Custom, Excise & Service Tax Tribunal
Bansal Fine Foods Pvt Ltd vs Mundra on 7 July, 2022
Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
REGIONAL BENCH- COURT NO. 3
Customs Appeal No. 10595 of 2020
(Arising out of OIA-MUN-CUSTM-000-APP-310-312-19-20 dated- 20/04/2020 passed by -
Commissioner ( Appeals ) Commissioner of Central Excise, Customs and Service Tax-
AHMEDABAD)
BANSAL FINE FOODS PVT LTD ........Appellant
121 Km Stone, G T Road, Opp Agro Mall, Karnal
Karnal
Karnal, Haryana
VERSUS
C.C.-Mundra .......Respondent
Office Of The Principal Commissionerate Of Customs, Port User Buld. Custom House Mundra, Mundra, Kutch, Gujarat- 370421 WITH Customs Appeal No. 10596 of 2020 (Arising out of OIA-MUN-CUSTM-000-APP-310-312-19-20 dated- 20/04/2020 passed by - Commissioner ( Appeals ) Commissioner of Central Excise, Customs and Service Tax-
AHMEDABAD) MUNISH BANSAL ........Appellant
Bansal Fine Foods Pvt Ltd., 121 Km Stone, G T Road, Opp Agro Mall, Karnal Karnal Karnal, Haryana VERSUS C.C.-Mundra .......Respondent Office Of The Principal Commissionerate Of Customs, Port User Buld. Custom House Mundra, Mundra, Kutch, Gujarat- 370421 AND Customs Appeal No. 10697 of 2020 (Arising out of OIA-MUN-CUSTM-000-APP-310-312-19-20 dated- 20/04/2020 passed by - Commissioner ( Appeals ) Commissioner of Central Excise, Customs and Service Tax-
AHMEDABAD) V ARJOON ........Appellant
9, Hafizain Building, 3rd Floor, 129/131, Kazi Syed Street, Masjid Mumbai Mumbai, Maharashtra VERSUS C.C.-Mundra .......Respondent Office Of The Principal Commissionerate Of Customs, Port User Buld. Custom House Mundra, Mundra, Kutch, Gujarat- 370421 APPEARANCE:
Shri Ajay Singh and Shri Paritosh Gupta, Advocates for the Appellant Shri Vinod Lukose Superintendent (Authorised Representative) for the Respondent CORAM: HON'BLE MR. RAMESH NAIR, MEMBER (JUDICIAL) HON'BLE MR. RAJU, MEMBER (TECHNICAL) Final Order No. A/ 10795 - 10797 /2022
2|Page C/10595-10596/2020&C/10697/2020 DATE OF HEARING: 02.05.2022 DATE OF DECISION: 07.07.2022 RAMESH NAIR The present appeals are directed against the impugned order-In-Appeal No. MUN-CUSTM-000-APP-310 to 312-19-20 dated 19.03.2020 passed by the Commissioner of Customs (Appeals), Ahmedabad.
2. Briefly, the facts of the present case are that the appellant M/s Bansal Fine Foods Pvt. Ltd. had exported Rice under 8 Shipping Bills which were originally booked for Iran, but investigation revealed that the consignment were delivered to Jabel Ali, UAE and hence violated the provisions of para 2.40 and 2.53 of the Foreign Trade Policy. Accordingly, show cause notice dtd. 04.06.2018 was issued and after due process of law the adjudicating authority had held that the goods is liable for confiscation under Section 113(i) and 113(d) of the Customs Act 1962 and imposed the penalties under Section 114 of the customs Act 1962 and under Section 114AAof the Customs Act 1962 read with Section 11(1) of the Foreign Trade (Development & Regulation) Act 1992, Rule 11 and 14(2) of the Foreign Trade (Regulation) Rules 1993 read with provisions of Section 50 of the Customs Act 1962. Being aggrieved with the impugned order Appellants filed Appeals before the Commissioner (Appeals), who vide impugned order-in- appeal upheld the order of the Additional Commissioner, Customs House, Mundra and dismissed the appeals filed by the Appellant. Aggrieved, the appellant have filed these Appeals before CESTAT.
3. Shri Ajay Singh, learned counsel appeared for the Appellant M/s Bansal Fines Foods Pvt. Ltd. and co-appellant Shri Munish Bansal and Shri Paritosh Gupta learned counsel appeared for Shri V.Arjoon. Shri Ajay Singh submits that Learned Appellate Authority failed to appreciate that entire case against the appellant is based on statement of certain individual and letters from shipping line stating that container were discharged at Jebel AliPort in UAE coupled with statement of their employee. No inquiry or investigation, whatsoever was conducted as to what happened to the containers /goods after they were offloaded at Jebel Ali. During investigation, Appellant had always maintained that the goods, though were offloaded at Jebel Ali, ultimately reached Iran and the proof of receipt of the goods by the original consignee, as well as remittances, as received from the very same consignee, were also shared. During the adjudication Appellant requested for examination/cross examination of the witnesses in compliance with the
3|Page C/10595-10596/2020&C/10697/2020 Principle of Natural Justice and compliance with provisions of Section 138B of the Customs Act 1962. The Ld. Original Authority denied the request of Examination /Cross Examination and proceeded to adjudicate the case in violation of principles of Natural justice and express provisions of the statute and also guidelines contained in circular issued by the Board.
3.1 He also submits that in the impugned matter Ld. Original adjudicating authority forwarded the documents which were submitted by the Appellants during the personal hearing for further verification to the office of DRI, New Delhi. The DRI, New Delhi further forwarded these documents to their officers at Indian Consulate at Dubai. However no doubt were raised by the investigating agency at New Delhi or its officers at Indian Consulate at Dubai about the genuineness of the Dubai Customs documents submitted by the Appellant. This implies that the Dubai Customs Documents showing further export of rice to Iran were genuine.
3.2 He also submits that the packing of the goods was bearing markings in Iranian language with clearance from the India Government for export only to Iran. In such circumstances, it is the case of the appellant that the goods could not have been cleared in Dubai for home clearance and consumption. Rules and Regulations in UAE prohibit domestic clearance and consumption of the goods which are not packed in a container containing declaration in the local Arabic language and/ or English. In case of the consignments cleared by the Appellant, the declarations were only meant for Iran and were also made entirely in Iranian Language. Other than few solitary statements, which are even otherwise contradictory in nature, no evidence has been adduced by the department to discharge the burden of showing that the goods have not been delivered to the Iranian Buyer but have been discharged in the domestic market of Dubai.
3.3 He further submits that entire proceeding premised on the fact that though sold to Iranian buyers but diverted to Dubai. The authorities have however, failed to appreciate that there was no condition in the Indo-Iranian Trade that the goods must be delivered only in Iran or that it should be consumed only in Iran.
3.4 He also submits that Ld. Appellant authority failed to appreciate that even the Phytosanitary Certificate declaring destination as Iran, was furnished before Customs Authority in India. There is no allegation or any
4|Page C/10595-10596/2020&C/10697/2020 evidence that the said certificate was amended at any stage in order to get the goods cleared in a country other than Iran. In the impugned matter both the authority failed to verify the facts and documents submitted before them. Mere change of port of discharge cannot be the factor to conclude otherwise especially when incontrovertible evidence in the form of export documents from Dubai Customs has been adduced to the effect that goods were not cleared in UAE but shipped further to Iran. Ld. Adjudicating authority failed to appreciate that merely because the containers were offloaded at Jebel Ali, UAE, it does not get proved that the goods were diverted in UAE in absence of necessary verification at Jebel Ali Port/ Customs end. The entire finding of the original authority and confirmed by the Appellate authority is based on assumption and presumption and therefore bad in law and liable to be set aside.
3.5 He further submits that once the goods are shipped and the Bill of Lading is issued, the goods become property of the purchaser of the goods and the title in the goods is vested with consignee. The purchaser who holds the title in goods is then free to deal with the goods as desired by him. Therefore, the change in port of discharge of the goods due to rerouting or high seas sales or any other exigency, after the goods were out of customs charges and/ or handed over to Shipping Company for loading on the vessel and / or the vessel reaches high seas, is prerogative of the consignee. The Indian Exporter cannot be held liable for any such act, at the behest of the foreign buyer. In support of this he refer Indian Bills of Lading Act, 1985.
3.6 He also submits that Ld. Authority failed to appreciate that there is no dispute that the impugned 8 consignments were shipped to the very same parties to whom the other 40 consignment were shipped. There is no allegation of any irregularity in respect of remaining 40 consignments shipped by Appellant to very same Foreign Buyers. Payment in each and every consignment has come from Iran, from the very same party to whom the goods were shipped through proper banking channel. None of the consignee have claimed that the goods have been short shipped /not received by them. None of the remittance receipts furnished to the concerned bank, have been objected to by the concerned Indian Bank. None of the remittance receipts have been alleged to be fake.
3.7 He also placed reliance on following decisions in support of above arguments.
5|Page C/10595-10596/2020&C/10697/2020 Manek Chemicals Pvt. Ltd. Vs. Union of India -2016 (334)ELT 302(Guj) Ambika International Vs. Union of India -2018(361)ELT 90 (P&H) Basudev Garg Vs. Commissioner of Customs - 2013(294)ELT 353(Del) Ganesh Yadav Vs. Union of India -2015(320)ELT 711 M/s Santogen Textile Mills Ltd. - 2017-TIOL-219-HC-MUM Commissioner of Customs Vs. Shri Mohd Ashraf Armar - 2019- TIOL-1954-CESTAT-MUM
4. Shri Vinod Lukose, Superintendent (AR) appearing on behalf of the revenue reiterates the findings of OIA and placed reliance on the following decisions.
Dharmpal Satyapal [2015 (320)ELT 3 (SC)] Patel Engineering Ltd. [2014(307)ELT 862 ( Bom) ] N S Mahesh [2016 (331) ELT 402 (Ker)] Chennai Marine Trading [2014(304)ELT 354(Mad.)] A G Incorporation [2013(287)ELT 357(Tri)] Pundole Shahrukh [2014(313)ELT 573 (Tri.)] GTC Industries Ltd. [2011(264)ELT 433 (Tri.)] Harminder Singh Chaddha [2018(362)ELT 95] Krishnaram Dyeing & Finishing Works [2007(209)ELT 410(Tri.) Om Prakash Bhattia [2003(155) ELT 423 (SC) Rajeev Verma [2007(218)ELT 200 Del] Shri Rama Thenna Thayalan [2021-TIOL-2269-HC-MAD-CUS] Shri Chinta Haran Oja CHA [2020-TIOL-611-CESTAT-DEL]
5. Heard both sides and perused the records of the case. We find that the case of the department is that M/s Bansal Fine Foods Pvt. Ltd. had filed the Shipping Bills/Export documents for export of goods i.e Rice to Port Bandar Abbas (Iran); but the goods were delivered at UAE (Jabel Ali Port). The remittance was received in Indian Rupees from Iran instead of free convertible foreign currency. Thus, there appeared to be mis-declaration on part of Appellant. The revenue in support of allegations rely upon the statements of Director, CHAs and the officials of Shipping Lines. However We find that these persons were not examined in the adjudication proceedings even after the request of Appellant and as such their statements are not admissible, as evidence under the provisions of Section138B of Customs Act, which provides that - if an authority in any proceedings under the Act wants
6|Page C/10595-10596/2020&C/10697/2020 to rely upon the statement of any person (made during enquiry), such person is required to be examined as witness and if the adjudicating authority finds the evidence of the witness 'admissible', then such witness should be offered for cross-examination and only thereafter the evidence is admissible. In absence of compliance of the provision of Section138B of the Act, the statements are not admissible as evidence. Section138B of the Customs Act, 1962 reads as under :-
"138B. Relevancy of statements under certain circumstances. - (1) A statement made and signed by a person before any gazetted officer of customs during the course of any inquiry or proceeding under this Act shall be relevant for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains, -
(a) When the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the court considers unreasonable or
(b) When the person who made the statement is examined as a witness in the case before the court and the court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice.
(2) The provisions of sub-section (1) shall so far as may be apply in relation to any proceeding under this Act, other than a proceeding before a court, as they apply in relation to a proceeding before a court."
5.1 We also find that the rejection of cross-examination in the impugned matter tantamount to violation of principles of natural justice. Request for cross-examination has been denied and the witnesses have not been examined despite specific reliance by the appellant on Section138B. The Hon'ble Madras High Court in the case of Veetrag Enterprises v. Commissioner of Customs - 2015 (330) E.L.T. 74 (Mad.) has observed as under :
"8. While considering the value of cross-examination, the Apex Court in Ayaaubkhan Noorkhan Pathan's case (cited supra) held thus :
"Cross-examination is one part of the principles of natural justice :
23. A Constitution Bench of this Court in State of M.P. v. Chintaman Sadashiva Vaishampayan, AIR 1961 SC 1623, held that the rules of natural justice, require that a party
7|Page C/10595-10596/2020&C/10697/2020 must be given the opportunity to adduce all relevant evidence upon which he relies, and further that, the evidence of the opposite party should be taken in his presence, and that he should be given an opportunity of cross-examining the witnesses examined by that party. Not providing the said opportunity to cross-examine witnesses, would violate the principles of natural justice."
A mere reading of the above said proposition clearly shows that the rules of natural justice require that a party must be given an opportunity to adduce all relevant evidence upon which he relies and further that the evidence of the opposite party should be taken in his presence by giving an opportunity of cross-examining the witnesses examined by that party. In the present case, neither any speaking order has been passed nor the respondent justified in not permitting the petitioner to cross-examine the above said eight witnesses. Thus, such attitude of the respondent shows that the petitioner was not given fair opportunity to defend their case, therefore, not providing an opportunity to cross-examine the above said eight witnesses, in my view, would violate the principles of natural justice. Accordingly, the impugned order is set aside and the respondent is directed to permit the petitioner to cross-
examine the above said eight witnesses and pass appropriate orders on merits and in accordance with law. Such exercise shall be completed by the respondent within a period of 45 days from the date of receipt of a copy of this order.
9. In fine, for the reasons stated above, the writ petitions stand allowed. No costs. Consequently, connected miscellaneous petitions are closed."
5.2 We also find that in the present matter all the documents in respect of disputed consignments were in the name of Iranian buyers. There is nothing on record to show that the said documents were amended at any stage so as to permit import of goods at UAE. Further Revenue nowhere produced any documentary evidence to show that the export documents produced by the Appellant were false and fabricated.We find that once all the export documents were in the name of Iranian buyers there was no scope for
8|Page C/10595-10596/2020&C/10697/2020 clearance of the goods in UAE and its subsequent sale its beyond imagination to assume that the goods in question have not arrived to Iran but cleared in UAE for home consumption. Further department nowhere disputed the foreign remittance of impugned consignments in Indian Rupees from Iran.
5.3 We also noticed that in the case of food products the goods which are exported to Iran required Phytosanitary Certificate with each consignment which is issued by the Ministry of Agriculture and Farmer Welfare, Government of India. These certificates are required to be enclosed with each consignment and these certificates are issued by the officials of Ministry of Agriculture and Farmer Welfare, Govt. of India after proper inspection of each consignment. In the present case we have gone through the Phytosanitary Certificates produced by the Appellant. Each of these Phytosanitary Certificate carries e-Registration No., the name of the exporter in India and consignee in Iran, number of bags and its quantity etc. There is no allegation or any evidence that the said certificates were amended at any stage in order to get the goods cleared in a country other than Iran.
5.4 Without prejudice, we further find that Appellant lost the ownership of the goods as soon as 'let export order' was issued by the Customs authorities. After the said let export order it was the responsibility of the Shipping Lines to ship the goods to the foreign buyer and the exporter having no control over the goods. Hence, Appellant cannot be held responsible if the importer situated at Iran had given instruction to change the port from Bandar Abbas port to Jabel Ali port as after the 'let export order' was issued by the Customs authorities it was the importer at Iran who became the owner of the goods. In support of this finding we rely upon the CBEC circular No. 999/2015-CX dated 28-02-2015. This circular is with regard to at what point of time the transfer of property takes place in cases of exports. The CBEC has categorically provided that after the let export order is issued the transfer of property can be said to have taken place at the port where the shipping bill is filed by the manufacturer exporter. Further the Hon'ble Apex Court in the case of Collector of Customs, Calcutta Vs. Sun Industries reported in 1988 (35) ELT 241 has held in categorical terms that in case of exports the title of the goods gets transferred to the buyer as soon as the ship carrying goods crossed territorial waters of India.
5.5 We also find that in the present matter none of buyer at Iran have claimed that the goods have been short shipped /not received by them.
9|Page C/10595-10596/2020&C/10697/2020 None of the remittance receipts furnished to the concerned Bank, have been objected to by the concerned Indian Bank. None of the remittance receipts have been alleged to be fake. As per RBI regulations payment against exports can be received from consignee (foreign buyer) as shown in export documents and cannot be received from any other party. Therefore the contention of revenue that payment has come from third party and not from actual buyer in UAE not supported by any evidences not sustainable.
5.6 Without prejudice, we further observe that in the case the only allegation and finding against Appellant is that they had violated para 2.53 of the FTP i.e. to say that since according to the Customs the goods were actually exported to UAE, the payments should have been received in convertible foreign exchange. The whole case revolves around irregularities in respect of receipt of currency with regard to exported goods. We find that these violations relate to post export conditions. There is no doubt that any violation relating to foreign exchange are covered under FEMA, 1999 and not under the Customs Act. Though the show cause notice invoked Section 113(d) and 113(i) of the Customs Act but these provisions were invoked by only alleging violation of para 2.53 of the FTP and section 8 of FEMA, 1999. We therefore hold that there was no violation of Customs Act in any manner. There is no dispute about the description of the goods, its quantity and value. The export of rice was neither prohibited nor restricted. It is a well settled law that in respect of alleged violation of foreign exchange, it is the erstwhile FERA authorities or FEMA authorities who are competent to initiate the proceedings against the party. In support of this finding we rely upon the law laid down by this Tribunal in the case of Chinku Exports Vs. Commissioner of Customs, Calcutta reported in 1999 (112) ELT 400 (Trib). This judgment has been upheld by the Hon'ble Apex Court as reported in 2005 (184) ELT A36. This judgment has been followed by this Tribunal in the case of Hillari Computer Exports (P) Ltd vs. Commr. of Cus., Visaskhapatnam reported in 2006 (199) ELT 636 and in the case of Bank of Nova Scotia Vs. Commissioner of C.Ex (Adj), Bangalore reported in 2009 (233) ELT 260 (Tri.-Bang). Though the first two judgments relate to period when FERA was in operation whereas the third judgment in the case of Bank of Nova Scotia relates to period when FEMA came into operation wherein it has been held that if at all there is violation of FEMA and the related regulations suitable action lies with the enforcement authorities and Reserve Bank of India. It has further been held that with regard to the violations of Exim policy, adjudication can be done only by authorities notified under section 13 of Foreign Trade (Development & Regulation Act), 1992. Hence 10 | P a g e C/10595-10596/2020&C/10697/2020 we hold that in the facts of the present case since it was only a case of alleged violation of the provisions of Foreign Trade (Development & Regulation Act) and rules made there under as well as that of Foreign Exchange Management Act, the Customs authorities did not have jurisdiction to issue the show cause notice for said violation.
5.7 In respect of the Appeal filed by M/s. V. Arjoon, CHA, we find that the CHA had filed shipping bills as per the documents provided to him by exporter. Therefore the bonafide act of the Appellant cannot be doubted. The act of filing the export documents for customs clearances shows that the appellant has no mens rea and filed the documents being a bona fide facilitator. Further, in any event of the matter, since we have already held that the goods were ultimately delivered to the buyers at Iran, there is no justification for imposing penalty upon the appellant, therefore, the penalty imposed on the appellant is set aside.
6. In view of the above discussion, the order of the Commissioner (Appeals) is set aside and all the appeals filed by the Appellants are allowed with consequential relief, if any as per law.
(Pronounced in the open court on 07.07.2022) RAMESH NAIR MEMBER (JUDICIAL) RAJU MEMBER (TECHNICAL) Geeta