Custom, Excise & Service Tax Tribunal
Narendra Lodaya vs Nhava Sheva on 20 January, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: C/86435/2015
[Arising out of Order-in-Original No: 03/2015-16/COMM.NS-I/JNCH dated 17/04/2015 passed by the Commissioner of Customs, Nhava Sheva II.]
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
Narendra Lodaya
Appellant
Vs
Commissioner of Customs
Nhava Sheva
Respondent
Appearance:
Shri Anil Balani, Advocate for the appellant Shri M.K. Mall, Asstt. Commissioner (AR) for the respondent CORAM:
Honble Shri C J Mathew, Member (Technical) Date of hearing: 20/01/2016 Date of decision: 08/07/2016 ORDER NO: ____________________________ Shri Narendra Lodaya is in appeal against order-in-original no. 03/2015-16/COMM.NS-I/JNCH dated 17th April 2015 by which Commissioner of Customs, Nhava Sheva II imposed a penalty on him under section 112(a) of the Customs Act, 1962. It would appear that the proceedings for misdeclaration based on investigations into imports of betel nuts effected by M/s Vishnu Packaging against five bills of entries with the declared value of ? 29921856 (@ US $ 800 PMT) was partly terminated following the applications before the Settlement Commission made by four out of five notices. The Settlement Commission confirmed the duty and interest computed in the show cause notice and limited the penalty to the importer. The appellant was unable to seek the intervention of the Settlement Commission as he was not connected, contractually by ownership, with the importing firm. Consequently, proceedings against the appellant continued leading to imposition of penalty.
2. The adjudicating authority found:
12. The Director/owners of the firm M/s Vishnu Packaging and Mukesh Garg, proprietor of M/s Naksh Impex, have admitted that there was undervaluation in the import of Betel Nut by misdeclaring the value and quality of the goods. Shri Mukesh Garg has stated that he used to procure the goods from the Indonesian supplier CV Sejahtera through their representative Shri Narendra Lodaya and the undervalued invoice for US $ 800 per MT instead of correct value was also prepared by the supplier in consultation with Shri Narendra Lodaya. They have also stated in their statements that they were assisted in their nefarious activity by Shri Narendra Lodaya. The copy of emails sent by Narendra Lodaya to other Noticees and the supplier retrieved during the investigations support the fact of undervaluation and his direct involvement in arranging or preparing invoices depicting low value @ 800 per MT. This fact has been admitted by him in his statement recorded on 15.2.2012 under Section 108 of Customs Act, 1962. Hence, this act of misdeclaration of value and description/quality of the goods has rendered the imported goods liable to confiscation under the Customs Act, 1962 and Shri Narendra Lodaya, by abetting these acts has rendered himself liable to penal action under Section 112(a) of the Customs Act, 1962.
3. The appellant seeks the extension of exclusion from penal provisions to co-noticees as decided by the Tribunal in SK Columbowala v. Commissioner of Customs (Import), Mumbai [2007 (220) ELT 492 (Tribunal)] when proceedings against principal noticee is allowed to be abated. The adjudicating authority did not accept this plea in view of different decision of the Tribunal in K I International Ltd v. Commissioner of Customs, Chennai [2012 (282) ELT 67 (Tri.-Chennai)].
4. The appellant reiterates the decision of the Tribunal in re SK Columbowala (supra) as well as subsequent decisions of the Tribunal appear to have followed after noticing the decision in re KI International (supra), viz., i. Virender Bansal v. Commissioner of Customs (ICD), New Delhi [2015 (317) ELT 796 (Tri.-Del.);
ii. Radiant Silk Mills (P) Ltd. v. Commissioner of Customs & Central Excise, Jaipur [2013 (288) ELT 311 (Tri.-Del.) iii. Commissioner of Central Excise, Raipur v. Abir Steel Rolling Mills [2013 (296) ELT 90 (Tri.-Del.) iv. Commissioner of Central Excise, Raipur (C.G.) v. Jay Prakash Agarwal [2013 (297) ELT 554 (Tri.-Del.)]
5. Learned Authorised Representative placed reliance on the decisions of the Tribunal in Kapil Oberoi v. Commissioner of Customs, Amritsar [2014 (299) ELT 61 (Tri.Del.)] and Chetan Kharey, Director v. Commissioner of Customs, Bangalore [2014 (314) ELT 193 (Tri. Bang.)]; both these orders pertaining to disposal of stay/dispensation of pre-deposit do not bind this Tribunal in final disposal of an appeal. Not surprisingly, learned Authorised Representative also placed reliance on the decision of the Tribunal in KI International (supra).
6. It is seen that the original authority has held the goods to be liable for confiscation on account of mis-declaration of value based on certain documents recovered from the importer as well corroborated by statements of the principal officers of the importing firm and the appellant. The two alternative decisions of the Tribunal in re S.K. Colombowala and re KI International (supra) are noted. Before proceeding to ascertain the applicability of the decisions of the Tribunal, to the present appeal, it may be worthwhile to examine the issue on merits. It is seen that the appellant does not carry out any activity within the territory of India. Betel nuts were imported from M/s CV Sejahtera, Indonesia, supported by commercial invoices which, allegedly, do not reflect the true value. It is stated that the invoices furnished by the supplier to support the declaration was facilitated by the appellant.
7. The appellant had, before the original authority, even questioned the applicability of the Customs Act, 1962 to an individual who is based outside the country on which the adjudicating authority finds:
13. In most cases of such undervaluation, it is seen that an Indian National is stationed abroad who has attained NRI status to facilitate such fraudulent activities while based abroad for helping evasion of applicable customs duties. In this case also, it is thus seen that the case laws cited by Noticee are not applicable to the facts of the case. Hence, the plea of the Noticee that he being an NRI whose actions arose outside the jurisdiction of the Customs Act, 1962 and thus, the Act is not applicable to him is devoid of merit.
8. It is seen that this is an issue of undervaluation and not one of mis-declaration of the goods. Consequently, the process under the Customs Act, 1962, to revise the value for assessment was required to follow the provisions of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Effectively, rejection of the declared value as not being reflection of the transaction value leads to alternative valuation in the sequential order prescribed in the said Rules as approximation of transaction value. It is not that the invoice that determines the scheme of assessment in Customs Act, 1962 in accepting the declared value or ascertaining on approximate value. It is the declaration made under section 46 of the Customs Act, 1962 by the importer containing all the details prescribed thereunder that creates the relationship between importer and tax administration. Though an invoice is required to be furnished, it is for the importer to do so and for the purpose of supporting the declared value. Under section 47 of Customs Act, 1962 it is for the proper officer to be satisfied that the import duty assessed after ascertaining value has been paid.
9. The importer, and the importer alone, creates the relationship of obligation upon and by making the prescribed declaration. Likewise, the goods landed in India are to be made available by or on behalf of the importer for any verification to ascertain the conformity of the declaration under section 46 of the Customs Act, 1962. The responsibility and obligation of the persons concerned in relation to clearance of the goods commences with the filing of the bill of entry under section 46. All the transaction preceding such filing would fall outside the ambit of any obligation under the Customs Act, 1962. Further, the obligations and the penalties, if any, adjudged for contravention of the obligations will revolve exclusively around the contents of the bill of entry or in relation to production of the goods for completion of the assessment.
10. The appellant is situated outside the country. The appellant has not filed the bill of entry nor subscribed to the veracity of its contents. The appellant is not concerned with the production of goods for verification. In these circumstances, the scope of creating an obligation under the Customs Act, 1962 for the appellant does not appeaser to have any legal basis where issue of an invoice, which, for any reason has been rejected in the process of assessment, may not be easily susceptible for initiating penal proceedings under section 112 of the Customs Act 1962, the scope for action for participation in negotiation leading to issue of invoice is non-existent. Otherwise shippers/consignors based outside the country would also have to be made noticees and be subject to the same penal provisions as the importers themselves in each and every proceedings. Contemplation of such a jurisdiction caricaturises the customs enforcement. The situation of the appellant is not much different from that of shippers/consigners of the goods.
11. Accordingly, the imposition of penalty on the appellant for an alleged act that has nothing to do with the obligation devolving on imports under section 46 and section 47 of the Customs Act, 1962 may not be proper. Lack of jurisdiction that precludes the appellant from approaching the Settlement Commission is a clear indication that the provisions of section 112 were not intended to cover persons who are not concerned with the goods after its landing in India.
12. In view of the above the appeal of Shri Narendra Lodaya is allowed and the penalty set aside.
(Pronounced in Court on 08/07/2016) (C J Mathew) Member (Technical) */as 8