Customs, Excise and Gold Tribunal - Delhi
Shivam Overseas, Shri Harjit Singh ... vs Cc on 11 April, 2007
Equivalent citations: 2007(118)ECC273, 2007ECR273(TRI.-DELHI)
ORDER T.K. Jayaraman, Member (T)
1. These appeals have been filed against order-in-original No. 22/Commr./2003 dated 26.11.2003 passed by the Commissioner of Customs, Ahmedabad. The brief facts of the case are as follows:
2. The appellants filed two shipping bills both dated 20.9.1999 under the drawback scheme on behalf of M/s. Oversky Associates, Gurgaon, Haryana to export 24,750 pcs. of viscose/cotton power loom ladies blouses (declared value at Rs. 22,82,281/- FOB) and 11500 pcs. of similar goods (declared value at Rs. 11,46,608/- FOB) respectively. Examination of the consignment was carried out and it was found that the goods were old and used garments of foreign origin. A detailed investigation was carried out. The investigations of the departmental authorities revealed the following facts:
(1) H.S. Grewal with one other person came to Jamnagar to study the scope of export readymade garments somewhere in the month of December, 1998.
(2) Mr. H.S. Grewal met Mr. Ashfak Ismail Khatri of Jamnagar in STD-PCO near Custom House, Jamnagar, exchanged visiting cards and discussed about export of garments from Jamnagar.
(3) In the month of February, 1999, Mr. Grewal sent two consignmentsl alongwith original documents of readymade garments to ship breaking yard of Mr. Ashfak at Sachana (Jamnagar). The consignors were two companies, one was M/s. Shivam Overseas of Mr. H.S. Grewal and another was M/s. Kanwar Exports of Delhi.
(4) As the export of garments under DBK was not possible from Jamnagar, the consignment was dumped at Mr. Ashfak's godown for pretty long time.
(5) So Mr. H.S. Grewal planned to export the garments from Kandla Port and took help of one Mr. Laxmichand to Kandla to arrange the export somewhere in July, 1999.
(6) Mr. Narayanan Nair Ajay Kumar of M/s. Unique Shipping Services Ltd., Gandhidham was introduced to Mr. Laxmichand through Mr. Ashok Singh and his friend/relative named Mr. Indersingh of Gandhidham and work for clearing the said consignment was given to M/s. Unique Shipping Services P. Ltd., Gandhidham.
(7) Mr. H.S. Grewal instructed Mr. Ashfak to transfer one consignment and documents of M/s. Shivam Overseas to M/s. Unique Shipping Services Pvt. Ltd., Gandhidham and one of M/s. Kanwar Export back to Delhi.
(8) Accordingly one consignment of M/s. Shivam Overseas was sent to Kandla and warehoused in KPT's godown rented by M/s. Kamat & Co.(CHA) in the month of October, 1999.
(9) Mr. H.S. Grewal became apprehensive since Custom House, Kandla was very strict. So he wanted to pay a safer game. So by calling back documents issued in his own company's name.
(10) Mr. H.S. Grewal formed a fake company namely M/s. Oversky Associates, Gurgaon by tempting one unemployed tenth passed youth Mr. Devendra Kumar who went to him for search of job.
(11) Mr. H.S. Grewal took the signatures of Mr. Devendra Kumar on blank forms and papers and got opened a bank account. Also called for photographs and copy of ration card from Mr. Devendra Kumar.
(12) After withdrawing documents of M/s. Shivam Overseas, a set of fresh documents i.e. Shipping Bills in the name of M/s. Oversky Associates, Gurgaon were sent to Mr. Narayanan Nair Ajay Kumar of M/s. Unique Shipping Services Pvt. Ltd. Gandhidham.
(13) Out of the total documents submitted by Mr. H.S. Grewal in the name of M/s. Oversky Associates, some were got signed by Mr. Devendra Kumar and rest were managed by Mr. H.S. Grewal by affording forged signature of Mr. Devendra Kumar.
(14) The S/Bs No. F-014009 & F-014010 were got noted in the Customs department on 20.09.99 by M/s. Unique Shipping Services P. Ltd. using the name of M/s. Kamat & Co. as a CHA.
(15) M/s. Unique Shipping Services Pvt. Ltd., Gandhidham was dealing in clearing and forwarding of export/import cargo. For this purpose they were using the CHA licence of M/s. Kamat & Co. on royalty basis.
(16) Before producing the cargo for examination Mr. Narayanan Nair Ajay Kumar checked the cargo and found that there are number of faded/stained and damaged pieces in the consignment so he informed Mr. H.S. Grewal. Accordingly Mr. H.S. Grewal told him that Mr. Laxmichand would be coming to Kandla to inspect to the cargo.
(17) Mr. Laxmichand visited Kandla and inspected the garments and told Mr. Narayanan Nair Ajay Kumar that there was no much problem and goods can be exported as such by keeping sound clothes on the top and damaged garments below it.
(18) Mr. Narayanan Nair Ajay Kumar reported the facts to Mr. Gopal Krishnan about the proposal made by Mr. Laxmichand, but staff and Director of M/s. Unique Shipping Services Pvt. Ltd., Gandhidham decided to survey the cargo to segregate the damaged pieces. The same thing was intimated to Mr. H.S. Grewal.
(19) The survey was conducted by M/s. Inspectorate (India) Consulting Engineers Pvt. Ltd. As there was no specific order for survey only segregation was made. 22 boxes containing 2606 damaged pieces were separated. The survey was conducted by laymen. Survey report is also silent about quality/standard and composition of the fabric. So the report proved to be useless.
(20) Though the report was not self sufficient, shipping bills were amended accordingly and cargo was produced before the customs authority for examination.
(21) Examination of the cargo was carried out by Customs officers and it was detected that the cargo were misdeclared and over invoice to get huge drawback fraudulently. The garments did not match with the description declared in the S/Bs. The garments were old and used, stained, damaged and of 'FOREIGN ORIGIN'. The exporter tried to keep the authorities in dark by removing the labels of foreign origin from the garments. But could not remove 100% and in many garments labels of foreign origin were detected.
(22) So under the reasonable belief of confiscation of the goods, the goods were seized on 4.12.99 by the Customs Department as the goods are liable for confiscation under Section 113(d) of the Customs Act, 1962.
3. In view of the above, show cause notices were issued to M/s. Shivam Overseas, New Delhi, the Custom House Agent M/s. Unique Shipping Services Pvt. Ltd., Gandhidham, Mr. H.S. Grewal, Mr. Laxmichand, Mr. Devendra Kumar, Mr. Narayanan Nair Ajay Kumar and Mr. K.V. Gopalkrishnan proposing for confiscation of the seized goods covered by two shipping bills under Section 113(d)(h) of the Customs Act. Penalties under Section 114 of the Customs Act were also proposed. After conducting the adjudication proceedings, the Commissioner passed the impugned order. He held that the impugned goods which were attempted to be exported under the drawback scheme were liable for confiscation under Section 113(d) of the Customs Act, 1962. He absolutely confiscated the goods. Further, he has imposed a penalty of Rs. 10,88,000/- on M/s. Shivam Overseas, New Delhi and penalty of Rs. 10,00,000/- on Mr. H.S. Grewal under Section 114 of the Customs Act. Further, he has imposed a penalty of Rs. 5,00,000/- on Shri Ajay Kumar, Director of M/s. Unique Shipping Services Pvt. Ltd., Gandhidham. The appellants have strongly challenged the impugned order. The following defects were recorded on hearing :
4. The case was adjourned several times. Shri R. Sudhinder, Advocate last appeared on 9.2.2007 and on his request the matter was adjourned and it was listed for hearing on today and it remained on the final hearing board. However, on behalf of the appellant no one appeared.
Shri B.K. Singh, learned authorized representative appeared on behalf of the Revenue. He narrated briefly the facts of the case and the contraventions leading to the confiscation of the impugned goods and also the imposition of penalties on the appellants. On the basis of the available records, we are deciding the issue.
5. In the appeal memo of Shivam Overseas and H.S. Grewal, the following points were urged:
(a) The impugned order is based on presumptions and surmises and the imposition of penalty on the appellant is not justified as the appellant is neither the exporter nor are they connected in any way of the export of goods worth Rs. 38,28,889/-. They have never claimed the goods.
(b) According to the show cause, the examination of the goods was done and representative samples were also drawn. It is alleged that the goods were old and used garments of foreign origin and the shipment was stopped and 100% examination was carried out in the presence of two punch witnesses. The examination revealed that the consignments contained old, used, torned, shopsoiled garments which are not of Indian origin. These are incorrect. The facts are otherwise brought out in the cross-examination of the departmental officers and the same had been reproduced in the impugned order.
(c) The shipping bills were filed. Subsequently the goods were damaged by rain water. Therefore, the same were segregated by Unique Shipping Agency without the knowledge of the department. However, the shipping bills were amended thereafter after prior permission of the department.
(d) A perusal of shipping bill 014010 giving description of the goods as "viscose/cotton powerloom ladies blouses" reveals that on filing of the shipping bills, the goods were examined by Preventive Officers and Superintendent under SIIB supervision and passed in full on 2.12.99. The examination report on the above mentioned shipping bills reads "Inspected lot checked export marks and number O/E 100% lable, A/S description and quantity. Drawn and forwarded the seal sample for test and group Examination under SIIB supervision on 02.12.1999". A perusal of the shipping also reveals that the goods were examined by Preventive Officer and Superintendent under SIIB supervision and similar examination report has been given.
(e) In both the shipping bills there is noting as under:
Provisionally allowed drawback (DBK) to be paid after SIIB clearance as per Deputy Commissioner (SSIB)'s Order and signed on 01.12.99.
Both the bills are assessed on 25.9.99. The laboratory test reports were also received wherein the declared quality was also confirmed. From the above, it is clear that the declared goods were examined under SIIB supervision, passed in full and test reports also confirmed the quality and Let Export Order under Section 51 of the Customs Act passed on 2.12.1999 by the proper officer.
(f) The description given in the show cause notice regarding the garments which were examined on 100% is at variance with what is shown in the panchnama.
(g) In the show cause notice, no details of the fact that samples were drawn have been given. It is also not mentioned therein that the prescribed procedure was not followed, nor the fact that the test reports of the first samples were drawn as per procedure and sent to the laboratory had confirmed the quality of the declared goods. Therefore, the Indian origin is also confirmed.
(h) The adjudicating authority has held that the panchnama does not seem to be reliable as there was contradiction in the report of the laboratory about fabric being viscose/cotton powerloom and observation by panchas about fabric found to be synthetic when no samples had drawn as per procedure. The authority has stated that no expertise was needed to comment on the condition of the garment being torn, old and used or oil stained. It was never appreciated that the goods had been damaged by rain water and segregated. On examination, the declared goods had been found as per declaration in all respects. In view of the above, the show cause notice is not based on correct facts. The facts have been distorted and the investigation done is improper. That being so, the impugned order is not sustainable. The adjudicating authority has stated that it is immaterial that the order is not sustainable. The adjudicating authority has stated that it is immaterial that the order under Section 51 has not been reviewed since subsequent investigations have proved that there had been fraud, suppression and mis-declaration. He has also held that the panchnama was not reliable. In these circumstances, the question of fraud, suppression and mis-declaration does not arise especially when the departmental examination reports and laboratory test reports confirmed that the goods are as per the declaration. The adjudicating authority cannot accept a part of the unreliable panchnama and discard the rest.
(i) A perusal of the shipping bills reveals that the goods had been examined by the SIIB supervision, the samples were drawn, the "Let Export Order" was also passed after the AC had satisfied himself. Drawback was provisionally allowed after SIIB clearance as per the DCs order. Thus, these orders were passed under Section 51 by the proper officer. It is well settled that once the authorities after examination of the consignment gave a "Let Export Order", it amounts to an order of adjudication in terms of Section 51 of the Act and the same can be called in question by the Collector of Customs by exercising the power of review in terms of Section 129D(2). This has not been done in the present case.
(j) In the instant case, the clearance has been given by the Deputy Commissioner who has also issued the show cause notice and legally cannot revise or call the same in question.
(k) As the declared goods have been held to be correct as per the examination by the Customs and as per laboratory test results and the subsequent panchnama has been held to be not reliable by the adjudicating authority himself, there is no fraud or mis-declaration or suppression and issuing of show cause notice without countermanding the "Let Export Order." On this account also the order narrates to be set aside.
(1) The show cause notice proposes confiscation under Section 113(d)(h) of the Customs Act, 1961 and not under Section 113(h) thereby confirming that there was no mis-declaration. Since Section 113(d) has been invoked, it implies that the goods were being tried to be exported contrary to any prohibition imposed under this Act or any other law for the time being in force. As regards confiscation under 113(d), no details have been given of the prohibition being violated. The goods as per the shipping bills are permissible for export and "Let Export Order" had been given accordingly. Hence, the confiscation under this Section is not warranted and hence the order deserves to be set aside.
(m) Since confiscation is not warranted, no penalty is imposable.
(n) No penalty is imposable on the appellants as the appellants are neither the owner of the goods, nor have claimed the same, nor exporter nor in any manner concerned with the goods nor have made any attempt to export the goods nor are beneficiary in the entire records, show cause, statements of persons and in the discussions and findings given in the impugned order, no act of omission or commission has been brought out regarding the appellant, a partnership firm. Hence penalties imposed are illegal.
5(b) The third appellant Sri Narayana Rao Ajay Kumar pleaded that he had taken all care to see that the particulars mentioned in S/Bs are correct and acted in a bonafide manner. He acted only as C & F agent and did not sign any document. Hence no penalty is warranted on him. He relied on Hon'ble Apex Court's decision in HSL v. State of Orissa wherein it is held that no penalty is leviable for bonafide breach of law.
6. The learned SDR took us through the adjudication order reiterating the findings of the adjudicating authority. He justified the confiscation and imposition of penalties on the appellants.
7(a). We have gone through the records of the case carefully. The show cause notice under Section 124 of the Customs Act was issued on 4.5.2000. The key person involved in the attempt to export the goods with intention of claiming drawback fraudulently appears to be Shri H.S. Grewal. He is actually shown as proprietor of M/s. Shivam Overseas, New Delhi.
The first two appellants are Shivam Overseas and Mr. H.S. Grewal. The third appellant is Mr. Narayana Rao Ajay Kumar of Unique Shipping Services, Gandhidham.
7(b) Briefly stated, the case of the Revenue is that H.S. Grewal initially attempted to export used garments with an intention to get drawback fraudulently in the name of Shivam Overseas owned by him. Later he created a fictitious company "Overseas Associates, Gurgaon" in the name of one Shri Devender Kumar only to export the impugned goods through the fictitious company "Overseas Associates".
7(c). On going through the records, we find that there are very many missing links in the investigation and also a very unsatisfactory dealing with the issues in the order-in-original. For example, we find that in the shipping bill there is an endorsement regarding the examination conducted by the competent officer. It is also seen that the SIIB officers had taken part in the examination of the goods. Even the Deputy Commissioner has passed the shipping bill for export under drawback. First of all these facts have not been brought out in the show cause notice, as contended by the appellant. The adjudicating authority merely records that Shri Luthra, Deputy Commissioner has accepted that these are omissions. He has not at all discussed the implications of these reports of the departmental authorities and also the fact of clearing the consignment for export under claim for drawback. We also find that the samples have been taken and sent to the Chemical Examiner, whose reports are also available on record. A perusal of these reports do not indicate any discrepancy or any type of mis-declaration with regard to the description of the goods as declared in the shipping bill. The adjudicating authority has also not discussed the test reports. It is the case of the department that initially the goods were attempted to be exported in the name of M/s. Oversky. However, later it was decided to send them in the name of Oversky which is a fictitious company created by Shri H.S. Grewal. We wanted to see the record as also the basis on which the Revenue has come to the above conclusions. It has also been alleged that the fictitious company is in the name of Devender Kumar. No statement from Devender Kumar has been recorded under Section 108 of the Customs Act. The statement which is found in the file does not show any link between Devender Kumar and H.S. Grewal. The adjudicating authority has not given a clear cut finding regarding the confiscation of the impugned goods. Moreover, there is lot of confusion regarding the status of M/s. Shivam Overseas. In certain places Shri H.S. Grewal has been shown as proprietor of M/s. Shivam Overseas, but whereas in the affidavit there is statement that he has been described as partner. All these crucial facts have not been properly appreciated by the adjudicating authority. The role of the third appellant Shri Narayana Rao Ajay Kumar has also not been properly discussed. In these circumstances, we feel that in the interest of justice, the case has to be remanded back to the original authority for a fresh consideration and decision in so far as these appeals are concerned. We set aside the absolute confiscation of the impugned goods and the penalties imposed on the three appellants. The original authority shall pass a denovo order in the light of our observations within a period of three months from the date of receipt of this order.
8. The appeals are accordingly allowed by way of remand.
[Dictated and pronounced in the open Court]