Custom, Excise & Service Tax Tribunal
Mumbai vs Mahendra Kumar Darewala on 19 February, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: C/85867/2014
[Arising out of Order-in- Original CAO No. 134/2013-14/CAC/CC(E)/YG/GR.VII dated 29th November 2013 passed by the Commissioner of Customs (Export), Mumbai]
For approval and signature:
Honble Shri C J Mathew, Member (Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
No
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
Commissioner of Customs (Export)
Mumbai
Appellant
versus
Mahendra Kumar Darewala
Respondent
Appearance:
Shri MK Sarangi, Dy. Commissioner (AR) for the appellant Shri B Shesha Gopalan, Advocate & A. Sheerazi, Advocate for the respondent CORAM:
Honble Shri C J Mathew, Member (Technical) Date of hearing: 19/02/2016 Date of decision: 19/02/2016 ORDER NO: ____________________________ Per: C J Mathew:
Consequent upon the review of order-in-order CAO no. 134/2013-14/CAC/CC(E)/YG/GR.VII dated 29th November 2013 of Commissioner of Customs (Export), Mumbai,in exercise of powers under section 129D(1) of the Customs Act 1962, the competent committee of Chief Commissioners directed the original authority to file this appeal before the Tribunal.
2. Proceedings were initiated against M/s Nitco Limited and others for alleged evasion of Customs duty by mis-declaration of description/quantity and value of natural marble blocks and slabs imported from Italy, Turkey and Spain and artificial marble tiles and vitrified tiles imported from China. While these proceedings were pending, the importer, along with 20 other noticees, approached the Settlement Commission of Customs and Central Excise in accordance with the provisions of section 127B of Customs Act, 1962. Consequently, proceedings under sections 111 and 112 of Customs Act, 1962 were continued and concluded only in relation to Shri Mahendra Kumar Darewala, Shri Pawanchandra Mulchand Mehta, Shri Shantilal Seth, Shri Prafulchandra Kataria, Shri Nitin Majethia and Shri Vinod Tomer. In impugned order, the adjudicating authority imposed a penalty only on Shri Vinod Tomar, the Customs House Agent.
3. Proceedings against Shri Prafulchandra Kataria, who had since expired, were abated. Proceedings against Shri Nitin Majethia were dropped for want of any proposal in the show cause notice for imposition of penalty. Against the other three noticees, the proceedings were dropped on the ground that there was no evidence of direct linkage of these individuals in the admitted cash transactions relating to the imports. The adjudicating authority also relied upon the decision of this Tribunal in SK Colombowala v. Commissioner of Customs (Import), Mumbai [2007 (220) ELT 492 Tri.-Mumbai)]. The relevant portion of the relied upon order, following reference to third Member owing to difference of opinion, was that :
26. .
(c) The case against all co-noticees comes to an end once the order of settlement is passed in respect of the person entitled to file an application before the Settlement Commission and therefore, penalty imposed upon the appellants cannot be sustained and is set aside.
4. The appeal of the Revenue contends that the adjudicating authority should instead, have, followed the later decision of the Tribunal in KI International Ltd v. Commissioner of Customs, Chennai [2012 (282) ELT 67 (Tribunal)] which, taking note that the decision of the Honble Supreme Court in S.P. Changalvaraya Naidu v. Jagannath [1994(1) SCC 1] had not been considered by the Tribunal in re SK Colombowala, held to the contrary. In particular, it is contended on behalf of Revenue that the adjudicating authority should have appreciated that the Tribunal while deciding M/s Rajesh Associates v. Commissioner of Customs [Appeal no. C/195-197/2012] had sought reference of these two rulings to a Larger Bench which, however, declined to decide on the reference as the expected determination by the Honble High Court of Madras would provide a wider jurisdictional guidance. It is also the contention of the Revenue that the conclusion of there being no direct linkage of the three noticees with the admitted cash transactions was, considering the statement of Shri Rajeev Bangard and the confessions of Shri Pawan Chand Mehta and Shri Kantilal Seth, erroneous.
5. Learned Authorised Representative brought on record the order of the Settlement Commission dated 31st May 2013 to illuminate the factual matrix. Further reliance is placed on the decision of the Honble High Court of Bombay in Yogesh Korani v. Union of India [2013 (159) ELT 3] which held:
22.?Once it is held that the penalty levied upon M/s. Choice Laboratories and the Petitioner are based on independent and distinct causes of action and there is no settlement in respect of imported Clove Bud oil with which the Petitioner is concerned, then the alternative submission of Mr. Bulchandani that the levy of Penalty of Rs. 15,00,000/- is excessive and harsh, loses credibility. In the facts of this case, the Petitioner, a Chartered Accountant, has indulged in fabricating bogus documents and went to the extent of creating and signing the document on behalf of M/s. Fresh Laboratories and M/s. Choice Laboratories as their Director/partner, when he is not even an office bearer of those two entities. This is a serious offence and the authorities below were justified in showing no leniency upon the Petitioner. The Petitioner was solely responsible for executing fictitious and bogus High Sea Sale Contract and none other parties to the show cause notice were involved in that act. In the instant case, although the customs duty ordered to be recovered on goods were cleared under a common advance licence granted to M/s. Choice Laboratories the penalty levied upon M/s. Choice Laboratories and the Petitioner arise from different causes of action. The liability to pay penalty is not joint but several. The offence committed by the Petitioner is totally independent and far more serious than the acts of the principle noticee and other persons involved and hence the case of the Petitioner cannot be considered on par with the main noticee. Accordingly, heavy penalty levied upon the Petitioner is justified and cannot be said to be harsh or excessive.
6. Learned Counsel for the respondent has placed reliance on the decision of the Tribunal in Virender Bansal v. Commissioner of Customs (ICD), New Delhi [2015 (317) ELT 796 (Tri.-Del.)] which followed the decision of the Tribunal in re S K Colombowala.
7. Considering the main ground on which the adjudicating authority dropped the proceedings against the respondent, viz., the decision in re SK Colombowala and reservation about its finality owing to pendency of appeal against the decision of the Tribunal in re KI International with the impact of its outcome clearly articulated by the Larger Bench in re Rajesh Associates [Misc. Order no. 42714/2015], exploration of the evidence linking the notices with the illicit import is secondary to the issue of continuance of proceedings..
8. The decision of the Tribunal in re S K Colombowala was settled by reference to a third member with the majority holding, that co-noticees cannot be proceeded against once the main noticee has settled the demand before the Settlement Commission. The contrary decision, viz, that of the Tribunal in KI International has been pronounced by a division bench of the Tribunal. It is now well-settled that the decision emanating from reference to a third member on account of different of opinion has the same status as that of a Larger Bench. Therefore, it would appear that the Tribunal has no option but to follow the decision in re SK Colombowala. A further impediment to according precedential value to the decision in re KI International is the pendency of the appeal against it in the Honble High Court of Madras.
9. It is also pertinent to note that in Radiant Silk Mills Pvt Ltd v. Commissioner of Customs & Central Excise, Mumbai II [2013 (288) ELT 311 (Tri.-Delhi)] a single member bench of the Tribunal, placed in a similar quandary, had opined :
10.?Learned DR has drawn my attention to recent Division Bench decision in the case of K.I. International referred supra, wherein the majority decision in the case of S.K. Colombowala does not stand followed by observing as under:-
It was plea of the appellants covered by adjudication orders Nos. 6949/07, dated 30-11-2007, 6947/2007, dated 30-11-2007, 6944/07, dated 30-11-2007, 6948/2007, dated 30-11-2007, 6946/2007, dated 30-11-2007 and 7453/2007, dated 25-3-2008 that the importers covered by the said adjudications having settled their dispute before Settlement Commission and immunity from penalty and prosecution having been granted to them, the trader, broker and sub-broker appellants covered by those adjudications cannot be called upon to pay penalty out of same adjudication. Honble Supreme Court in the case of S.P. Chengalvaraya Naidu v. Jagannath reported in (1994) 1 SCC 1 laid down the law that the principle of finality of litigation cannot be pressed to the extent of such an absurdity that it becomes an engine of fraud in the hands of dishonest litigants. The courts of law are meant for imparting justice between the parties. One who comes to the court, must come with clean hands. We are constrained to say that more often than not, process of the court is being abused. Property-grabbers, tax- evaders, bank-loan-dodgers and other unscrupulous persons from all walks of life find the court-process a convenient lever to retain the illegal gains indefinitely. We have no hesitation to say that a person, whos case is based on falsehood, has no right to approach the court. He can be summarily thrown out at any stage of the litigation. Thus plea of these appellants are baseless and being misconceived are devoid of merit and they are liable to penalty under law for the unlawful act. The order of the Tribunal in the case of S.K. Colombowala v. CC (Import), Mumbai - 2007 (220) E.L.T. 492 (Tri.-Mum.) does not come to rescue of these appellants since that decision did not take into consideration the law laid down by Apex Court in the case of Chengalvaraya Naidu (supra). Accordingly, the orders passed by Settlement Commission in case of importers are not binding on Tribunal to grant relief to the appellants who were not before the Settlement Commission and fraud and Justice being sworn enemy of each other, the appellants in aforesaid appeals are barred to take undue advantage of orders of Settlement Commission since they were not before the Commission. Further, the doctrine of finality does not immune these appellants who defrauded Revenue.
11.?As is seen from the above, the Division Bench has not followed the majority decision of the Tribunal in the case of S.K. Colombowala by observing that the said decision did not take into consideration the law laid down by Apex Court in the case of S.P. Chengalvaraya Naidu referred supra.
12.?I have looked into the said decision of the Honble Supreme Court in the case of S.P. Chengalvaraya Naidu. On going through the entire judgment, I find that the same was in respect of judgment or decree obtained by fraud and without disclosing the factual position. The Honble Court observed that decree obtained by non-disclosure of the release deed amounted to fraud on Court and hence decree liable to be set aside. The facts of the said decision of the Honble Supreme Court are entirely different from the facts of the instant case or the facts available in the case of S.K. Colombowala. The proceedings are under the Central Excise Act as regards imposition of penalty in terms of Rule 26 of Central Excise Rules. The question of obtaining any decree or order by mis-representing the facts of the case or by fraudulently representing the case, as was the case before the Honble Supreme Court, are not involved in the present appeal. While delivering the majority judgment, the majority Members have relied upon the decision of the Honble Supreme Court as also of the Tribunal, which were pari materia on facts and in law and analysed the provisions of Section 127. As such, it cannot be said that majority order, which stand passed in precedent decision involving identical facts and law is not required to be followed as the same has not taken into consideration the Supreme Court judgment in the case of S.P. Chengalvaraya Naidu. The said judgment of the Honble Supreme Court was in altogether different facts and circumstances and under different provisions of law.
10. Learned Authorised Representative drew my attention to the decision of the Honble Supreme Court in Collector of Customs, Madras v. D. Bhoormull [1983 (13) ELT 1546 (SC)] and S A Futehally v. Commissioner of Customs, Mumbai [2004 (178) ELT 861 (Tri.-Mumbai). These decisions, as well as that in re Yogesh Korani, were in connection with immunity under Kar Vivadh Samadhan Scheme whereas SK Colombowala v. Commissioner of Customs (Import), Mumbai is specific to immunity accorded by the Settlement Commission and has recorded the distinction between the two. It is also noticed that the decision in Yogesh Korani v. Union of India allowed continuance of proceedings owing to the finding that the proceedings against the co-noticee was on a ground other than the one settled under section 127B of Customs Act, 1962 and that the amnesty availed under the Kar Vivadh Samadhan Scheme was limited.
11. From the above, it would appear that the decision in re SK Colombowala prevails for the moment. The impugned order has correctly relied upon this and, consequently, the appeal of Revenue fails.
(Pronounced in Court) (C J Mathew) Member (Technical) */as 1 10