Customs, Excise and Gold Tribunal - Bangalore
Shri Subramanya Sharma And Ors. vs The Commissioner Of Customs on 18 January, 2006
Equivalent citations: 2006(106)ECC215, 2006ECR215(TRI.-BANGALORE)
ORDER T.K. Jayaraman, Member (T)
1. The following appeals have been filed against Order-in-Original No. 42/2004 Cus Adjn (Commr) dated 22.12.2004 passed by the Commissioner of Customs, Bangalore.
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Sl Appeal Name of the Duty Penalty (under Fine No No appellant Section 112(a)
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1. C/67/05 Mr S. Sharma Rs 1,00,000/-
2. C/109/05 Mr B. Praveen Rs 5,00,000/-
3. C/110/05 M/s Labdhi Rs 43,306/- Rs 2,00,000 Computech Pvt.
Ltd.
4. C/125/05 M/s Labdhi Rs 4,91,230/-
Technologies Rs 74,225/-
Ltd.
5. C/126/05 Sunil Solanki Rs 3,00,000/-
under Section
6. C/132/05 Ramesh Solanki Rs 25,00,000 under Section 112
(a) In the impugned order, the Commissioner has held Shri Ramesh Solanki to be treated as the actual importer in respect of the goods imported vide BE No. 365754 dated 27.9.2002 in the name of M/s Suntech Bangalore. He held that the goods imported under the above Bill of Entry valued at Rs. 14,11,000/- (as per disposal figures) are liable for confiscation under Section 111(m) of the Customs Act. He has also ordered appropriation of the amount towards customs duty of Rs. 10,37,509/-. He has confirmed a differential duty amounting to Rs. 95,18,347/- under Proviso to Section 28(1) of the Customs Act 1962 along with interest Section 28AB ibid for the goods imported during the period from 3.7.2002 to 20.9.2002. He ordered appropriation of the balance amount of Rs. 3,72,499/- out of Rs. 14,11,000/- realized on disposal of goods towards the adjudication levied mentioned above. He has ordered that the balance amount of Rs. 91,45,856/- shall be paid by the appellants (M/s Sun Tech) within 15 days from the date of receipt of the adjudication order. He held that the following goods are liable for confiscation under Section 111(m) of the Customs Act 1962.
a) Goods valued at Rs 3,27,500/- seized from M/s Labdhi Technologies (Pvt) Ltd., on 28.9.2002.
b) Goods valued at Rs 2,23,600/- seized at M/s Labdhi Computech, Bangalore on 29.9.2002.
c) A penalty of Rs 10,00,000/- on M/s Guru Electronics under Section 112(b) of the Customs Act 1962. However, M/s Guru Electronics has not filed any appeal against the imposition of the penalty.
2. Shri Varada Rajan learned advocate appeared for Mr. S. Sharma. Shri M.S. Srinivasa, learned advocate appeared for M/s Labdhi Computech (P) Ltd and M/s Labdhi Technologies and Shri Sunil Solanki. Shri B.N. Gururaj learned advocate appeared for Mr B. Praveen. Shri Rajesh Chandra Kumar learned advocate appeared for Shri Ramesh Solanki. Shri K. S. Reddy, learned JDR appeared for the Revenue.
3. The brief facts of the case are as follows:
A Bill of Entry 365754 dated 27.9.2002 was filed on behalf of M/s Suntech through CHA, M/s Premier Forwarding Services, Bangalore for clearance of 20 Nos. of Mother board and 200 Nos. of cooler fans on a declared value at Rs. 93,433.69. The goods were assessed to duty of Rs. 40,419/-. However, before the importer could clear the goods, the customs officers, on receipt of intelligence investigated the matter. Examination of the goods to be cleared under the Bill of Entry mentioned above revealed mis-declaration in quantity and value. Certain goods were in excess and certain goods were less than the declared quantity. A large number of items were undeclared. The total value of the goods amounted to Rs 78,07,090/-. Follow up action was carried out by the department. The proprietor of M/s. Suntech on paper is one Mr. Praveen, an employee of Shri Ramesh Solanki. Further investigations revealed that Mr Ramesh Solanki floated M/s. Suntech using the name of Shri Praveen as proprietor. Shri Praveen was actually an employee of Mr Ramesh Solanki drawing a salary of Rs. 3,000/- per month. Mr. Ramesh Solanki was in touch with M/s Guru Electronics from Singapore. In all, 23 consignments were imported in the name of M/s Suntech. The statements of concerned persons were taken. In respect of each consignment there was mis-declaration and import of excess quantity of goods. The goods are mainly motherboards, memory cards and Pentium processors. Several incriminating documents were seized. Searches were carried out in the premises of M/s. Labdhi Technologies and M/s. Labdhi Computech. Imported computed parts without proper documents to prove the licit importation were seized from both the above premises. Mr. Ramesh Solanki was also running Labdhi Computech and his brother Mr. Sunil Solanki claimed to be the Managing Director of M/s. Labdhi Technologies. One Shri P. Subramanya Sharma, an employee of M/s. Premier Forwarding Services helped the appellants for clearance of goods from the Customs. As a result of investigation, a large scale evasion of customs duty by under-valuation of goods declared was detected. There was also evidence of non-declaration. Many incriminating documents such as FAX messages to the foreign supplier were recovered. In this entire episode, it was seen that Shri Ramesh Solanki used the name of Shri Praveen for importing goods in the name of M/s Suntech and selling them in the country. Shri Praveen also obliged Shri Ramesh Solanki in abetting the illegal activity of customs evasion. Revenue proceeded against the concerned persons by issue of show cause notice dated 21st March 2003. The adjudicating authority after following the principles of natural justice passed the impugned order. In the said order, he dealt with the following issues.
a) who should be treated as the actual importer in respect of the goods imported vide Bill of Entry No 365754 dated 27.9.2002 in the name of M/s Suntech, Bangalore
b) Whether the goods which were imported vide bill of entry No. 365744 dated 27.9.202 and which were misdeclared, non-declared, under declared and which were seized on 28.9.2002 valued at Rs. 78,07,090/- are liable to confiscation under provisions of Section 111(i) and 111(m) of the Customs Act, 1962.
c) Whether the goods valued at Rs. 3,27,500/- seized from the premises of M/s. Labdhi Technologies (P) Ltd., Bangalore on 28.9.2002 are liable to confiscation under Section 111(m) a of the Customs Act, 1962.
d) Whether the goods valued at Rs. 2,23,600/- seized on 29.9.2002 at the premises of M/s Labdhi Computech, Bangalore are liable to confiscation under the provisions of Section 111(m) of the Customs Act, 1962.
e) Whether there has been under valuation in respect of the goods imported by M/s. Suntech, Bangalore and why the differential duty amounting to Rs. 95,18,347/- should not be demanded under Section 28 of the Customs Act, 1962 along with interest thereon under Section 28 AB of the said Customs Act.
f) Whether the differential duty amounting to Rs. 43,306 is liable to be demanded in respect of goods seized at the premises of M/s Labdhi Computech, Bangalore
g) Whether the differential duty amounting to Rs. 74,22/- is liable to be demanded in respect of goods seized at the premises of M/s. Labdhi Technologies, Bangalore
h) Whether the differential duty of Rs. 4,91,230/- is liable to be demanded under Section 28 of the Customs Act in respect of the goods seized from the premises of M/s. Labdhi Technologies (P) Ltd., Bangalore
i) Whether M/s. Suntech, Bangalore, M/s Labdhi Technologies (P) Ltd., Bangalore, M/s. Labdhi Computech, Banglaore, Shri Ramesh Solanki, Shri Sunil Solanki of M/s Labdhi Technologies (P) Ltd., Bangalore, Shri B. Praveen and Shri Subramanya Sharma and Shri G.S. Shekar Rao are liable to penalty under Section 12(a) of the Customs Act 1962.
j) Whether M/s Guru Electronics Singapore (Pvt.) Ltd., Singapore are liable to penalty under Section 112(b) of the Customs Act, 1962, for aiding and abetting smuggling of computer parts by M/s Sun Tech., Bangalore.
4. Based on the statements of the following six persons given under Section 108 of the Customs Act, the adjudicating authority has come to the conclusion that Shri Ramesh Solanki is the real and actual owner of M/s Suntech, Bangalore.
a) Shri Subramanya Sharma of the CHA Firm, M/s. Premier Forwarding Services.
b) Shri B. Praveen of M/s. Suntech, Bangalore.
c) Shri K.K Radhakrishnan of M/s. Geo Logistics (P) Ltd.
d) Shri Girish, Franchisee of M/s. Team United Express.
e) Shri G. B. Kumara Swamy and Shri B.K. Narendra, Transporters of the goods and
f) Shri S. Nanjappa, Proprietor of M/s. Ganapathi Travels and owner of the STD Booth.
He has elaborately discussed this point in Para 154 to 161 of the Order-in-Original. He has stated after analyzing the evidences available that all the activities which led to the importation of the goods such as placing the order with foreign suppliers arranging for the customs clearance at the port of import, paying the duty for the imported goods, taking possession and arranging transportation of the goods form the port of imports to the place of delivery and receipt of the imported goods has been undertaken by Shri Ramesh Solanki. He has stated that it is very clear that it is Shri Ramesh Solanki who is the actual owner and importer in the instant case and not Shri B. Praveen who was only a facade or a front employed by Shri Ramesh Solanki. Based on the documentary evidence, the Commissioner has given a finding that the assessable value of the goods imported under the BE dated 27.9.2002 would be Rs. 78,07,090/-. He held that the goods are liable to confiscation under the provisions of Section 111(1) and 111(m) of the Customs Act 1962. During the period from July 2002 to September 2002 M/s. Suntech had imported from M/s. Guru Electronics Singapore 23 consignments even though the bills of entry pertaining to these consignments M/s. Suntech had declared that they had imported only mother boards and cooling fans, it was seen that in addition to the mother boards and cooling fans Pentium iii and Pentium iv processors, SD Rams of 128 and 256 MB capacity were also supplied which were not declared to the Customs Department. From para 166 to 180 of the OIO, the Commissioner has made a very detailed examination of the imports made my M/s. Suntech from July 2002 to September 2002 and has come to the conclusion that due to undervaluation and non-declaration the duty amount evaded during this period amounts to Rs. 95,18,347/-. In para 180, he has held that Shri Ramesh Solanki who is the actual owner of M/s. Suntech, Bangalore is liable to pay the above amount under Proviso to Sub-section 1 of Section 28 of the Customs Act 1962. Goods valued at Rs 2,23,600/- were seized from the premises of M/s Labdhi Computech. At the time of seizure, Shri Ramesh Solanki who is the proprietor of M/s. Labdhi Computech could not show any documents for establishing the licit import of the goods seized. The Commissioner has come to the conclusion that the goods under seizure are liable to confiscation and the party is liable to pay a duty of Rs. 43,306/-. The Commissioner, held that Shri Ramesh Solanki is liable to penalty under Section 112(a) of the Customs Act. Further he also held that Shri Praveen who is an employee of Shri Ramesh Solanki has actively aided and abetted in the smuggling of computer parts by M/s. Suntech by lending his name as a proprietor of the said firm and also by dealing with the smuggled goods imported by the said firm. Therefore he held that Shri Praveen is liable to penalty under Section 112(a) of the Customs Act 1962 for abetting the smuggling of computer parts by Shri Ramesh Solanki and M/s. Suntech.
5. Shri Rajesh Chandra Kumar, learned advocate who appeared for Shri Ramesh Solanki made the following submissions.
1) The appellant Shri Ramesh Solanki has been called upon to pay an amount of Rs. 95,18,347/- under Section 28 of the Customs Act being the differential duty in respect of the goods imported by M/s. Suntech. There is no proposition in the show cause notice to treat Shri Ramesh Solanki as the importer of the goods. The show cause notice continued to treat Mr. Praveen as the importer and thus also required Mr. Praveen to show cause to pay the differential duty. It is a settled position in law that no two persons can be treated as the importers of the same goods.
2) In Para 56 of the show cause notice, the appellant Shri Ramesh Solanki is called upon to show cause as to why he should not be treated as the actual importer only in respect of the goods consigned under the BE dated 27.9.2002.
3) There was no proposition to treat the appellant as an importer of all the past consignments imported by M/s. Suntech. Hence the demand from the appellant is not tenable. In respect of the imports made by M/s. Suntech, Mr. Praveen had represented to be the proprietor and claimed to be the importer. All assessments of the bills of entry had already been made in the name of M/s. Suntech treating Mr. Praveen as the proprietor. In these circumstances there ought to have been a notice to show cause issued to Mr. Praveen to treat him to be a dummy importer. Such a show cause notice was not issued. Therefore, without the proposition to treat Mr. Praveen as a dummy importer, the adjudicating authority would not have proceeded to hold Mr. Ramesh Solanki as an importer of the said goods.
4) Once a person had been held to be an importer and assessed accordingly, no other person can subsequently be held to be an importer of the same very goods. Section 2(26) of the Customs Act 1962 defined an 'importer' in relation to any goods and any time between their importation and the time when they are cleared for home consumption to include any owner or any person holding himself out to be the importer. In the instant case Shri Praveen had clearly held himself to be the importer in respect of all the 23 consignments imported in the name of M/s. Suntech and also the goods imported vide BE dated 27.9.2002 between the time of their importation and the time their clearance for home consumption. Hence, in law he is liable for the consequences that may fall upon an importer. The High Court of Madras, in the case of J.B. Trading Corporation v. UOI has held that no other person can claim to be an importer for the goods except the person shown in the manifest originally. The above decision was followed by the Tribunal in the case of Biren Shah v. Collector of Customs .
5) Both the appellants and Shri Praveen were asked to show cause to pay the differential duty on the past imports made in the name of M/s. Suntech.
6) The finding of the Commissioner that the appellant is being importer and real owner of M/s. Suntech is based upon third-party opinions recorded in the various statements relied upon in the show cause notice.
7) The third party opinion cannot constitute evidence in law for the purpose of finding and holding that the appellant is the owner of M/s. Suntech.
8) The statement recorded on 1.10.2002 from Mr. Praveen reveals that he is the proprietor of M/s Suntech which he stated in 2002; that M/s Guru Electronics of Singapore was introduced to him by the appellant; that the records of M/s. Suntech had been kept by him in his friends house; that he received 23 consignments form M/s. Guru Electronics of Singapore; that he sold all these except 6 motherboards; that he was using the address of Mr. Venugopal which was the office address of M/s. Suntehch; that Mr. Venugopal was introduced to him by the appellant.
9) The averments of Mr. Praveen in the reply to the show cause notice clearly demonstrate that the imports were ordered by Mr. Praveen and he is in fact the importer. All the correspondence with the Customs Authorities seeking for re-export of the goods was by Mr. Praveen even after the investigation was commenced.
10) There is no evidence on record to show that the goods imported under the name of M/s. Suntech were in fact paid for by the appellant or that the goods were in fact sold by the appellants and the sale proceeds were also accounted to the benefit of the appellant and not Mr. Praveen.
11) The Commissioner failed to appreciate that the appellant had merely assisted and helped Mr. Praveen as a friend and that the appellant had no interest in the goods nor any interest in the transaction of import.
12) There is no evidence to show that the appellant had made any financial investment for the business of M/s. Suntech.
13) The Faxes relied on by the Commissioner were uncorroborated unsigned and unnamed. No enquiries have been made with M/s Guru Electronics to confirm the fact that the Faxes said to have been originated with them were in fact issued by them.
14) The finding of the adjudicating authority that quantities in excess than those declared have been imported is based solely upon hypothetical determination of what the weight of the goods ought to be as against the weight declared. On the basis of a comparison between the two, the adjudicating authority has proceeded to hold that the weight declared in excess relates to undeclared goods; that such an assumption is impermissible in law.
15) All consignments in the past imported by M/s Suntech were subjected to physical examination at the time of assessment. In such circumstances when the goods have been subjected to physical examination there is no basis to find that there have been excess quantities imported. In view of the above, the Commissioner grossly erred in imposing a penalty under Section 112(a) of the Customs Act 1962 upon the appellant.
6. Shri Rajesh Chandra Kumar made the following submissions on behalf of M/s. Labdhi Computech.
(i) In the course of certain investigations into the import of M/s. Suntech the Customs Officers search the premises of M/s Labdhi Computech on 29.9.2002 and seized goods valued at Rs. 2,23,600/- on the ground that the appellants would not show evidence of the licit import of the goods. The adjudicating authority held that the goods are liable for confiscation under Section 111(m) of the Customs Act 1962. Further, he confirmed a differential duty demand of Rs. 43,306/- under Section 28 of the Customs Act. He imposed a penalty of Rs. 2 lakhs on the appellant under Section 12(a) of the customs Act 1962.
(ii) Since the seized goods were not notified under Section 123 of the Customs Act, the burden to prove that they are smuggled is on the Revenue.
(iii) The Commissioner failed to appreciate that the goods namely computer parts and accessories etc., were freely importable and were widely available in the local markets in the country. Even the customs authorities were auctioning the goods quite often.
(iv) Merely because the goods were of foreign origin itself would not render the goods to be smuggled ones particularly when the same are openly available in the market. He relied on the Tribunal decision in the case of Loknath Sinha v. CC .
(v) Mere marking of foreign origin does not by itself render the goods to be treated as smuggled goods as held by the Tribunal in several cases.
(vi) In view of the above submissions, the confiscation is not sustainable and the penalty is also not leviable hence the appropriation of 43,306/- is not correct.
7. Shri B.N. Gururaj appearing for Shri B. Praveen made the following submissions.
The learned advocate submitted that the appellant Shri Praveen was employed under Shri Ramesh Solanki for a fixed salary of Rs. 3000/- per month. He had studied up to SSLC and has also done ITI certificate course in electronics. During his employment with Shri Ramesh Solanki he was carrying out any work assigned to him irrespective of his technical background including collection and delivery of goods traded by Shri Ramesh Solanki. Shri Ramesh Solanki started a proprietary concern named M/s. Suntech in the name of the appellant, even though the appellant had no money to commence any business. For the purpose of postal address, this concern was ostensibly situated at 603, II Block, Dr. Raj Kumar Road, Rajajinagar, Bangalore. The appellant is not knowledgeable and experienced and being a paid employee could do nothing about his employer using his name for business purposes. The impugned order has traversed beyond the show cause notice. In the notice, the appellant had been directed to show cause against demand of duty, confiscation of goods and imposition of penalty as if he were the importer and owner of the imported goods. The Commissioner having agreed that the appellant was merely an employee ought to have logically dropped the proceedings. Instead he has introduced a new finding that the appellant had abetted and aided the co-noticee. Thus the basis for imposing penalty is beyond the show cause notice. It is clearly on record that the appellant made no pecuniary gain out of the alleged mis-declaration or under-valuation. The penalty imposed on the company is lower than the penalty imposed on the employee. This is the height of anomalous exercise of discretion. The penalty imposed on many co-noticees who were actually charged for mis-declaration, under-valuation and upon whom duty liability was confirmed is much lower. The penalty imposed on Shri Sunil Solanki MD of Labdhi Technologies who is the importer is as low as Rs. 3,00,000/- whereas the penalty on the appellant a mere employee of the company is Rs. 5,00,000/-. When the show cause notice alleges that the appellant was the importer upon whom duty liability could be saddled, it was not possible to allege that he had also abetted Ramesh Solanki. This would result in an absurd situation where the person abets himself in committing violations. The appellant had nothing whatsoever to do with the clearance of imported goods. He came into picture only for collection of goods from the customs that too through Shri Subramanya Sharma and deliver the same to the place of Shri Ramesh Solanki. Hence the appellant had done nothing which would render the goods liable to confiscation or result in abetment of such acts. The penalty imposed on the appellant is disproportionately high.
8. Shri M.S. Srinivasa learned advocate appearing for M/s Labdhi Technologies, M/s Labdhi Computech and Shri Sunil Solanki made the following submissions.
a) Shri Sunil Solanki:
The Commissioner has imposed a penalty of Rs. 3 lakh under Section 112(b) of the Customs Act. In the show cause notice, there is not even a single allegation against the appellants to indicate as to which of the contraventions envisaged in Section 112(a) is attributable to him. The notice is totally silent as to the role played by the appellant in the alleged clearance of goods. In the absence of allegation of specific role played by the appellant, the Commissioner ought not have imposed penalty on the appellant. The following case law was relied on CCE v. Bhikhlal Dwarkadas . The show cause notice is vague in as much as the contraventions in both Sub-sections (a) & (b) are alleged and penalty is proposed under Section 112 without specifying the sub section but in the impugned order, the penalty under Section 112(a) of the Customs Act, 1962. The appellant has not committed any act or omitted to do any thing nor he has concerned himself in acquiring transporting, receiving keeping selling or in any other manner dealing with such goods which he knew or had reasons to believe were liable for confiscation. Since the ingredients of Section 112(a) or (b) are absent the said section is not applicable to the present case. Relying on Tribunal's decision in the case of Anil Kumar Saxena v. CCE reported in 2001 (44) RLT 386 the advocate urged that there should be some positive evidence to show that an assessee had knowledge that the goods were liable for confiscation and that the knowledge cannot be simply attributed to a person holding a particular post.
b) Submissions in respect of Labdhi Technologies (P) Ltd.,
(i) The Commissioner has held that the goods valued at Rs. 3,27,5000/- seized from the premises of the appellant are held liable to confiscation under Section 111(m) of the Customs Act 1962. Further, he has confirmed a differential duty of Rs. 4,91,230/- along with interest on account of under-valuation. He has appropriated an amount of Rs. 74,225/- paid vide TR Challan dated 17.2.2003 and in respect of the goods seized at the premises of M/s. Labdhi Technologies, Bangalore. Though the appellant has furnished evidence to prove that these purchasers are covered by Bills of entry in respect of imported goods, and bills bills/invoices in respect of goods locally purchased, the Commissioner has rejected the evidence furnished by the appellant that the statement of purchases, sale and stock has been unsigned and they are photocopies which are not attested by a Chartered Accountant.
(ii) The statement of Shri Sunil Solanki is not voluntary for the reasons stated in reply to the show cause notice and it was not relied As per the decision of the Apex Court in the case of Hindustan Ferodo Ltd v. CCE 91997 (89) ELT 16 if the onus of proof is on the department and the department fails to discharge the onus, the evidence furnished by an assessee, even if rejected, the case of the department cannot be sustained.
(iii) The seized goods are not notified under Section 123 and the burden to prove that the goods are imported illicitly is on the department The department having failed to discharge the burden cast on it cannot expect the appellant to prove the contrary.
(iv) In this case larger period has been invoked without any specific allegation in the notice regarding suppression or willful misstatement or collusion. Therefore, the demand should have been restricted to the normal period of six months.
(v) The value was sought to be revised on the basis of the price mentioned in some FAX messages by adopting that price as the contemporaneous value. The said basis is wholly unjust and illegal. The appellant has nothing to do with the Fax messages and they are not sent to the appellants.
(vi) It is well settled that in the matter of valuation, the burden is on the department to prove under-valuation.
(vii) In the case of Sushil Enterprises v. CC , the Tribunal has held that the Telex between two persons who are not concerned with the importation of goods as such could not be the sole basis for arriving at the assessable value.
(viii) In the case of CCE v. Chem Crown (I) Ltd , it was held that invoice price cannot be routine discarded except on the strength of clear evidence that the invoice is not genuine and that it does not show the real price as has been transacted between the importer and the foreign supplier.
9. The learned JDR appearing for the Revenue reiterated the Order-in-original and requested the Bench to confirm the same as the Commissioner has elaborately dealt with all the issues under consideration.
10. We have gone through the records of the case carefully. An investigation over the items imported under Bill of Entry dated 27.9.2002 in the name of M/s. Suntech, Bangalore revealed that the goods received were in excess of those declared in the Bill of Entry. Moreover, there was gross under-valuation in respect of a particular item viz., cooler fans, the goods received were much less than the number declared. A thorough investigation revealed the modus oprendus adopted by the persons concerned in the illegal imports of computer parts. The Bill of Entry was filed by M/s. Suntech, which is a proprietary company. On record, the proprietor is one Shri B. Praveen but the defacto proprietor was Ramesh Solanki. In fact, B. Praveen was an employee of Ramesh Solanki who is associated with two other companies/firms viz., M/s. Labdhi Computech Pvt. Ltd. and M/s. Labdhi Technologies Ltd. One Shri Sunil Solanki is the brother of Ramesh Solanki. Shri Subramanya Sharma, an employee of CHA M/s. Premier Forwarding Services, Bangalore helped M/s. Suntech in the clearances of the imported consignments. The name of B. Praveen was actually used by Ramesh Solanki. Shri Praveen was only an employee drawing a salary of Rs. 3000/- p.m and he had no sufficient finances to run the entire business. Investigation further revealed that in all 23 consignments were imported in the name of M/s. Suntech during the period from 3.7.2002 to 20.9.2002. All the goods, which are computer parts, were imported from M/s. Guru Electronics, Singapore. Certain fax messages were handed over to the investigators by B. Praveen. From the incriminating documents, the Adjudicating Authority has come to the conclusion that apart from the present consignment, in all the previous 23 consignments there was gross mis-declaration and under-valuation. Further it was revealed that Shri Ramesh Solanki is the actual brain behind these nefarious activities. In the follow-up action, goods were seized both from the premises of M/s. Labdhi Computech Pvt. Ltd. and M/s. Labdhi Technologies Ltd., in view of the fact that there was no evidence for the licit import of goods. It was also revealed that at the port of export as per the declaration given the value of the goods was different from what has been shown in the invoice and Bill of Entry, and even the weight was different. During the investigation, the weight of the items normally imported by M/s. Suntech was ascertained. As per the calculations, the weight of the items as per declaration in the Bill of Entry should be much less than what has been declared in the packing list. The difference, according to the Revenue, is clearly attributable to the goods, which were sent in excess of the invoiced quantity. In fact there was excess declaration of quantity in respect of cooler fans, in order to pack other goods in excess quantities. From the statements of the concerned person, it is very clear that Shri Ramesh Solanki organized everything right from negotiations with the foreign supplier to the delivery of the goods in lndia. There is enormous corroborative evidence of the statements rendered by the persons concerned. Shri Sunil Solanki, the brother of Ramesh Solanki has accepted the import of goods in excess of the declaration. In these circumstances, Show Cause Notices were issued and the impugned order was passed. The learned advocate who appeared for Shri Ramesh Solanki urged the point that the Show Cause Notice proposes Ramesh Solanki to be treated as the actual importer in respect of the goods covered by Bill of Entry dated 27.9.2002 and not in respect of the goods imported in the previous 23 consignments. Therefore, he said that the Commissioner has traversed beyond the scope of the Show Cause Notice in holding that Shri Ramesh Solanki is the importer in respect of the previous 23 consignments. Further, he made the point that Shri Praveen in order to escape his liability has given a statement to the effect that he is not the proprietor of M/s. Suntech. In fact, Shri Praveen only is the proprietor of M/s. Suntech and Ramesh Solanki only helped as a friend. There is nothing wrong in that. Moreover, all the consignments have been imported only in the name of M/s. Suntech. He has further stated that there is no evidence to show that the goods imported in the name of M/s. Suntech were paid by Mr. Ramesh Solanki. Further, it is not established that the imported goods were sold by Ramesh Solanki and sale proceeds were accounted to his benefit.
11. We have carefully considered the submissions of the learned advocate and we are not able to accept the same for the following reasons. The Commissioner has referred to the statements of six persons given under Section 108 of the Customs Act in para 154 of the impugned order. A reading of the statements given by these persons reveals that Shri Ramesh Solanki is the brain behind the imports of M/s. Suntech. There is no reason why the statements of these persons should be dismissed. In fact, even Sunil Solanki, brother of Ramesh Solanki has stated about the goods imported in excess of the declared quantity. There is clear evidence that for each clearance Rs. 5000/- has been paid to Shri Subramanya Sharma an employee of CHA. The Commissioner has gone through all the statements carefully. Apart from these statements, several fax messages sent to M/s. Guru Electronics, Singapore were given by Shri Praveen to the investigating officers. Praveen being an employee of Ramesh Solanki could not have carried out the illegal activities himself. The investigations clearly reveal that Mr. Praveen has only been used by Shri Ramesh Solanki. In the face of enormous evidence, we cannot fault with the conclusion of the Commissioner that Ramesh Solanki is the defacto proprietor of M/s. Suntech, Bangalore. In the totality of the circumstances, the fact that the Show Cause Notice has not made a proposition that Ramesh Solanki is the importer/owner of all the previous 23 consignments is not a very serious infirmity. Once it is proved that Ramesh Solanki is the owner of M/s. Suntech, all the other consequences would follow. Since the imports have been made on behalf of M/s. Suntech. M/s. Suntech is liable to pay the duty demanded in respect of the present import as well as the imports in respect of all the 23 previous consignments. As it is established that the defacto proprietor of M/s. Suntech is Shri Ramesh Solanki. Shri Ramesh Solanki is liable to pay the differential duty of Rs. 95,18,347/- as stated by the Commissioner in para 180 of the impugned order. It has been contended that the fax messages are unauthenticated documents and cannot be relied on. This objection cannot be accepted in a case of this type. Shri Sunil Solanki in his statement has clearly indicated that in respect of the goods received in excess of the invoiced quantity, the payment is made to the representatives of M/s. Guru Electronics by cash. In clandestine activity like this, it is not possible to have authenticated registers and records. The Revenue officers received fax messages from Shri Praveen who handed over the same as per the directions of Shri Ramesh Solanki. These fax messages have wealth of details which enabled the Revenue to have an estimate of the quantity and value of excess declared goods. In this connection, it is appropriate to reproduce the observations of the Commissioner in the impugned order in para 168 of the impugned order.
From these fax messages, it is evident that in addition to the goods declared in the bills of entry, M/s. Guru Electronics, Singapore had supplied additionally 1329 Nos. of 845 Mother Boards, 1530 Nos. of Pentium IV Processors, 460 Nos. of Pentium III Processors, 19069 Nos. of 128 MB SD Rams, 450 Nos. of 256 MB SD Rams and 894 Nos. of Mother Boards. As per the value indicated in these fax messages, the assessable value of these goods imported in addition to the declared quantities works out to Rs. 2,45,72,355/- and the duty liability works out to Rs. 95,18,347/-. These fax messages were recovered from Shri B. Praveen of M/s. Suntech who had handed over the same as per the directions of Shri Ramesh Solanki.
12. Further the following observations of the Commissioner in Para 176 of the impugned order are very revealing as regards the modus oprendus adopted by Shri Ramesh Solanki.
It is also relevant to mention that there has been systematic under-valuation adopted by the supplier namely M/s. Guru Electronics. To illustrate, the cargo clearance permit filed at Singapore Customs bearing No. BP 62461162 dated 01.10.2002 clearly indicates the value of the consignment booked under MAWB No. 05838829473 dated 26.09.2002 relating to B/E No. 365754 dated 27.9.02, a consignment comprising of 6 cartons and weighing 173 kgs id declared to be 94,073/- Singapore Dollars which @ Rs. 25.00 per Sing $ works out to approximately Rs. 23,51,825/-. This document has been relied in the addendum to the show cause notice issued to the concerned parties. This clearly exhibits that the value declared at the port of export was Rs. 23.52 lakhs and whereas the value declared in the Bill of Entry is only Rs. 77,920/- (US$ 1600 @ Rs. 48 70 per US $). Further, the export value does not include freight and insurance which is about 21.25% and if the same is included, the assessable value of the items pertaining to the said bill of entry would be around Rs. 28,48,648/-.
In view of what has been stated above, we hold that the Commissioner's conclusions regarding the ownership of the goods imported is correct. The charges of mis-declaration and undervaluation have been established. Shri Ramesh Solanki is liable for penalty under the Customs act 1962. The impugned goods are liable for confiscation.
13. As regards the goods seized at M/s. Labhdi Computers and M/s. Labdhi Technologies Ltd., it has been urged by the learned advocates that the goods seized are not notified under Section 123 of the Customs Act 1962 and therefore the owners of proving that the goods are smuggled is on the Revenue. Revenue has not discharged its owners, hence the goods are not liable for confiscation and the firms are not liable for penalty. We are not persuaded by these arguments. The seizures at the above firms were effected as a follow-up action of the investigation into the imports by M/s. Suntech, whose defacto proprietor is Shri Ramesh Solanki. Shri Ramesh Solanki is also associated with the above firms. The goods relating to M/s. Suntech were also found in the premises of the above firms. Looking into the totality of the circumstances and in the context of imports in excess of declared quantity by M/s. Suntech, it is very necessary on the part of M/s. Labdhi Computech Pvt. Ltd. and M/s. Labdhi Technologies Ltd to establish the licit import of the goods seized from their premises. Since, they could not establish the same, the Commissioner was right in holding those goods liable for confiscation. In view of the enormous evidence with regard to under-valuation, the values adopted by Revenue cannot be ignored. Hence, the orders of confiscation with regard to these goods are legal and proper. We up hold the same. Hence, we uphold the penalties levied on above two firms by the Commissioner in the impugned order.
14. In respect of B. Praveen, the Commissioner has imposed the penalty of Rs. 5,00,000/- under Section 112(a) of the Customs Act 1962 for abetting the illegal imports. Even though there is no evidence that Shri Praveen shared the illegal proceeds of the smuggling activity, it is clearly established that he has helped Mr. Ramesh Solanki by lending his name for running M/s Suntech. We cannot say that Shri Praveen is totally innocent. He is not a child to plead helplessness and say that he acted only on the directions of Shri Ramesh Solanki. If he were law abiding person, he would have completely disassociated himself from the activities of Shri Ramesh Solanki. Further he could have refused to lend his name. Hence the finding of the Commissioner that Shri Praveen is liable for penalty under Section 112(a) is correct. However, having regard to his financial situation we feel that the ends of justice would be met if the penalty on him reduced to 10,000/- (Rupees Ten thousand only).
15. Shri Sunil Solanki is a partner in M/s. Labdhi Technologies. Goods whose licit import have not been established were seized from the premises of M/s. Labdhi Technologies Ltd. Sunil Solanki who is the brother of Ramesh Solanki cannot claim to be an innocent person, especially when he had knowledge of the illegal activities of his brother Ramesh Solanki. This is clear from his statements given under Section 108 of the Customs Act 1962. Moreover, he was actually dealing with the goods, which were smuggled. In these circumstances, he is liable for penalty. However, we feel that it would be in the interest of justice, if the same is limited to Rs. 1,00,000/- (Rupees One Lakh Only).
16. As regards, Mr. Subramanya Sharma, it is seen that even though the CHA M/s. Premier Forwarding Services disassociated themselves with S/Shri Ramesh Solanki and Sunil Solanki, he cleared the consignments of M/s. Suntech using the name of the CHA and for consideration of Rs. 5000/- per consignment. Therefore, the Commissioner has rightly held him liable for penalty under Section 112(a). However, we feel that the penalty can be reduced from Rs. 1,00,000/- to Rs. 10,000/- (Rupees Ten Thousand only) considering the poor family situation of Shri Sharma.
17. Summing up, we uphold the Order-in-Original with the following modifications.
(a) The penalty on Shri Sunil Solanki is reduced to Rs. 1,00,000/- (Rupees One lakh only).
(b) The penalty on Shri B. Praveen is reduced to Rs. 10,000/- (Rupees Ten thousand only).
(c) The penalty on Shri Subramanya Sharma is reduced to Rs. 10,000/- (Rupees Ten thousand only).
The Appeal Nos. C/110/05, C/125/05 and C/132/05 are dismissed. The Appeal Nos. C/67/05, C/109/05 and C/126/05 are disposed of in the above terms.
(Pronounced in open Court on 16 Jan 2006)