Custom, Excise & Service Tax Tribunal
Chennai Marine Trading Co. P. Ltd vs Commissioner Of Customs (Sea), Chennai on 8 May, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
C/189 to 192/2012
(Arising out of Order-in-Original No.18892/2012 dated 4.6.2012 passed by the Commissioner of Customs (Port Import), Chennai)
For approval and signature:
Honble Shri P.K. Das, Judicial Member
Honble Shri Mathew John, Technical Member
1. Whether Press Reporters may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether the Members wish to see the fair copy of the Order?
4. Whether order is to be circulated to the Departmental authorities?
1. Chennai Marine Trading Co. P. Ltd.
2. Rajesh Mehra
3. M.A.R. Ahmed
4. Mohammed Gawher Rauf Appellants
Vs.
Commissioner of Customs (Sea), Chennai Respondent
Appearance Shri Z.B. Nagarkar, Consutlant, for the Appellants Shri K.S.V.V. Prasad, Jt. Commr. (AR) for the Respondent CORAM Honble Shri P.K. Das, Judicial Member Honble Shri Mathew John, Technical Member Date of Hearing : 06.02.2013 Date of Pronouncement: 08.05.2013 Final Order No. ____________ Per P.K. Das All these appeals are arising out of a common order and, therefore, all are taken up together for disposal.
2. The appellant No. 1, the company, imported five containers declared to contain HCFC R-401A refrigerant gas covered under manual bills of entry for warehousing bearing No. 134045 to 134049 all dated 30.11.2010, imported from China (country of origin). Import license authorizing import of HCFC R-401A was submitted by appellant. The said containers lying in M/s. Binny CFS, Perambur, Chennai, were detained for examination by the officers of DRI. After thorough investigation by the DRI officers, it was found that the appellant imported refrigerant gas of R22 which is a restricted item and the materials were seized. The adjudicating authority held that the imported goods is R22 gas (an Ozone Depleting Substance) a single Hydro Chloro Flouro Carbon compound (HCFC) classifiable under Tariff Heading 2903 49 10 of the Customs Tariff Act, 1975 and enhanced the declared value from USD 1.70 per kg. (CIF) to USD 2.42 per kg. (CIF) and re-determined the total value of the goods is Rs.61,50,012/- (CIF). He has also confiscated the entire goods and allowed to redeem the goods on payment of redemption fine of Rs. 10 lakhs for the purpose of re-export and also imposed penalty of Rs. 6 lakhs on the appellant-company and penalty of Rs. One lakh each on Shri Rajesh Mehra, Shri M.A.R. Ahmed and Shri Mohamed Gawher Rauf alias Sanjay, Directors of the appellant-company.
3. The learned counsel submits that the entire case was made out on the basis of report dated 2.5.2012 of Dr. R. Murugesan, Scientific Officer I of Indian Institute of Technology (IIT), Madras. He submits that they have disputed the contents of the report and requested for cross-examination of Dr. R. Murugesan, which was rejected without assigning any reason. He submits that the Dean of IIT, Madras informed that the imported blended gas was incapable of being tested in IIT. He also placed the e-mail communication dated 31.1.2013 of the learned counsel and 1.2.2013 of Dr. Babu Vargheese, IIT, Madras during the course of hearing in support of his contention that IIT, Madras is not equipped for testing. He submits that in the facts of the case it is required to allow the cross-examination for the purpose of establishing the truth. Without prejudice to the above submission, it is contended by the learned counsel that the refrigerant gas R-22 is available freely and therefore it should be allowed for home consumption. In support of that contention he placed copy of cash memo of Customs Retail Sales Corner, Bangalore, Chennai and Tax invoices issued by the Customs Preventive Commissionerate. It is submitted that the appellant is incurring huge demurrage and therefore, it should be released immediately for the purpose of ship stores.
4. The learned AR vehemently opposes the prayer of the learned counsel. He reiterates the finding of the Commissioner. He points out that the appellant is a trader and not an actual user of the gas. The Government policy is to phase out import and use of this gas over a period of time. However, actual users can import it against specific licenses for some more time till alternatives are put in place. That cannot be reason to take a lenient view in the case of a trader. He submits that the importer admitted the mis-declaration and requested for re-export. He submits that the show-cause notice was issued on the basis of the test report where it was found to be 100% R22 refrigerant gas. The adjudicating authority allowed re-testing of the samples from IIT, Madras at the request of the appellant and therefore they cannot dispute the said report. It is contended that as revealed from the report that the sample was tested with the available control sample with the aid of GC MS, (which stands for Gas Chromatography Mass Spectometer) the most advanced instrument for determining the purity of gaseous substances. The adjudicating authority righty allowed re-export of the goods. He also submits that the import of refrigerant gas R-22 is restricted as per EXIM Policy to allow restricted imports by actual users and is allowed on a valid specific licence issued by the authority designated by the Govt. of India, Ministry of Environment & Forest (Ozone Cell), viz. Director General of Foreign Trade. He submits that according to Montreal protocol signed by India the use of R-22 is to be phased out much earlier than the period allowed for phasing out gases like HCFC R-401A which is refrigerant gas now predominantly used in tropical countries like India. The issue in dispute is not the exact composition of different gases in a blend of gas. The issue is that the imported gas was found to be R-22 gas when compared with a standard control sample of R-22 gas. The learned AR submits that in the facts and circumstances of the case, cross-examination should not be allowed.
5. We have considered the submissions of both sides and perused the records. The facts of the case as revealed from the record, in brief, are as under:-
(i) The appellant filed five manual Bills of Entry for warehousing on the 30th November 2010. It was declared the description of the goods in the Bills of Entry as refrigerant gas HCFC R-401A under Tariff Heading 2903 49 90 of the Customs Tariff Act. The DRI officers made a thorough investigation.
(ii) The samples were tested by Electronic Refrigerant gas testing kit and all the samples were found to be 100% R22 Refrigerant gas. Mahazar proceedings dated 7.12.2010 was drawn in the presence of Shri M.A.R. Ahmed, Appellant No. 3, one of the Directors of the appellant-company. Shri Ahmed in his statement dated 8.12.2010 stated that the goods declared as HCFC R-401A under the Bills of Entry are actually R-22, a refrigerant gas.
(iii) Shri Rajesh Mehra, Appellant No. 2, Director of the appellant-company in his statement dated 8.12.2010 stated that they had not tested the gas till date and the technicians in their office checks the pressure of the gases by means of gauge machines for determining the pressure of the refrigerant gases imported by them. He stated that the imported gas was HCFC R-401A refrigerant gas, mixture of three blends of HCFCs and there is no mis-declaration. He also stated that the other Director Shri Ahamed should have used his better judgment in explaining HCFC - 401A.
(iv) Shri Mohammed Gawher alias Sanjay, Director of the appellant-company, Appellant No. 4, in his statement dated 9.12.2010 stated that they have mis-declared the imported consignment as HCFC R401A instead of R-22 refrigerant gas and accepted the mahazar proceedings dated 7.12.2010.
(v) By letter dated 10.12.2010, the appellant-company informed the DRI officers that upon your checking of our gas, we were shocked and surprised that their containers containing goods named as HCFC R-401A, turned out to be totally different gas. The same has been referred to our suppliers and they have accepted that the wrong dispatch has been done and they have requested us to send the goods back to them. They will give the correct goods on receiving of the above consignment.
(vi) Shri Rajesh Mehra, in his statement dated 21.10.2011, stated that they do not have any lab facility to check the exact nature of refrigerant gas imported. It was also stated that they are selling the gases on the basis of declaration of the suppliers. It is also stated that they ordered for HCFC 401A refrigerant gas, which is mixture of three different blends of HCFC gases.
(vii) A show-cause notice dated 21.11.2011 was issued proposing to reject the description of goods and the same should be R22 refrigerant gas (an ozone depleting substance) a single Hydro Chloro Fluoro Carbon compound (HCFC) classifiable under 2903 4910 of Customs Tariff Act, 1975 and value should be re-determined from USD 1.70 per KG. CIf to USD 2.42 per Kg. CIF. It was also proposed to confiscate the goods for mis-declaration of description and value under Sections 111(d), 111(l), 111(m) of the Customs Act, 1962 read with Section 3 of the Foreign Trade (Development and Regulation) Act, 1992 read with Ozone Depleting Substances (Regulation and Control) Rules, 2000. It has also proposed to impose penalty on the appellant-company and other appellants who are Directors of the appellant-company.
(viii) In reply to show-cause notice and during the personal hearing, the appellant requested to re-test the sample through Govt. institutions / labs like IIT, Anna University etc. without further loss of time. It was contended that the appellant is incurring huge demurrage day to day for the detention of the goods.
(ix) The Commissioner acceded to the request of the appellant. The sample was re-tested by IIT, Madras. By letter dated 2.5.2012, Dr. A. Murugesan, Scientific Officer, Gr. I, Sophisticated Analytical Instrument Facility, IIT, Madras submitted the report which is reproduced below:-
Please refer to your letter F.NO. VIII/48/54/2010-DRI dated 16.4.2012. Received three small cylinders said to contain refrigerant gas placed in green cloth lined paper cover, sealed with DRI specimen seal indicating the respective tonner cylinder numbers 00044, 04414 and 04419, on the individual sealed covers duly signed by the witnesses and the importers.
The nature of the gas contained in the sample cylinders forwarded by you were tested with the available control sample with the aid of GC-MS, the most advanced instrument used for determining the purity of gaseous substances. GC-MS data were recorded for samples forwarded by you and available control sample, both the data were compared. GC-MS data for the samples forwarded by you exactly matches with GC-MS data of available control sample. Hence it is concluded from GC-MS data, that the samples forwarded by you is nothing but R-22 refrigerant gas.
(x) The appellant by its letter dated 19.5.2012 stated that the report is totally silent on the values / results and method/equipment employed for test. The prayer of the appellant in the said letter is reproduced below:-
a) Provisionally release the goods by taking samples and test it as per the Standard Testing Procedure given in page No. 80 of Reply to Show Cause Notice and permit us to cross-examine the expert before finally adjudicating the case by granting a hearing for making submission n account of cross-examination or
b) For any reason, if it is not feasible, we request you to adjudicate the case, without further hearing, taking note of the oral / written submissions already made and release the cargo without any further loss of time. In such an event, we pray for a lenient view since we are a Small Scale Industry and imported the goods against Licence.
(xi) In the adjudication order, the Commissioner rejected the prayer for cross-examination and he has confiscated the goods and imposed redemption fine for re-export of the goods and also imposed penalties as stated above.
6. The purpose of narration of the above facts is to examine as to whether in the above factual background, the cross-examination of the Scientific Officer should be allowed or not. It is settled law that reasonable opportunity under the natural justice would include cross-examination. The right of cross-examination in any quasi judicial proceeding is a valid right given to the accused/noticee to establish the truth. The purpose of cross-examination is to find out the truth and detection of falsehood in human testimony. But, cross-examination cannot be made straight jacket formula to be applicable in all the cases, compliance of cross-examination is solely dependent upon the facts and circumstances of each case.
7. In the present case, we find that the applicant vide its letter dated 10.12.2012 informed the DRI officers that the supplier wrongly dispatched this material and requested them to send back the goods to them. The two Directors of the appellant-company admitted that the goods in question had been wrongly delivered by the supplier. The learned AR particularly drew the attention of the statement dated 9.12.2010 of Shri Mohamed Gawher Rauf alias Sanjay, Director of the appellant-company and appellant No. 4. It was stated that he is authorized signatory and admitted the mis-declaration of the import consignment. It was further stated that they declared the consignment as R22 only when it is supplied to M/s. Shipping Corporation of India on ship stores, which do not require licence from DGFT. It was also stated that many consignment in the past have been mis-declared to be R401A to enhance sales to various repair service centres to boost sales and improve profitability. The test conducted by the DRI officers, it was found that it is R-22. The re-test was conducted at the request of the appellant. It appears from the letter dated 19.5.2012 that the appellant requested the adjudicating authority to permit to cross-examine the expert and alternatively to release the cargo without further loss of time. It is requested that the appellant is a small scale industry and therefore a lenient view may be taken. The report of IIT, Madras indicates that it was tested with the aid of GC MS, the most advanced instrument used for determining the purity of gaseous substance using a control sample of R22 gas.
8. At the time of hearing before the Tribunal, the learned counsel on behalf of the appellant placed the e-mail communication dated 31.1.2013 and 1.2.2013. By communication dated 31.1.2013, the learned counsel enquired whether IIT, Madras would test the R22 refrigerant gas and by reply dated 1.2.2013, it is informed that IIT, Madras is not equipped for testing of refrigerant gas. This e-mail communication was not addressed in the context of report dated 2.5.2012, which has concluded from GC-MC data. Taking in account of the totality of the situation and particularly statements, evidences and request of the appellant before the adjudicating authority, we do not find any infirmity on refusal of cross-examination by the adjudicating authority. In our view, it would not violate the principles of natural justice.
9. There is no dispute that R-22 refrigerant gas is restricted item for import. It is noted that the Montreal Protocol, administered by the United Nations Environment Programme (UNEP), maintains the list of ozone-depleting substances that are targeted for control practices, reductions, or total phase-outs and designed to protect human health and the environment against the adverse effects of the depletion of the stratospheric ozone layer. The above protocol contains a list of chemicals (ODS) covered for total phase out and R-22 refrigerant gases, also known as Chlorodifluoromethane (R22) and Difluorochloromethane HCFC 22 is one of the Ozone Depleting Substance (ODS) mentioned therein.
10. As per the ITC HS Code of Import and Export, items are permitted for import by actual users against a licence. Licensing Note No. 1 to Chapter 29, reads as under:-
Import is permitted by actual users against a license from a country which is a party to the Montreal protocol on substances that deplete the ozone layer. The list of countries which are parties to the Montreal protocol will be notified by the Director General of Foreign Trade from time to time. However, import from countries, which are not parties to the Montreal protocol is prohibited.
11. The Ministry of Environment and Forests, in exercise of powers under Section 6, 8 and 25 of the Environment (Protection) Act, 1986, issued Notification dated 17.7.2000 and enacted Ozone Depleting Substances (Regulation) Rules 2000 for regulating ozone depleting substances. Rule 10 of the said Rules, provides no person shall import or cause to import such ozone depleting substance unless he obtains licence issued by the authority. It is noted that R22 is a powerful greenhouse gas with a global warming potential 1810, and indicates that it is 1810 times as powerful as carbon-di-oxide, and this regulates as an additional environmental threat. In the present case, the appellant is a trader and imported R22 refrigerant gas without a licence and also not fulfilled the actual user condition and therefore, considering the larger environmental perspective, there is no need to accede the request of the appellant to release the goods for home consumption or ship stores. The attempt of the learned counsel that some item is available in the market and therefore this consignment R 22 should be allowed for home consumption cannot be accepted. It is settled that the concept of equity cannot be pressed to commit another illegality. We have also noticed that the appellant took the plea before the Commissioner that they are able to procure the licence for import of R-22. But no licence was produced by them before the learned Commissioner. The initial request of the appellant was to allow re-export which the adjudicating authority has allowed.
12. In view of the above discussion, we do not find any merit in the appeals filed by the appellants. The learned Commissioner rightly allowed re-export upon payment of redemption fine and penalty. It is seen that Directors of the company and the appellant herein were involved for improper importation of goods and imposition of penalty under Section 112(a) of the customs Act, 1962 is justified. Accordingly, all the appeals filed by the appellants are dismissed and the adjudication order is upheld.
(Pronounced in open court on 08.05.2013)
(Mathew John) (P.K. Das)
Technical Member Judicial Member
Rex
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