Custom, Excise & Service Tax Tribunal
4. Whether Order Is To Be Circulated To ... vs Shri Khem Singh Lalas, Shri Mukhalesh ... on 30 May, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
COURT - III
Appeal No.C/200,222/2012-SM
Arising out of: OIO No. KDL/Commissioner/02/2012-13, dt.22.05.2012
Passed by: Commissioner of Customs, Kandla
For approval and signature:
Mr. H.K. Thakur, Honble Member (Technical)
1. Whether Press Reporters may be allowed to see the No
Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the Yes
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen
the order?
4. Whether order is to be circulated to the Departmental Yes
authorities?
Appellant:
Shri Khem Singh Lalas, Shri Mukhalesh Jain
Respondent:
CC Kandla Represented by:
For Assessee: Shri H.D. Dave, Shri D.K. Trivedi - Advocates For Revenue: Shri Jitendra Nair, Superintendent (AR) CORAM:
MR. H.K. THAKUR, HONBLE MEMBER (TECHNICAL) Date of Hearing:02.05.14 Date of Decision:30.05.14 Order No. A/11041-11042/2014, dt.30.05.2014 Per: H.K. Thakur
1. Appeal No.C/222/2012 has been filed by the appellant Shri Khem Singh Lalas with respect to a penalty of Rs.1 lakh imposed upon him under Section 114 (i) of Customs Act, 1962 by CC Kandla under OIO No.KDL/COMMR/02/2012-13, dt.22.05.2012. Appeal No.C/200/2012 has been filed by Shri Mukhalesh Jain with respect to a penalty of Rs.5 lakhs imposed upon him under Section 114(i) of Customs Act, 1962 of the above order passed by adjudicating authority.
2. The brief facts of the case are that the DRI Chennai intercepted two containers bearing No.TGHU 8926084 and TRLU 6669027 from a vessel on sail from Mundra Port to Malaysia. These two containers were brought to Chennai Port and were found to be covered by two shipping bills No.6411052 dt.17.04.2010 and No.6416009, dt.30.04.2010 filed by M/s Oswal Handicrafts, Jodhpur and the items declared was 17 tons of furniture. The containers were found sealed with one time bottle seals of Jodhpur Central Excise II Range. During the detailed examination of these two containers, it was seen that they contain Red sander logs having quantities of 17.880 MT and 21.180 MT in the container No.TGHU 8926084 and TRLU 6669027 respectively. The containers were having one time lock seal bearing No.083577 and No.APL 9174617. Both the seals on the containers were found to be intact and there was no visible sign on hinges and rivets of the doors of containers to indicate any tampering. On opening of these containers, it was found that the same were stuffed with red sander logs as against the furniture items declared in the clearance documents. The total weight of the red sander logs from the two containers was 39.06 MTs. During investigation, statement of Shri Mukhalesh Jain, Inspector of Central Excise who supervised stuffing and sealing of containers was recorded on 23.07.2010 under which it was submitted that he along with Superintendent looked after the work of loading and sealing of furniture of M/s Oswal Handicrafts, Jodhpur. That both the containers were stuffed with the furniture items by him along with Superintendent and one time seal was fixed. Shri Khem Singh Lalas, the other appellant submitted that examination and unloading of the cargo was done by inspector and that he was not present at the time of stuffing and sealing. However, it was argued that he may or may not supervise the physical stuffing of the consignment as per the procedure set out by the Department. After detailed investigation, a show cause notice was issued to M/s Oswal Handicrafts Jodhpur, Shri Deepak Jain, Proprietor of M/s Oswal Handicrafts, Jodhpur and both the appellants and under the OIO dt.22.05.2012, inter alia, penalties were imposed upon both the above mentioned appellants against which the present appeals were filed.
3. Shri H.D. Dave appearing on behalf of the appellant Shri Khem Singh Lalas argued that this appellant was not present at the time of supervision of stuffing and sealing of furniture in containers. He made the Bench go through Sr.No.3.6 of CBEC Circular F.No.224/37/2005-CX-6, dt.24.12.2008 which reads as under:-
3.6 Examination and sealing of export consignments under Central Excise seal On being deputed by the Range Officer visit the specified premises for examination and sealing of export consignments and prepare examination report as per relevant departmental instructions. Duly completed examination report must accompany the export goods as per instructions/ circulars on the subject.
To depute the Sector Officer or himself carry out the process of examination and sealing as per relevant departmental instructions. To ensure that in the case of free shipping bills, the assessee has to mandatorily opt for self sealing of export consignment in view of Boards circular No.860/18/ 2007-CX, dt.22.11.07.
3.1 It was his case that as per this circular, duty of the Superintendent regarding examination and physical stuffing of consignments, is to depute officer or himself to carry out the process of examination. He argued that for stuffing and sealing of the present containers Shri Mukhalesh Jain Inspector was deputed and there are no signatures on the invoice indicating that this appellant was present during the stuffing, examination and sealing. That the statement of the co-accused Shri Mukhalesh Jain cannot be used against the present appellant in the absence of any other corroborative evidence. Ld.Advocate also made the Bench go through the order dt.19.10.2013 passed by the jurisdictional CBI Court where Special Criminal No.12/2011 is filed and submitted that as per this order also Shri Khem Singh Lalas has not been considered to be liable for further prosecution as no charges are framed against him whereas the charges have been framed against other persons including Shri Mukhalesh Jain. It is also submitted that Shri Khem Singh Lalas is a kidney patient and is due to retire shortly.
4. Shri D.K. Trivedi, ld.Advocate appearing on behalf of Shri Mukalesh Jain argued that during the stuffing and sealing of the containers, only loading of furniture was noticed by him. That in the statement recorded by the investing agency, it was never confronted to him that only red sander logs were found in the containers without a trace of furniture which was supervised by him. Ld.Advocate made the Bench go through Para 16 of the OIO dt.22.05.2012 which contained the defense submission made by the appellant Shri Mukhalesh Jain. These submissions made before the adjudicating authority are reproduced below:-
16. Shri Mukhalesh Jain, Inspector of Central Excise filed reply to the show cause notice wherein he, inter alia, made the following submissions:-
(i) He had performed duties as per the instruction issued by the Central Board of Excise & Customs vide F.No.224/37/2005-CX-6, dt.24.12.08. He had examined the goods on the spot as per the directions of the Range Superintendent, namely, Shri Khem Singh Lalas in his presence and found the goods to be furniture as declared by the exporter in concerned invoices and packing list. Thereafter, the goods were stuffed in the containers in the presence of both of them and the containers were sealed on the spot as per the procedure prescribed in CBECs said Circular dt.24.12.2008.
(ii) The charge that helped Shri Deepak Jain in smuggling of red sanders out of India in the guise of furniture is frivolous and devoid of any substance as the DRI has failed to prove any extraneous consideration flowing to him for facilitating Shri Deepak Jain. In fact, no incriminating evidence other than the presence of the intact departmental Bottle Seal appears to be available with the DRI. Even in the case of impugned bottle seals and the containers, no examination report from any authorized laboratory is available with the DRI.
(iii) He had sought information under RTI from various Customs and Central Excise Commissionerate whether the department Bottle Seal is made by Government undertaking unit or private party. The Customs House, Kandla in its reply has informed that the Bottle Seals are purchased from supplier who quotes the lowest rates, irrespective of the fact whether it is government undertaking or private party and no supervision of Government office exists there. Therefore, it was very much possible that the same number and color bottle seal could be replicated/made and their misuse cannot be ruled out.
(iv) In a particular case, a container No.TTNU 2516442 was stuffed with Roofing tiles under the supervision of Shri Rajkumar, Preventive Officer at CWC-CFS, Gandhidham on 11.07.2006 and after stuffing Shri Rajkumar, Preventive Officer put the remarks on the shipping bill that the container No.TTNU 251644 stuffed under Customs supervision and sealed with department bottle seal No.EXP 681367. After stuffing, the said container was transshipped from CWC-CFC to MICT, Mundra on 13.07.2006 by loading it on Truck No.GJ 12 8893. When the container was taken to Adani Port, Mundra, its seal was duly verified, and MICT, Mundra had duly acknowledged its receipt, that the seal applied at the material time was neither changed nor broken and the seal was never tampered.
(v) On 14.07.2006, Customs Officers at Kandla, Mundra and DRI, Gandhidham opened the said container after breaking the two seals, one is EXP 681367 (which was sealed by the Customs P.O. after completion of stuffing as above) and another seal No.CARAVEL 39044 in the presence of two independent panchas and other officers at MICT, Mundra, whereupon, it was found that the said container contained red sander logs instead of roofing tiles for which shipping bill was filed. Statement of the owner of the truck No.GJ 8893 and driver of the said truck were recorded under Section 108 of Customs Act, 1962, wherein it was stated that the goods declared in the shipping bill were stuffed in the said container, which were, however, replaced with logs of red sanders in the farm known as Jamnagar Vadi. Search was carried out at the said Jamnagar Vadi and export cargo declared in the shipping bill which was de-stuffed from the said container and replaced with logs of red sander wood) was found lying there. Details are available in the OIO No.KDL/COMMR/50/2008 passed by the CC Kandla, vide F.No.S/10-11/2007-Adj., dt.03.12.2008 in the matter of M/s Shri Prakash Devji Gandhiya & Others, Gandhidham (Gujarat).
(vi) No statement of driver or owner of the truck was recorded even then the mobile number and name of the driver was mentioned on the transporter G.R. of the container No.TGHU 8926084 and TRLU 6669027 from which the issue could be cleared/solved.
(vii) In his D.O.C. No.840/JPR/19-XXXVII/11, dt.12.12.2011, addressed to the Additional Chief Secretary, Govt. of Rajasthan, Jaipur, Shri Sanjay Shrinet, Additional Director, DRI, Jaipur informed in Para 7(iii) that the smugglers in India place order for export of various goods like furniture or refractory bricks etc to indigenous manufacturer and pursue them to get the container factory stuffed in presence of Central Excise/Customs officers. The container is loaded in the vehicle provided by these smugglers. Thereafter, during the transportation from factory of stuffing to the port, these unscrupulous elements indulge in cutting the seal, de-stuffing the container and stuffing with red sander logs and re-sealing back with duplicate seals of Customs and shipping line. The containers are then exported out of India.
(viii) In another case, pursuant to intelligence received by the DRI that under the declared export cargo namely Raw Gypsum in shipping bill, red sanders were being attempted to be smuggled out of India, container No.CRXU-1606480 was de-stuffed in the presence of Panchas and other officers. On de-stuffing the goods declared as Raw Gypsum packed in plastic bags of 50 Kgs each, red sander logs found concealed at the bottom of the container beneath these bags. During the investigation, the premises of godown of M/s Mahalaxmi Warehouse and Allied Industries, Gandhidham were searched in the presence of police and independent Panchas. 151 plastic bags filled with dull white colored powder were found lying there which were detained by the officers of DRI. Further, the officers found 30 one time used bottle seals, electric machine for embossing numbers on bottle seals, dies of various numbers and alphabets, various tools, nut-bolts etc. As per DRI, it prima facie appeared that the same were meant for embossing numbers on bottle seals.
(ix) Besides there are number of cases reported where the Bottle seals were found defective and after sealing when rotated and pulled down the lower portion of bottle seals opened. He enclosed a copy of letter of DC (H), Customs sub-commissionerate, Jodhpur who informed the Additional Commissioner, Customs, Jaipur. He also submitted a CD which would demonstrate how a Bottle Seal can be opened with the help of some instruments without tampering the bottle seal and again locked in the same manner.
(x) Statement of Shri Deepak Jain, Proprietor of M/s Oswal Handicrafts, Jodhpur has also not been provided to him as he is not available to DRI. Now, it has come to notice that Shri Deepak Jain has surrendered before CBI Court, Jodhpur, so a copy of his statement may be provided to him.
(xi) He placed reliance on various case laws, viz. (i) CC Bangalore Vs M. Naushad 2007 (210) ELT 464 (Tri-Bang) (ii) CC New Delhi Vs Hargovind Export 2003 (158) ELT 496 (Tri-Del) (iii) CC (Prev.) West Bengal Vs Arun Chakraborty 2009 (48) ELT 530 (Tri-Kolkata) (iv) CC New Delhi Vs M.I. Khan 2000 (120) ELT 542 (Tri-Del) (v) G.M. Enterprises Vs CC (Export), Nhava Sheva 2010 (262) ELT 796 (Tri-Mum) and (vi) Arif Shaikh Vs CC (Gen.) Mumbai 2011 (272) ELT 596 (Tri-Mum).
(xii) He is working with the Department since 1992 and had an extremely clean record. Therefore, his 20 years of clean service record cannot be questioned with a particular incident involving one time lock bottle seal which itself is not reliable as submitted hereinabove. Hence, the proposal for imposition of penalty under Section 114 is unjustified and requested that the proceeding initiated against him may be dropped. 4.1 It is the case of appellant Shri Mukhalesh Jain that there was a prevalent practice at the relevant time where the goods stuffed in the presence of Customs officers were subsequently substituted without even tampering with one time bottle seal or that the same numbered one time bottle seal was obtained from elsewhere and put on the containers after cutting the original seals. It was argued that in view of the above submissions made during adjudication, the adjudicating authority should have given some findings as to why the argument made by this appellant were not acceptable when no statement of Shri Deepak Jain, Proprietor of M/s Oswal Handicrafts, Jodhpur, and the driver were recorded.
4.2 Ld.Advocate also relied upon the observations of the adjudicating authority in Para 25 of the OIO dt.22.05.2012 that Shri Mukhalesh Jain was not a part of the conspiracy or abetment which could be established only on the basis of the concrete evidences. It was emphasized by the Advocate of the appellant that statements of the other offenders like Deepak Jain, Proprietor of M/s Oswal Handicrafts and the transporter were not recorded which could throw light whether the red sander logs were stuffed before sealing done by Shri Mukhalesh Jain or same was substituted after the clearance from the factory.
4.3 Ld.Advocate also relied upon the following case laws and argued that in the absence of any extraneous consideration for lack of knowledge of the appellant regarding Red Sander Logs stuffed in the container; no penalty under Section 114 of the Customs Act, 1962 is attracted:-
i) A.P. Sales Vs CC Hyderabad 2006 (198) ELT 309 (Tri-Bang)
ii) CC New Delhi Vs Hargovind Export 2003 (158) ELT 496 (Tri-Del)
iii) CC Bangalore Vs M. Naushad 2007 (210) ELT 464 (Tri-Bang)
iv) I. Sahaya Edin Prabhu Vs CC Chennai 2008 (222) ELT 308 (Tri-Che.)
v) C. Ashok Kumar Vs CC (Export-Seaport), Chennai 2010 (262) ELT 321 (Tri-Che.)
vi) Neptunes Cargo Movers Pvt.Ltd. Vs CC (Export) Chennai 2007 (219) ELT 673 (Tri-Che.)
5. Heard both sides and perused the case records. So far as the imposition of penalties upon Shri Khem Singh Lalas is concerned, it is observed from the records that as per the prescribed procedure and CBEC Circular dt.24.12.2013, during examination and sealing of export consignment under consideration the Superintendent can depute an officer or he himself can carry out the process of examination and sealing as per relevant departmental instructions. In the present case, during investigation and before the adjudicating authority, this appellant has taken a stand that in the present stuffing and sealings of containers, he was physically not present. Only a statement of the co-accused cannot be said to have established that Shri Khem Singh Lalas was present during the examination and stuffing of the cargo in the containers which were subsequently found to contain red sander logs. It is relevant to note that the evidences available on record were also not considered sufficient for framing charges against Shri Khem Singh Lalas by the jurisdictional Special Judge CBI in Special Criminal No.12/2011. In view of these observations, no penalty can be imposed upon this appellant under Section 114(i) of Customs Act, 1962 and the order passed by the adjudicating authority to that extent is required to be set aside.
6. So far as the imposition of penalty under Section 114 of Customs Act, 1962 against other appellant Shri Mukhalesh Jain is concerned, the only evidence available against him is that both the containers were sealed with one time bottle seals which were found to be in tact at the time of examination at Chennai, when only red sander logs were found in the containers and there was no trace of furniture said to have been stuffed into those containers under supervision of Shri Mukhlesh Jain. No statements of Shri Deepak Jain, Proprietor of M/s Oswal Handicrafts and the transporter were recorded by the investigating agency which could have established that during transport, from the point of stuffing to the point of Customs area, no substitution has taken place. Prima facie, no tampering of the one time seals do raise a suspicion that red sander logs were stuffed from the very first go and there was no furniture stuffed in these two containers. At the same time, it cannot be ignored that appellant Shri Mukhlesh Jain has brought on record certain facts reproduced in Para 16 of OIO dt.22.05.2012. As per Para 16 (iii), it is observed that one time bottle seal are purchased by the Revenue from the Government Undertakings or private parties based on the lowest rates quoted for supply of one time bottle seals and there is no supervision by Government agency over the manufacturing of such bottle seals. Further, from Para 16 (iv) & (v) of the submissions made by the appellant before adjudicating authority, as reproduced in Para 4 above, it is evident that instances exist where goods were substituted after sealing by the concerned officer either without tampering with the seal or by using duplicate one time seals by embossing the desired number. It is also observed from Para 16 (vii) of the order dt.22.05.2012 that a senior officer of DRI has written to Additional Chief Secretary of Govt. of Rajasthan that the smugglers in India place order for export of various goods like furniture or refractory bricks etc to the indigenous manufacturers and pursue them to get the container factory stuffed in presence of Central Excise /Customs officers. The containers are loaded into the vehicle provided by the smugglers and during the transportation from factory of stuffing to the ports, these unscrupulous elements indulge in cutting open the seal, de-stuffing of container and stuffing with red sander logs and re-sealing back with duplicate seals of customs and that thereafter the containers are exported out of India. Factual submissions made in Para 16 (viii) of the OIO dt.22.05.2012 also convey that unscrupulous elements do manipulate the existing prescribed procedures. No findings have been recorded by the adjudicating authority on the factual submissions made by the appellant. On the contrary, he had observed in the adjudication order that element of conspiracy of abetment against the appellant could not be established. Further statements of the driver or the owner of the truck and exporters have not been recorded to establish that no substitution from the place of stuffing to the Customs area has taken place. There is no evidence on record that Shri Mukhalesh Jain did not inspect the empty containers before the stuffing or that the stuffing and sealing was done by the exporter without the presence of Shri Mukhalesh Jain and that this appellant was only made to sign on the documents. In view of the above facts and circumstances and in the absence of any other corroborative evidences, no penalty can be imposed upon this appellant under Section 114 of Customs Act, 1962 in view of the case laws relied upon by the appellant. For negligence in discharging duties, this appellant has been served with a separate charge-sheet by the Department for which the law can take its course. Accordingly, it is held that no penalty is imposable upon Shri Mukhalesh Jain and the appeal filed by him is required to be allowed.
7. Based on the above observations, both the appeals filed by the appellants are allowed.
(Pronounced in Court on 30.05.2014) (H.K. Thakur) Member (Technical) cbb ??
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