Custom, Excise & Service Tax Tribunal
M/S Samsung India Elect vs Cc, New Delhi on 9 October, 2013
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
DIVISION BENCH
Court No.2
Appeal No. C/740/2008
M/s Samsung India Elect. Appellant
Vs
CC, NEW DELHI Respondent
(Arising out of common Order-in-Original No. 50/2008 dated 29/08/2008 passed by the Commissioner of Customs, New Delhi) Appeal No. C/741/2008 M/s Samsung India Elect. Appellant Vs CC, NEW DELHI Respondent (Arising out of common Order-in-Original No. 51/2008 dated 29/08/2008 passed by the Commissioner of Customs, New Delhi) Appeal No. C/742/2008 M/s Samsung India Elect. Appellant Vs CC, NEW DELHI Respondent (Arising out of common Order-in-Original No. 52/2008 dated 29/08/2008 passed by the Commissioner of Customs, New Delhi) Appeal No. C/743/2008 M/s Samsung India Elect. Appellant Vs CC, NEW DELHI Respondent (Arising out of common Order-in-Original No. 53/2008 dated 29/08/2008 passed by the Commissioner of Customs, New Delhi) Appeal No. C/744/2008 M/s Samsung India Elect. Appellant Vs CC, NEW DELHI Respondent (Arising out of common Order-in-Original No. 54/2008 dated 29/08/2008 passed by the Commissioner of Customs, New Delhi) Appeal No. C/770/2008 Sh. Sunil Goel Appellant Vs CC, NEW DELHI Respondent (Arising out of common Order-in-Original No. 50/2008 dated 29/08/2008 passed by the Commissioner of Customs, New Delhi) Appeal No. C/771/2008 Sh. Sunil Goel Appellant Vs CC, NEW DELHI Respondent (Arising out of common Order-in-Original No. 51/2008 dated 29/08/2008 passed by the Commissioner of Customs, New Delhi) Appeal No. C/772/2008 Sh. Sunil Goel Appellant Vs CC, NEW DELHI Respondent (Arising out of common Order-in-Original No. 52/2008 dated 29/08/2008 passed by the Commissioner of Customs, New Delhi) Appeal No. C/773/2008 Sh. Sunil Goel Appellant Vs CC, NEW DELHI Respondent (Arising out of common Order-in-Original No. 53/2008 dated 29/08/2008 passed by the Commissioner of Customs, New Delhi) Appeal No. C/774/2008 Sh. Sunil Goel Appellant Vs CC, NEW DELHI Respondent (Arising out of common Order-in-Original No. 54/2008 dated 29/08/2008 passed by the Commissioner of Customs, New Delhi) Present for the Appellant : Shri A.R. Madhav Raw, Advocate Present for the Respondent: Shri I. Baig, A.R. Reserved on: 10/04/2013 Pronounced on:09/10/2013 FINAL ORDER NO.57924-57933/2013 PER D. N. PANDA
1. Customs appeal No.740/2008 to 744/2008 and C/774/2008 was only listed for hearing without appeal No. C/770/2008 to C/773/2008 being listed although there was mention in the interim order dated 09/02/2009 to list all these appeals for analogous hearing. Ld. Counsel appearing in all these 10 (ten) appeals prayed for common hearing and disposal of all such appeals on the ground that the facts and issue in all the appeals are common although proceedings were initiated for the period December 2001 to 31.3.2004 by different Show Cause Notices (SCN) issued by different Jurisdictional Commissionerate viz., Customs, Air Cargo Export, New Delhi; Preventive, West Bengal, Kolkata; Export, Chennai and Air Cargo Complex, Meenam bakkam, Chennai and all such SCNs were adjudicated by a designated adjudicating authority viz. Commissioner of Customs, ICD, TKD, New Delhi in terms of separate adjudication order numbers 50-54/2008 dated 29/08/2008 which are subject matter of this bunch of appeals.
2. Revenue having agreed to the above proposition, all these appeals was heard analogous and a common order has been passed against such appeals arising out of different adjudication orders as said above giving rise to different consequences depicted under each such appeal as under.
Appeal No. C/740/2008 AND Appeal No. C/770/2008
3. Appeal No. C/740/2008 and appeal No. C/770/2008 were filed by Samsung Electronics Ltd. (hereinafter referred to as The Appellant Company) and Sri Sunil Goel, Vice President (Finance and Accounts) of the appellant company respectively arising out of Order-in-Original No.50/2008 Dated 29/08/2008 adjudicating SCN No. VII/10/TKD/SIIB/22/2004 dated 28/02/2004 and such adjudication gave rise to the following consequences:
(i) VGA monitors declaring FOB value of Rs.18,17,112/- exported by M/s Samsung India Electronics Ltd. Nodia were confiscated finding mis-declaration of description of the said goods as CGA in the shipping bills and a fine of Rs. 2 Crores (two crores only) was imposed on the appellant company in lieu of confiscation since such goods had left India.
(ii) Undue DEPB benefit of Rs.2,90,76,818/- gained by the appellant company against export of mis-declared monitors violating Section 113 (d) and 113(i) of the Customs Act, 1962 was disallowed.
(iii) Customs duty of Rs.2,35,22,016/- discharged utilizing unduly gained DEPB scrips was ordered to be recovered under section 28 of the Customs Act, 1962 and interest was directed to be payable on the said amount of customs duty demand under section 28AB of the Customs Act, 1962.
(iv) An amount or Rs.1,60,00,000/- deposited by M/s Samsung was appropriated and remaining amount of duty of Rs.75,22,016/- was ordered to be recovered encashing Bank Guarantee vide No. of Rs.1,40,00,000/- issued by Deutsche Bank, AG- Tolstoy House, New Delhi 796 BGG 0400729 dated 22.12.2004.
(v) Goods imported utilizing DEPB scrips unlawfully obtained were confiscated. But such goods not being physically available for confiscation, a fine of Rs. 1 Crore (One Crore only) in lieu of confiscation was imposed on the appellant company.
(vi) Penalty of Rs.2.50 Crores (Two Crores and fifty lakhs only) was imposed on M/s Samsung India Electronics Ltd., under section 112 and 114 of the Customs Act, 1962.
(vii) Penalty of Rs. 20 lakhs (Twenty lakhs only) was imposed on Shri Sunil Goel, Vice President (Finance & Accounts) of M/s Samsung India Electronics Ltd. under section 112 and 114 of the Customs Act, 1962.
Appeal No. C/741/2008 AND Appeal No. C/771/2008
4. Appeal No. C/741/2008 and appeal No. C/771/2008 were filed by Samsung Electronics Ltd. (hereinafter referred to as The Appellant Company) and Sri Sunil Goel, Vice President (Finance and Accounts) of the appellant company respectively arising out of Order-in-Original No.51/2008 Dated 29/08/2008 adjudicating SCN No SIIB/07/2006/SCN/SIIB/81/2006 dated 08/02/2006 and such adjudication gave rise to the following consequences:
(i) VGA monitors declaring FOB value of Rs.11,32,40,681/- exported by M/s Samsung India Electronics Ltd. Nodia were confiscated finding mis-declaration of description of the said goods as CGA in the shipping bills and a fine of Rs. 1.5 Crore (one crore fifty lakhs only) was imposed on the appellant company in lieu of confiscation since such goods had left India.
(ii) Undue DEPB benefit of Rs.1,40,30,482/- gained by the appellant against export of mis-declared monitors violating Section 113 (d) and 113(i) of the Customs Act, 1962 was disallowed.
(iii) Customs duty of Rs.1,17,44,230/- discharged utilizing unduly gained DEPB scrips was ordered to be recovered under section 28 of the Customs Act, 1962 and interest was directed to be payable on the said amount of customs duty demand under section 28AB of the Customs Act, 1962.
(iv) Goods imported utilizing DEPB scrips unlawfully obtained were confiscated. But such goods not being physically available for confiscation, a fine of Rs.1 core (one crore only) in lieu of confiscation was imposed on the appellant company.
(v) Penalty of Rs.1.5 crores was imposed on M/s Samsung India Electronics Ltd., under section 112 and 114 of the Customs Act, 1962.
(vi) Penalty of Rs. 15 lakhs (Fifteen Lakhs Only) was imposed on Shri Sunil Goel, Vice President (Finalce & Accounts) of M/s Samsung India Electronics Ltd. under section 112 and 114 of the Customs Act, 1962.
Appeal No. C/742/2008 AND Appeal No. C/772/2008
5. Appeal No. C/742/2008 and appeal No. C/772/2008 were filed by Samsung Electronics Ltd. (hereinafter referred to as The Appellant Company) and Sri Sunil Goel, Vice President (Finance and Accounts) of the appellant company respectively arising out of Order-in-Original No. 52/2008 Dated 29/08/2008 adjudicating SCN No S.MISC.20/2006 GR7-ACC/SCN/58/37/37/2006-GR7-ACC dated 22/05/2006 and such adjudication gave rise to the following consequences:
(i) VGA monitors declaring FOB value of Rs. 1,42,85,219/- exported by M/s Samsung India Electronics Ltd. Nodia were confiscated finding mis-declaration of description of the said goods as CGA in the shipping bills and a fine of Rs.25 lakhs (twenty Five lakhs only) was imposed on the appellant company in lieu of confiscation since such goods had left India.
(ii) Undue DEPB benefit of Rs.22,85,635/- gained by the appellant company against export of mis-declared monitors violating Section 113 (d) and 113(i) of the Customs Act, 1962 was disallowed.
(iii) Customs duty of Rs.22,85,266/- discharged utilizing unduly gained DEPB scrips was ordered to be recovered under section 28 of the Customs Act, 1962 and interest was directed to be payable on the said amount of customs duty demand under section 28AB of the Customs Act, 1962.
(iv) Goods imported utilizing DEPB scrips unlawfully obtained were confiscated. But such goods not being physically available for confiscation, a fine of Rs.15 lakhs (fifteen lakhs only) in lieu of confiscation was imposed on the appellant company.
(v) Penalty of Rs.25 lakhs (twenty lakhs only) was imposed on M/s Samsung India Electronics Ltd., under section 112 and 114 of the Customs Act, 1962.
(vi) Penalty of Rs. 2 lakhs (two lakhs only) was imposed on Shri Sunil Goel, Vice President (Finalce & Accounts) of M/s Samsung India Electronics Ltd. under section 112 and 114 of the Customs Act, 1962.
Appeal No. C/743/2008 AND Appeal No. C/773/2008
6. Appeal No. C/743/2008 and appeal No. C/773/2008 were filed by Samsung Electronics Ltd. (hereinafter referred to as The Appellant Company) and Sri Sunil Goel, Vice President (Finance and Accounts) of the appellant company respectively arising out of Order-in-Original No.53/2008 Dated 29/08/2008 adjudicating SCN No C.NO.II(26A)4/PTPL-RD/05 dated 20/10/2005 and such adjudication gave rise to the following consequences:
(i) VGA monitors declaring FOB value of Rs.25,09,66,901 exported by M/s Samsung India Electronics Ltd. Nodia were confiscated finding mis-declaration of description of the said goods as CGA in the shipping bills and a fine of Rs. 3 (three) crores only was imposed on the appellant company in lieu of confiscation since such goods had left India.
(ii) Undue DEPB benefit of Rs.4,25,84,713/- gained by the appellant company against export of mis-declared monitors violating Section 113 (d) and 113(i) of the Customs Act, 1962 was disallowed.
(iii) Customs duty of Rs.4,18,36,088/- discharged utilizing unduly gained DEPB scrips was ordered to be recovered under section 28 of the Customs Act, 1962 and interest was directed to be payable on the said amount of customs duty demand under section 28AB of the Customs Act, 1962.
(iv) Goods imported utilizing DEPB scrips unlawfully obtained were confiscated. But such goods not being physically available for confiscation, a fine of Rs.2 Crores in lieu of confiscation was imposed on the appellant company.
(v) Penalty of Rs.4.50 Crores was imposed on M/s Samsung India Electronics Ltd., under section 112 and 114 of the Customs Act, 1962.
(vi) Penalty of Rs.25 lakhs (Twenty five lakhs only) was imposed on Shri Sunil Goel, Vice President (Finalce & Accounts) of M/s Samsung India Electronics Ltd. under section 112 and 114 of the Customs Act, 1962.
Appeal No. C/744/2008 AND Appeal No. C/774/2008
7. Appeal No. C/744/2008 and appeal No. C/774/2008 were filed by Samsung Electronics Ltd. (hereinafter referred to as The Appellant Company) and Sri Sunil Goel, Vice President (Finance and Accounts) of the appellant company respectively arising out of Order-in-Original No.54/2008 Dated 29/08/2008 adjudicating SCN No. C.NO.VIII/12/ACE/DEPB/Misc/297/2004 dated 15/12/2005 and such adjudication gave rise to the following consequences:
(i) VGA monitors declaring FOB value of Rs.5,25,64,338/- exported by M/s Samsung India Electronics Ltd. Nodia were confiscated finding mis-declaration of description of the said goods as CGA in the shipping bills and a fine of Rs.50 lakhs (fifty lakhs only) was imposed on the appellant company in lieu of confiscation since such goods had left India.
(ii) Undue DEPB benefit of Rs. 84,10,294/- gained by the appellant company against export of mis-declared monitors violating Section 113 (d) and 113(i) of the Customs Act, 1962 was disallowed.
(iii) Customs duty of Rs.17,76,275/- discharged utilizing unduly gained DEPB scrips was ordered to be recovered under section 28 of the Customs Act, 1962 and interest was directed to be payable on the said amount of customs duty demand under section 28AB of the Customs Act, 1962.
(iv) Goods imported utilizing DEPB scrips unlawfully obtained were confiscated. But such goods not being physically available for confiscation, a fine of Rs.25 lakhs (twenty five lakhs only) in lieu of confiscation was imposed on the appellant company.
(v) Penalty of Rs.20 lakhs (twenty lakhs only) was imposed on M/s Samsung India Electronics Ltd., under section 112 and 114 of the Customs Act, 1962.
(vi) Penalty of Rs.5 lakhs (five lakhs only) was imposed on Shri Sunil Goel, Vice President (Finalce & Accounts) of M/s Samsung India Electronics Ltd. under section 112 and 114 of the Customs Act, 1962.
8.1 Search to the premises of the appellant Company made on 25/05/2004 and similar search to the premises of M/s Park Electronics, 406, 4th Floor, 56, Nehru Place, New Delhi, New Delhi, a distributor of Samsung, made on 22.5.2004 resulted in recovery of certain documents which were subjected to scrutiny by investigation. Statements from different persons were recorded in the course of investigation and extensive enquiry was made to ascertain real nature of the goods exported to claim DEPB benefit as is apparent from in Para 6 to 11 of the adjudication order.
8.2 Investigation noticed that Colour Monitors, VGA (Video Graphic Array) of 15 and above and Colour Monitors of higher quality/resolutions were exported by the appellant company during December 2001 to 31.3.2004 mis-declaring the same as CRT Data Display Monitor (Colour CGA) to make undue gain of DEPB benefit since DEPB benefit was available only against CRT Data Display Monitor (Colour CGA) of all sizes but not against Colour Monitors VGA of 15 and higher sizes at the relevant time. Investigation proceeded to ascertain whether the appellant company had manufactured CGA monitor to export the same. But it came to the light that no such monitors were manufactured by the appellant company.
8.3 Investigation examined Shri Sanjay Pees, National Sales Manager IT Products of the appellant company. He, in his statement recorded under section 108 of the Customs Act, 1962., inter alia stated that they used to sell their colour monitors of range 15, 17,19 and 21; and Colour Monitor with base resolution 1024 X 768 (Minimum) and above (which comes under the category XGA); they had not sold any CGA color monitor during last two years.
8.4 Shri Ajay Kumar, Proprietor of M/s Park Electronics, a distributor of Samsung in his statement interalia, stated that he used to buy computer components/peripherals from national distributors of Samsung; that all models of color monitors being bought by them from Samsung were VGA technology based; that they had not procured any CGA monitor since the commencement of their business i.e. 1993 and CGA monitors were not being sold since long.
8.5 Shri Vivek Prakash, Vice President (marketing) and incharge of I.T. Products (Sales) as well as integrated marketing group of Samsung, in his statement dated 22.5.2004, inter alia, stated that he was responsible for sales of I.T. Products both in India and abroad; they have exported CDT based monitors of various sizes viz 15 and 17 both normal and flat tube type from their factory in India; that the exact technical specification are available on the companys website; that the decision regarding classification of monitors for the purpose of DEPB was taken by Shri N.K. Singh, logistics team member and that Shri N. K. Singh does not work for Samsung any more. Accordingly, data was collected by the investigation form the various web sites containing the specifications of CGA monitors and VGA monitors and monitors of higher specifications which revealed that M/s Samsung had exported VGA technology monitors only and not CGA technology monitors.
8.6 LG Electronics India Pvt. Ltd. vide their letter No. TSPL/LGEIL/DGFT dated 11.03.2004 written to the DGFT Udyog Bhawan, New Delhi with a copy endorsed to investigation confirmed that as per their understanding CGA Monitors were not manufactured in India at all since that was an outdated technology replaced by VGA.
8.7 Shri Mihir Tiwari, Business Manager, Exports of Samsung admitted in his statement dated 10.01.05 about the availment of aforesaid amounts of DEPB credit against export of VGA colour monitors and utilization thereof to discharge Customs duty against imports made by the appellant company.
8.8 Shri Sunil Goel, Vice President (Finance and Account) of Samsung in his statement dated 25.06.2004 admitted that their company was exporting Colour Monitors to various countries under DEPB Scheme. On being asked about the person instrumental in deciding the classification of Colour Monitors for DEPB benefit he stated that he did not know as to who was the person who decided the classification of Colour Monitor for export under DEPB Scheme.
8.9 M/s Samsung India Electronics Ltd. vide their letter dated 10.06.2004 informed that they made deposit of Rs.1,60,00,000/- (Rupees One Crore Sixty Lakhs only) vide TR-6 Challan No. 1184 dated 10.06.2004 towards ineligible DEPB credit already utilized by them.
8.10 Investigation visited the web site: http:/what is techtarget.com/definition/o.sid9 gci 211966.html, and noticed technical features of the goods manufactured and sold by the appellant company as recorded in Para 12 to 18 of the adjudication order No. 50 dated 29/08/2008. Goods of appellant company were compared with the nature of the goods manufacture in India by IBM and it was found that technically CGA and VGA monitors were different. Different features of both has been depicted in para 12 of the adjudication order No. 50/2008 dated 29/08/2008 for comparison. Motive of the appellant to make undue gain of DEPB benefit making misdeclaration of description of goods has been recorded in para 20 of the above adjudication order.
9.1 From the scrutiny of the documents recovered, statements recorded from the persons connected with dealing in production/export of Samsung monitors and technical data gathered from web site it was inferred by investigation that the appellant company had been mis-declaring its monitors for export as CRT Data Display Monitors (Colour CGA) to claim DEPB benefit whereas they were actually manufacturing and exporting VGA and other higher versions of colour monitors viz. XGA, SXGA etc on which there was no DEPB benefit available to them.
9.2 Examining statement of Shri Mihir Tiwari, Manager OEM Exports on 25/06/2004, learned Adjudicating Authority below got a fair idea about the nature and type of goods exported by the appellant as has been recorded in para 20 of the adjudication order no. 50/2008 dated 29/08/2008. Shri Tiwari also admitted that the monitors exported by them were of the above model and size. In para 22 of the said order technical features of goods of the appellant was compared with other three manufacturers and tabulated for appreciation of the nature and character of the goods exported. In para 24 of the impugned order it had been brought out how VGA and XGA monitors have different characteristics which were exported describing the same in the shipping bill as CGA monitors to get DEPB benefit unduly.
9.3 Authority below examined statement of production of monitors during December 2001 to 31.03.2004 as submitted by Shri Vimal Bajpai of Samsung on 22.05.2004. Such statement confirmed the fact of no manufacture of CGA monitors when evidence gathered by investigation demonstrated that Samsung manufactured Monitors of Models 45BN 14, 56V 15, 7535 17, 551S 15, 1525 15 753DFX 17 153V, 763 MB.
9.4 Ld. Adjudicating Authority evaluated evidence recorded from Shri Ajay Anand, Quality Control Manager of Samsung. In his statement, he admittedly revealed that the resolutions of their 15 and 17 monitors were 1024 X 768 and 1280 X 1024 specification respectively. As per information available in the internet website: http:what is techtarget.com/definition/o. sidgesei 211966.html the 1024x768 resolution monitors were of XGA and resolution of 1280x1024 was of SXGA-monitors as was admitted by appellant company which manufactured colour monitors of size 15, 17 and 19.
9.5 Ld. Adjudicating Authority opined that technical specification of the monitors exhibited by the website of the appellant established that the said monitors were not CRT Data Display Monitors (Colour CGA) but were colour monitors of higher resolution i.e. VGA, EXA, SXGA etc. Appellant did not export CRT Data Display Monitor (Colour CGA) at all. But colour monitor of higher resolutions i.e. VGA, EXA, SXGA etc were exported. This was established from admitted fact by Shri Sanjay Pees, National Sales Manager of Samsung who stated that appellant company never sold any CAG colour monitor during the last 2 years.
9.6 Ld. Adjudicating Authority also relied on statement of Shri Ajay Kumar, Prop. of distributor of appellant. He admittedly stated that the monitors purchased by them from the appellant company were not CGA CRT Data Display Colour Monitors; that monitors purchased by them since 1993 from Samsung were VGA and of higher versions/resolutions and that CGA colour monitors were not manufactured in India since then.
9.7 Shri Vivek Prakash, Vice President Marketing and incharge of IT products of the appellant, in his statement, stated that the exact technical specification of the monitor manufactured and exported by tem is given on their website.
9.8 Ld. Adjudicating Authority found that the aforesaid statement were credential when unrebutted by appellant company and without leading any cogent evidence to the contrary. He also found from various websites that monitor of resolution 1024 x 768 and 1280 x 1024 were of XGA and SXGA respectively and not of colour CGA which proved that colour monitors exported by Samsung were not CRT Data Display Monitors (Colour CGA) but were colour monitors VGA or XGA or SXGA of higher resolutions.
9.9 It was stated by Sri Ajay Anand that Monitors exported by appellant had 13 and 15 pins respectively for different sizes of the monitors. But its web site showed that CGA Colour monitor had only 9 pins. This proved that the pins used in the colour monitors manufactured and exported by the appellant company were not of CRT Data Display Moniotrs (Colour CGA) but were of VGA colour monitors and of higher resolutions.
9.10 Ld. Adjudicating Authority found statement of Shri Sanjay Pees, Area Sales Manager of appellant company was credible since he categorically stated that Samsung had not sold any CGA Colour Monitor (CRT Data Display Monitors) during the preceding two years. Similarly, statement of Shri Ajay kumar, Proprietor of M/s Park Electronics who was distributor of appellant was believable when he stated that he had never purchased any CGA colour monitor from Samsung. He had also confirmed that the colour monitors of Samsung were VGA technology based. He categorically stated that CGA colour monitors were not sold by him. The colour monitors found in stock of M/s Park Electronics were of models 773S, 773DFX, 763 MB and resolution of the said models of monitors was not of (CGA colour) CRT Display Monitor but was of VGA Colour.
9.11 Ld. Adjudicating Authority also found that the technical specifications of monitors of appellant company retrieved from its website established that the scanning frequency of the monitors of the appellant was 30-70 kHz which were of VGA colour monitors. Scanning frequency of CGA colour monitors was only 15.7 kHz as per information available form website http:/www/monitorworld.com. Accordingly he held that samsung did not export (Colour CGA) CRT Data Display Monitors but exported Colour Monitors of VGA and of higher resolutions only.
9.12 Ld. Authority also looked into Sync Master CDT Monitor Sales Guide, of M/s Samsung which showed Systems Requirements. The Systems Requirements exhibited VGA-SOOx600-16 bit thousand of colours. So also the signal used in CGA Colour monitor is digital colour signal. Specifications of colour monitors of appellant company showed that the signal used in the monitors was RGB Analog Video Signal which is used in colour monitors of VGA and XGA etc of higher resolutions and not in CRT Data Display Monitors (colour CGA).
9.13 Further, according to ld. Adjudicating Authority as per endorsed copy of the letter of DGFT, monitors exported by M/s Samsung were not CRT Data Display Monitor colour CGA. This established that the CGA monitors were not manufactured in India during the relevant period and the monitors manufactured in India during that period was VGA Colour Monitors only.
10. In Para 28 of adjudication order, breach of law made by the appellant company and other persons was recorded by ld. Adjudicating Authority to complete the adjudication examining entire defence of the appellant. He held that the goods exported by the appellant company as per shipping bills and invoice were 15 monitor, Sync Master 551S model; 17 monitor, Sync Master 773S and Sync Master 773 DGX and Sync Master 763MB not entitled to DEPB benefit.
ARGUMENTS ON BEHALF OF APPELLANTS 11.1 Ld. Counsel for the appellant submitted that monitors exported during the impugned period had screen sizes of 15, 17 and 19 and CRT Data Display Monitors (Colour CGA) was entitled to be 16% DEPB benefit. The appellant claimed such benefit under bonafide belief that CRT Data Display Monitors was not Colour Graphic Adopter, but Computer Graphic Array or Compatible Graphic Array. In view of the words used colour in bracket under serial no. 17 of the DEPB schedule the abbreviation CGA shall not be Colour Graphic Adapter that shall be only Computer Graphic Array or Compatible Graphic Array since the word color was not intended to be used twice in the DEPB Schedule under serial number 17. It was further submitted that the customs authority has no jurisdiction to sit over judgment of DGFT which is licensing authority as DEPB granting authority. Therefore the authority implementing Export-Import Policy can only have a say as to whether DEPB benefit shall be admissible to the appellant. Accordingly appellants argument was that sow cause notice was issued without jurisdiction relying on the following judgments:
(i) Ashok Enterprises vs. CC, Chennai-2005 (179) ELT 124 (T).
(ii) Kobian ESC India Pvt. Ltd. vs. CC-2003 (157) ELT 662 (T).
(iii) M.K. Fisheries vs. CC, Cochin-2002 (150) ELT 998 (T)
(iv) Vrundavan Exports vs. CC Mumbai reported in 2005 (191) ELT 1036
(v) Pradeep Polyfils reported in 2004 (173) ELT 3
(vi) ITC Ltd. reported at 171 ELT 733 SC 11.2 It was submitted on behalf of the appellant that the public notice No.3/2004-09 dated14/09/2004 removed the controversy of appearance of colour CGA in sl. No. 17 of the DEPB schedule and after removal of such controversy, the entry reads as under:
Colour Monitors/CRT Display Monitors (Colour) The entry under Sl. No. 17 of DEPB schedule granting benefit to colour CGA Monitor prior to resolving the difference was reading as under:
Sl. No. Item DEPB Credit 17 CRT Data Display Monitors (colour CGA) 16% 11.3 It was submitted by the learned Counsel for appellant that subsequent amendment coming into force from 14/09/2004 having removed the difficulty is clarificatory in nature and that shall retrospectively apply to the colour CGA Monitors exported by the appellant and DEPB benefit undeniable.
11.4 According to the appellant, an interpretation which is in accordance with advancement in technology should be adopted. Similarly, condition of notification No. 45/2002-Cus dated 14/05/2002 having been fulfilled it was rightly issued DEPB scrips and use of the scrips for discharge of customs duty against imports cannot be denied. The appellant bonafide believed that it was entitled to the DEPB benefit. Therefore denial of benefit of DEPB is unwarranted. So, also Section 28 cannot be invoked to apply longer period of limitation for which the adjudication is time barred.
11.5 It was further argued that the penalties imposed on the appellants be waived and no duty chargeable nor claim to and use of the DEPB scrips deniable.
11.6 Under Para 4.37 of Hand Book of Procedure prescribes the DEPB rate taking into the deemed duty paid on the imported inputs for export products, FOB value of export is determined. Therefore DEPB against such FOB value of export of cannot be denied. Neither there was short levy nor the shipping bills challlanged. Therefore no demand arises in adjudication.
11.7 It was alternatively argued that duty drawback is admissible to the appellant under section 75 of Customs Act, 1962.
ARGUMENTS ON BEHALF OF REVENUE 12.1 On the other hand revenue argued that when the deliberate misdeclaration was detected, the appellant made deposit of part of the DEPB benefit gained unduly. Investigation and extensive enquiry made resulted in gathering of vital evidence of no manufacture of CAG colour monitor by the appellant at the relevant time proving neither sale nor export thereof made as has been established in adjudication by evidence recorded in adjudication order. Evidence gathered from the distributor of the appellant proved such fact and the inventory taken from the distributors premises also proved the same. No manufacture of CAG monitor by the appellant. Even the persons in charge of manufacture and sales of the product of the company revealed that no CAG monitors were manufactured by the appellant.
12.2 The appellant defined the abbreviation CAG according to its own convenience to serve its ill will with the ulterior motive to make undue gain at the cost of revenue and draws misplaced sympathy of the Court when its web site provided all technical details of the product it manufactured as has been descriptively recorded by learned adjudicating authority. IBM also confirmed no manufacture of CAG computer at the relevant point of time in India. There were several evidence gathered by the investigation which was evaluated by the learned adjudicating authority and appreciated demonstrating that the appellant had never manufactured nor exported CAG monitors of the description entitled to DEPB benefit for which adjudication was rightly done. None of the evidence gathered by the investigation was rebutted by the appellant except a mere consolation that CAG stands for Computer Graphic Array or Colour Graphic Array which is not a fact nor revealed to investigation. It is an afterthought plea to escape adjudication.
12.3 Appellants plea that Customs Authority has no jurisdiction on DEPB issue is a fallacy since every authority acts within its jurisdiction and Customs performs its duty to curb evils of misdeclaration to save the exchequer from loss of Revenue due to undue gain of DEPB scrips. Appellant filed to prove its bonafide for which it deposited part of DEPB amount unduly gained by it when its deliberate misdeclaration was detected. Without coming out with clean hands, the appellant has made futile exercise to make undue gain of the ratio of the judgments cited by it.
12.4 Ld. Adjudicating Authority had proper authority and jurisdiction to adjudicate the matter when Revenue was defrauded, invoking extended period of limitation prescribed by section 28 of the Customs Act, 1962 following the ratio laid down by Apex Court in the case of CC V. Candid Enterprises 2001(130) ELT 404 (SC). He has acted well within his jurisdiction and rightly examined the credible and cogent evidence gathered by investigation from different sources including website information by corroborative enquiry. Therefore adjudication findings are not liable to be disturbed. Appellant made deliberate misdeclaration of description of goods for which action was rightly initiated under Section 28 of the Customs Act, 1962. That disentitles the appellant to claim DEPB benefit under law when entire plea of appellant is baseless to get relief in these appeals for no reason. Therefore none of the adjudication findings are liable to be disturbed and all the appeals are liable to be dismissed.
FINDING AND ORDER OF TRIBUNAL 13.1 Heard both sides and also perused the record.
13.2 What that was argued before learned Adjudicating Authority was only reiterated before Tribunal contending that the abbreviation of CGA stands for Computer Graphic Array or Compatible Graphic Array but not colour graphic adopter. Such technical plea was not at all substantiated by any evidence or any authenticated technical literature produced in the course of hearing for appreciation. The only stand of the appellant was that sl. No. 17 of DEPB Schedule enables it to get DEPB scrips for utilization thereof to discharge import duty.
13.3 Adjudicating Authority examined entire evidence gathered by investigation from different sources, persons and website as has been enumerated in Para 8.1 to Para 10 of this order establishing that the exported consignments were not CGA monitors. None of the evidence relied by ld. Adjudicating Authority were discarded by the appellant leading any cogent evidence. The evidence gathered from the web site showing number of pins used in the monitor exported went against the appellant demonstrating neither CGA monitors were manufactured nor exported by the appellant. This was corroborated from the inventory taken at the distributors premises and various oral evidence recorded u/s 108 of the Customs Act, 1962 from technical and marketing personnel of the appellant. Such evidence remained un-assailed by appellant in the course of hearing these appeals.
13.4 Entire oral evidence gathered by investigation remained un-rebutted by the appellant in the course of hearing. Appellants claim that the subsequent notification dated 14/09/2004 of the DGFT amending the entry 17 of the DEPB schedule to read the goods as colour monitors/ CRT display monitors (colour) clarified that the goods exported were CAG monitors does not appeal to common sense since altogether different goods were exported by appellant by the technical features thereof as has been established from adjudication finding.
13.5 The notification dt. 14.9.2004 was pressed by appellant to be read as retrospective to grant benefit to it was at the cost of the exchequer. Its submission that the said notification shall be read as clarificatory fails to succeed in absence of any legislative intention thereto. If the notification is read as suggested by the appellant that shall unjustly enrich the appellant at the cost of the Revenue. Further, the interpretation adopted by appellant that the approach for grant of DEPB should keep in pace with advancement of technology is also baseless for the reason that grant of any notification at the cost of public revenue is not retrospective following the ratio laid down by Apex Court in Sunwin Technology 2011 (21) STR 97 (SC). Accordingly grant of the notification above cannot be stretched to grant benefit to past exports made by the appellant misdeclarating description of the goods.
13.6 Appellants plea that the word colour used twice in sl. No. 17 of DEPB Schedule was redundant is of no sense when the goods exported by the appellant described its own identity. Misdeclaration of description of the goods by the appellant was proved to be deliberate to make undue gain of DEPB scrips. Therefore appellants were rightly brought to the fold off section 28 of the Customs Act 1962 debarring the plea of time bar following the ratio laid down by Apex Court in Candid Enterprises 2010 (130) ELT 404 (SC). When the appellant was questioned as to the aforesaid deliberate misdeclaration it surrendered before the law and made a deposit of the amount of Rs.1,60,00,000/- which was appropriated by the ld. Adjudicating Authority towards part of the duty demand made in the Adjudication which is under appeal No. C/740/2008.
13.7 Appellant relied on the decision of the Honble High Court of Bombay in the case of Pradip Polyfils Pvt. Ltd. V/s Union of India, 2004 (173) E.L.T. 3 (Bom.) to submit that Customs Authority has no power to sit over the decision of the DGFT. Reliance of the appellant is misplaced when the fact of the said case is looked into from Para 5 of the Judgment. Honble High Court in Para 5 of the Judgment framed the issue as to whether in respect of export of articles of Poly propylene effected prior to the amendment of the public notice on 15-12-1999, the Customs authorities were justified in holding that the same being not covered under Chapter 39 of the ITC classification and the petitioners are not eligible for benefit under DEPB Scheme. The issue so framed by the Honble High Court, makes clear that if there is no misdeclaration, the Customs Authority cannot interpret an entry in the DEPB Schedule to their advantage. For that reason Honble High Court in Para 7 of the Judgment categorically held that it is not the case of the Customs Authority that there is any discrepancy in the description, quantity and FOB value of the export product. Therefore, in the present appeals when there is misdeclaration, appellants plea that Customs Authority has no power is not tenable.
13.8 Appellant further relied on the decision of the Tribunal in the case of M.K. Fisheries vs. CC, Cochin-2002(150) E.L.T. (Tri Chennai) to submit that DGFT is ultimate Authority to issue DEPB scrips and use thereof cannot be denied. The case related to claim of benefits on post-export basis. As per the quadruplicate shipping bill which was sent by the appellants to the Office of the DGFT, that office sanctioned the credit up to 4% of the FOB value declared in the shipping bill and that was accepted by the Customs at the time of exports. According to the procedure, Customs Authorities were required to endorse the said decision of the DGFT on the pass-book on the basis of sanction letter of DGFT. But customs Authority restricted the endorsement to 2% instead of 4%. Tribunal, following Apex Court decision in MJ Exports Ltd. - 1992(60) ELT 161 (SC) held that in all fairness, justice requires that if Customs find any variation between misdeclaration of the goods as declared on the shipping bill and as declared in the public notice issued by Customs House for the same consignment, they would be entitled to bring such discrepancy to the notice of the DGFT and await for further orders on the quantum of credit to be given under DEPB for DGFT. Accordingly it was directed that Adjudicating Authority shall refer the matter to the DGFT to have final say on the described goods in the bill on entry whether falls within the scope of such entry. But in the present case there was misdeclaration by appellant for which it fails to succeed in its plea that Customs Authority should not question the DEPB credit granted by DGFT.
13.9 Appellant further relied on 2003 (157) E.L.T. 662 (Tri.-Mumbai), Kabian ECS India Pvt. Ltd. Vs. Commissioner of Customs,-2003(157) ELT 662 (Tri-Mum) to submit that customs has no power to question decision of DGFT. There is no doubt that customs shall not dispute the export if there no variation or misdeclaration of the description on the Bill of Entry. But in the present case there was material departure to the declaration as to description of the goods for which appellant fails to gain any benefit of that decision.
13.10 It was further relied on the decision in Vrundavan Exports vs. Commissioner of Customs (Ex.), Mumbai - 2005 (191) E.L.T. 1036 (Tri.-Mumbai) to submit that decision of the DGFT is final. No more description is called for in view of following of the decision of 2003 (157) E.L.T. 662 (Tri.-Mumbai) by Tribunal in the above case i.e., Kabian ECS India Pvt. Ltd. Vs. Commissioner of Customs, Mumbai which has been dealt in the preceding para.
13.11 Reliance was also placed by the appellant on the decision in Ashok Enterprises Vs Commissioner of Customs, Chennai 2005 (179) E.L.T 124 (Tri.-Chennai), which was an interim order of Tribunal. Such order having no precedential value that has no relevance in final decision. Further the Appellant failed to show how the decision of the Apex Court in I.T.C. Ltd. Vs Commissioner of Central Excise, New Delhi-2004 (171) E.L.T. 433 (S.C.), applies to its case.
14. If a party makes representations which he knows to be false and injury ensues therefrom although the motive from which the representations proceeded may not have been bad is considered to be fraud in the eyes of law. It is also well settled that misrepresentation itself amounts to fraud when that results in deceiving and leading a man into damage by willfully or recklessly causing him to believe on falsehood. Of course, innocent misrepresentation may give reason to claim relief against fraud. In the case of Commissioner of Customs, Kandla v. Essar Oil Ltd. - 2004 (172) E.L.T. 433 (S.C.)it has been held 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. Fraud involves two elements, deceit and injury to the deceived.
15. Undue advantage obtained by the deceiver will almost always cause 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:AIR 1994 SC 853]. It is said to be made when it appears that a false representation has been made (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly and carelessly whether it be true or false [Ref: Roshan Deen v. Preeti Lal [(2002) 1 SCC 100], Ram Preeti Yadav v. U.P. Board of High School and Intermediate Education [(2003) 8 SCC 311], Ram Chandra Singhs case (supra) and Ashok Leyland Ltd. v. State of T.N. and Another [(2004) 3 SCC 1].
16. Suppression of a material fact would also amount to a fraud on the court [(see Gowrishankar v. 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. When fraud is established that unravels all. [Ref: UOI v. Jain Shudh Vanaspati Ltd. - 1996 (86) E.L.T. 460 (S.C.) and in Delhi Development Authority v. Skipper Construction Company (P) Ltd. - AIR 1996 SC 2005]. Any undue gain made at the cost of Revenue is to be restored back to the treasury since fraud committed against Revenue voids all judicial acts, ecclesiastical or temporal and DEPB scrip obtained playing fraud against the public authorities are non est. So also no Court in this country can allow any benefit of fraud to be enjoyed by anybody as is held by Apex Court in the case of Chengalvaraya Naidu reported in 1994 (1) SCCI:AIR1994 SC 853. Ram Preeti Yadav v/s U.P. Board High School and Inter Mediate Education (2003) 8 SCC 311.
17. Evidence Act does not insist on absolute proof for the simple reason that perfect proof in this imperfect world is seldom to be found. That is why under Section 3 of the Evidence Act, a fact is said to be proved when, after considering the matters before it, the Court either believes it to exist or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, acts upon the supposition that it exists. This definition of proof does not draw any distinction between circumstantial and other evidence. Preponderance of probability comes to rescue of Revenue and Revenue is not required to prove its case by mathematical precision. Thus, if circumstances establish that there is high degree of probability that a prudent man ought to act on the supposition that there was design to secure fake, false, forged or illegitimate DEPB scrip to clear imports duty free in contravention of the law or abetting to achieve such ill object, such act against public Revenue calls for penal consequence to curb such mischief.
18. A person whose case is based on falsehood has no right to seek relief in equity [Ref: S.P. Chengalvaraya Naidu v. Jagannath, AIR 1994 SC 853]. It is a fraud in law if a party makes representations, which he knows to be false, and injury ensues therefrom although the motive from which the representations proceeded may not have been bad.[Ref: Commissioner of Customs v. Essar Oil Ltd., (2004) 11 SCC 364 = 2004 (172) E.L.T. 433 (S.C.)].
19. When material evidence establishes fraud against Revenue, white collar crimes committed under absolute secrecy shall not be exonerated as has been held by Apex Court judgment in the case of K.I. Pavunny v. AC, Cochin - 1997 (90) E.L.T. 241 (S.C.). No adjudication is barred under Section 28 of the Customs Act, 1962 if Revenue is defrauded for the reason that enactments like Customs Act, 1962, and Customs Tariff Act, 1975 are not merely taxing statutes but are also potent instruments in the hands of the Government to safeguard interest of the economy. One of its measures is to prevent deceptive practices of undue claim of fiscal incentives.
20. It is cardinal principle of law which is enshrined in Section 17 of Limitation Act that fraud nullifies everything for which plea of time bar is untenable following the ratio laid down by Apex Court in the case of CC. v. Candid Enterprises - 2001 (130) E.L.T. 404 (S.C.). Non est instruments at all times are void and void instrument in the eyes of law are no instruments. Unlawful gain is thus debarred.
21. Fraud and justice do not dwell together for which penal provisions are enacted to eradicate evils of defrauding Revenue which is anti-social activity adversely affecting public revenue. Such provisions are construed in the manner which curbs the mischief, promote their object, prevent their subtle evasion and foil their artful circumvention. Thus construed, the term fraud within the meaning of these penal provisions is wide enough to take in its fold any one or series of unlawful acts committed or omissions made. 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.
22. Applying the aforesaid principles of law, in these appeals, when material evidence gathered by Revenue remains uncontroverted, adjudication findings sustain. Accordingly appellants fail to succeeded on merit and on the fact and circumstances of the cases. It can unambiguously be held that there was deliberate misdeclaration of the description of goods exported and DEPB scrips were fraudulently obtained. Use of such non est scrips to discharge import duty against subsequent imports covered by the five appeals of the appellant company is recoverable with penal consequences of law.
23. It is also needless to say that no evasion occurs without human intervention. Sri Sunil Goel is found to be instrumental to the wrongful claim of DEPB scrips by the company appellant causing prejudice to the interest of Revenue. Therefore on the facts and circumstances of the case as well as evidence recorded, adjudication finding against him remain untouched.
24. So far as the past consignments are concerned, record does not reveal whether any of such exports were under bond or provisional assessment. Since redemption requires existence of the goods, there shall not be imposition of redemption fine against goods already exported and left India in all the five appeals of the appellant company.
25. It is trite that a judgment or decree by the first court or by the highest court obtained by playing fraud on the Court is a nullity and non est in the eye of law. [Ref. S.P. Chengalvaraya Naidu v. Jagannath - (1994) 1 SCC 1 and India Household and Healthcare Ltd. v. LG Household & Healthcare Ltd. - (2007) 5 SCC 510]. Therefore DEPB scrips obtained by the appellant Company in all the appeals making deliberate misdeclaration of the description of the goods in respect of past exports with intent to defraud Revenue, renders that to be non est and debars it to make use thereof against import duty payable. Accordingly, imports made using such DEPB scrips shall be liable to duty of import followed by interest as well as redemption fine as has been adjudicated in all these appeals. That part of the demand is hereby confirmed.
26. The amount of Rs.1,60,00,000/- deposited and appropriated towards part of the demand in these appeals of the company is held to be proper. Similarly the value of bank guarantee of Rs.1,40,00,000/- is liable to be appropriated against the demand.
27. Penalty imposed on the appellant company in each appeal is reduced to 40% thereof in the fitness of the circumstances of the case to deter evasion.
28. Considering that no evasion occurs without human intervention and intention to evade, penalty is also imposable on Sri Sunil Goel. However considering facts and circumstances of the case, the same is reduced to 50% of such imposition in each of the appeals.
29. In the result all the appeals are partly allowed with the result and to the extent aforesaid.
(Pronounced in the open court on 09/10/2013)
(MANMOHAN SINGH) (D.N. PANDA)
TECHNICAL MEMBER JUDICIAL MEMBER
*satish*
34