airway Bills (MAWB) presented to the Customs with the description of the goods and value thereof was negotiated through ICICI Bank, Sowcarpet, Chennai. On 25.3.2013, (page 69 of appeal folder) the invoice value of USD 87750 was discharged by the bank on behalf of its customer M/s. Antoine & Becouerel Organic Chemical Company, Chennai for an amount of USD 87750. Although, payment was made on behalf of such customer, a false claim was made by that customer company before Customs on 17.4.2013 by a declaration with the caption TO WHOMSOEVER IT MAY CONCERN stating that the goods covered by MAWB No. 043/572/55590 were sent to it by mistake by M/s. Prisun Pharma chem Co. Ltd., of China (consignor-exporter). Fraud against Customs was engineered through such declaration to defraud Customs although from the beginning the invoice was in the name of the appellant-importer and appellant was actively and consciously involved in the import of the impugned goods without drug licence in Form 10. Payment was made by ICICI bank against the impugned import from the accounts of appellant-importer. Such colorful device was adopted by the appellant-importer to escape from penal consequence of law.
15. Appellant-importer arranged a communication from the Chinese exporter to deliberately file false amendment application before Customs by M/s. DHL Logistics Pvt. Ltd., holding out that concern as the importer of the impugned goods. It also had no drug licence in Form 10. The Chinese exporter M/s. Prisun Pharmachem by its declaration dated 16.4.2013 captioning TO WHOMSOEVER IT MAY CONCERN stated that the consignment covered by MAWB was sent to M/s. Antoine & Becouerel Organic Chemical Co., erroneously but that belongs to M/s. DHL Logistics Pvt. Ltd. Both parties colluded to act on the basis of the Chinese exporters declaration dated 16.4.2013 to file a letter dated 22.4.2013 before Deputy Commissioner, Transshipment for amendment of MAWB in its favour. It did not come out with clean hands to prove its stand as well as the import bonafide supported by drug licence. The fact remained is that the goods imported were drug and licence was required for import of the same. M/s. DHL Logistics Pvt. Ltd., had also no such licence.
16. It is curious to note that the communication came from the Chinese exporter on 16.4.2013 was false and on the next date i.e., 17.4.2013, the appellant-importer issued a declaration as stated above to enable M/s.DHL Logistics Pvt. Ltd., to file letter dated 22.4.2013 before Customs for amendment of the MAWB. Strangely, the ICICI bank, Sowcarpet has sent the remittance to the exporter nearly a month before for and on behalf of the appellant-importer M/s.Antoine & Becouerel Organic Chemical Co. Engineering of the documents by all the three parties were made to serve their ill will. Investigation detected that the appellant-importer was a habitual importer of the life saving drug of aforesaid description without license.
17. The appellant-importer admitted that it had made remittances to the overseas supplier. Evidence in support of such payment was also adduced before adjudicating authority. So also it admitted ownership of the imported goods (Ref. para 44 of the adjudication order). Shri Ramlal Jain although denied the allegations against him as owner of the appellant-concern stating that Sohan Chand was the owner thereof, he failed to establish that leading any cogent and credible evidence in that regard. It is surprising how he operated the bank accounts as aforesaid dealing with crores of rupees to make the remittances, if Sohan Chand was the owner of the importing concern. Sohanchand was only the name lender to Ramlal Jain. Ramlal was the mastermind behind the import and Sohan Chand was his benamidars. No evidence came forward to detach Ramlal from the ownership of the appellant concern as well as the impugned goods. He was answerable to law and was bound to face the consequences thereunder.
18. Appellant pleaded that the goods imported were not drug. But perusal of the definition of the term drug under section 2(b) of the Drugs and Cosmetics Act, 1940 brings the impugned goods to its purview since the imported goods were proved to be drug upon testing by the Drugs Controller. Appellant further submitted that there is no drug licence required for an exporter who manufactures outside India. But, Rule 24A of the Drugs and Cosmetics Rules, 1945 rules out such proposition. Added to this, Rule 23 of the said rules requires an import licence in Form No. 10 as was suggested by the Drugs Controller as well as Revenue. Appellant places reliance on Rule 45 of the said Rules, 1945. But, no such rule comes to the rescue of the appellant since that rule deals with duties of the Government analyst. Therefore, appellant circumvented the law defrauding Customs.
19. Cogent and credible evidence came to record and Customs proved its case against both the appellants. These appellants made every attempt to be enriched at the cost of this country. They all had hand in glove. Secrecy and stealth being covering guards of ill designed act, they acted under secrecy to cause detriment to the interest of law smuggling the prohibited goods as defined by section 2(39) read with section 2(33) of the Customs Act, 1962. Many facts relating to the ill design remained in the special and peculiar knowledge of the appellants concerned with that. Echoing evidence, series of factors and several circumstances were determinative. Questionable conduct and oblique motive of the appellant contributed to their implication to the charge.
20. When fraud surfaces, that unravels all. Revenues stand is fortified from the Apex Court judgment in the case of UOI v. Jain Shudh Vanaspati Ltd. - 1996 (86) E.L.T. 460 (S.C.). So also fraud nullifies everything as held by Apex Court in Commissioner of Customs Vs Candid Enterprises - 2001 (130) E.L.T. 404 (S.C.) and in the case of Delhi Development Authority Vs Skipper Construction Company (P) Ltd - AIR 1996 (SC) 2005. Import of the offending goods without licence and attempting to clear the same was fraud committed against Revenue. The frauds committed by the perpetrators of the offence were in close connivance. The Apex Court in the case of S P Chengalavaraya Naidu Vs Jagannath - AIR 1994 SC 853 and in the case of Ram Preeti Yadav Vs UP Board of High School and Intermediate Education - AIR 2003 SC 4268 has held that no court in this land will allow a person to keep an advantage which he obtained by fraud.
21. When the material evidence established fraud against Revenue white collar crimes committed under absolute secrecy shall not be exonerated from penal consequence of law following Apex Court judgment in the case of K. I. Pavunny v. AC, Cochin - 1997 (90) E.L.T. 241 (S.C.). Various technicalities raised in the course of appeal hearing by appellant did not matter when substance of the matter weighed heavily for determination of the issues in favour of Revenue.
22. An act of fraud on Revenue is always viewed seriously. Fraud and collusion vitiate even the most solemn proceedings in any civilized system of jurisprudence. It is a concept descriptive of human conduct either by letter or words, which includes the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letter. It has been held by Apex Court in the case of Commissioner of Customs, Kandla v. Essar Oil Ltd. - 2004 (172) E.L.T. 433 (S.C.) that by fraud is meant an intention to deceive; whether it is from any expectation of advantage to the party himself or from the ill will towards the other is immaterial. The expression fraud involves two elements, deceit and injury to the deceived. Undue advantage obtained by the deceiver, will almost always call loss or detriment to the deceived. Similarly a fraud is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by anothers loss. It is a cheating intended to get an advantage. (See S.P. Changalvaraya Naidu v. Jagannath [1994 (1) SCC 1].
23. Fraud is proved when it is shown that a false representation has been made (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly, careless whether it be true or false. This aspect of the matter has been considered by Apex Court in Roshan Deen Vs PreetiLal [2002 (1) SCC 100], Ram Preeti Yadav Vs U.P. Board of High School and Intermediate Education [2003 (8) SCC 311], Ram Chandra Singhs case (supra) and Ashok Leyland Ltd. Vs State of T.N. and Another [2004 (3) SCC 1]. Suppression of a material document would also amount to a fraud on the court (see Gowrishankar Vs Joshi Amha Shankar Family Trust, [1996 (3) SCC 310] and S.P. Chengalvaraya Naidus case AIR-1994 SC-853. No judgment of a Court can be allowed to stand if it has been obtained by fraud. Fraud unravels everything and fraud vitiates all transactions known to the law of however high a degree of solemnity.
24. Record revealed that M/s. DHL Logistics Pvt. Ltd., was proxy of the importer-appellant to come to its rescue filing the letter dated 22.4.2013 before Customs claiming ownership of the import. Entire material fact and evidence warrant lifting of the corporate veil due to dubious claim of ownership of the goods and two parties holding out themselves to be importer of the offending goods at different point of time. The goods were therefore confiscable. M/s. DHL Logistics Pvt. Ltd., was not the actual importer as per evidence. Beginning from the origin of the goods from China from the exporter till that reached India and MAWB presented to Customs, the appellant was real importer on record without having drug licence. Therefore, at this juncture, it would be necessary to state that at the interest of the nation, the Director General of Revenue Intelligence may cause enquiry and ascertain whether M/s. DHL Logistics Pvt. Ltd., is engaged in the trading of drug i.e., Tranexamic Acid. If so, whether any import of such goods was made in the past by such concern. In the event import was made, whether that was covered by drug licence. That authority may act as may be considered appropriate in accordance with law.
25. It is also surprising to note that all of a sudden M/s.DHL Logistics Pvt Ltd., came to file application to amend the HAWB when it was neither the investor of the goods nor placed any purchase order with the consignor-appellant nor any remittances were made by it to the exporter. Such finding is enough to rule out the claim of the M/s. DHL Logistics Pvt. Ltd., as owner of the imported goods. M/s. DHL Logistics Pvt. Ltd., acted as a console agent for the importer and effort was made to move the goods to FTWZ amending the HAWB and suppliers invoice to hold out M/s. DHL Logistics Pvt. Ltd., as owner thereof. It is left to the Director General of Revenue Intelligence to cause intensive investigation from the FTWZ as to the status of the documents in that zone and the reasons behind the questionable operandi followed by all the three parties.
26. Penalty of confiscation is a penalty in rem which is enforced against the goods. In such case, it is not necessary for the Customs authorities to prove that any particular person is concerned with their illicit importation or exportation. It is enough, if the Department furnishes prima facie proof of the offending goods being smuggled one. The second kind of penalty is one in personam which is enforced against the person concerned in the smuggling of the goods. In such case, the Department has to prove further that the person proceeded against was concerned in the smuggling.
27. The smuggling racket perpetuated smuggling in the past as is revealed from their conduct. Evidence gathered by Revenue unambiguously proved that both the appellant were contributory to the fraud committed against Customs and they made an organised bid to be enriched at the cost of the nation. It is established principle of law that fraud and justice are sworn enemies. When the collusion and fraudulent design of the exporter, importer-appellant, K. Ramlal Jain and M/s. DHL Logistics Pvt. Ltd., surfaced, the impugned goods that came to India, became no mans property and confiscation being an action in rem, the dubious claim of ownership of the goods at different point of time calls for absolute confiscation thereof without any leniency for redemption and re-export of the same. Accordingly, the order of the adjudicating authority requires to be set aside on such count and absolute confiscation of the impugned goods is hereby ordered. In the course of hearing, Revenue informed that the impugned goods have already left India on payment of redemption fine. Therefore it is left to the Chairman of the CBE&C to deal this matter as the Board may consider appropriate in the fitness of the circumstances of the case to protect interest of Revenue since the action of redemption of the goods and re-export has caused detriment to interest of justice.
28. Registry is directed to send a copy of this order to the Chairman, CBE&C as well as Director General of Revenue Intelligence for the needful.
29. In view of the aforesaid material facts, evidence and findings, both the appeals are dismissed.
(Pronounced in open court on/04/2016) (D.N. PANDA) JUDICIAL MEMBER Ksr/Rex 28-04-2016 DRAFT Remarks I II III Date of dictation 06.04.2016 Draft Order - Date of typing 06.04.2016 Fair Order Typing .04.2016 Date of number and date of dispatch /04/2016 DRAFT Remarks I II III Date of dictation 06.04.2016 Draft Order - Date of typing 06.04.2016 Fair Order Typing 28.04.2016 Date of number and date of dispatch 29/04/2016 2 C/41606,41607/2014