Customs, Excise and Gold Tribunal - Mumbai
Gurmeet Singh Kohli vs Commissioner Of Customs (P) on 20 March, 2006
Equivalent citations: 2006(108)ECC314, 2006ECR314(TRI.-MUMBAI), 2006(199)ELT822(TRI-MUMBAI)
ORDER
Jyoti Balasundaram, Vice President
1. Common issues arise for decision in these appeals which are hence heard together and disposed of by this common order.
2. The case of the department is that M/s. Omjeet Industries, the proprietary concern of Shri Goutam Jain, M/s. Jain Enterprises, proprietor of Shri Naresh Jain and M/s. Four Field Electroplast Pvt. Ltd. exported readymade garments of inferior quality and claimed inadmissible drawback. In the case of M/s. Omjeet Industries and M/s. Four Field Electroplast Pvt. Ltd., drawback amount of Rs. 1,08,76,041/- and Rs. 35,94,695/- has been ordered to be recovered from Shri Goutam Jain and M/s. Four Field Electroplast Pvt. Ltd. and penalty of Rs. 20,00,000/- has been imposed on one Gurmeet Singh Kohli (in the case of exports by Omjeet Industries) and Rs. 10,00,000/- has been imposed upon Shri Gurmeet Singh Kohli in the case of exports by M/s. Four Field Electroplast Pvt. Ltd. under the provisions of Section 114(iii) on the ground that he rendered the goods liable to confiscation under Section 113(i) of the Customs Act, 1962 (Omjeet Industries also exported gaskets found to be of inferior quality). In the case of exports allegedly by M/s. Jain Enterprises, readymade garments have been held liable to confiscation and Gurmeet Singh Kohli liable to penalty of Rs. 7,50,000/- and drawback amount of Rs. 25,28,668/- has been ordered to be recovered from Gurmeet Singh Kohli. Hence these appeals.
3. We have heard both sides.
4. Three issues arise for determination:
(i) Liability of export goods to confiscation under Section 113(i);
(ii) Liability of Gurmeet Singh Kohli to penalty under Section 114;
(iii) Liability of Gurmeet Singh Kohli to pay back drawback amount as per Rule 16A of the Customs and Central Excise Duties Drawback Rules, 1995, in appeal No. C/620/99.
5. Our findings on issue No. (i) are recorded herein below:
In the case of exports by M/s. Omjeet Industries and M/s. Four Field Electroplast Pvt. Ltd., Shri Gurmeet Singh Kohli entrusted the job of export to representative of CHA, Shri Satish Mishra, and informed him that the export consignments would be of inferior quality. During the course of examination of the goods, Shri Satish Mishra and Shri Nimesh Dawda clerk of M/s. Thakkar Cargo Forwarders, have also seen that the goods were of inferior quality in terms of value as shown in the shipping bills. In the case of exports in the name of M/s. Jain Enterprises, it is again Gurmeet Singh Kohli who entrusted job of exports to CHA's representative to Shri Sandeep Shirke and Shri Vikas Rasane, both of whom have stated that during the course of examination of the goods, they noticed that the value of the goods was very exorbitant as compared to the quality. More than 95% of the consignments were purposely planned for carting to be examined by one Customs Examiner at Bombay docks and after the Examiner was transferred to Mulund CFS, ICD, he arranged for the goods to be examined by the same Examiner and this fact is established by the statement dated 2.3.1998 of Satish Mishra. In all three cases, none of the noticees disclosed the source of procurement of exported consignments and payment particulars for the purchase thereof. Out of the total duty drawback amount received by Omjeet Industries and Four Field Electroplast Pvt. Ltd., only part was paid to one Lakhmendra Khurana as consideration for purchase of readymade garments by Naresh Jain, who acted as an intermediary between Gurmeet Singh Kohli and Goutam Jain, and Manoj Jain as per instructions of the appellant. No remittance has been arranged to be repatriated and no noticee produced any correspondence between them or the exporter firm on one hand and the foreign buyer on the other, explaining why remittances were not repatriated and this would establish that the goods were of trivial value. In the case of exports in the name of Jain Enterprises, it was the pre-concerted plan not to arrange remittance in the account and therefore different persons were shown as the proprietor of Jain Enterprises at different periods and in different banks and the common feature is that the address of all three account holders were found to be fictitious. Readymade garments shipped by Omjeet Industries and Four Field Electroplast to Colombo on 3.5.1997 remained unclaimed by the consignee and on enquiry, the shipping agents in Mumbai reported to their counterparts in Colombo that the address of the shipper is found to be non-existent and therefore advised auction of the exported goods. The fact that none of the noticees could afford to forgo the very high value of Rs. 3,20,56,773.45 (value shown in shipping bills filed by Omjeet industries) and Rs. 2,39,91,338/- (value shown on shipping bills of Four Field Electroplast) itself shows that the export goods were of very negligible value. In the case of exports by Omjeet Industries where the shipping bills were signed by the appellant as Om Prakash, the appellant has also informed Naresh Jain that in the case of exports in the name of Jain Enterprises, no remittance would be arranged.
6. In the light of the above, we hold that the evidence on record proves that export garments were overvalued and hence liable to confiscation under Section 113(i) and we reject the contention of the appellant that the material on record is not sufficient to establish the overvaluation of the goods so as to render them liable to confiscation.
7. We thus answer issue No. (i) by holding that the export garments are liable to confiscation. However, nothing has been brought out regarding inferior quality of gaskets and we, therefore, set aside the liability to confiscation of gaskets.
8. Issue No. (ii) - The evidence in all three cases is similar and we shall be referring to the material on record in the case relating to Omjeet Industries (appeal No. C/619/99) for ease of reference. The impugned orders clearly bring out the role of the appellant. Satish Mishra has stated that the appellant was exporting goods as proprietor of M/s. ATA Industrial Enterprises and assured that he would give him export work of four parties on commission basis, i.e. @ 5% of the drawback amount involved in each shipping bill subject to the condition that the carting of the cargo should be done with shipping line only and that he should personally attend to the examination of the cargo to take care of any problem arising during the examination. Documents from the appellant were got processed through Kirit Kakkad, commission agent of Thakkar Cargo Forwarders. The export related documents such as invoice, packing list, GR forms etc. were received by him either directly from the appellant or through his employee, Popat Salve. Export consignments of one M/s. B & M International, Omjeet Industries and Four Field Electroplast were sent by the appellant directly to Mumbai Docks or Mulund ICD. He has also stated that he handed over bank attested invoice, xerox of EP copy of shipping bill etc. to Mrs. Lailamma, drawback agent, on receipt of the documents from the appellant and that drawback cheques for these two exporters were collected by him and handed over by him to the appellant. Satish Mishra's statement also brings out the appellant's knowledge that the goods were substantially inferior in terms of value as compared to the value declared in the shipping bills. Sandeep Shirke, partner of Agasti Shipping Agency, has stated that consignments were sent by the appellant and that cargo was examined in his (Sandeep Shirke) presence and he noticed that the goods were of inferior quality as compared to the value shown in the shipping bills. Vikas Rasane, (sic) partner of Agasti Shipping Agency, corroborated these facts. In the identification parade conducted on 18.10.1997, Satish Mishra identified the appellant as the person who had handed over export documents of Omjeet Industries to him and as the person to whom he gave the duty drawback cheque of approximately Rs. 76 lakhs in the name of Omjeet Industries. Popat Salve also confirms that he was delivering documents and money given to him by the appellants to Satish Mishra. Lakhmendra Khurana who was identified by Mrs. Lailamma as one of the two persons who visited her residence (the other was the appellant) stated that he received goods for packing in his godown from the appellant and that he had purchased readymade garments from one West Coast Arjay International as per instructions of the appellant and the same were received in his godown for checking and packing and that he handed over a draft of Rs. 3 lakhs received from Naresh Jain to that company. Manoj Jam (nephew of Naresh Jain), proprietor of M.M. Jewellers and Manoj Jewellers, has deposed that Lakhmendra Khurana requested him to arrange cash from his bank and sent the appellant with three cheques totally valued at Rs. 20 lakhs and all the three cheques were deposited in the respective accounts of M.M. Jewellers and Manoj Jewellers and M/s. Padmavati Marketing and that Khurana and the appellant collected the money from him and he (Manoj Jain) collected his commission from both of them. Even though Manoj Jain subsequently slightly altered his earlier statement, he maintained that he had delivered money to Khurana and to the appellant.
9. Miss Bela Ash who is a part time computer operator with the appellant, typed the invoice and packing list for export goods in the name of B & M International and Omjeet Industries and as per instructions given by the appellant and on the basis of handwritten draft given by him, he typed various letters on the letterhead of the above three exporters. Naresh Jain also implicates the appellant in his statement to the effect that the appellant wanted to export in the names of companies or firms having RBI code number and import export code number, and promised to pay him 7% commission of the drawback amount after realisation and that he therefore gave the appellant copies of RBI code number and IEC number (later found to be fake) of their respective companies/firms. The appellant also informed Naresh Jain that Khurana supplied the readymade garments exported in the name of Omjeet Industries and Four Field Electroplast. The statement of Harjeet Singh alias Pindi, who looks after the business of M/s. V-Tex (India) of checking, altering, stain removal, pressing and packing of readymade garments on labour charge basis, that he knew the appellant and that the appellant used to sent him mixed shirts for pressing and packing, also implicates the appellant. Popat Salve has also confirmed that he collected readymade garments (shirts) as per the appellant's instructions and delivered them to the godown of Harjeet Singh at Mahim. The officer working in the Foreign Exchange Branch of Corporation Bank, Nariman Point, has identified the appellant as the person who visited her office for obtaining bank attested invoice of Omjeet Industries, from a photograph shown to her. Goutam Jain has stated that he met the appellant through Naresh Jain and had requested him to arrange remittances for the goods exported.
10. One Kamal Uddin Khan, partner of Sonia Exports, has confirmed that he purchased defective/rejected lots of readymade garments which are then graded/sorted in his godown and sold to dealers and that the appellant visited his godown about 6 to 7 months prior to January 1998 and purchased 1200 shirts at Rs. 45/- each and that he had paid Rs. 30/- for those shirts. The appellant has also admitted signing some cheques of Omjeet Industries and Four Field Electroplast, as Om Prakash.
11. All this would show that it is the appellant who planned a strategy for exporting goods of inferior quality in the name of other firms, negotiated with Satish Mishra and agreed to pay him 5% of the drawback amount for handling export consignments of the firms provided Satish Mishra agreed to arrange carting at the given shipping line and remained present when the goods were being examined, that he got typed purchase order on letterhead of foreign buyer in the name of Omjeet Industries and others by his typist, Bela Ash, that he arranged purchase of substandard readymade garments from Khurana and Kamal Uddin and got them packed in the godown of Harjeet Singh and exported them in the names of other firms/companies by overvaluing them, that he arranged transportation of export goods to Mumbai docks and Mulund CFS, that he got the copies of bill of lading, customs attested invoice etc. collected by his employee, Popat Salve, from the office of the CHA and got them submitted at the Foreign Exchange Branch of Corporation Bank at Nariman Point, he received Rs. 4 lakhs in cash from Naresh Jain. The Commissioner has therefore rightly held that he was the mastermind behind the entire fraud of overvaluation of export readymade garments with a view to obtain huge amounts of inadmissible duty drawback which would render the export goods liable to confiscation. There is, therefore, no doubt that he is liable to penalty under Section 114 of the Customs Act. We uphold the penal action against him. However, in the totality of the facts and circumstances of the case, we reduce the penalties imposed upon the appellant in each case as under:
(1) Appeal No. C/619/99 - Rs. 5,00,000/-
(2) Appeal No. C/620/99 - Rs. 2,00,000/-
(3) Appeal No. C/621/99 - Rs. 2,50,000/-
12. Issue No. (iii) - It is not disputed by the appellant that drawback amount is required to be recovered in terms of Rule 16A of the Drawback Rules for the reason that admittedly sale proceeds in respect of the export goods have not been realised either by or on behalf of the exporter in India. However, what is disputed is liability to pay back drawback amount received for exports made by Jain Enterprises. We find that one Ramesh Kumar Jain was the proprietor of Jain Enterprises which was engaged in the trading of packing material in Kalbadevi area of Mumbai. Goutam Jain contacted him, as per inducement of the appellant and Naresh Jain and influenced him (Ramesh Jain) to lend money of his firm and the bank having an account in return for an advance of Rs. 2.000/- and 2% of the drawback amount as commission and accordingly Goutam Jain supplied the name of Jain Enterprises and the bank, i.e. Raghuvanshi Co-operative Bank Ltd., to Naresh Jain and the appellant. Although one Bachchraj Singh @ Thakur @ R.K. Chauhan was subsequently shown as the proprietor of Jain Enterprises in whose account drawback cheques were deposited, the fact remains that Rajesh Kumar Jain was in existence when export goods were procured and exported in July 1997. Therefore, it is Ramesh Kumar Jain who is to be treated as exporter as per the definition thereof in Section 2(20) of the Customs Act which states that "Exporter in relation to any goods at any time between there entry for export and the time when they are exported include any owner or any person/holding himself out to be exporter." We, therefore, hold that since Jain Enterprises was in existence at the time of procurement and export of garments, it is Ramesh Kumar Jain, the proprietor thereof, who should have been directed to pay back the drawback received by Jain Enterprises. Accordingly, we set aside the order for recovery of drawback amount from the appellant herein.
13. To sum up, we uphold the liability of the export garments to confiscation, set aside the direction for recovery of drawback against the appellant for goods exported by Jain Enterprises and reduce the penalties on the appellant as above.
14. The appeals are thus partly allowed in the above terms.