Punjab-Haryana High Court
M/S Srg International And Others vs Commissioner Of Customs (Preventive) on 6 April, 2010
Bench: Ashutosh Mohunta, Mehinder Singh Sullar
CUSAP No.1 of 2010 -1-
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
CUSAP No.1 of 2010
DATE OF DECISION: April 6, 2010
M/S SRG INTERNATIONAL AND OTHERS ...APPELLANTS
VERSUS
COMMISSIONER OF CUSTOMS (PREVENTIVE), ...RESPONDENT
AMRITSAR
CORAM: HON'BLE MR. JUSTICE ASHUTOSH MOHUNTA.
HON'BLE MR. JUSTICE MEHINDER SINGH SULLAR.
PRESENT: MR. R.S. RAI, SR.ADVOCATE
WITH MR. RAJESH GARG, ADVOCATE
FOR THE APPELLANT.
MR. H.P.S. GHUMAN, SR.STANDING COUNSEL
FOR THE RESPONDENT.
ASHUTOSH MOHUNTA, J.(ORAL)
This common order shall dispose of 14 appeals viz. CUSAP Nos. 1, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16 and 17 of 2010, as questions of law as well as facts involved in these appeals are common.
The appellants have filed these appeals under Section 130 of the Customs Act, 1962 (for brevity "the Act") against the order dated 16.10.2008 passed by the Customs Excise and Service Tax Appellate Tribunal (herein after referred to as "the Tribunal"), whereby, the appeals filed by the appellants against the order Annexure A-11 passed by the Commissioner of Customs (Preventive) Amritsar (herein after referred to as "the Adjudicating Authority") were rejected and the order of the Adjudicating Authority was upheld.
The brief facts, which are involved in the present appeals, are that 16 export containers of the appellants, which were on their way to CUSAP No.1 of 2010 -2- Nhava Sheva port for shipment, were detained and the same were covered under 74 shipping bills. It was found that the goods which were actually exported were different from the goods from which the samples had been drawn. It is a matter of record that the said 16 containers were placed under seizure and Show Cause Notice was issued to the concerned persons and the entire matter is yet pending for final adjudication and which is not a subject matter of the present case. On the basis of the above said seizure, the DRI drew an inference that since the live consignments seized in the above said case showed the material to be sub-standard, the past exports in the present case might not have been genuine. On the basis of the aforesaid assumptions and presumptions, show cause notices were issued to the appellants by the DRI. It was, inter alia, alleged in the said show cause notices that the goods shown to be "Heat Resistant, Rubber Tension tape and raw material for gear cutting tools and track wheels" were misdeclared in description, weight and value and the same were actually "sub-standard/scrap." After the issuance of the said show cause notices, the Adjudication proceedings were initiated by the Adjudicating Authority. After the reply was filed by the appellants and certain witnesses, who were allowed to be cross-examined, an addendum containing supplementary allegations was also issued to the appellants, which was based upon the exports made by 10 other firms/companies during the year 2002 as well as on the statements of directors/partners of the firms namely Vinod Garg and Narsi Dass Garg as well as other employees obtained during the course of their detention in August 2003. Vide order dated 14.03.2005 Annexure A-11, the Adjudicating Authority, inter alia, disallowed the Duty Drawback Claimed, directed the recovery of Duty Drawback Claim regarding the goods that had already been exported and CUSAP No.1 of 2010 -3- also imposed penalties etc. on the appellants and other noticee's. However, the Adjudicating Authority in its order also observed that since the goods had already been exported, the same were not liable for confiscation and accordingly, he has not imposed any redemption fine in lieu of confiscation under Section 125 of the Customs Act.
While the appellants herein filed appeals before the Tribunal against the Commissioner's order challenging the denial of drawback and imposition of penalty on them, the Revenue filed three review appeals before the Tribunal challenging the portion of the order observing that since the goods have already been exported, the same are not available for confiscation and accordingly not imposing redemption fine in lieu of confiscation. The Revenue's appeals sought imposition of redemption fine in lieu of confiscation in respect of the goods held by the Adjudicating Authority to be liable for confiscation under section 113 (d), 113 (i) and 113 (ii) of the Act.
Vide impugned order dated 16.10.2008 the Tribunal rejected the appeals of the appellants and also rejected the three Review Appeals filed by the Revenue. So far as the Customs Appeals of the Respondent are concerned, the same were dismissed by this Court vide order dated 12.01.2010 as there was no valid review authorization to file an appeal. Feeling aggrieved, the present appeals have been filed by the appellants against the impugned order of the Tribunal.
We have heard Mr. R.S.Rai, learned Senior Counsel appearing for appellants and Mr.H.P.S.Ghuman, learned counsel for the respondent at length.
The learned Senior counsel for the appellants has argued that CUSAP No.1 of 2010 -4- when the proceedings before the Adjudicating Authority were at an advanced stage, an addendum containing supplementary allegations qua the searches made in the year 2003 was also issued in the present case when the reply to the show cause notice was already filed and cross-examination of witnesses was also over. Therefore, issuance of the said addendum was not permissible in the eyes of law. He has placed reliance upon the case of Mahindra & Mahindra Vs. CCE 2006 (196) ELT 62 (CESTAT) to contend that the issuance of addendum was not sustainable.
It is further contended by the learned Senior Counsel that no person mentioned as witnesses was examined to prove the allegations pertaining to the addendum in question. The counsel has further disputed the overseas enquiry report produced by the Revenue while contending that the same was not supported by any other corroborative piece of evidence. In the said report as the allegations qua the enquiries made from the foreign buyers are based on the statement of one Yogesh Patel, Director of M/s. Falcone Cash & Carry, however, the Adjudicating Authority did not allow him to be cross-examined by the appellants.
It has been further contended by the learned Senior Counsel that the samples drawn at the time of exports were duly scrutinized, verified and found to be genuine in terms of prescription, value and quality after obtaining reports from Central Revenue Control Laboratory (for brevity "the CRCL"). Our attention has been drawn to reports Annexure A-19 and A-20, which do not reveal any anomaly pertaining to the quality and description of the goods in question. Learned counsel further argued that the Test report of the samples drawn from the live consignment (not in the present case) cannot be applied to the past exports of the appellants as the exported goods CUSAP No.1 of 2010 -5- had already reached their buyers and export remittances already received back, therefore, export obligation is complete in all respects. It has further been pointed out that material had left the territorial waters of India and export proceeds had been remitted through proper banking channel.
The learned counsel has further referred to letter Annexure A-3 written by Commissioner of Customs, Amritsar to the Joint Director, DRI Ludhiana to contend that the vigilance enquiry in the present case has found no evidence of conspiracy between the customs officials and the appellants. He further argues that regarding the allegations leveled in the show cause notice as well as addendum, the Central Bureau of Investigation (CBI) also conducted investigations wherein, the directors, employees of the appellant firms as well as certain customs officials were also arrayed as accused. The CBI has found the allegations to be false and has filed closure reports, which was accepted by the concerned Special Court. The said orders of the Court have attained finality as they were not challenged in any higher court. So far as the charges of misdeclaration and over-invoicing leveled in the addendum to the show cause notice are concerned, the learned Counsel for the appellants has contended that the same are also bereft of any merit in view of the order of the Hon'ble Supreme Court dated 21.09.2004 quashing the detention orders qua the directors of the appellant firms/companies, wherein, it was observed that the chemical analysis report prepared by the CRCL clearly indicated that the exports goods as alleged in the addendum were, in fact, made up of 'alloy steel'.
On the other hand, the learned counsel for the respondent Sh.H.P.S.Ghuman has vehemently opposed the contentions raised by the counsel for the appellants and has supported the allegations contained in the CUSAP No.1 of 2010 -6- Show Cause Notice as well as the impugned orders. He contends that there was no manufacture of export goods in the factory and the goods exported were sub-standard. He further argued that certain consignments declared to be 'Heat resistant rubber tension tape' and raw material for 'gear cutting tools' and 'track wheels' have been shown to have been purchased from certain firms, were exported to various firms in foreign countries but on inquiry it was found that none of the consignees existed. Not only this, the export proceeds of the goods exported to the consignees in U.K. have been received from countries other than the consignee country, therefore, this is a clear indication that the exports were not genuine. He has further argued that the Tribunal has concurred with the Commissioner's finding that the goods, in question, had been grossly misdeclared in terms description, quality and value with intention to claim drawback and since their actual value was much less than the amount of drawback claimed, no drawback was admissible and the penalty has been rightly imposed on the appellants, therefore, there is no infirmity in the impugned orders and the same are liable to be upheld.
We have heard both the parties and have also carefully perused the impugned orders as well as documents placed on record by the appellants.
Undoubtedly, the charges of misdeclaration and fraudulent availment of incentives etc. against the appellants are based on suspicion and inferences drawn by the Revenue as when the chemical examination of the goods indicated in the live consignments of subsequent exports pertaining to 16 containers seized showed the material to be sub-standard, it was suspected that in past, the same exporting firms had exported goods CUSAP No.1 of 2010 -7- declared as 'gear cutting tools of high speed steels', 'track wheels' and 'heat resistant rubber tension tapes' under draw back/DEPB claim and that export also might have been misdeclared. In the present case, the Impugned Show Cause Notice as well as impugned order do not deal with the live consignments but pertain to earlier consignments i.e. past exports where export had already been completed and goods had already reached the hands of the foreign buyers. It is a settled proposition of law that the past exports cannot be challenged as being improper on the basis of any irregularities noticed in subsequent exports for which a separate show cause notice had already been issued. Therefore, the impugned show cause notice could not have been issued merely on the basis of inferences or suspicion.
During the course of arguments, our attention has also been drawn to the CRCL reports Annexures A-19 pertaining to the goods in question. Upon a bare reading of the test reports, it is evident that there is no anomaly pertaining to quality and description of the goods. One of the analysis of the test reports reads as under: -
"...One representative sample said to be Gear Cutting Tools of Cobalt Bearing High Speed Steel as declared by the Exporter vide S/B no. 510 Dated 29.03.2000 of container Freight Station, Jalandhar port herewith for Chemical Analysis so as to ascertain whether it is made of Gear Cutting Tools of Cobalt Bearing High Speed Steel or not..."
"...Report: The Sample is in the form of small cylindrical metallic piece (article) made of Cobalt Bearing High Speed Steel..."CUSAP No.1 of 2010 -8-
It is a matter of record that the goods had already reached the hands of the foreign buyer and the export remittances have been received. Therefore, the export obligation was complete in all respects. It has further been pointed out that material had left the territorial waters of India and export proceeds had been remitted through proper banking channel. The requirement of drawback is that goods should be exported out of country and currency should be realized. In the present case, when the goods got clearance, moved to the high seas beyond the territorial waters of India and the title to the goods also passed to the purchasers and export remittances have been received, the export is complete. The question as to whether, the export is complete for the purpose of duty drawback, had come up for consideration before the Hon'ble Apex Court in the case of Collector of Customs, Calcutta Vs. M/s.Sun Industries, 1988(supp) SCC 342. in the said case, it has been held as under: -
"4. Section 2(18) states "export" with its grammatical variations and cognate expressions, means taking out of India to a place outside India. The Customs and Central Excise Duties Drawback Rules, 1971 framed under the Act by Rule 2(c) also provides as follows:
"2. (c) 'export' with its grammatical variations and cognate expressions, means taking out of India to a place outside India and includes loading of provisions or store or equipment for use on board vessel or aircraft proceeding to a foreign port:"
While interpreting the wording of the aforesaid Section 2(c), it was further held as under: -
"...We are of the opinion that in view of the wording of the section, the goods went out of the territorial waters. When the CUSAP No.1 of 2010 -9- ship got clearance and moved out of the territorial waters the export was complete. The title to the same goods passed to the exporters. The facts as they emerge are that the goods reached a place in the high seas which is outside India and the title of the goods also passed to the purchasers. It is true that the goods did not land in any place because of the defect in the ship. But the expression "taking out to a place outside India"
would also mean a place in high seas. It is beyond the territorial waters of India. High seas would also mean a place outside India, if it is beyond the territorial waters of India. Therefore, if the goods were taken out to the high seas outside territorial waters of India, they will come within the ambit of expression "taking out to a place outside India". Indubitably the goods had been taken out of India. "Place" according to Webster Comprehensive Dictionary, International Edn., p. 964 means a particular point or portion of space, especially that part of space occupied by or belonging to a thing under consideration; a definite locality or location. It also means an open space or square in a city. Therefore, in international trade the ship beyond the territorial waters of a country would be a place outside the country, if the goods are taken to that place, that is to say, a situation outside the territorial waters of a country and the title to the goods passes to the purchasers. Then, in our opinion, the goods are taken to a place outside India.
8. The expression "place" will depend for its connotation on CUSAP No.1 of 2010 -10- the context in which it is used. In clause of charter party requiring chartered to procure safe "place" for discharge of cargo, quoted word meant spot selected to drop anchor plus area over which tanker might swing on tide and charterer's duty was not fulfilled merely by selecting area containing both safe and unsafe berths. The word "place" as used in a statute relating to searching for stolen goods in any store, shop, warehouse, or other building or place in a town, includes a steam boat or vessel moored at the wharf. See Words and Phrases, Permanent Edn., Vol. 32-A, p. 128. The word "place" is generally found in conjunction with other words which give it a colour, and is usually controlled by its context. For example, "place for water" includes a well. See Stroud's Judicial Dictionary, Third Edn., Vol. 3, pp. 2199 and 2208.
9. In that view of the matter, in our opinion, there was export of the goods in terms of Section 75 of the Act..."
It is further an undisputed fact that when the reply had already been filed and the Adjudication Proceedings were at an advance stage, an addendum to the Show Cause Notice seeking to bring on record certain additional facts and grounds pertaining to subsequent exports made by various firms as well as searches made in the year 2003 was also issued. We find that the appellants have not been afforded a proper opportunity to defend the said addendum and also to cross-examine the witnesses sought to prove the same.
Even there is a vigilance enquiry in the present case as is revealed from Annexure A-3 i.e. a letter dated 28.11.2002 written by CUSAP No.1 of 2010 -11- Commissioner of Customs, Amritsar to the Joint Director, DRI, Ludhiana, which shows that the case was examined from vigilance angle also and no substantive or corroborative evidence has been found by the authorities to proceed in the present case against the customs officials.
So far as the allegations pertaining to overseas enquiries made with the foreign buyers are concerned, the same, as per the record, are based upon the statement of Shri Yogesh Patel, Director of M/s.Falcone Cash and Carry to show that M/s.U.K. International did not exist at the disclosed address. However, during the adjudication proceedings, the appellant had sought leave to cross-examine abovesaid Yogesh Patel to establish the truth, but the request of the appellants was not accepted nor the said Yogesh Patel was produced for cross-examination.
Entire allegations pertaining to the earlier exports made by the appellants, which is a subject matter of the present controversy, were also referred to the CBI by the DRI by way of RCCHG2004A0007 dated 15.03.2004. Comprehensive investigation was conducted by the CBI and it was found that the allegations had no substance it. The investigations before the CBI in that case contained following allegations: -
"The instant case was registered on source information on the allegations that S/Sh. A.K. Kaul, D.R. Ahuja both Inspectors at Customs Freight Station, Ludhiana, accepted and cleared container No. CRXU-235135-8 Comprising shipping Bill No. 3231 to 3240 of M/s S.R.G. International a proprietary concern of Sh. Vinod Garg on 22.5.2000 purportedly carrying Gear Cutting tools of Cobalt bearing high speed steel. However, before the goods could move from the duty port at CUSAP No.1 of 2010 -12- Ludhiana to the port at Mumbai they were intercepted on secret information by the Directorate of Revenue Intelligence, Regional Unit, Amritsar on 25.5.2000 and a representative sample was taken and tested which confirmed that the exported items were of inferior quality. Immediately thereafter 15 more containers belonging to M/s SRG International, New Delhi and its sister concerns namely M/s S.R.G. Forge Overseas Ltd, M/s Garg Forgings and Casting Ltd., M/s Goodwill Impex, New Delhi and M/s Ragini Steels Pvt. Ltd., Ludhiana, which had been earlier been accepted and cleared for the export by the aforesaid customs officials of CFS Ludhiana, and Jalandhar were intercepted by DRI officials at Nhava Sheva Port, Mumbai and opened in presence of independent witnesses during 6.6.2000 to 9.6.2000. Samples were taken from these containers and tested at Customs Laboratory Mumbai, which confirmed that although the items were shown to contain Heat Resistant tension Tapes, Track wheels and Gear Cutting Tools of Cobalt bearing high speed steel, yet the same are found to be of inferior quality. Further total weight of 2,13,830 Kgs shown in the shipping bill was found to be short by 99,010 Kgs. Shri Arun Shori, Chartered Engineer confirmed the market value of (he goods contained in the aforesaid 15 containers to be much less than their declared value. All the aforesaid Companies/firms were alleged to have claimed incentives based on the declared values under the Duty Entitlement Pass Book Scheme and Duty Draw Back scheme... CUSAP No.1 of 2010 -13-
...In view of the above it was alleged that Sh.Vinod Garg, Prop. M/s SRG International and other aforesaid mentioned Companies/firms in connivance with S/Sh. A.K. Kaul, D.R. Ahuja, both Superintendents, T.N. Dhar, M.P. Singh, both Inspectors, posted at CFS Ludhiana and unknown officials of CFS Jalandhar exported/attempted to export the above goods by willfully mis-declaring their quality, quantity and value for the purpose of availing higher duty draw back and DEPB incentive."
After conducting the investigations, the CBI reached the conclusion that there are no allegations against the director of the companies/firms namely Vinod Garg. Accordingly, a closure report was filed in the Court of Special Judge at Patiala and the Competent Court also accepted the same. Upon asking of the Court, the counsel for the respondent states that the said order has not been challenged by them in any higher forum. Therefore, the said order has attained finality.
So far as the allegations leveled in the Addendum to the Show Cause Notice pertaining to over invoicing, misdeclaration of goods for availing export benefits are concerned, the same were also sent for investigation to the CBI by way of RC. AC3/2004A0003 dated 22.06.2004. Vide a comprehensive report; the CBI concluded that there was absolutely no evidence available against for committing any offence. In the said case, the following conclusions were arrived at by the CBI: -
".... As already discussed in detail, the allegation of export of scrap does not stand substantiated..."
" ...During processing of the export documents, the documents, CUSAP No.1 of 2010 -14- the documentation was found in order and there was no deficiency whatsoever. Similarly , the export goods i.e. Alloy Steel Forging(machine) was also found to be the same as declared in the shipping bills during physical inspection/ examination. Further since the export item i.e. the Alloy Steel Forging (machine) had value cap of Rs 175/- per kg fixed by the ministry of Commerce, Government of India and the price quoted by the merchant exporters was always below the value cap, market enquiry regarding its present market value (PMB) was not necessary as per CBEC circular no. 69/97-CUS (F.No.605/51/97-DBK) dated 08.12.1997"
"Thus, there was no need, whatsoever, to undertake any exercise to find out whether the value was over invoiced \inflated. However, as a matter of abundant precaution custom official draw the samples and got the market enquiry done. The samples drawn from exports by Vikrant exports covered under shipping bill no. 2182 dated 24
-04-2002 were subjected to market enquiry from M/S ANG Exports Limited,B-48, Phase-II, noida , U.P. manufactures/ exporters of forged/machined automotive components, which opined that the sample weighing approx. 18 KG was made of Alloy Steel Forgings and was machined and its estimated market value was between Rs. 2300/- and Rs. 2700/- per piece vide it's report dated 14.5.2002. Further, Shri Vimal Kumar Aggarwal of M/s V Kumar & Associates, SCO 124-125, 1st Floor, Sub-City Centre, Sector 34A, Chandigarh who CUSAP No.1 of 2010 -15- conducted the Special Audit u/s 14A of the Central Excise Act, 1944 in respect of M/s National Steel Products Company / Nandan Auto Tech Limited, Ludhiana for ascertaining the value of exported goods has mentioned in his report dated 2.4.2007 submitted to the Customs, Excise and Service Tax Appellate Tribunal, New Delhi that the assessable rate of exported goods i.e. Alloy Steel Forgings (Machined) is Rs. 117.22 per Kg. in the case of manufacturer Nandan Auto Tech Limited and Rs. 141.60 per Kg. in case of merchant exporter M/s National Steel Products Company. If the manufacturing cost of Alloy Steel Forging s (Machined ) of Rs. 117.22 is taken as the ARE 1, price, then it's present market value (PMV) would be Rs. 175.83 after adding the admissible transporting cost etc. up to 150% of ARE 1 price as per CBEC Circular No. 69/97-Cus. Dated 8.12.1997, which is almost at per ore more than the FOB value declared in the Shipping Bills in question."
"In view of this, the allegation in the FIR that the exported goods was scrap worth only Rs. 50/ per Kg. could not be established."
"Investigation also revealed that there is nothing to prove that Alloy Steel Forgins (Machined) was not manufactured and exported through the merchant exporters by M/s Nandan Auto Tech Limited, Ludhiana. The Central Excise Department at Ludhiana has also accepted that the export goods manufactured by M/s Nandan Auto Tech Limited and CUSAP No.1 of 2010 -16- exported through the merchant exporters was Alloy Steel Forgins (Machined) worth Rs. 175/- per Kg. as declared in ARE.1 and released the eligible Central Excise rebate to the manufacturer M/s Nandan Auto Tech Limited, Ludhiana and also to some of the merchant exporter viz. M/s Brightwell Enterprises, M/s Buildex Metal, M/s International Engineers, M/s Sunrise International M/s Tech Industrial Corporation M/s Vikrant Overseas and M/s National Steel Products Company. In view of the fact that such rebate claim is sanctioned only after the Central Excise authorities are satisfied with the actual exports, and in view of above analysis, the allegation of export of scrap/substandard material worth Rs.5/- in place of actual item i.e. Alloy Steel Forgins (Machined) as alleged in the FIR could not be proved."
"Since the samples of the exported goods contained more than 0.3% by weight of chromium as per the CRCL reports mentioned above, the exported goods was definitely Alloy Steel and not scrap as alleged in the FIR".
"In its's report No.; 35- Chem/Cus/2002/CL/197-198 DRI dated 23.10.2003, CRCL has stated that, "Each of the two samples is in the form of a circular article having diameter of 21.5 cm on the upper side and 13.5 cm on the lower side. Each is made of steel. Chromium content in the samples is 0.50% and 0.53% by weight in the sample Nos. CL 197 and CL 198 respectively. Carbon content in samples is 0.1% and 0.11% by weight in sample Nos. CL 197 and CL 1098 respectively. By CUSAP No.1 of 2010 -17- chemical tests, it is not possible to state whether the samples are forged (Machined) or otherwise. Thus even as per this report, the export goods (live consignment) is Alloy Steel as it contained more than 0.3% by weight of chromium. The DRI also accepted this report and did not seek further tests on the samples to fine out whether the samples are forged (Machiend) or otherwise. Further, while setting aside the COFEPOSA order against A3 Narsi Dass Garg and A4 Vinod Kumar Garg, the Division Bench of the Hon'ble Supreme Court of India in it's order dated 21.9.2004 passed in Crl. Appeal No. 822 of 2004 also observed that "the subject matter of the consignment was not scrap metal and was made up of Alloy steel as per CRCL report and that the order of detention was passed in haste without there being adequate materials."
"Thus, investigation did not reveal evidence to prove mis-declaration or over-invoicing of the export product by the merchant exporters till the time of clearance by Customs officials. "
"Investigation has further revealed that after getting the Customs cleared export documents such as Bills of landing. Mate Receipts etc., from the Shipping Line/s, the merchant exporters deposited the said documents along with other relevant documents with the bankers of the merchant exporters i.e. (i) State Bank of Hyderabad, Ludhiana in the cases of M/'s Sunrise International (Account No. 01000050039), M/s International Engineers (Account No. CUSAP No.1 of 2010 -18- 1000050016) and M/s Vikrant Overseas (Account No. 1000050044), (ii) Induslnd Bank Limited, Ludhiana in the cases of M/s National Steel Products Company (Account No. 0020-199228-050) and M/s Buildex Metal (Account No. 0020- 198227-050), (iii) Lord Krishna Bank, Ludhiana in the cases of M/s Nation al Steel Products Company (Account No. 2676), M/s Sunrise International (Account No. 2218), M/s Brightwel Enterprises (Account No. 21668), M/s Buildex Metal (Account No. 2552) and M/s Tech Industrial Corporation (Account No. 2421) and (iv) Bank of Punjab Limited, Ludhiana in the cases of M/s National Steel Products Company (Account Nos. 1826 & 99079), M/s Sunrise International (Account Nos. 1714 & 99069), M/s Brightwel Enterprises (Account Nos. 1764, 99043 & 990-46) and M/s Buildex Metal (Account Nos. 1813 & 99061), for the purpose of realizing the export proceeds from the consignment. Accordingly, the export proceeds were realized either through the bankers or directly by the merchant exporters through banking channels and credit to the respective bank accounts of the merchant exporters. The bank documents such as statements of accounts, vouchers, swift messages etc, collected from the bankers of the merchant exporters and also from A-4 Shri Vinod Garg reveal that there were, in fact, inward foreign remittances into these accounts from the original consignees. The concerned bank officials have also confirmed this fact. In view of the inward foreign remittances having been received from the original consignees, CUSAP No.1 of 2010 -19- the allegation of bogus nature of original consignees is not proved. It is also pertinent to note here that the export transactions took place as per RBI norms".
"As regards the alleged payment of bribe by the merchant exporters to the Customs Officials to facilitate clearance of scrap as Alloy Steel Forgings (Machined), investigation did not reveal sufficient evidence to prove that the Customs officials accepted the alleged payments as a motive or reward for showing undue favour to the merchant exporters in the discharge of their duties as public servants. As already discussed in detail, the allegations of export of scrap does not stand substantiated.
Thus, from the evidence collected during investigation, both oral and documentary, the geneses of the case i.e. export of scrap in place of Alloy Steel Forgings (Machined) and payment of bribe to the Customs officials to facilitate the clearance of such goods do not stand substantiated and no criminal case is made out against any of the accused persons. There is no dispute regarding the realization of export proceeds from the consignees through proper banking channels and consequent issuance of BRC's and DEPB licenses by the Ludhiana based banks and office of DGET (Licensing), New Delhi respectively. The DEPB li9censes so issued were also sold/transferred to other importers by the merchant exporters as per the DEPB scheme and there is no dispute on this point also"....CUSAP No.1 of 2010 -20-
As such the CBI proceeded to file a closure report. It is further an admitted fact on record that the said report also stands accepted by the concerned Special Court and has not been challenged by the respondent or the DRI in any higher forum. On the contrary, during the course of the arguments, the learned Counsel for the appellant has contended that the respondent Commissioner of Customs(Preventive) Amritsar in their Appeals before this Court, which were dismissed, had also placed reliance on the reports of the CBI to contend that action could not be proposed against the concerned officers, as the CBI had found them to be innocent. The learned counsel for the respondent has not been able to dispute the said fact. It appears that the CBI report covers almost all the issues as raised in the Show Cause Notice.
Our attention has also been drawn to cross-examination of customs officials where they have stated that there is no possibility of changing the samples drawn from a consignment in the Customs House. They have also stated that they have followed the prescribed procedure for allowing the export and have also drawn samples.
Even while quashing the detention orders which were based upon the grounds as mentioned in the addendum, the Hon'ble Apex Court vide its judgment dated 21.09.2004 held that the chemical analysis prepared by the Central Revenue Control Laboratory, New Delhi clearly indicated that the exported goods were, in fact, made up of alloy steel and the detaining authority, by not waiting for the results of the said chemical analysis before issuing the order of detention, had acted in haste without there being adequate materials.
The appellants have formulated various questions of law. CUSAP No.1 of 2010 -21- However, the necessity of dealing with these questions is obviated because after having carefully examined the submissions of the learned counsel for the appellants as well as the counsel for the respondent and after going through the impugned orders of the Tribunal as well as the Adjudicating Authority and other relevant materials on record, we are of the considered opinion that the authorities below have failed to examine the entire matter especially in the light of the aforesaid facts. The facts brought to our notice show that non-examination of the aforesaid issues have caused prejudice to the case of the appellants. Therefore, the whole matter requires re- examination and reconsideration by the authorities below especially in view of the observations made herein above, as the same are necessary, relevant and would have a vital bearing on the issues involved.
Accordingly, all the 14 appeals filed by the appellants are allowed and the impugned order dated 16.10.2008 passed by the Tribunal as well as the order Annexure A-11 passed by the Adjudicating Authority are set aside and the entire matter is remanded back to the Adjudicating Authority for a fresh adjudication while examining and taking into consideration all the aspects including the aforesaid observations as well as material, which may have a vital bearing on the entire case. Needless to say that the Adjudicating Authority would afford a proper opportunity to the appellants to rebut the allegations and cross-examine the material witnesses.
The parties are, accordingly, directed to appear before the Adjudicating Authority on 8.6.2010.
(ASHUTOSH MOHUNTA)
JUDGE
April 6, 2010 (MEHINDER SINGH SULLAR)
Gulati JUDGE