Custom, Excise & Service Tax Tribunal
M/S Hi-Tech Fertifoods Pvt. Ltd vs Commissioner Of Customs (Export on 4 March, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT No. I Appeal No. C/960 to 966/12 and C/1006/12 (Arising out of Order-in-Original No. 17/2012-13 dated 30.07.2012 passed by Commissioner of Customs, Nhava Sheva, Raigad) For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical) ================================================
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 : No 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?
M/s Hi-Tech Fertifoods Pvt. Ltd.
Indian Metals & Chlorides Dinesh Shantilal Shah Intensive Agri Development Pvt. Ltd.
Babulal Shantilal Shah Preeti Dinesh Shah Shri Balwinder Arora Appellant Vs. Commissioner of Customs (Export, Nhava Sheva Respondent Appearance:
Shri S.N. Kantawala, Advocate Shri V.M. Doiphode, Advocate for appellant Shri V.K. Singh, Spl. Counsel for respondent CORAM:
Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical) Date of Hearing: 04.03.2016 Date of Decision: .2016 ORDER NO Per: M.V. Ravindran All these appeals are directed against Order-in-Original No. 17/2012-13 dated 30.07.2012 and are being disposed of by a common order.
2. Heard both sides and perused the records.
3. Appeal No. C/1006/12 is filed by Shri Balwinder Arora, Proprietor of M/s. Prime Trading Co., on whom penalties have been imposed under the provisions of Section 114AA of the Customs Act, 1962 on the finding that he had exported potassium chloride declaring them as calcium chloride. To arrive at such conclusion, various statements of Shri Balwinder Arora was considered. 3.1 Following appeals are filed by other appellants against the penalties imposed on them under the provisions of Section 114AA of the Customs Act, 1962:-
(a) Appeal No. C/960/12 Hi-Tech Ferti Foods Pvt. Ltd.
(b) Appeal No. C/961/12 Indian Metals & Chlorides
(c) Appeal No. C/962/12 Dinesh Shantilal Shah
(d) Appeal No. C/963/12 Intensive Agri Development Pvt. Ltd.
(e) Appeal No. C/964/12 Babulal Shantilal Shah
(f) Appeal No. C/965/12 Preeti Dinesh Shah
(g) Appeal No. C/966/12 Kirti Shantilal Shah 3.2 Learned Counsel S.N. Kantawalla, appeared for appellant Shri Balwinder Arora and learned Counsel V.M. Doiphode, appeared for other seven appellants. Shri V.K. Singh, Spl. Counsel appeared for Revenue.
4. Learned Counsel Shri S.N. Kantawalla would draw our attention to the show-cause notice, order-in-original and the findings recorded by the adjudicating authority to come to a conclusion that appellants are liable to be penalized under the said provision. He would submit that subsequently after two months of passing of order-in-original, the adjudicating authority has issued a corrigendum to the order-in-original by incorporating that the penalty imposed on M/s Prima Trading Co., is also under Section 114(i) of the Customs Act, 1962 along with penalties under Section 114AA. He would draw our attention to the paragraph No. 95(a) and submit that the adjudicating authority has recorded that he is not imposing any penalty under Section 114(i) and 114(iii) as proposed in the show-cause notice. It is the submission that the corrigendum which imposes the penalty under Section 114 of Customs Act, 1962 is not correct and the entire order which imposes penalty on the appellant needs to be set aside.
5. Learned Counsel appearing on behalf of the Revenue, responding to the submission made by the learned Counsel, submits that there is an admission of Shri Balwinder Arora as to the export of restricted item potassium chloride as Calcium chloride, there is no need for any further evidence. It is his submission that the penalty was proposed under Section 114(i) and 114(iii) of the Customs Act, 1962 in the show-cause notice and the words not imposed as recorded by the adjudicating authority does not mean that he has dropped the proceedings under the said provisions and the corrigendum is only stating the facts of the imposition of penalty under both the Sections.
6. Learned Counsel Shri V.M. Doiphude appearing for other appellants would submit that in the case of Appeals No. C/964/12 and 965/12 the penalties imposed are totally improper, inasmuch that the statement of Shri Babulal Shantilal Shah in Appeal No. C/964/12 clearly indicates that he was not attending to day to day work of the firm and the work was undertaken by Shri Kirti Shantilal Shah, hence penalty imposed on Shri Babulal Shantilal Shah needs to be set aside.
6.1 As regards the penalty imposed on Ms Preeti Dinesh Shah (C/965/12), it is his submissions that in the statement recorded it is very clear that she is a sleeping Director/partner of the Intensive Agri Development Pvt. Ltd., hence no active role can be attributed to these two persons for imposition of penalties under Section 114AA of the Customs Act, 1962.
6.2 As regards penalty imposed on other appellants it is his submission that the findings of the authority are very sketchy and are totally incorrect inasmuch as the penalties had to be imposed on these appellants is based upon the statement recorded on Shri Balwinder Arora which indicates / implicates these appellants by stating that these people were aware that Shri Balwinder Arora was exporting potassium chloride as calcium chloride. It is his submission that all these appellants have sought cross examination of Shri Balwinder Arora in order to bring on record that appellants had no idea Shri Balwinder Arora wanted to export potassium chloride as calcium chloride. He submits that the decision of the Tribunal in the case of Agrawal Round Rolling Mills Ltd. v. CCE 2015 (317) ELT 145 (Tri. Del.) relying on the judgement of J & K Cigarette Ltd. 2009 (242) ELT 189 (Del.) lays down the law that cross-examination if asked for should be granted if reliance is placed on such a statement. He would also submit that the Honble High Court of Gujarat in the case of Mahek Glazes Pvt. Ltd. v. Union of India 2014 (300) ELT 25 (Guj.) has stated that if request for cross-examination is made, it has to be dealt with separately and cannot be rejected in the adjudication order. It is his submission that the provisions of Section 138B of the Customs Act, 1962 should be followed in its entirety as per the decision of the Honble High Courts.
6.4 Learned Spl. Counsel responding to the submissions made by the learned Counsel on behalf of the appellants fairly submits that Shri Babulal Shantilal Shah and Ms. Preeti Dinesh Shah were not attending day to day work when the infraction took place.
6.5 As regards other appellants, the denial of cross-examination cannot be a reason for setting aside the penalties. It is his submission that there is a clear acceptance by Shri Balwinder Arora that all these appellants were aware of the fact that potassium chloride was being exported under the curb of calcium chloride, hence penalties imposed are correct.
7. We have considered the submissions made at length by both the sides and perused the records.
8. As regards the penalties imposed on Shri Babulal Shantilal Shah and Ms. Preeti Dinesh Shah we find from the records that both these appellants have categorically stated in their statements that they were not engaged in day to day working of the Company as its Directors or partners. This factual aspect has not been considered in right perspective by the adjudicating authority not contradicted in the impugned order. Since both the appellants are not playing any active role in day to day functioning of the firms which sold potassium chloride to Shri Balwinder Arora, then in our view penalty cannot be imposed under Section 114AA on these two appellants. On these findings, we set aside the penalties imposed on these two appellants.
8.1 As regards the appellant Shri Balwinder Arora, we do find from the records that the adjudicating authority has imposed penalty under Section 114AA as per the adjudication order and subsequently issued corrigendum to include the imposition of penalty under Section 114(i) of the Customs Act. In our view, if the adjudicating authority wants to impose further penalty after passing the adjudication order he should have followed the principles of natural justice before coming to any conclusion. In our view, the penalties imposed on Shri Balwinder Arora needs to be reconsidered by the adjudicating authority, as we find from the show-cause notice that there is a proposition to impose penalty under Section 114(i) and 114(iii) of the Customs Act, 1962. We also notice that the provisions of Section 138B of the Customs Act, 1962 needs to be followed in its letter and sprit by the adjudicating authority before coming to a conclusion. The provisions of Section 138B of Customs Act have been incorporated by various decisions of the Honble High Court, more specifically, in the case of Basudev Garg & Ors. v. CC 2013-TIOL-464-HC-DEL-CUS. Recently, Delhi Bench of this Tribunal in the case of CCE Delhi v. Kuber Tobacco India Ltd. in Final Order No. 50938-50942/2016 dated 04.03.2015 has considered the provisions of Section 9B and Section 138B of the Central Excise Act and Customs Act as regards the examination and cross-examination of the persons making statement. After following the law as laid down in final order No.50938 50942/2016 the Tribunal recorded as under:-
14. In view of the above anaylsis, it is clear that during adjudication, the adjudicating authority is required to first examine the witness in chief and also to form an opinion that having regard to the facts and circumstances of the case, the statements of the witness are admissible in evidence. Thereafter, the witness is offered to be cross examined in the absence of examination in chief, allowing the cross examination, is a futile exercise. We further find that the appellant have challenged the impugned order on the ground that the evidence in the form of statements gathered have no link of the appellant to the activities took at Sandeep Poultry Farm which is required to be examined on the basis of records available during the course of adjudication and the same has not been considered judicially.
15. In view of the above, the impugned order Is set aside.
The adjudicating authority shall be at liberty to re-adjudlcate the matter after following the procedure laid down under section 9D of the Act as discussed above.
8.2 As regards the appeals filed by other appellants, we find that they have requested the adjudicating authority to grant them cross-examination of Shri Balwinder Arora in order to define the allegation as to they were aware of the fact that potassium chloride was to be exported under the curb of calcium chloride. We are of the view that cross-examination as sought of should have been granted in order to arrive at a correct conclusion as to of the appellants were aware of the facts or otherwise. In our considered view the appeals filed by Shri Balwinder Arora and others needs to be disposed of by way of remand to the adjudicating authority to reconsider the issue afresh after following the principles of natural justice and adherence to the provisions of Section 138B of the Customs Act, 1962 and binding judgement of the Hon'ble High Court on this point.
9. All the appeals are disposed of as indicated herein above.
(Pronounced in Court on..) (C.J. Mathew) Member (Technical) (M.V. Ravindran) Member (Judicial) nsk ??
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1 10Appeal No. C/960 to 966 and C/1006/12