Customs, Excise and Gold Tribunal - Mumbai
Finacord Chemicals (P) Ltd., S.R. ... vs Commissioner Of Customs on 8 September, 2003
Equivalent citations: 2003(157)ELT537(TRI-MUMBAI)
ORDER Jyoti Balasundaram, Member (J)
1. M/s. Finacord Chemicals (P) Ltd., Mumbai (hereinafter referred to as FCPL) imported two consignments of undenatured ethyl alcohol (malt spirit plus or minus 59.3% vol.) at Nhava Sheva port under two bills of entry. As per the invoices submitted along with bills of entry dated 9.9.1991, the goods were supplied by M/s. Ravco International Ltd. (hereinafter referred to as RIL), England, vide their two invoices, both dated 15.8.1991, at the rate of Pounds Sterling 1.40 per litre CIF Nhava Sheva. According to the packing lists, country of origin certificates and bills of lading submitted along with the bills of entry, goods were shipped by M/s. Morrison Bowmore, U.K., on account of RIL. Clearance of the goods was claimed under two import licences, dated 23.1.1991 and 12.3.1991, valid for import of items permissible as per the provisions of paragraph 192 of the Import & Export Policy 1990-93, Bills of entry were assessed and clearance of the goods was allowed on declared value. Customs duty of Rs. 30,81,414/- and Rs. 30,26,148/- was paid. After the release of the consignments, a review application was filed before the Collector (Appeals) on the ground that the licences were not valid to cover the consignments; the Collector (Appeals) allowed the review application vide an Order-in-Appeal dated 2.3.1993; the importers filed an appeal before the Tribunal which remanded the case to the Collector (Appeals). The Collector (Appeals) allowed the department's review application in de novo proceedings and thereafter a show cause notice was issued on 31.5.1994 alleging that the goods imported were covered by Entry No. 31 of Appendix 2B of 1990-93 Policy which read as "Concentrate of Alcoholic Beverages" and since the importer produced REP import licences which were valid only for items in Appendix 3A of the Policy, the import was unauthorised and the goods liable to confiscation under Section 111(d) of the Customs Act. The notice proposed confiscation of goods and levy of differential duty. The importers and others were called upon to show cause against confiscation of the goods and against imposition of penalty under Section 112 of the Act.
2. Similarly, M/s. S.R. Nagpal & Sons (India) Ltd., Mumbai (hereinafter referred to as SRN) also imported a consignment of the same goods at Nhava Sheva and filed a Bill of entry for clearance of the same, on 23.9.1991. The goods in this case were also supplied by RIL at the same rate under three invoices. The documents showed that the goods were shipped by M/s. Morrison Bowmore on account of RIL. Clearance was claimed against two import licences dated 19.3.1991 and 22.3.1991, valid for import of items permissible as per paragraph 192 of the Exim Policy 1990-93. This consignment was released on provisional basis in December 1992 on payment of duty on the CIF value of (SIC) 3.78 per bulk litre.
3. Subsequently, information was received that the goods imported by both importers were heavily under-invoiced, that the actual price of the goods is (SIC) 3.78 per litre, that the goods were manufactured by M/s. Morrison Bowmore Distillers Ltd. of U.K., but were being imported not directly from the manufacturer, but through an intermediary, RIL, run by Mr. Ravi Khosla, so as to under-invoice the goods in order to evade payment of duty. Information also revealed that the goods after importation are being sold to M/s. Maharashtra Distilleries Ltd., Aurangabad, a subsidiary of M/s. Shaw Wallace & Co. Ltd., at the rate of Rs. 900/- per bulk litre. The office premises of both the importing firms, the residence of Mr. Umesh Nagpal, Attorney of the importing firms and the premises of M/s. Maharashtra Distilleries Ltd. were searched and statements were recorded. Based on investigation, it was alleged that the declared invoice price did not represent the actual transaction value of the goods and the correct transaction value appeared to be (sic) 3.78 per bulk litre which was paid for as (SIC) 1.40 per bulk litre under letters of credit opened by the importers, and (SIC) 2.38 per bulk litre by way of payment of US$ 266,500 by direct bank transfer from Habib Bank, Hong Kong, to the account of RIL with Berkley's Bank, U.K. and these amounts had in turn been passed on by RIL to M/s. Morrison Bowmore Distilleries Ltd. The correct CIF and assessable value of the goods imported was alleged to be as under:-
Finacord Chemicals (P) I.td S.R. Nagpal & Sons (India) Quantity of the goods imported (in bulk litres) 24, 423 36,902 Amount paid under L/Cs@£ 1.40 per bulk litre (converted at the exchange rate of f 2.2900 = Rs.1007-prevailing on the date of filing of the Bills of Entry).
£34,192.20 = Rs. 14,93, 1097- £51,662.80 -Rs.22,56,0177- + ._ Amount paid by direct bank transfer @ £ 2.38 per bulk litre, equivalent to US$ 2.66.5007-. being the actual amount transferred (converted at the exchange rate of US$ 3.8475 = Rs.100/-prevailing on the date of filing of Bills of Entry) divided proportionately, between the two Finns.
USS 1,06,1357-- Rs.27,58,5457- US$ 1,60,3657-= Rs.4 1,68,03 17- + Amount of Rs.3 1,25,0007- (@ Rs.50/-
per bulk litre for 62,500 bulk litres) paid locally, as per the instructions of Mr. Ravi Khosla of M/s. Ravco International Ltd., divided proportionately between the two Finns.
Rs. 1 2,44,5477- Rs. 18, 80,4537- Total GIF value Rs.54,96,2017- Rs.83,04,5017- Assessable value Rs.55,51,1637- Rs.83,87,5467- Customs duty leviable @ 355% + 50% Rs.2,24,82,2107- Rs.3,39,69,5617- This resulted in a non-levy/short levy of customs duty of Rs. 1,63,74,648/- in respect of goods imported and cleared by FCPL and in respect of goods imported by SRN, the goods were found to be chargeable to duty as per the correct transaction value as set out above. For the deliberate mis-declaration of the value of the goods with intent to evade payment of duty, the goods were held to be liable to confiscation under Section 111(m) of the Act. Further, the goods appeared to have been imported without cover of a valid import licence - the goods were found to be concentrate of alcoholic beverages, as they had alcoholic strength of 59.3% vol. which was over-proof whisky, for the reason that alcoholic preparations having more than 42.85% alcohol vol. would merit to be considered as over-proof whisky or concentrate of alcoholic beverages (ISI Standards defined proof spirit as spirit containing 57.1% of alcohol by vol.) In the absence of a valid import licence the goods imported by SRN appeared to have been imported in contravention of Import (Control) Order read with Section 3 of the Import Export (Control) Act, 1947 and thus liable to confiscation under Section 111(d) of the Act. Regarding goods imported by FCPL, although they were cleared by Customs, they were subsequently traced and seized from the premises of M/s. Maharashtra Distilleries Ltd. However, these were subsequently allowed to be utilised by M/s. Maharashtra Distilleries Ltd. as per orders of the Hon'ble Bombay High Court. Since the goods had been imported without cover of a valid licence, they were held to be liable to confiscation under the same provisions of law. In view of the above, show cause notice dated 28.9.1992 was issued proposing rejection of the declared invoice value, recovery of customs duty of Rs. 1,63,74,648/- on goods imported by FCPL and duty on the actual transaction value of goods imported by SRN, which was determined as Rs. 83,04,501/-, proposing confiscation, as well as imposition of penalty on the importers and others.
4. The notice was adjudicated by the Collector of Customs, Nhava Sheva, who ordered as follows:-
"In terms of the discussion and findings above, I order as follows:-
(A) Regarding M/s. Finacord Chemicals (P) Ltd., I order that:-
(a) the declared value of the goods at the rate of (SIC) 1.40 per bulk litre CIF is not acceptable and the actual transaction value of the goods is determined as Rs. 54,96,201/- CIF. The Customs Duty on the said correct value was not levied/short-levied because of deliberate misdeclaration of value and suppression of the correct value by the importer. I, therefore, order recovery of short levied Customs Duty of Rs. 1,63,74,648/- from M/s. Finacord Chemicals (P) Ltd. under Section 28 of the Customs Act, 1962 read with proviso to Sub-section (1) thereof. However, any part of this duty, if finally recovered in relation to the seized goods on deposit in lieu thereof in pursuance of other parts of this order shall stand abated from the said amount of Rs. 1,63,74,648/- held recoverable from M/s. Finacord Chemicals (P) Ltd.
(b) I hold that the goods value at Rs. 54,96,201/- CIF imported by M/s. Finacord Chemicals (P) Ltd. and finally in possession of M/s. MDL) are liable to confiscation under Section 111(d) and (m) of Customs Act, 1962. An Order in this behalf is being made in relation to M/s. MDL.
(c) I also impose a penalty of Rs. 1,64,00,000/- on M/s. Finacord Chemicals (P) Ltd. under Section 112(a) of the Customs Act, 1962.
(B) Regarding M/s. S.R. Nagpal & Sons (India), I order that:
(a) the declared of the goods at the rate of (SIC) 1.40 per bulk litre CIF is rejected and the actual transaction value of the goods is determined as Rs. 83,04,501/- CIF. I order recovery of Customs duty from M/s. S.R. Nagpal & Sons (India) based on the said value of Rs. 83,04,501/- CIF.
(b) The goods valued at Rs. 83,04,501/- CIF are held liable to confiscation under Section 111(d) and (m) of the Customs Act, 1962. However, as the said goods were provisionally released on furnishing of a bank guarantee of Rs. 1,00,00,000/- and are not available for confiscation, I hereby order the enforcement of the bank guarantee and appropriate an amount of Rs. 77,34,994/- towards differential duty and an amount of Rs. 22,65,006/- towards value of the goods from the said Bank Guarantee.
(c) I also impose a penalty of Rs. 2,63,00,000/- on M/s. S.R. Nagpal & Sons (India) under Section 112(a) of the Customs Act, 1962.
(C) Further, I impose a penalty of Rs. 1,00,00,000/- on Shri Umesh Nagpal under Section 112(a) of the Customs Act, 1962.
(D) I also impose a penalty of Rs. 20,00,000/- on Shri Nandlal Nagpal under Section 112(a) of the Customs Act, 1962.
(E) I further impose a penalty of Rs. 1,00,000/- on Shri Suresh R. Singh under Section 112(a) of the Customs Act, 1962.
(F) As per the discussions in this order, I do not impose any penalty on M/s. Shaw Wallace, Shri K.R. Chhabria, Shri U.K. Ganguly, Shri A.S. Malik and M/s. MDL.
(G) 15,664.50 bulk litres of the goods seized from M/s. MDL are held liable to confiscation under Section 111(d) and (m) of the Customs Act, 1962. However, as in compliance with Hon'ble Bombay High Court's Order, the said goods were allowed to be utilised by M/s. MDL on their depositing an amount of Rs. 1,56,64,500/- and the goods are not available for confiscation, I hereby appropriate Rs. 1,05,02,087/- out of the said deposit towards differential duty on these goods (which is also recoverable under Section 125(2) of the Customs Act) and also appropriate an amount of Rs. 51,62,413/- towards the value of the goods (which would have been leviable as redemption fine if the goods had been available for confiscation)."
Hence these appeals.
5. We have heard both sides and carefully considered the rival submissions. Our findings are recorded as under:-
Validity of Import The admitted alcoholic strength of the goods is 59.3% vol., and therefore over-proof whisky as per ISI Standards, according to which "degrees over-proof and under-proof are considered, depending on whether the liquid is more concentrated or more diluted than proof spirit. For example, 20 over-proof (20 OP) refers to 120% proof spirit and 20 under-proof (20 UP) refers to 80% proof spirit. 100% proof spirit is equivalent to 57.1% alcohol by vol." The question that remains to be answered is whether over-proof whisky is a concentrate of alcoholic beverages. We find that in the case of Bussa Overseas Properties Ltd. v. CC(I), Mumbai 2002 (148) ELT 328, the Tribunal has held that whisky of over-proof alcoholic strength is to be treated as concentrate of whisky. In that case the goods were under-proof whisky 55% by vol. alcoholic strength and this is what weighed with the Tribunal in holding that the goods were not concentrates of alcoholic beverages requiring specific licence for import on the ground that the goods were covered by serial No. 31 of Appendix 2B of the Import Policy, and on this basis the Tribunal set aside orders of confiscation passed by the Collector of Customs, while allowing applications for rectification of mistake in the tribunal's final order upholding confiscation and penalty on payment of reduced amounts of fine and penalty. Since the goods in question are concentrates of alcoholic beverages in the light of the above, we uphold that import of the goods was unauthorised and we therefore uphold their confiscation.
6. Valuation of Goods Reliance has been placed on the following documents to allege that the correct value of the said goods in UK (SIC) 3.78 per ltr.
a) Invoices issued by RIL for UK (SIC) 1.40 and UK (SIC) 2.38 in the name of SRN and FCPL (see pages 203 to 205/Vol. II for invoices issued by RIL in the name of SRN @ UK (SIC) 1.40 pages 206 to 208/Vol. II for invoices issued by RIL in the name of SRN for (SIC) 2.38).
b) Invoices issued by Morrison Bowmore Distilleries Ltd. in the name of RIL (see pages 202 and 209/Vol. II)
c) Reports sent by the High Commissioner of India, U.K. vide letters dated 2.2.1992, 3.4.1992 and 24.4.1992 which are at pages 191, 194 and 219 of Vol. II along with the enclosure thereto. The letters are reproduced below:-
"No. CT/VI/15/91 2nd February, 1992 Subject: Suspected mis-declaration of value of undenatured ethyl alcohol imported by M/s. Finacord Chemicals (P) Ltd., and S.R. Nagpal & Sons (India) both of Bombay - regarding.
Please refer to your d.o. letter No. 365/XVII/1/91 Pt. dated 15.10.1991, on the above subject.
1. Enquiries made have revealed as under:-
a) M/s. Ravco International Ltd. is a firm which supplies air-conditioning and general building materials to Middle East countries.
b) Mr. Ravi Khosla, Managing Director of M/s. Ravco International Ltd. agreed to work with M/s. Finacord Chemicals (P) Ltd. and S.R. Nagpal and Sons (India) at the request of a family friend Mr. Nandi Nagpal.
c) At the request of Mr. Umesh Nagpal, the invoice for (SIC) 3.78 per ltr. was split by M/s. Ravco into two sets of invoices; one to show a price of (SIC) 1.40 per ltr. and the other to show the price of (SIC) 2.38 per ltr. The invoices showing the price of (SIC) 1.40 per ltr. were paid by letter of credit and the other set showing (SIC) 2.38 per ltr. was paid by direct bank transfer to M/s. Ravco from Habib Bank, New York or Hong Kong, who in turn would pay it to M/s. Morrison Bowmore.
2. Details of the transactions with M/s. Finacord Chemicals (P) Ltd. and M/s. S.R. Nagpal and Sons (India) are as under:-
a) M/s. Finacord Chemicals (P) Ltd.
Invoice No.RI/922/91931 @£ 1.40 per Itr.
£ 17250.80 Invoice No.RI/92291931A @ f 1.40 per Itr.
£16941.40 Total paid by letter of credit £34192.20 Invoice No.RI/922/9193 1 @ £ 2.38 per Itr.
£ 29326.36 Invoice No.RI/922/9193 1 A @ .£ 2.38 per Itr.
£ 28800.38 Total paid by direct bank transfers £58126.74 Full amount actually paid by Finacord Chemicals (P) Ltd.
£92318.94 Duly authenticated copies of invoices and letters of credit are at Annexure 'A' (6 sheets).
b) M/s. S.R. Nagpal and Sons (India) Invoice No.RI/926/91938 @ £ 1.40 per Itr.
£ 17103.80 Invoice No.RI/926/91938 A @ £ 1 .40 per Itr.
£17151.40 Invoice No.RI/926/91938B @ £ 1.40 per Itr.
£ 17407.60 Total paid by letters of credit £51662.80 Invoice No.RI/926/91938 @ £ 2.38 per ltr.
£ 29076.46 Invoice No.RI/926/91938A @ £ 2.38 per ltr.
£29157.38 Invoice No.RI/926/91938B @ £ 2.38 per ltr.
£ 29592.92 Total paid by direct bank transfers £ 87826.76 Duly authenticated copies of invoices and letters of credit are at Annexure 'B' (9 sheets).
3. Duly authenticated copies of the bank transfer covering above transactions are enclosed at Annexure 'C' (2 sheets). On these slips the amounts are shown in US Dollars.
4. It appears that one of the persons on whose instructions a sum of US$ 6490 has been credited to the account of M/s. Ravco is Vishva K. Kalra. (please see document dated 9.9.91 at Annexure 'C'). The importers representative may have to be interrogated about the identity and status of Mr. Kalra.
Yours sincerely, Sd/-
Encls:- Annexure - A to C. Total 17 sheets.
Shri B. Sankaran, Director General, Directorate of Revenue Intelligence, New Delhi."
--------------------------------------------------------------------------------------
"No. CT/VI/15/91 3rd April, 1992 Subject: Suspected mis-declaration of value of undenatured ethyl alcohol imported by M/s. Finacord Chemicals (P) Ltd., and S.R. Nagpal & Sons (India) both of Bombay - regarding.
Please refer to your fax message No. 365/XVII/1/91-Pt. dated 21.2.1992 followed by a letter No. SG/INF-28/AJ/91 SIIB dated 19.2.1992 from Shri D.S. Solanki, Collector of Customs, Bombay.
In this connection, further investigations conducted by H.M. Customs and Excise reveal that Mr. Khosla, the Managing Director of Ravco International Ltd. confirmed that the total payment received by Ravco International for spirit purchased by Finacord Chemicals (P) Ltd., was (SIC) 92,318.94. Copies of relevant invoices are as per Annexure 'A' which Mr. Khosla confirmed were true copies of company records.
Further, Mr. Khosla confirmed that the total payment received by Ravco International Ltd. for spirit purchased by S.R. Nagpal and Sons (India) was (SIC) 139,489.56. Copies of all relevant invoices, which Mr. Khosla confirmed were true copies of company records are as Annexure 'B'.
The total amount paid to Morrison Bowmore Distillers Ltd. was (SIC) 231,808.50 minus (SIC) 9976.25 commission = (SIC) 221,832.25. A signed copy of a Ravco International Ltd.'s debit note is as per Annexure - 'C'.
Mr. Khosla also confirmed that the sum of $ 266,450 received in five unequal instalments from the Habib Bank (Hong Kong) between the period July 1991 to September 1991 related entirely to the consignments of spirits bought by Finacord Chemicals (P) Ltd. and S.R. Nagpal & Sons (India). It has not been possible to discover the source of the payments received from the Habib Bank (Hong Kong). If necessary, enquiries may please be made from our source at Hong Kong. Mr. Khosla produced five transactions slips which are as per Annexure 'D'. Mr. Khosla was also able to provide copies of the indents received from Finacord Chemicals (P) Ltd. and S.R. Nagpal and Sons (India) which are as per Annexure 'E'.
Regarding signed copies of invoices of M/s. Ravco International Ltd., the commercial practice in this country does not require invoice to be signed and hence the copies of invoices forwarded by H.M. Customs in this case are not signed ones.
Invoices raised by M/s. Morrison Bowmore Distillers Ltd. in respect of the above two consignments to M/s. Ravco International Ltd., are at page-5 & 6 of Annexure - 'A' and page-13 & 14 of Annexure - 'B'.
Although Mr. Khosla declined to give a normal signed statement, he stated that he was more than willing to allow the information he provided to be used, in confidence, by the Indian Authorities.
Total twenty pages documents duly authenticated by the Consular Section, High Commission of India, London are being forwarded to Shri D.S. Solanki, Collector of Customs, Bombay directly. A photocopy of the set of documents is enclosed for your record.
Yours sincerely, Sd/ 3.4.92 Shri B. Sankaran, Director General, Directorate of Revenue Intelligence, New Delhi.
Encls:- 22 pages documents as per list attached.
Copy to: Shri D.S. Solanki, Collector of Customs, Bombay, along with authenticated documents as discussed above."
----------------------------------------------------------------------------------------------
"No. CT/VI/15/91 24th April, 1992 Subject: Suspected mis-declaration of value of undenatured ethyl alcohol imported by M/s. Finacord Chemicals (P) Ltd., and S.R. Nagpal & Sons (India) Please refer to your fax message No. 365/XVII/1/91-Pt. dated 16.4.1992 received by this Unit on 21.4.1992.
As desired an attested copy of letter No. ILPO 928 dated 31.3.192 from H.M. Customs and Excise with remarks "attested from the original" is being sent to the Collector of Customs, Bombay directly and a copy of the same is enclosed herewith.
Further, on our request H.M. Customs & Excise has confirmed that they have no objection to their letter dated 31.3.1992 being used for departmental proceedings against the importer in India.
With kind regards, Yours sincerely, Encls: 2 as above.
Shri B. Sankaran, Director General, Directorate of Revenue Intelligence, New Delhi."
None of the documents establish that the actual price of the said goods in UK (SIC) 3.78. The invoices issued by RIL in the name of SRN and FCPL referred to above are unsigned. There is nothing to indicate or show that the two sets of invoices, one for UK (SIC) 1.40 and the other for UK (SIC) 2.38 are to be added or totalled together or that one is in continuation of the other. The invoices issued by Bowmore Distillers Ltd. in favour of RIL contain no details or particulars whatsoever so as to co-relate or link the same to the said goods imported by SRN or FCPL. Apart therefrom, these two invoices refer to the "balance sheet" which works out to UK (SIC) 2.3562 and UK (SIC) 2.319 in the two cases and not UK (SIC) 2.38, as alleged by the department. Hence, these documents are not relevant or reliable.
As regards the Report of the High Commission of India although the same refers to what is allegedly stated by Mr. Ravi Khosla of RIL, copies of these statements have not been furnished or disclosed to the appellants. There is a reference to receipt of payment by RIL from Habib Bank, New York or Hong Kong, but the documents relating to such payments which are at pages 212 and 213/Vol. II, do not connect either SRN or FCPL or Umesh Nagpal with such payments. On the contrary, as is evident from the letter dated 31.3.1992 written by H.M. Customs and Excise (page 200/Vol. III) records, it is not possible to discover the source of payment received from Habib Bank and enquiries would have to be made directly at Hong Kong.
The Commissioner has also relied upon the statements of Umesh Nagpal, particularly statements dated 8.10.1991 and 9.10.1991 recorded by the Enforcement Directorate (see pages 336 to 341/Vol. II). In these statements, Umesh Nagpal has, inter alia, deposed that the price with Bowmore Morrison Distillers Ltd. was negotiated by M/s. Shaw Wallace Co. Ltd. and has not admitted that the correct value of the said goods is UK (SIC) 3.78. All the other statements of Umesh Nagpal are also exculpatory and contain no admission or confession that the actual value was UK (SIC) 3.78. Although Umesh Nagpal has, in one of the statements dated 9.10.1991 (page 343/Vol. II), inter alia, stated that he had made payment of Rs. 31,25,000/- in India to some person on behalf of RIL @ Rs. 50/- per ltr., this statement has been retracted. Besides, this statements is in conflict with and contradictory to the case of the department, which is that the entire differential amount was paid to RIL through Habib Bank and hence the question of making payment in person in India on behalf of RIL, does not arise at all. So also, this alleged payment of Rs. 31,25,000/- does not represent the differential value, as alleged by the department, which is alleged to be Rs. 60,25,923/- (Rs. 83,04,501/- - Rs. 22,78,578/-) in the case of SRN and Rs. 39,99,161/- (Rs. 54,96,201/- - Rs. 15,08,040/-), in the case of FCPL. Therefore, this statement is uncorroborated and unsubstantiated and the retraction thereof is valid and proper in law, rendering the statement unreliable.
On the other hand, the manufacturer's invoice (Bowmore's invoice) issued in favour of SRN and FCPL containing full details and particulars are available on record and are signed. These are at pages 119 and 133 of Vol. II. There is no allegation of finding that these invoices are bogus or not genuine. They are for (SIC) 1.40 which cannot be ignored and unsigned invoices cannot be accepted as made out by the Revenue. When the manufacturer's invoices are available, such invoices constitute the best evidence of value. (See Sai Imepx v. Collector 1992 (62) ELT 616) which has been upheld by the Hon'ble Supreme Court as reported at 1996 (84) ELT A-47) and Telebrands Mfgrs. & Assembling Industries v. Commissioner 2001 (138) ELT 745) which has also been upheld by the Hon'ble Supreme Court as reported at 2002 (143) ELT A-85.
In almost identical circumstances, this Tribunal in Bussa Overseas Properties Pvt. Ltd. v. Commissioner 2001 (137) ELT 637 set aside the findings of undervaluation in relation to import of undenatured ethyl alcohol from Morrison Bowmore Distillers Ltd. where also the department had sought to rely on the report received from the High Commission of India, U.K. The evidence relied upon in that case consisted of 5 documents:-
(a) a copy of letter dated 1st December, 1992 of M/s. Morrison Bowmore Distillers Ltd. addressed to the Investigation division of HM Customs & Excise, Glasgow in Scotland and four internal vouchers totalling to (SIC) 1,56,000/-.
(b) Documents stated to be extracts of sales ledger of MBL.
(c) A copy of banker's cheque dated 11.10.1991 for (SIC) 75,000/- payable to MBL and drawn on National Westminster Bank, UK.
(d) Copy of letter dated 13th May, 1994 from K.K. Ajwani, Second Secretary (Trade), High Commission of India, London addressed to the Directorate of Revenue Intelligence in New Delhi.
The Tribunal considered the entire evidence and the provisions of Section 139 of the Customs Act relating to presumption as to documents and held that the link necessary to prove payment beyond a preponderance of probability was missing. This decision is applicable on all fours to the present case and hence the findings of the Commissioner with regard to undervaluation are not sustainable in law and on facts.
It may also be pointed out that by a letter dated 31.5.2001, Morrison Bowmore Distillers Ltd. has also confirmed that the actual price of the said goods was UK (SIC) 1.40 less (SIC) 0.05 and net (SIC) 1.35. Copy of letter received by FCPL is part of the seized records. We therefore set aside the duty demands.
7. Redemption fine In view of our finding on issue (i) that the goods are liable to confiscation as they have been imported without cover of a valid licence, we hold that levy of fine is warranted. However, we note that for the first time in the case of Bussa Overseas Properties Ltd. v. CC(I), Mumbai 2002 (148) ELT 328, the Tribunal held that over-proof whisky having more than 55% alcohol content by vol. is a concentrate of alcoholic beverages and until this decision, a practice to allow clearances of similar goods under REP licence was prevalent. We also note that a long period has lapsed since the import and that the goods are raw materials for manufacture of alcoholic beverages that this is not a case of duty evasion as the finding on undervaluation has been set aside by us, thereby reducing the gravamen of the charge. The assessable value of the goods imported by FCPL is Rs. 15,08,040/- while the assessable value of the goods imported by SRN is Rs. 22,78,578/-. The fine levied by the Commissioner on FCPL is Rs. 51,62,413/- and that of SRN is Rs. 22,65,006/-. We are not able to fathom the logic behind fixing the above quantum of fines. There is nothing in the impugned order to indicate the basis on which the quantum was arrived at. Having regard to the above factors including the fact that the Import Policy was liberalised subsequently and that only the charge of ITC violation has been sustained by us, we reduce the fine levied on FCPL to Rs. 10 lakhs and on SRN to Rs. 15 lakhs.
8. Penalty on the importers The two consignments imported by FCPL were allowed clearance for home consumption by the proper officer under Section 47 of the Customs Act, 1962 against REP licence, which was subsequently set aside by the Commissioner of Customs vide the impugned adjudication order. The law on the correct interpretation of the entry in Appendix 2B of concentrate of alcoholic beverages came to be settled for the first time by the Tribunal in the case of Bussa Overseas Properties Ltd. cited above. Similar consignments had been allowed to be cleared against REP licences. Therefore, this is a bonafide case of wrong interpretation of the expression "ethyl alcohol" and "concentrates of alcoholic beverages", and there is total lack of malafide or deliberate defiance of the law on the part of the appellants. Therefore, there is no justification for imposition of penalty and accordingly we set aside the same.
9. Penalty on the individuals Penalty imposed on Umesh S. Nagpal, Nandlal S. Nagpal and Suresh R. Singh is also set aside for the reasoning as set out in the earlier paragraph.
10. The appeals are thus partly allowed in the above terms with consequential relief.