Customs, Excise and Gold Tribunal - Calcutta
Commissioner Of Customs, Calcutta vs Ramapati Exports on 9 January, 2002
Equivalent citations: 2002(82)ECC419, 2002(142)ELT77(TRI-KOLKATA)
ORDER Archana Wadhwa, Member (J)
1. The present appeal has been filed by the Revenue against the order-in-original No. 30/2001, dt. 20-4-2001 passed by CC, Calcutta vide which he had dropped the proceedings, inter alia, against the respondents and the other persons, initiated vide show cause notice dt. 20-7-2000. Though the impugned order has been passed by the Commissioner against a number of persons including the respondents, the appeal has been filed by the Commissioner only in respect of M/s. Ramapati Exports.
2. Briefly stated the facts of the case are as under : -
2.1 M/s. Ramapati Exports is a proprietorship firm, who exported 12 consignments of glass beads (totally weighing 7.2 M,T.) during June, 1999. The declared FOB price of the glass beads was US Dollars 162 (Rs. 6,897.80) per Kg. The export was made to M/s. Top Bottom Impex of Singapore. Initially the assessments were made on provisional basis after examination of the goods. Samples were drawn from the said consignment and after fully satisfying themselves the Revenue officers finally assessed the consignment in question in the month of July, 1999. The respondents availed the benefit of DEPB scheme in terms of para 7.25 of Exim Policy, 1997-2002 and availed the credit, as admissible to them.
2.2 Subsequently on the basis of suspect about over-valuation of about a number of exports goods of various exporters, investigations were initiated against such exporters including the respondent. The Commissioner of Customs (Port) vide his letter dt. 21-9-99 addressed to Member, Customs opined that there was no over-invoicing in the case of decorative finished glass beads (exports in question) within the price range of Rs. 6,000/- to Rs. 6,500/- per Kg. It is also on record that the final assessments were not appealed against under the provisions of Section 129D of the Act. However, the case was investigated by the Special Investigations Branch of the Customs Department at Calcutta, who during the course of investigations recorded the statements of various persons including the proprietor of the respondent firm Shri Bharat Kr. Mahensaria as also the other persons from whom the said export firm purchased the glass beads in question.
2.3 Based upon the said investigations, a show cause notice was issued to the exporter alleging over-valuation of the exported goods and proposing confiscation of the goods exported as also of the goods imported against six DEPB licences and proposing penal action against the various noticees. The show cause notice alleged that money paid by Shri Bharat Kr. Mahensaria, proprietor of Ramapati Exports to M/s. Nirpa Indus, and M/s. Madho Prasad Mahavir Prasad, the two companies controlled by Nirmal Kumar Saraswat for purchase of glass beads was transferred to 9 different companies which were floated by Shri Nirmal Kumar Saraswat in different names. Part of the purchase money was also sent to M/s. Arawali Gems Exports Ltd., Jaipur, whose director categorically stated that they had not supplied any glass beads to M/s. Ramapati Exports and returned the entire amount to Shri Kishan Goswami, representative of M s. Ramapati Export for small commission. Proprietors of 3 benami companies of Shri Nirmal Kumar Sawaswat who were available, gave statement under Section 108 of Customs Act, 1962 that they are merely name lenders and they have handed over the cheques of the respective company duly signed by them to Shri Nirmal Kumar Saraswat and in return of which, they got small commission. The statement given by Nirmal Kumar Saraswat before the officers of DRI that he had procured the glass beads from Shri Ajay Kumar Ojha from Mala Pita Bhawan, Siliguri was also proved to be false since the owner of Mata Pita Bhawan stated before the officers of customs at Siliguri that Ajay Ojha never stayed at that address. Neither the exporter nor the so-called supplier could identify the source of procurement of the finished glass beads till date. Enquiries made through High Commission of India, Singapore revealed that there was no market of glass beads in Singapore. The said show cause notice was adjudicated upon by the Commissioner of Customs vide his impugned order wherein he dropped the proceedings against all the noticees.
3. Shri P.K. Dutta, Id. Adv. along with Shri Biswajit Mukherjee, ld. Adv. appeared on behalf of the Revenue and contended that the Commissioner has framed the following issues for consideration :-
(i) Whether the assessment finalised on the basis of Board's circular can be reopened by way of an executive order and whether such circulars are binding for the purpose of reopening assessments.
(ii) Whether there was a cause for invoking provisions of Section 28(1) of the Customs Act, 1962 for reasons of fraud/collusion/ willful mis-statement or suppression of facts.
(ii) Whether substantive evidence has been collected to pursue the charge of over-valuation of finished glass beads.
4. Arguing on the first issue he submits that the adjudicating authority's view that the process of re-opening the final assessments without taking recourse to the provisions of Section 129D of the Customs Act, 1962 are not correct inasmuch as it is settled law that where importation and clearance is obtained for fraudulent means, the same could not debar the issuance of show cause notice for confiscation of the goods and such a clearance is not required to be set aside by exercise of revisional powers before the ill effects of the fraud can be set right for initiation of the process of confiscation of the fraudulently cleared goods. On the same analogy he submits that any order passed under Section 51 of the Customs Act in respect of the export goods cannot stand as an embargo or act as a bar for initiation of proceedings under Section 124, for ascertaining the correct assessable value of the goods, without taking recourse to revision proceedings. The above legal position is not disputed by Dr. Samir Chakraborty, ld. Adv. appearing for the respondents. As such we are of the view that the Revenue authorities were having jurisdiction to issue the show cause notice under the provisions of Section 124 of the Customs Act, 1962.
5. Though we find that all the grounds of appeal relate only to the above legal position and the Revenue has not challenged the findings of the Commissioner that there was not sufficient evidence on record to show the over-valuation of the goods, nevertheless we deal with the said aspect inasmuch as the same were argued by the Id. Adv. Shri Dutta by referring to one of the grounds to the effect that the impugned order has been passed without taking into consideration the relevant facts. As such, though we feel that the findings on evidence have not been specifically challenged in the grounds of appeal, we are considering the same in view of the foregoing.
6. As per the facts on record the decorative glass beads were purchased by the respondents from Nirpaa Industries and Madho Prasad Mahabir Prasad, belonging to one Shri Nirmal Kumar Saraswat. Shri Nirmal Kumar Saraswat has agreed to have sold 7.2 M.T. of the said goods to the respondents during the material period. However, as per the allegations made in the show cause notice the purchase money received by the said two companies controlled by Nirmal Kumar Saraswat was further transferred to nine different companies floated by said Shri Nirmal Kumar Saraswat. The said money was withdrawn from the various nine companies by cheque and it is alleged that the money in question flowed back to the respondent's company M/s. Ramapati Exports. The notice alleges that Nirmal Kumar Saraswat got a commission of 0.25% for the above arrangement. However, we find no source for the above allegation. In all the four statements of Shri Saraswat recorded on 8th, 11th (two st.) and 12th of February, 2001, there is no mention of the commission. Dr. Chakraborty, Id. Advocate for the respondent, during the course of hearing before us, requested Shri Dutta, appearing for the Revenue to point out to the portion of the statement referring to the commission, but Shri Dutta could not point out the same. It is seen that in all, four statements of Shri Saraswat were recorded. In his first two statements recorded on 8th and 11th February he has admitted having sold the beads to the respondents. The subsequent two St. recorded on llth and 12th of February are to the effect that no glass beads were sold by him. The said statements were retracted by him immediately on the next days by making representations to various authorities by Shri Saraswat who contended that he was compelled to make such statements and referred to the circumstances reflecting upon the factum of the statements having been tendered under duress and pressure. It is also seen that said Shri Nirmal Kumar Saraswat filed before the Commissioner certified copies of sale/purchase agreement, challans, invoices, payment instruction and money receipts issued to the respondents and admitted before the adjudicating authority, in his reply filed before him that the said sale purchase was complete between him and the respondent company and the glass beads in question were sold by him to the respondent company. The distribution of purchase money by Shri Nirmal Kumar Saraswat to his different 9 companies cannot be made a ground for arriving at a finding that the respondent company did not purchase the goods from the two companies owned by Shri Nirmal Kumar Saraswat. There is no statement of any person that after the transfer of money to the 9 different companies, the same were withdrawn and handed over to M/s. Ramapati Exports. As such it cannot be said that M/s. Ramapati Exports received back the purchase money paid to Shri Nirmal Kumar Saraswat as consideration of the beads in question and it cannot be concluded that the value of the beads was on the higher side. The handling of the purchase money by Nirmal Kumar Saraswat by transferring the sale proceeds to its sister concern is not relevant to the issue of over-invoicing of the goods by the respondent company.
7. Similarly we find that the Revenue has tried to build up its case on the statements given by Shri Nirmal Kumar Saraswat that the glass beads in question were procured by him from whom one Shri Ajay Kumar Ojha from Mata Pita Bhawan, Siliguri. During investigation the owner of Mata Pita Bhawan stated that Shri Ajay Kr. Ojha never stayed at this address. From this the Revenue is contending that it becomes clear that the sale purchase of the beads never took place. However, we find that it is not the Revenue's case that the beads were not exported to Singapore. As such the Revenue's contention that source of procurement of beads could not be verified will not reflect upon the valuation aspect of the beads, which were admittedly bought by the respondent company and exported. We also note that the show cause notice refers to the statement made by Director of M/s. Aravali Jains Export Ltd., Jaipur, which is to the effect that the glass beads were never supplied by them to M/s. Ramapati Exports. The said Director, Shri Ramprakash Gupta's statement is to the effect that the money received by him by cheque was returned to one Shri Kishan Goswami, who is representative of the respondent company. However, Shri Kishan Goswami has pointed out to the apparent contradiction in the statement of Shri Ramprakash Gupta wherein at one place he had deposed that the money was returned to Shri Kishan Goswami by cheque whereas at another place he is deposing that the same was returned to him in cash. On the other hand we find that the concerned persons of the 9 different companies have stated that the proceeds of the cheques were returned to Shri Ramprakash Gupta. Shri Kishan Goswami has denied any role in the purchase of glass beads exported by M/s. Ramapati Exports and Shri Bharat Mahensaria, proprietor of the respondent export firm has also denied that Shri Kishan Goswami is a representative of the respondent company. As such it has been strongly argued by the respondents that the statement of Ramprakash Gupta is self-contradictory and being not corroborated by independent evidence does not carry any evidentiary value. He has in one of his statement dt. 24-1-2000 has clearly admitted that he does not know the respondent company.
8. We find that the Commissioner of Customs, Calcutta, on appraisal of the evidence and the statements of various persons has concluded that the statements may create an element of doubt and suspicion with regard to the valuation of the impugned glass beads, but no tangible evidence has been obtained to substantiate the evidence collected through the statements. We find that all the three persons Shri Nirmal Kumar Saraswat, who has sold the goods to the respondent company, Shri Ajay Kr. Ojha, who has sold the goods to the companies owned by Shri Nirmal Kumar Saraswat and Shri Kishan Goswami in their replies filed before the adjudicating authority have corroborated the stand of the respondent company. Shri Nirmal Kumar Saraswat has admitted having sold the goods to the respondent and have produced the evidences before the adjudicating authority, Shri Ajay Kr. Ojha has also stated that the glass beads were procured by him from the primary market and were sold to Nirpa Industries and Madho Prasad Mahabir Prasad, belonging to Shri Nirmal Kumar Saraswat. Shri Kishan Goswami has denied that he had anything to do with the procurement of glass beads or has at any point of time dealt with Shri Ramprakash Gupta of Aravali Gems. As such we are of the view that the findings of the Commissioner that the said statements do not constitute positive and tangible evidence to support the allegations of over-valuation of the glass beads in question are legal and sustainable.
9. The respondents have also strongly contended that the impugned order of the Commissioner deals with the show cause notice issued to number of noticees including Shri Nirmal Kumar Saraswat, Shri Ajay Kr. Ojha and Shri Kishan Goswami. Vide the impugned order he has dropped the proceedings against all the noticees. However, the Revenue has chosen to file only one appeal against M/s. Ramapati Exports. This shows that the Commissioner's findings in respect of the other persons have been accepted by the Revenue. This shows that the evidences produced on record by Shri Nirmal Kumar Saraswat showing the sale of the glass beads have been accepted by the department, who having accepted the contentions of the said co-noticees, cannot now contend to the contrary. If the submissions of Shri Nirmal Kumar Saraswat and Shri Ajay Kr. Ojha having sold the beads to the respondents at the rates reflected in the documents are accepted, the Revenue's appeal challenging over-valuation of the goods by the respondents exporter cannot stand. We find force in the above contention of the respondent. The case of all the three persons namely Shri Nirmal Kumar Saraswat, Ajay Kr. Ojha and Shri Kishan Goswami to the effect that the goods in question have been sold by Shri Ajay Kr. Ojha to Shri Nirmal Kr. Saraswat, who in turn sold the same to the respondent has been accepted by the Revenue inasmuch as no appeal has been filed against the said portion of the impugned order dropping the proceedings against the said three persons. If that be so, the Revenue's contention that the goods were not sold by Shri Nirmal Kumar Saraswat at the rates reflected in the invoices cannot be accepted inasmuch as the same would amount to reversing the findings of the adjudicating authority relatable to Shri Nirmal Kumar Saraswat without there being any appeal by the Revenue against him.
10. The respondents in their memo of appeal have strongly challenged the allegations made in the show cause notice that the quotation of the several parties and computer print outs issued by the Bombay Customs show the price of the beads in the range of Rs. 70/- to Rs. 100/- per kg by referring to the other documents in the shape of price list of various parties and the invoices, quotations and computer print-outs that the value of the glass beads during the relevant period were as high and as comparable to the value declared by the respondents. They have also referred to the adjudication orders in respect of other exporters of glass beads where the price declared by such exporters as US Dollars 165 per kg was accepted. As such it has been contented that the price declared by the respondent as US Dollars 162 is less than the export price accepted by the department in the case of other similarly situated exporters. However, we find that the said documents have not been discussed by the Commissioner and as such we refrain from commenting upon the same.
11. It has been further contended on behalf of the respondents that though samples were collected from the consignments exported by them, but the same have not been put to any test and it is recorded in the impugned order of the Commissioner that the samples got mis-placed. As such it has been argued that in the absence of the samples, to allege that the goods in question were of the lower value, is not justifiable. Dr. Chakraborthy has drawn our attention that whereas the appellants have exported "decorative and finished' glass beads, the price proposed to be adopted in the show cause notice is that of 'standard' glass beads. As such he submits that there being nothing on record to show that the goods exported by the respondents were same or similar to the goods investigated by the department, the value adoption by the Revenue is not justified. For his above submission he relied upon the Tribunal's decision in the case of Time Masters v. CC (Export), Mumbai - 2000 (129) E.L.T. 882 (T) = 2000 (38) RUT 332 (CEGAT)].
12. We find a lot of force in the above submission of the Id. Adv. appearing for the respondents. No efforts have been made by the Revenue to show that investigations conducted by them were in respect of the same quality of beads which were exported by the respondents. In the absence of any such co-relation being made by the Revenue, the allegations of undervaluation of the goods cannot be accepted. It does not need any common knowledge to say that the value of a particular item would depend upon the quality of that item. Taking an example from the daily life, a men's shirt is available in the market at a price of Rs. 100/- or so and another shirt of higher quality may fetch higher price, may be 20 times or more than the value of an ordinary shirt. Nevertheless both the men's shirts and on that count itself, the value cannot be compared.
13. The respondents have also contended that the entire sale proceeds from the Singapore importer have been received by them. The Revenue is also not disputing that the full export values were realised by the respondents from their foreign buyers through banking channels and bank realisation certificates have been verified. Enquiries conducted by the Revenue from the High Commissioner of India in Singapore as regards the purchase of the subject exported goods also revealed that the foreign buyer was a living company and the financial capability and/or business reputation of the said foreign buyer were not even doubted. In this view of the matter also, we do not find any merits in the Revenue's case. In fact it is seen that during investigation proceedings the Commissioner of Customs, Calcutta in his communication to the Board made in September, 1999 opined that the decorative finished glass beads exported from the Calcutta Port, in the recent past range from Rs. 6,000/- to Rs. 6,500/- per kg and there was no case of over-valuation noticed. Having already held that there was no sufficient evidence to sustain the charge of under-valuation against the respondents, we do not find any merits in the Revenue's appeal.
14. The respondents have also urged that the various circulars issued by the Board as regards the exports under DEPB scheme were duly followed by the concerned officers and the assessments were made accordingly. These circulars are binding on all the departmental authorities, who are bound to obey the same and bound to act only within the framework of the said circulars. For the above submission, reliance has been placed upon various decisions of the Hon'ble Supreme Court as also of the Tribunal. They have also argued that the notice only proposes confiscation of the goods and imposition of penalties and does not propose any revision in the DEPB credit benefit.
Having already held that the evidence on record is not sufficient to substantiate the allegation of over-valuation against the appellants, we do not feel it necessary to comment upon the above arguments of the appellants in respect of applicability of the circulars.
15. In view of the foregoing we are of the view that the impugned order passed by the Commissioner is correct, legal and sustainable. Accordingly we uphold the same and reject the appeal filed by the Revenue.