Custom, Excise & Service Tax Tribunal
M/S.Vaibhav Overseas vs C.C.E. Noida on 9 October, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
Division Bench
COURT NO. 2
Appeal No. C/234 and C/235/2009
(Arising out of Order-in-Original No. 22/Commissioner/2009 dated 14.5.2009 passed by Commissioner of Customs & Central Excise, Noida)
Date of hearing: 04.04.2014
Pronounced on 09.10.2014
M/s.Vaibhav Overseas Appellant
Shri Gyan Chan, Partner
Vs.
C.C.E. NOIDA Respondent
Appearance:
Present for the Appellant: Shri G.L. Rawal, Sr. Advocate Shri Rajesh Rawal,Advocate Present for the Respondent: Shri V.P.Batra, DR Coram: Honble Mr. D.N. Panda, Judicial Member Honble Mr. Manmohan Singh, Technical Member FINAL ORDER No.53836-53837/2014 PER: MANMOHAN SINGH Appeal No. C/234 and C/235/2009 Appellants M/s Vaibhav Overseas and Shri Gyan Chand, Partner of M/s Vaibhav Overseas have come in appeal against the Order-in-Original No. 22/Commissioner/2009 dated 14/5/2009 Passed by Commissioner, Customs & Central Excise, Noida.
2. In this case, Non Basmati rice weighing 304.912 MT valued at Rs.1,76,53,602.37 (FOB) loaded in 13 containers, seized under panchnama dated 13.09.09 under section 113(d) of the Customs Act, 1962 were confiscated with a option to redeem the goods on payment of redemption fine of Rs.32.50 lacs in lieu of confiscation. A penalty of Rs.9,10,000/- was imposed upon M/s.Vaibhav Overseas under section 114 (i) of the Customs Act 1962. Further, a penalty of Rs.2.60 lacs was also imposed upon Shri Gyan Chand, partner of M/s.Vaibhav Overseas, under section 114(i) of the Customs Act, 1962.
3. To appreciate the issue, brief facts are recapitulated. As per Notification No. 55 (RE-2008)/2004-09 dated 05.11.2008, as amended, issued by the director General of Foreign Trade, non basmati rice, is notified as a prohibited item for export. Only the Basmati Rice is permitted to be exported freely, subject to the conditions/specifications contained in the said notification.
4. Upon examination, it was noticed that M/s.Vaibhav Overseas had attempted to export poor quality and substandard and non Basmati rice in the guise of Basmati rice in four shipping bills covering 13 containers, declaring to contain basmati rice, were seized. It was found that only the bags in front row were of basmati rice and rest of the bags non- Basmati rice. The grain of non basmati rice did not conform to the specification of Basmati Rice as provided in DGFT Notification no. 55 (RE-2008)/2004-2009 dated 5..11.2008 (as amended) which required that grain of rice shall be more than 7mm of length and ratio of length to breadth of the grain shall be more than 3.6, the consignments were seized under Section 110 of the Customs Act, 196. Representative samples were drawn from all 13 containers and sent for testing to Shriram Institute of Industrial Research, 19, University Road, Delhi (hereinafter referred as SIIR) under cover of test memo No.23,24,25,26,27,28,29,30,31,32,33,34,35 all dated 24.04.2009 to ascertain whether:-
(i) Grain of rice is more than 7.0mm of length and ratio of length to breadth of the grain is more than 3.6 and
(ii) Quality of rice whether was Basmati rice or not.
5. Details of test Samples drawn covering container wise is as under:-
Sl.
No. Shipping Bill No. & Date Container No. Test Sample No. & date 1 1053883 dt.02.04.09 UACU-3249186/20;
UACU-3194416/20;
UACU-3199104/20;
23 dt.24.4.09 24 dt.24.04.09 25 dt.24.04.09
2.
1053884 dt.02.04.09 BLJU 2052341/20 BLJU 2961860/20 MOAU -0512880/20 MOAU -0665200/20 26 dt.24.04.09 27 dt.24.04.09 28 dt.24.04.09 29 dt.24.04.09
3. 1053885 dt.02.04.09 MOAU -014953/20 MOAU -014953/20 30 dt.24.04.09 31 dt.24.04.09
4. 1053882 dt.02.04.09 MOGU-2569469/20 FCIU-3273293/20 MOAU -0221099/20 MOAU -0610531/20 32 dt.24.04.09 33 dt.24.04.09 34 dt.24.04.09 35 dt.24.04.09
6. The test reports received from SRI vide test certificate No.000126539 to No.000126551 all dated 25.04.2009 revealed that all the given samples did not conform to the requirement of average length and length/breadth ratio as specified in the partys specification. That proved false declaration of description of goods under section 50 of the Customs Act 1962.
7. Statement of Shri Gyan Chand, Partner M/s.Vaibhav Overseas was recorded under section 108 of the Customs Act dated 15.4.2009 wherein he admitted after seeing samples that rice in many bags were apparently of non-basmati category. In a subsequent statement, he stated that order was placed with supplier for basmati rice but he loaded wrong consignment in place of basmati rice. Investigation found that Shri Gyan Chand misled them by an afterthought for the reason that non basmati rice was found concealed deliberately behind the bags of basmati rice in the containers attempted to be exported.
8. Learned Sr. Counsel contended that confiscation of non basmati rice may be done only without basmati rice. It was also submitted that redemption fine of Rs.32.50 lakhs was on higher side and calls for reduction. Mixing of basmati rice and non-basmati rice occurred due to mixing of consignments by the workers. Appellant also contested imposition of penalty of Rs.9,10,000/- on M/s.Vaibhav Overseas and penalty of Rs.2.60 lakh imposed on Shri Gyan Chand, partner of M/s.Vaibhav Overseas.
9.1. On the other hand, ld.DR reiterated the findings as contained in the adjudication order. He also contended that it was clear case of suppression of facts and mis-declaration of description of goods. There was a deliberate as attempt to export non basmati rice in the guise of basmati rice contained in 13 containers. On examination of such containers in the presence of CHA representative, it was revealed that front row contained only basmati rice and second row behind first row contained non basmati rice. Actually non-basmati rice were camouflaged to avoid detection at the time of examination.
9.2 It was further agreed that attempt to export non-basmati rice in the guise of basmati rice came to light only upon detection, test reports and admittance of Shri Gyan Chand, Partner revealed their commitment of offence. He also invited attention to Annexure A to the inventory prepared at the time of seizure where modus operandi to camouflage the non-basmati rice kept in interior row with basmati rice in the first rows emerged.
10. Annexure A to show cause notice extracted below, show premeditated plan of appellants to smuggle non-basmati rice in the guise of basmati rice. Each container contained 198 bags of basmati rice and 2100 bags of non-basmati rice. Details of other containers contents also indicates a systematic way to mis-declaration of the contents.
S. No. Name of the Exporter Shipping Bill NO & Date Bayer Description/ marking Container No. Type of packing No. of bags Quantity in Kgs.
Value in Rs.
As per market enquiry
1. Vaibhav Overses, 5584, IIIrd Floor, Naya Bazar, Delhi 1053883 dt. 02.04.09 Raja Foods, 8110, N. St. Louis Avenue, Skokie,IL-60076, Chicago, U.S.A. Ph. 847-675-4455 Fax No. 847-675-4498 SWAD Brand Rice/Raja Foods UACU-
3249186/20 Basmati Rice Pack of 20Lbs(9.08kg) paked in Jute bag (Two packs further packed in PP bag) 198 1798 71913.60 Non Basmati Rice Pack of 20Lbs(9.08kg) paked in Jute bag (Two packs further packed in PP bag 2102 19086 286292.40 UACU-3 194416/20 Basmati Rice Pack of 20Lbs(9.08kg) paked in Jute bag (Two packs further packed in PP bag 198 1798 71913.60 Non Basmati Rice Pack of 20Lbs(9.08kg) paked in Jute bag (Two packs further packed in PP bag 2100 19068 286020.00 UACU-
3199104/20 Basmati Rice Pack of 20Lbs(9.08kg) paked in Jute bag (Two packs further packed in PP bag 198 1798 71913.60 Non Basmati Rice Pack of 20Lbs(9.08kg) paked in Jute bag (Two packs further packed in PP bag 2104 19104 286564.80
2. Vaibhav Overses, 5584, IIIrd Floor, Naya Bazar, Delhi 1053884 dt. 02.04.09 Navajyoti General Trading (FZE), Sharjah Airport International Free Zone, P.O. Box No. 121796, Sharjah (U.A.E.) Tel No. 009716-5341160 Navya Shree Korutla Brand BLJU-
2052341/20 Basmati Rice Pack of 19 Kgs paked in PP Bag 126 2394 95760.00 Non Basmati Rice Pack of 19 Kgs paked in PP Bag 1143 21717 325755.00 BLJU-
2961860/20 Basmati Rice Pack of 19 Kgs paked in PP Bag 126 2394 95760.00 Non Basmati Rice Pack of 19 Kgs paked in PP Bag 1145 21755 326325.00
3. Vaibhav Overses, 5584, IIIrd Floor, Naya Bazar, Delhi 1053885 dt. 02.04.09 AGE General Trading L.L.C., Shop No. 4, Behind Alras Hotel, P.O. Box No. 65017, AL Ras Deira Dubai, UAE Tel 04-2265589, Fax-04-2267798 African Elephant Brand MOAU-
0512880/20 Basmati Rice Pack of 50 Kgs packed in PP Bag 55 2750 110000.00 Non Basmati Rice Pack of 50 Kgs packed in PP Bag 430 21500 322500.00 MOAU-
0665200/20 Basmati Rice Pack of 50 Kgs packed in PP Bag 55 2750 110000.00 Non Basmati Rice Pack of 50 Kgs packed in PP Bag 430 21500 322500.00 MOAU-
0114953/20 Basmati Rice Pack of 50 Kgs packed in PP Bag 55 2750 110000.00 Non Basmati Rice Pack of 50 Kgs packed in PP Bag 431 21550 323250.00 MOAU-
0748074/20 Basmati Rice Pack of 50 Kgs packed in PP Bag 55 2750 110000.00 Non Basmati Rice Pack of 50 Kgs packed in PP Bag 429 21450 321750.00
4. Vaibhav Overses, 5584, IIIrd Floor, Naya Bazar, Delhi 1053882 dt. 02.04.09 AGE General Trading L.L.C., Shop No. 4, Behind Alras Hotel, P.O. Box No. 65017, AL Ras Deira Dubai, UAE Tel 04-2265589, Fax-04-2267798 African Elephant Brand MOGU-
2569469/20 Basmati Rice Pack of 50 Kgs packed in PP Bag 55 2750 110000.00 Non Basmati Rice Pack of 50 Kgs packed in PP Bag 427 21350 320250.00 FCIU-3273293/20 Basmati Rice Pack of 50 Kgs packed in PP Bag 55 2750 110000.00 Non Basmati Rice Pack of 50 Kgs packed in PP Bag 430 21500 322500.00 MOAU-
0221099/20 Basmati Rice Pack of 50 Kgs packed in PP Bag 55 2750 110000.00 Non Basmati Rice Pack of 50 Kgs packed in PP Bag 431 21550 323250.00 MOAU-
0610531/20 Basmati Rice Pack of 50 Kgs packed in PP Bag 55 2750 110000.00 Non Basmati Rice Pack of 50 Kgs packed in PP Bag 432 21600 324000.00 Non Basmati Rice Pack of 50 Kgs paked in PP Bag 431 21550 323250.00 MOAU-
6601922/20 Basmati Rice Pack of 50 Kgs paked in PP Bag 55 2750 110000.00 Non Basmati Rice Pack of 50 Kgs paked in PP Bag 429 21450 321750.00
11. Heard both sides and gone through the records.
12. Record reveals that in the guise of Basmati rice, attempt was made to export non Basmati rice adopting questionable modus operandi. Actually 13 containers were attempted to be cleared. Containers were stuffed in such way that front row contained Basmati rice and second row contained non-Basmati rice. First row was used to camouflage the inferior rows. Samples were tested which proved intention of appellants to deceive revenge. Misdeclaration came to record. Test Results indicated that consignments were non basmati rice export of which is prohibited by DGFT Notification No. 55/(RE-2008)/2004-2009 as amended. Test results showed exported goods were non-basmati rice. That demolishes the defense plea of mixing of consignments and non basmati rice were wrongly loaded in the containers. Test reports confirmed that representative samples did not conform to the requirement of average length & length/breadth ratio as prescribed by the DGFT Notification and were contrary to the specifications of rice declared by the appellants failing to meet the specifications of Basmati rice as per the Agmark specification.
13. Findings of the Commissioner relating to confiscation of the goods and imposition of redemption fine of Rs.32.50 lakhs. In the facts and circumstance is justified when questionable modus operandi remained un-explained. Intentional misdeclaration does not deserve leniency. Therefore redemption fine imposed in adjudication remains un-intouched.
14. Conduct of appellants show that they were consciously involved in the export of non basmati rice following dubious method to defraud the revenue. Therefore imposition of penalty on the exporter does not call for interference for which entire penalty is confirmed.
15. In respect of imposition of penalty of Rs.2.6 lakh on Shri Gyan Chand, partner of M/s.Vaibhav Overseas, it is evident that he was aware of attempt to export of non basmati rice in the guise of basmati rice. Later he tried to take shelter of the plea that supplier has mixed up the consignment of basmati rice and non-basmati rice which was ill founded. Further camouflaging of non-basmati rice in front rows to hide non basmati rice at the back clearly evidences conscious involvement with intention to export prohibited rice. Premeditated stackings of rice was well thought to avoid detection by Customs during examination, so it is evident that Shri Gyan Chand, Partner was actively involved in whole operation of attempt to export with intention to defraud the revenue. Accordingly we hold that penalty has rightly been imposed on Shri Gyan Chand, Partner.
16. In view of above discussions and findings, both appeals are dismissed.
(Pronounced on.............................) (Manmohan Singh) (D.N. Panda) Technical Member Judicial Member mk 8 C/234-235/09