Customs, Excise and Gold Tribunal - Mumbai
Kayvee Aeropharma Pvt. Ltd. vs Commissioner Of Customs-I on 27 October, 2000
Equivalent citations: 2001(73)ECC281, 2001(135)ELT284(TRI-MUMBAI)
ORDER Gowri Shankar, Member (T)
1. These appeals are against the common order of the Commissioner, one by the importer and the three are by the Commissioner of Customs. In that order the Commissoner had ordered appropriation of duty of about Rs. 17.75 lakhs deposited by the appellant against a demand raised on the ground that chlorenexdene glucomine imported by the appellant was under-valued. The appeals are against this order. The other three appeals are by the Commissioner on the ground that the Commissioner's order since it did not impose the penalty under Section 112 of the Act, proposed in the notice on the importer; on its Director and one employee.
2. We have heard Mr. Uday Joshi, the advocate for the importer and the two individuals, Kirit Shah, Prakash Naik, the Director and Manager of the importer, and A Chopra, departmental representative for the Commissioner.
3. M/s. Kayvee Aeropharma had imported the consignment in question consisting of chlorhexidine gluconte 20% from M/s. Xttrium Laboratories, Chicago, Illinois, and USA. The value declared in the bill of entry was based on the invoice value of US $ 1 per kilogram FOB. Investigation by the officers of the Directorate of Revenue Intelligence (DRI) for short) led the department to believe that the consignment was under-invoiced for the reason that the manufacturer's pricelist indicated the price of this commodity to be US $ 8.98 per kilogram FOB. During these investigations the officers found that a consignment of the same commodity imported earlier had been sold at Rs. 421 per kilogram, whereas on the basis of the cost declared of US $ 1 per kilogram, the sale price of the commodity would only be Rs. 65 per kilogram FOB. Based on these considerations, and also on the fact that during the course of investigations, the supplier had sent the importer an invoice for the goods at $ 8 per kg. notice was issued to the importer proposing that the consignment would be valued at $ 8 per kilogram FOB, demanding differential duty, and proposing confiscation of the goods. Penalty was also proposed on Kirit Parekh, the Director, and Naik, the manager.
4. In his order the Commissioner has not relied upon this latter invoice of US $ 8. He finds that although this invoice was tendered by the Naik, it was not voluntarily tendered by him. He refers to a complaint sent by Naik alleging harassment at the hands of the DRI. He finds that the invoice given to the DRI office on 13.7.1995 on which date the officers of the DRI recorded Naik's statement. He refers to the fact that in the invoice it has stated (sic) [been stated] by the supplier of the goods 'as per your requirement'. The Commissioner, however, does not accept the explanation tendered by Naik for the difference between the purchase price and the sale price of the goods that they required rectification before being sold, for the reason that no evidence has been produced in support, either during the investigation, or before him. He finds that an invoice for sale of three drums out of seven drums which were imported described the commodity in the same terms as the invoice for their importation, had the same batch number as the import invoice and did not describe the goods to be rectified. The goods were also sold in the same drums in which they were imported. He has, on this basis, ordered appropriation of the duty that was paid during investigations.
5. Two consignments were imported by the appellant. The first made in 1993 was covered by the invoice No. 16638 dated 12.5.1993 at US $ 1 per kilogram. For the second consignment arrived in 1994 the invoice No. 19040, dated 29.3.1994 was at US $ 1 per kilogram was produced. The notice to show cause inter alia relies on a fax dated 13.3.1995 by Kirit Parekh, the Director of the Company, lying in the USA, to the DRI. In this fax he says "As per your request March 13,1995 to Mr. Prasant Naik I am herewith confirming two invoices for each shipment at US $ 1.00/kg. and US $ 7/kilogram for C.H.G 20% solution. Invoice #s(XTTRIUM LAB) ARE # 16638 (1st shipment) and #19040 (2nd shipment)". To this are attached four invoices, two invoices per shipment. One of these is for $ 1 per kilogram and the other $ 7 per kilogram. The invoices for $ 7 per kilogram contain the words, "As per your request". The dates on both the $ 1 per kilogram and $ 7 per kilogram invoices are the same, i.e., 14th March, 1995 for the first consignment, and 29th March, 1995 for the second consignment. The Commissioner has held that the fax and invoices were not tendered voluntarily by Naik and hence they were procured by DRI officers through the assistance of Naik much later than 13th March, 1995. He does not indicate the basis on which he has come to this conclusion. There can be little doubt that it was as a result of Naik's efforts that these invoices were obtained. Kirit Parekh says as much in his fax to the DRI. However, that by itself does not show that the fax and the invoices were sent under compulsion. It is also to be noted that the invoices were issued not by Parekh, but by Xttrium Laboratories. On a reading of these invoices it is not possible to conclude that they were created only after Naik spoke to Parekh and Parekh in turn spoke to the supplier. That fact that the two invoices (one for $ 1 per kilogram and another for $ 7 per kilogram) for each consignment were identically worded, except for the rate and the words and "As per your request" contained in the invoices for $ 7 per kilogram. Indeed, even if we assume that it was the pressure on Naik, who in turn pressurised Parekh, there is no reason why Xttrium Laboratories should succumb to this pressure. One may say that Parekh contacted to obtain these invoices to please DRI so that they would stop pressurising Naik, his employee. There was no such compulsion upon Xttrium Laboratories for issuing the invoices. Indeed. By such issue, it would jeopardise its own position, eroding its credibility as an independent supplier. Yet it chose to do so. The only conclusion possible from this is that there were in fact two invoices for each consignment, one for $ 1 per kilogram and another for $ 7 per kilogram and the latter was not initially tendered before the Customs authorities.
6. The advocate for the appellant for Kayvee Aeropharma Pvt. Ltd. and its employee places emphasis on the complaint written by Naik to the Minister of State for Power, which was forwarded by that Minister on 10th April, 1995 to the Minister of State for Finance. In that letter he complaints that he was detained by the DRI at Mumbai from the morning of 13th March, 1995 to the evening of 14th March, 1995 and subjected to call his Director in the USA to submit the original invoice and mode of payment; as also an invoice for $ 7 per kilogram. He says that his Director having realised that he (Naik) under pressure, requested the Company to issue the invoices for $ 7 per kilogram.
7. This representation, it is to be noted has been sent to the Minister of State for Bower. It is not clear why Naik chose to send this to a political authority who was entirely unconnected with the matters. The Department of Power has nothing to do with revenue collection or importation of goods. If he had a complaint against the DRI officers one would have expected him to write to their superior authority or to their Minister in charge of that ministry; to whom in any case the complaint was finally sent. It is also not clear when this complaint was sent There is no date on the copy produced in the appeal. Further, it does not specify the kind of pressure that was applied, or name the officers who applied it.
8. It is to be noted that the Commissioner, despite not accepting the voluntry nature of these documents still finds that the goods were under-valued, for reasons that we have narrated. In our view, his reasoning is sound. No material is cited by the advocate for the importer to show that the goods in fact were substandard and inferior, and required processing. For the reasons that we have discussed above we confirm the Commissioner's finding with regard to the valuation.
9. The reason advanced by the Commissioner for not ordering confiscation and not imposing penalties is, "nature of the statement recorded, (apparently of Naik) and the fact that the amount of duty had already been paid". We do not see how these facts can nullify the liability to confiscation of the goods. The Commissioner's finding is that the goods were deliberately under-valued and that they should be valued at US $ 7 per kilogram for the reason, which is contrary to the facts, this conclusion that they were knowingly under-valued is unavoidable. His view that the Naik's statement was recorded under pressure can then have no bearing upon liability to confiscation of the goods. If, indeed, it was recorded under pressure, there may be a case for proceeding against the officers who are responsible for this under the law, in fact might have a case for damage against the officers. The Commissioner as adjudicating authority should not have let this fact affect his conclusion, but decided it on its own merits.
10. In our view the fact that the duty was paid by the importer again is no justification. This is not a case where the importer, realising that it was guilty of under-valuation, chose on its own account to redress the wrong and paid duty. It is only after the investigation officers came into the picture the duty was paid. In these circumstances there was a case for liability to confiscation of the goods under Clause (m) of Section 111 of the Act. The importer would also be liable to penalty. Liability of each of the individuals to penalty would also have to be examined having regard to their involvement in the proceedings. We are of the view that it is more appropriate for the Commissioner examine this aspect and decide it in accordance with law after taking into consideration such factors as margin of profit, for which he may hear the appellant also.
11. In the result Commissioner's order confirming the valuation of the goods is confirmed and the Appeal (C/307-V/96-Bom) filed by the importer is dismissed. The other three appeals (C/338 to 340/97-Bom) filed by the department are allowed and the Commissioner's order not confiscating the goods and not imposing penalty set aside.