Custom, Excise & Service Tax Tribunal
Dungarmal Pruthviraj & Co vs Commissioner Of Customs(P),Mumbai on 19 January, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
COURT NO. 1
APPEAL NO. C/429 to 431/02, 466 to 473/02, 483 to 489/02-Mum
(Arising out of Order-in- Original Nos. 48/2002/CAC/CC/ASS dtd. 10.5.02, 51/2002/CAC/CC/ASS dtd. 31.01.02, 45/2002/CAC/CC/ASS dtd 10.5.02, 49/2002/CAC/CC/ASS dtd.31.01.02, 47/2002/CAC/CC/ASS dtd. 10.5.02, 50/2002/CAC/CC/ASS dtd. 10.5.02 49/2002/CAC/CC/ASS dtd.10.5.02, 44/2002/CAC/CC/ASS dtd. 10.5.02, 40/2002/CAC/CC/ASS dtd 10.5.02 passed by the Commissioner of Central Excise & Customs )
For approval and signature:
Honble Mr P.G.Chacko, Member(Judicial)
Honble Mr.Sahab Singh, Member(Technical)
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1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : Yes
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
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Dungarmal Pruthviraj & Co.
Supershva Industries
J.P.Enterprises
Dungarmal Pruthviraj & Co.
-do-
Alfa Trancore Industries
Dungarmal Pruthviraj & Co.
-do-
-do-
-do-
-do-
Transtamp (I) Pvt.Ltd.
Ajay G. Deshmukh
Anil Modi
-do-
-do-
-do-
-do-
:
Appellants
VS
Commissioner of Customs(P),Mumbai,
Commissioner of Cen.Excise, Thane.II
Respondent
Appearance
Shri V.S.Nankani, advocate & Shri Anil Balani, Advocate for Appellants
Shri V.K.Singh, SDR for Respondent
CORAM:
Mr.P.G.Chacko, Member(Judicial)
Mr. Sahab Singh, Member(Technical)
Date of hearing: 06/01/2011
Date of decision 19/01/2011
ORDER NO.
Per : P.G.Chacko
These appeals are directed against 9 orders passed by the Commissioner of Customs in adjudication of 9 show-cause notices. The period of dispute is from May, 1994 to February, 1996. During this period, 20 Bills of Entry were filed, most of them by M/s. Dungarmal Pruthviraj & Co. ( Dungarmal for short) and some by 3 parties who bought the goods from Dungarmal on High Seas, for clearance of Seconds Cold-Rolled Grain-Oriented (CRGO) steel in coils imported from M/s. Overseas Development Corporation, New York, USA ( hereinafter referred to as ODC). To be precise, 14 Bills of Entry were filed by Dungarmal and 6 by the High Seas buyers namely, M/s. Supershva Industries, M/s. Transtamp (I) Pvt. Ltd. and M/s. Alfa Trancore Industries. All the consignments were cleared on payment of duty based on the declared value. Subsequently, investigations were launched into the imports by officers of the Directorate of Revenue Intelligence ( DRI) which started with a search of Dungarmals premises on 11.3.1999. Some records were recovered from those premises. Statements of Dungarmal Doshi (Proprietor), his son Mukesh Doshi and Anil Modi ( one of the partners of Modi Bros.) were recorded from time to time. DRI officers also retrieved some fax messages received at the premises of Anil Modi on 13.5.99. They also obtained, from other sources, certain documents such as Bank Advice, Invoice, correspondence etc. On the basis of the results of these investigations, DRI issued the subject-show-cause notices proposing -
a) to enhance the value of the goods and demand differential duty thereon from the parties who filed the subject-Bills of Entry ;
b) to confiscate the goods under Sec.111(m) of the Customs Act ;
c) to impose penalties on the noticees under Sec.112/114 A of the Act.
All these proposals were contested by the parties. It was in adjudication of this dispute that the Commissioner passed the impugned orders in relation to the 9 show-cause notices.
(2) Most of the appeals were filed by Dungarmal aggrieved by the demands of duty and penalties. In 3 other appeals, the High Seas buyers have challenged the respective demands of duty and penalties. In the remaining appeals, Shri Anil Modi is aggrieved by the penalties imposed on him under Sec.112 of the Customs Act. At the present hearing stage of these appeals, there has been no representation for the 3 High Seas buyers despite notice of hearing. Shri Anil Balani, advocate, represents Shri Anil Modi. Though he filed a vakalatnama for one of the High Seas buyers, this Bench has not accepted the same considering the conflict of the contentions raised by Shri Anil Modi and the High Seas buyer. Shri V. S. Nankani, advocate has represented Dungarmal Pruthviraj & Co. The respondent in these appeals is represented by the ld.SDR.
(3) The ld.counsel for Dungarmal Pruthviraj & Co. and the ld.SDR for the respondent have both submitted synopses grouping the appeals as follows:-
Group I : Appeal No. C/469/02 filed by Dungarmal and Appeal No.C/468/02 filed by Alfa Trancore Industries (Alfa) are in this group. Both these appeals are directed against Orderin Original No.48/2002 dated 10.5.02 which demanded differential duty of Rs. 8,88,654/- from Alfa and imposed penalties on Alfa and Dungarmal. The amount of duty was determined by the adjudicating authority by rejecting the declared value in two Bills of Entry and enhancing the value of the goods on the basis of Bank Advice dated 20.5.94 and Fax dated 25.8.94. The Bank Advice at page 139 of the Paper Book was taken as evidence of payment of US$ 37,982.90 to ODC, New York on 20.5.94 by Dungarmal in respect of the goods covered by invoice No.93292 and invoice No. 93288. One Telex message dated 24.5.94 ( page 132 of Paper Book) coupled with a statement of Dungarmal Doshi was taken as evidence of payment of US$ 38000 by Dungarmal Doshi to ODC. Another Telex message of even date (page 131 of Paper Book) was also relied upon by the adjudicating authority for holding that the said amount was paid by Dungarmal Doshi to ODC. The most crucial documentary evidence for the Revenue in Group I is another fax message (Page 134 of Paper Book) from Derek Turner of ODC to Modi Bros., Bombay. This document contained an estimate of US$ 3,038.32 as total commission payable to Modi Bros. by ODC in respect of 5 consignments of goods sold by ODC to Indian customers, 2 of these consignments sold to Dungarmal. In respect of the 2 consignments sold by ODC to Dungamal, the Telex message contained the following particulars :-
Invoice No. Customer Qty.M/T Price PMT Amount CIF Freight Amount FOB Commission 2% 93288 Dungarmal 60.081 975 58,578 6,008 52,570 1,051.40 93292 Dungarmal 42.00 825 34,650 4,200 30,450 609.00 The adjudicating authority found that, though the unit price mentioned in the above two invoices were $ 585 and $ 485 PMT respectively, the commission payable to Modi Bros. was estimated at 2% of the price calculated at the rate of $ 975 and $ 825 respectively. The other documents already referred to were relied upon by the ld.Commissioner to hold that an amount of US$ 38000 was paid by Dungarmal to ODC as differential price on the goods covered by invoice No.93288 and No. 93292. The ld.Commissioner further relied on Anil Modis statements to buttress his findings. In one of his statements, Anil Modi had admitted having received commission from ODC based on the higher price of the goods mentioned in the commission-related fax message.
Group II :
The main appeals in this group are C/473/02 filed by Dungarmal Pruthviraj &Co. and C/483/02 filed by Transtamp (I) Pvt.Ltd., both of which are mainly directed against demands of duty. The connected appeals, C/ 470/02 filed by Dungarmal Pruthviraj & Co., C/484/02 filed by Ajay G.Deshmukh , C/486/02 & C/488/02 filed by Anil Modi are directed against the penalties imposed on them. The amounts of duty demanded from Dungarmal Pruthviraj and Transtamp (I)Pvt. Ltd. in this group were determined by the adjudicating authority by enhancing the value of the goods on the basis of 4 invoices retrieved by the DRI from somewhere, viz. No. 53822A, 53823A 53824A all dated 18.9.1995 and No. 53815 A dated 6.9.1995. The adjudicating authority held that, in respect of the goods supplied by ODC under original Invoice No. 53822 dated 18.9.1995, No. 53823 dated 18.9.95, No. 53824 dated 18.9.95 and No. 53815 dated 6.9.95, supplementary invoices were issued to the buyers for recovery of higher price. On this basis, the price mentioned in Invoice No. 53822A dated 18.9.95 was added to that mentioned in original Invoice No.53822 dated 18.9.95 to obtain the correct price of the goods. This formala was applied to the remaining pairs of invoices also. There were six original invoices of ODC and an equal number of Bills of Entry in this group, which would mean that there were two unpaired invoices of ODC. The price of the goods covered by these 2 invoices was also enhanced on the basis of the alphabetically marked invoices. In this scheme adopted by the ld.Commissioner, differential duty was demanded from Dungarmal in respect of 3 Bills of Entry and from Transtamp (I) Pvt.ltd. in respect of the other Bills of Entry. These demands were accompanied by imposition of penalties also. Hence the 6 appeals in Group II.
Group III :
There are 10 appeals in this group. C/431, C/466, C/467, C/471 and C/472/02 filed by Dungarmal Pruthviraj and C/ 430/02 filed by Supershva Industries are directed against demands of duty and C/485, 487 and 489/02 filed by Anil Modi and C/429/02 filed by Dungarmal are against penalties. The ld.Commissioner determined the amounts of duty by enhancing the value of the goods treating the goods as similar to the goods covered by certain standard invoices. The position can be summarized as follows: -
Appeal No. No.of Bs/E Invoice as basis of enhancement of value C/430/02 1 No. 53822 A dtd18.9.95 C/472/02 5 -do- C/466/02 1 No. 53815 A dtd 6.9.95 C/471/02 2 No. 93288 dtd 30.5.94 C/467/02 1 -do- C/431/02 2 -do-
Obviously, the value of the goods covered by the first 3 cases above was enhanced on the basis of alphabetically marked invoices involved in Group II, whereas the value of the goods covered by the remaining cases was enhanced on the basis of the evidence pertaining to Group I. (4) The ld.counsel for Dungarmal submitted that the transaction value was correctly declared by them and that no valid reason was stated by the Commissioner for rejecting the same. The department should have given cogent reasons for rejection of the declared value. Before rejecting the value, the department should have atleast ascertained whether there were any imports of similar goods at the same time. In the absence of such evidence, there could be no valid rejection of the declared value. In this connection, the ld. counsel heavily relied on the Supreme Courts judgement in Commissioner of Customs, Calcutta vs South India Television (P) Ltd. [2007 (214) ELT 3 (S.C.). Referring to the documentary evidence considered by the adjudicating authority, the counsel submitted that the entire demand of duty in Group-I was based on unauthenticated fax messages coupled with misinterpreted statements of Dungarmal Doshi. All the fax messages were received at the premises of Anil Modi when the premises were searched by the DRI officials on 13.5.99. The counsel in this context referred to pages 131 & 132. At page 131 of the paper book was a xerox copy of a faxed letter dated 24.5.94 of Anil Modi to Derek Turner of ODC reading -
CONFIRM WHETHER 38T INSPN REPORT RCVD OR NOT.
PLS INFM EITHER WAY At page 132 was a xerox copy of another faxed letter dated 24.5.94 of D. S. Doshi (Mafia) addressed to ODC. This letter reads thus:-
We hope that the total is around 38 kgs. Kindly inform us by telephone as soon as it is confirmed. At page 139 was a xerox copy of a document captioned BOOK CREDIT ADVICE issued in the name of Israel Discount Bank of New York, dated 20.5.94. The document prominently displayed the amount $ 37,982.90 and mentioned the name of Overseas Development Corporation (ODC) as CREDIT PARTY. The name DUNGARMAL appeared handwritten below the relevant entries in this document. Invoice No. 93292 and No.93288 also figures in handwritten form along with the name DUNGARMAL. Another document referred to by the counsel was a xerox copy of a letter dated 25.8.94 of Derek Turner addressed to Modi Bros., Bombay. This letter dealt with the commission payable to Modi Bros. in respect of 5 transactions, 2 of which were covered by Invoices No. 93288 and No. 93292. We have already mentioned in para (3) other particulars of these two transactions while discussing the above faxed letter available at page 134 of the paper book. The ld. counsel for Dungarmal submitted that nothing contained in these documents could be relied upon inasmuch as the source of these documents was unknown and there was no means to check the veracity of the contents of these documents. In this context, the ld. counsel referred to Sections 138C and 139 of the Customs Act and also to the Supreme Courts judgment in J.Yashoda vs. K. Shobha Rani 2007(212) ELT 458 (S.C.). According to him, the above documents did not meet the requirements of either of these provisions so as to be admissible as documentary evidence in the case. The counsel also pointed out that no attempt was made by the investigating agency or even by the adjudicating authority to get the handwritten entries on BOOK CREDIT ADVICE at page 139 (otherwise referred to as Bank Advice) examined by any forensic expert to ascertain the genuineness of the said entries. It was pointed out that all the documents were of the month of May 1994 and hence the circumstances in which the DRI received them by fax after 5 years and, that too, exactly at the time of search of the premises of Modi Bros were suspect. For all these reasons, the ld.counsel urged that no reliance be placed on the above documents.
(5) In this connection, ld. counsel claimed support from Collector vs East Punjab Traders 1997 (89) ELT 11 (S.C.) and Bussa Overseas Properties Ltd. vs Commissioner 2001 (137) ELT 637 (Tri- Mum) affirmed in 2007 (216) ELT 659 (S.C.). He also referred to statements of Dungarmal Doshi. Among the numerous statements given by Shri Dungarmal Doshi, one dated 25.5.99 and another dated 27.5.99 were particularly referred to by the counsel. In his statement dated 25.5.99, Shri Dungarmal Doshi had, inter alia, stated to the effect that the expression 38 kgs used in his letter dated 24.5.94 (page 132/PB) meant US $ 38,000. He had also stated that Modi Bros. had been their indenting agents for procuring materials from ODC initially, but later on they started purchasing materials from ODC directly. This part of the statement of Dungarmal Doshi was used by the adjudicating authority as evidence of Dungarmal Doshi having paid US $ 38,000/- to ODC for the goods covered by invoices No. 93288 and No. 93292. The ld. counsel submitted that the above statement was subsequently retracted by Dungarmal Doshi in his statement dated 8.3.2000 wherein Dungarmal Doshi stated that he had no knowledge about 38 kgs mentioned in the aforesaid letter dated 24.5.94 (page 132/PB). In this connection, the ld.counsel also referred to a letter dated 27.5.99 of the advocate for Dungarmal Doshi addressed to the DRI (Page 167/PB) which was accompanied by a letter of even date written by Dungarmal Doshi to the DRI (page 170/PB). Dungarmal Doshi in his letter stated that his statement dated 25.5.99 had been recorded by coersion, force, pressure, promise and physical assault and that anything contained in the said statement was not true or correct. The advocates letter purported to bring on record of the DRI the retraction letter of Dungarmal Doshi. The ld.counsel argued that the confessional statement dated 25.5.99 having been validly retracted by Dungarmal Doshi could not be relied on against him and, consequently, there was no connecting link between the Bank Advice and other documents.
(6) It was further submitted that the declared value of the goods covered by the aforesaid two invoices was not liable to be rejected on the basis of any statement of the indenting agent (Anil Modi) or any letter alleged to have been received by him from ODC. There is no evidentiary material to connect Dungarmal Doshi with the letter said to have been received by Shri Anil Modi from ODC regarding the commission. In any case, there was no evidence of the amount of US $ 38,000 having been paid by Dungarmal Doshi to ODC. The faxed letter on page 134 of paper book (ODCs letter to Anil Modi regarding commission), with which no connection of Dungarmal Doshi was established, was not liable to be used to prove undervaluation of the goods purchased by Dungarmal Doshi from ODC under cover of the aforesaid two invoices. It was also submitted that a case of undervaluation could not be framed and established against Dungarmal Doshi solely on the basis of ODCs letter to their indenting agent or on the basis of a statement of the indenting agent. In the absence of evidence like contemporaneous import of identical or similar goods at higher price, the department could not have rejected the invoice value (transaction value). In this connection, ld. counsel relied on Commissioner vs South India Television (P) Ltd. 2007 (214) ELT 3 (S.C.). The ld.counsel also reiterated 2 grievances of Dungarmal Doshi :-
(1) the plea for forensic examination of the handwritten entries in the Bank Advice ( the name Dungarmal Doshi and invoice numbers) was not considered by the Commissioner;
(2) the request for cross-examination of DRI officers was also not considered.
Finally, it was argued that the demand of duty on the goods imported under cover of invoices No. 93288 and No. 93292 from ODC was not supported by any cogent evidence and hence the same was liable to be set aside.
(7) The ld. SDR submitted that the Revenue was not required to prove its case with mathematical precision. In this connection, he relied on Devi Dass Garg vs Commissioner of Central Excise, Delhi [2010 (257) ELT 289 (Tri-Del)] wherein it was held thus:-
The standard of proof required in the Departmental proceedings under the provisions of the Customs Act, 1962 or Central Excise Act, 1944 or of the Rules made thereunder, for confiscation of goods, confirmation of demand for duty evaded, and imposition of penalty is the preponderance of probability. For establishing to be preponderance of probability, the adjudicating authority or the Tribunal has to evaluate the evidence of both the sides and decide what is most probable This view was taken by relying on the apex courts ruling in Collector vs D.Bhoormull [1983 (13) ELT 1546(S.C.)]. The ld.SDR submitted that the faxed documents were apparently retrieved from the premises of Modi Bros., the indenting agent for ODC, who handled all the purchase orders placed on ODC by Dungarmal Doshi during the material period. He submitted that Anil Modi, who was also present when the documents were retrieved by DRI from the said premises, in his statement established a connection between those documents and the subject-transactions. Anil Modi did not retract his statement. Therefore, according to the SDR, the faxed letters/messages retrieved by the DRI from the premises of Modi Bros. on 13.5.99 were not to be lightly discarded. Contextually, relying on the apex courts judgment in Commissioner of C.Ex.,Madras vs Systems & Components Pvt.Ltd. [2004 (165) ELT 136 (S.C.)], the ld.SDR also contended that no proof was required for admitted facts. It was submitted that the interpretation given to letter dated 24.5.94 (page 132/PB) by Dungarmal Doshi in his statement dated 25.5.99 was of formidable support to the adjudicating authority to decode the term 38 kgs in the said faxed letter of Dungarmal Doshi to ODC and to arrive at the conclusion that an amount of US $ 38,000/- was paid by Dungarmal Doshi to ODC. According to the ld. SDR, as Dungarmal Doshi himself had given a statement supportive of the documentary evidence retrieved by the DRI, it was not necessary for the investigating agency or the adjudicating authority to subject the document to forensic examination. Referring to the retraction by Dungarmal Doshi, the SDR submitted that such retraction was not to be accepted and that the same was rejected forthwith by the DRI on specific grounds in a letter dated 28.5.99 to Dungarmal Doshi. The SDR submitted that, if the earlier statement dated 25.5.99 of Dungarmal Doshi had been extracted by use of coersion, force, pressure, promise or physical assault as alleged by him, the burden was on him to prove the allegation. In the absence of such proof, the statement dated 25.5.99 was to be treated as voluntary. In this connection, reliance was placed on case law viz.Surjeet Singh Chhabra vs Union of India 1997(89) ELT 646 (S.C.) ; Vinod Solanki vs UOI 2009 (233) ELT 157 (S.C.) ; Jogani Tyres (India) vs. Commissioner 2010 (255) ELT 264 (Tri- Mum,).
(8) In the absence of valid retraction, Shri Dungarmal Doshis statement dated 25.5.99 was rightly relied on by the adjudicating authority to hold that US$ 38,000/- was paid by Dungarmal Doshi to ODC as differential price for the goods covered by invoices No. 93288 and No. 93292. In this manner, the ld.SDR sought to defend the calculation made by the adjudicating authority who worked out an amount of US $ 37,771.59 after a scrutiny of the 2 invoices with ODCs letter (page 134/PB) to Anil Modi. The unit price of the goods covered by invoice No. 93288 was US$ 585 and that covered by invoice No.93292 was US $ 485 PMT. The unit price for the 2 consignments, on the basis of which Modi Bros. received commission from ODC, was US$ 975 for the first consignment and US$ 825 for the second. The difference between the unit prices in respect of the first consignment was 975 - 585 = 390 PMT and the difference between the unit prices in respect of the second consignment was US $ 825- 485 =340 PMT. On this basis, the extent of undervaluation of the two consignments was determined and the differential duty in respect of Group.I was worked out on the basis of this amount. Ld. SDR urged us to uphold this demand.
(9). After considering the submissions, we are of the view that the available evidence is predominantly in favour of the Revenue in Group.I. The most crucial documentary evidence gathered by the DRI and relied upon by the adjudicating authority is the faxed letter of Derek Turner of ODC dated 25.8.94 to Modi Bros, Bombay, the indenting agents of ODC. This letter was received by fax in the premises of Modi Bros. on 13.5.99 and recovered by the DRI in the presence of Anil Modi and the same was available at page 134 of the paper book. As we have already indicated, this letter pertains to certain commission payable to Modi Bros. by ODC in respect of 5 consignments of goods. 2 out of the 5 consignments were covered by invoices No. 93288 and No. 93292 issued to Dungarmal Doshi by ODC. The various other particulars of these goods have already been stated in para 3 of this order. In a statement, Anil Modi stated that he got commission at the rate of 2% of the higher price of the goods charged by ODC from Dungarmal Doshi. In respect of the consignment covered by invoice No.93288, he received commission from ODC to the extent of US$ 1,051.40, which was worked out on the basis of unit price of US$ 975 PMT. The invoiced price, however, was only US $ 585 PMT. In respect of the consignment covered by invoice No.93292, Anil Modi received US$ 609 as commission at the rate of 2% of a price higher than what was mentioned in the said invoice. The higher price was US$ 825 PMT as against the invoice price of US$ 485 PMT. When calculated on the basis of the aforesaid documents coupled with Anil Modis statement, the undervaluation of the goods was to the extent of US$ 37,771.59. Shri Anil Modi stated that US$ 38,000 had been paid by Dungarmal Doshi to ODC as differential price of the goods covered by the above two invoices. The statement of Anil Modi was never retracted. Anil Modi was not sought to be cross-examined by Dungarmal Doshi either. He was admittedly the indenting agent for ODC and handled Dungarmals purchase orders in respect of the subject goods. We find no reason to discredit his uncontroverted evidence. Coupled with this is the fact that the statement dated 25.5.99 of Dungarmal Doshi is in the nature of admission of having paid US $ 38,000 to ODC. Doshi was confronted with all the facsimiles (received by DRI on 13.5.1999) as well as the invoices No. 93292 and No. 93288 during the course of recording of the statement on 25.5.99. He admitted that the two invoices covered 42 MTs and 60.081 MTs of steel imported by him from ODC and that ODCs letter dated 25.8.94 to Modi Bros. (page 134/PB) showed a higher price for the goods than its invoice price and that the differential price was around US$ 38,000/-. Dungarmal also admitted his authorship of the letter dated 24.5.94 of D.S. Doshi (Mafia) to ODC by stating that he was called mafia by his friends. The expression 38 kgs used in the letter (page 132/PB) was decoded by himself to mean US$ 38,000. He also admitted that Modi Bros. had indented for them to purchase the goods from ODC. He did not deny connection with the Bank Advice (page 139/PB) which indicated payment of US$ 37,982/- to ODC. It is pertinent to note that Doshi did not question the authenticity of any of the documents before the investigating agency. His conduct was acquiescent when he was confronted with the documents. He noted the contents of the documents and acknowledged their relevance to his transactions with ODC. In this scenario, the appellant cannot legitimately plead that the facsimiles have no evidentiary value without forensic examination of handwritten entries.
(10) The statement dated 25.5.99 was retracted by Dungarmal Doshi on 27.5.99 and the ld. counsel has heavily relied on this retraction. In this connection, the submissions made by the ld.SDR are found to be forceful. Shri Dungarmal Doshi, in his retraction letter addressed to the DRI, alleged that his earlier statement dated 25.5.99 had been recorded by coersion, force, physical assault etc., but he is yet to prove this charge, nor is there any material on record indicating that any complaint was filed with police against the alleged assault by DRI officers. If the retraction has to be accepted, Dungarmal Doshi has to prove his allegation. We note that, upon receipt of Doshis retraction letter, DRI issued letter dated 28.5.99 (copy produced by SDR) informing Doshi thus :
As regard to the retraction of the statement, dated 25th May, 99, the deptt. state that the said statement was given voluntarily without the use of coercion, force, pressure, promise or any physical assault. You had written the same in your own handwriting and confirmed it as true and correct. The investigating agencys letter shifted the burden of proof to Dungarmal to show that he had been forced to make an involuntary statement through physical assault or otherwise. But he did not even attempt to discharge this burden. Therefore, his letter dated 27.5.99, which was a bare retraction without providing any different version of facts, and his belated version of facts contained in statement dated 8.3.2000 were only to be rejected. Dungarmals statement dated 25.5.99 was rightly accepted by the adjudicating authority as his voluntary statement of true and correct facts. We have also considered the relevant decisions cited before us. In the case of Devi Dass Garg, the Tribunal rejected the retraction of a statement on the ground that the person concerned failed to prove that he had been assaulted by the investigating officers to extract a confessional statement. In the case of Surjeet Singh Chhabra, the apex court held that a confession made under Section 108 of the Customs Act, though subsequently retracted, remained a binding admission.
(11) We have also examined the provisions of Sec.138C and 139 of the Customs Act. We have not found either of these provisions to be of any support to the appellants. On the other hand, Section 138C seems to operate in aid of the Revenue inasmuch as it provides that a facsimile copy of a document shall be deemed to be a document for the purposes of the Act/Rules and shall be admissible in any proceedings under the Act/Rules, without further proof or production of the original, as evidence of any contents of the original or of any fact stated therein. The adjudicating authority has rightly relied on the facsimile copies of documents (pages 132, 134, 139 etc. of Paper Book) which were acknowledged by Doshi to be genuine during the course of giving a voluntary statement under Section 108 of the Customs Act on 25.5.99. We also note that Section 139 of the Act is not applicable to documents received as facsimile copies of originals as in the present case. For this reason, the decision in the case of Bussa Overseas Properties Ltd. cited by ld. counsel in support of his plea for refusing to accept the bank advice (facsimile) as evidence is not applicable. By and large, the contents of the faxed documents were corroborated by the statements of Anil Modi and the statement dated 25.5.95 of Dungarmal Doshi. Considering this corroboration of documentary evidence by oral evidence, we see no reason to find fault with the Commissioner who is said to have ignored Dungarmal Doshis plea for forensic examination of some of the documents and cross-examination of DRI officers. Neither of these examinations was warranted in the above situation. Thus the Revenue has made out a very strong case in support of the demands of duty on the goods covered by Invoices No. 93288 and No. 93292 ( Group.I) . The Revenues case, in this group, is founded on evidence rather than probability.
(12). It is also on record that the goods covered by Invoices No. 93288 and No. 93292, which were purchased by Dungarmal from ODC, were sold to Alfa at the high seas. The relevant Bills of Entry were filed by Alfa for clearance of the goods and the demand of duty is upon them. Though there has been no representation for Alfa before us, we have perused the relevant records and considered their grounds against the Commissioners order. Alfa did not produce any invoice issued by Dungarmal (high seas seller). They produced the aforesaid invoices issued by ODC to Dungarmal and the value mentioned in those invoices was declared in the Bs/E. Alfa has a case that they were not aware of what had transpired between Dungarmal and ODC or of the transactions between them except that the price mentioned by ODC in the above invoices was recovered from Dungarmal. In this circumstance, according to Alfa, it cannot be said that they misdeclared the value of the goods. On this ground, Alfa has resisted the confiscation and penalty. It is for the person filing the B/E to ensure the correctness of his declaration therein. It was open to Alfa to produce invoices (if any) issued by Dungarmal (high seas seller). The Revenue has established that Dungarmal paid a higher price to ODC than what was mentioned in the aforesaid invoices. In the ordinary course of trade, Dungarmal would not sell the goods to Alfa at a price lower than what they paid to the original supplier (ODC). Looking from this angle, we have to hold that Alfa declared a lower value for the goods in the Bs/E than what they paid to Dungarmal at the high seas. In other words, Alfa should be held to have undervalued the goods with intent to evade payment of appropriate duty. Therefore, in the hands of Alfa, the goods became liable to confiscation under Sec.111(m) of the Customs Act. By misdeclaring the value of the goods with intent to evade payment of appropriate duty, Alfa rendered themselves liable for penalty under Sec.112 of the Act. The ld.SDR has rightly submitted that no mens rea requires to be established against an importer before imposition of penalty on him under Sec.112 of the Act. He has, in this connection, relied on the High Courts judgment in Commissioner of Customs(Export), Chennai vs Bansal Industries [2007(207) ELT 346(Mad)], wherein the Honble High Court considered a case of import involving undervaluation of goods and held that a penalty on the importer under Sec.112 of the Customs Act was justifiable even in the absence of mens rea . In other words, therefore, even if it be assumed that Alfa had no intention to evade duty, they were still liable to be penalized under Sec.112 of the Act on account of undervaluation of the goods. Again, as rightly stated by the ld. SDR, such penalty cannot be resisted on the ground that the goods were not physically confiscated. It is enough if the goods are found to be liable to confiscation under Sec.111 of the Act. Misdeclaration of the value of the goods rendered it liable to confiscation and its importer liable to penalty. The only question to be considered is whether the quantum of penalty imposed on Alfa by the Commissioner is reasonable. It is pointed out by the ld.SDR that the enhanced value of the goods covered by the two invoices is over Rs. 29 lakhs. We find that a penalty of Rs. 2 lakhs on Alfa is disproportionate to the offence found against them. Considering the fact that the misdeclaration of the value of the goods was not without the involvement of Dungarmal and considering other attendant circumstances, we reduce the penalty on Alfa to Rs. One lakh. Proportionately, we reduce the penalty on Dungarmal also to Rs. One lakh. In the result, Appeal Nos. E/468/02 and E/469/02 get disposed of.
(13). In Group II, the ld. counsel for Dungarmal submitted that the value of the goods covered by the 4 invoices No. 53822 to No. 53824 dated 18.9.95 and No. 53815 dated 6.9.95 was rejected on the basis of a set of other invoices which were said to have been obtained by the DRI from independent sources. The source of these invoices was never disclosed to Dungarmal. Therefore, there was no way how Dungarmal could verify the contents of such invoices which were alphabetically marked as invoice No. 53822 A, No.53823 A, No.53824 A and No.53815 A. In the absence of information as to who issued such alphabetically marked invoices to Dungarmal, whether the price mentioned therein was received by ODC from Dungarmal etc., nothing contained in those documents is liable to be relied on. In any case, according to ld. counsel, those alphabetically marked invoices cannot be admitted as evidence against Dungarmal without proof of payment of the price mentioned therein, by Dungarmal to ODC. One fact which was highlighted by the ld.counsel in this context was that none of the alphabetically marked invoices had been recovered from Dungarmal . We have heard ld.SDR also, who has reitereated the findings of the Commissioner.
(14). We find that the price mentioned in the original invoices No. 53822, No. 53823, No. 53824 and No.53815 issued by ODC to Dungarmal and declared in the relevant Bills of Entry was rejected by the adjudicating authority, who held that the value mentioned in the corresponding alphabetically marked invoices No. 53822 A, No.53823 A, No. 53824 A and No. 53815 A, which were treated as supplementary invoices issued by ODC to Dungarmal , was liable to be added to the declared value to get the assessable value. This finding of the Commissioner took care of 4 Bills of Entry in Group II. In respect of the remaining 2 Bills of Entry in this group also, the ld. Commissioner enhanced the value of the goods on the basis of one of the above-mentioned alphabetically marked invoices in the absence of any alphabetically marked invoices corresponding to the 2 original invoices of ODC produced by the importer. Thus, in Group II, the question arising for consideration is whether the alphabetically marked invoices gathered by the DRI and used by the adjudicating authority for enhancing the value of the goods can be accepted as valid evidence of undervaluation of the goods by those who filed the Bills of Entry. Xerox copies of these alphabetically marked invoices are found at pages 142, 144, 146 and 148 of the paper book. Though each of these documents purported to have been issued by ODC as invoices covering a certain quantity of CRGO material sold to Dungarmal , it has not been established by the Revenue that the document was issued by ODC to Dungarmal as a supplementary invoice in respect of the goods already supplied under an original invoice. In fact, even the source of these alphabetically marked invoices was not disclosed to the appellants. In this connection, one decision cited by the ld.counsel merits consideration and the same is Collector of Customs, Bombay vs East Punjab Traders, wherein it was held that, where the authenticity of photocopies of the Bills of Entry obtained by Indian Customs from abroad was suspected, any presumption under Sec.139(ii) of the Customs Act was not available especially when the documents had not come from proper custody or obtained by Indian Customs from Japanese Customs. This judgment of the Honble Supreme Court lends support to the appellants inasmuch as the department did not, or could not, disclose to them the source of the alphabetically marked invoices. The Revenue could not produce the originals of these documents either. In the circumstances, we have to accept the contention raised by the ld. counsel that the presumption under Sec.139 of the Customs Act is not available in respect of the xerox copies of what appeared to be alphabetically marked invoices issued by ODC to Dungarmal . In any case, Dungarmal did not admit having received such invoices, nor did they admit that payment of any amount mentioned in any of such invoices was made to ODC either through banking channels or otherwise. The statements of Anil Modi, who was apparently confronted with these documents, would not be of any avail to the Revenue inasmuch as, undisputedly, the documents were not retrieved from his premises and also did not mention his name as indenting agent. Whatever was stated by Anil Modi in relation to the alphabetically marked documents will be of no relevance. For all these reasons, we are unable to accept the said alphabetically marked documents as evidence of undervaluation of goods by those who filed the relevant Bills of Entry. In the result, the value declared in the relevant Bills of Entry will have to be accepted, particularly in the absence of proof of contemporary imports of identical/similar goods at higher value. Therefore, all the appeals in Group II have to be allowed and it is ordered accordingly.
(15). In Group III, 4 appeals filed by Dungarmal and 1 appeal filed by Supershva Industries are directed against demands of duty and penalties while one appeal filed by Dungarmal and 3 appeals filed by Anil Modi are against penalties. In this group, the ld.Commissioner determined the amounts of duty by enhancing the value of the goods by treating the goods as similar to the goods covered by certain invoices taken as standard. Alphabetically marked invoices No. 53822 A dated 18.9.95 and No. 53815 A dated 6.9.95 were taken as standard for enhancing the value of the goods covered by 7 Bills of Entry in this group, which are the subject-matter of Appeals C/430, C/466, C/472/02. We have already refused to accept the alphabetically marked so-called supplementary invoices as evidence of undervaluation of goods. The same principle would apply to the instant case and, consequently, the 3 appeals C/430, C/ 466 and C/472/02 will have to be allowed alongwith the connected appeals filed against penalties. In respect of the goods covered by the remaining 5 Bills of Entry, which constitute the subject-matter of Appeal Nos. C/431, C/467 and C/471/02, the standard chosen by the Commissioner as contemporaneous import for enhancement of value is the import covered by invoice No.93288 dated 30.5.94, which is one of the 2 invoices belonging to Group I. On going through the records, we note that the imports covered by these 5 Bills of Entry are not contemporaneous with the import in Group I covered by Invoice No.93288 dated 30.5.94. Hence the enhancement of value of the goods covered by the said 5 Bills of Entry on the basis of Invoice No.93288 ibid is not sustainable in law. Consequently, Appeals C/431, C/467 and C/ 471/02 are also liable to be allowed alongwith connected appeals filed against penalties. In the result, all the appeals in Group III will be allowed and it is ordered accordingly.
(16) To summarize the results, we hold as under :-
a) Appeal No.C/468/02 filed by M/s. Alfa Trancore Industries is dismissed on merits, but the penalty on them stands reduced to Rs. One lakh. They are directed to pay this penalty alongwith duty and interest thereon within thirty days.
b) Appeal No. C/469/02 filed by M/s. Dungarmal Pruthviraj & Co. is dismissed on merits, but the penalty on them gets reduced to Rs. One lakh, which shall be paid within thirty days.
c) All other appeals are allowed.
(Pronounced and dictated in court) Sahab Singh Member(Technical) P.G.Chacko Member(Judicial) pv 27