Custom, Excise & Service Tax Tribunal
Prerna Singh vs Mumbai Import - Ii on 22 January, 2020
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
MUMBAI
WEST ZONAL BENCH, MUMBAI
Customs Appeal No.89693 of 2018
(Arising out of Order-in-Original No. 11/2018-19 dated 23-8-2018 passed by the
Commissioner of Customs (Import-II), Mumbai.)
........Appellant
MS. PRERNA SINGH, CEO
M/S. SEVILLE PRODUCTS LIMITED
P.O. Box No. 5176
Sharjah, U.A.E.
Indian Authorised Representative:
V.Lakhsmikumaran
2nd Floor, B&c Building, Cnergy IT Park
Appa Saheb Marathe Marg
Prabhadevi, Mumbai 400 025.
VERSUS
Commissioner of Customs (Import-II) - ........Respondent
Mumbai
New Custom House
Ballard Estate
Mumbai - 400001.
WITH
Customs Appeal No.89695 of 2018
(Arising out of Order-in-Original No. 11/2018-19 dated 23-8-2018 passed by the
Commissioner of Customs (Import-II), Mumbai.)
M/S. SEVILLE PRODUCTS LIMITED ......Appellant
P.O. Box No. 5176
Sharjah, U.A.E.
Indian Authorised Representative:
V.Lakhsmikumaran
2nd Floor, B&c Building, Cnergy IT Park
Appa Saheb Marathe Marg
Prabhadevi, Mumbai 400 025.
VERSUS
Commissioner of Customs (Import-II) - ........Respondent
Mumbai
New Custom House
Ballard Estate
Mumbai - 400001.
Appeal Nos. C/89693 & 89695/18
2
APPERANCE:
Shri Akhilesh Kangsia, Advocate for the Appellant
Shri Manoj Kumar, Asst. Commissioner, Authorised Representative for the
Respondent
CORAM:
HON'BLE DR. SUVENDU KUMAR PATI, MEMBER (JUDICIAL)
FINAL ORDER NO. A/85065-85066/2020
Date of Hearing: 25-09-2019
Date of Decision: 22-01-2020
SUVENDU KUMAR PATI:
Imposition of penalty under Section 112(a) of the Customs Act on
appellants M/s. Sevile Product and Ms. Prerna Singh, CEO, both based
in Dubai, by the Ld. Commissioner of Customs (Import-II), Mumbai is
assailed in both the appeals.
2. Facts of the appellants case, in a nut-shell, is that DRI Mumbai
Zonal Unit through investigation found appellants and three others were
resorting to large scale under invoicing and consequently by mis-
declaring transaction value as well as retail sales price (RSP) of
confectionary items like wafers, cookies and toffees etc. they were
evading Customs duty during importation of these goods. Statement
of Prerna Sing (CEO) was recorded after she was summoned from Dubai
who admitted about issuing of two different invoices with different price
structures to the importer on regular basis for production of invoices
Appeal Nos. C/89693 & 89695/18
3
having lesser price before the Customs authority to avoid payment of
tax and the other one with proper price for business transactions.
Statement of other connected persons including importer named
Prakesh Menon i.e. Indian representative of Appellant company were
also recorded during investigation and ultimately they were issued with
show cause notices. Three of them settled the matter before the
settlement Commissioner and both the appellants challenged the
application of Indian Customs Act to impose penalty on overseas
company and person unsuccessfully before the Commissioner Customs
(Import-II) who confirmed penalty of Rs. 2,50,000/- on the appellant
company and penalty of Rs. 50,000/- on Prerna Sing, its CEO under
Section 112(a) of the Customs Act. Both the Appellants are before this
Tribunal challenging legality of the said order passed by the
Commissioner (Customs).
3. In the memo of appeal and during the course of hearing of appeal,
Learned Counsel Mr. Akhilesh Kangsia for the appellant argued that prior
to amendment to the Customs Act 1962 introduced on 29-03-2018, the
same was extended only to the whole of India and not beyond India for
which operation of the Act beyond the territory of India cannot be made
applicable to the overseas suppliers of Dubai, UAE and its NRI CEO and
subject them to penalty under Section 112(a) of the Customs Act. With
reference to the Hon'ble Supreme Court's decision in British India Steam
Navigation Co. Ltd. Vs. Shanmughavilas Cashew Indus - 1990 (3) SCC
481, he argued that Indian statute are ineffective against foreign
property and foreigners. Further, with reference to the decision
Appeal Nos. C/89693 & 89695/18
4
reported in 2017 (348) E.L.T. 168 (Tri. Mumbai) in the case of Narendra
Lodaya v. Commissioner of Customs, Nhava Sheva, HI Lingos Co. Vs
Collector of Customs decision delivered on 20th September 1993 and
decision of Customs Appeal no. 70148 of 2019 in the case of M/s. Shakti
Jewellers Pvt. Ltd. v. Commissioner of Customs, he also argued that
appellants, being company and NRI based in Dubai having no permanent
establishment in India and having no place of business in India, cannot
be penalised under the provision of Customs Act which extends to the
whole of the Indian territory and not all over the world beyond India and
responsibility as well as obligation of the importer commences with
filing of declaration under section 46 of Customs Act for which incident
occurred prior to that cannot be brought into the purview of the Customs
Act. Placing reliance in the case law reported in 2015 (325) ELT 199
(Tri. Bang) in the case of Shafeek P. K Vs. CC, Cochin, Learned Counsel
for the Appellants argued that in Foreign Exchange Regulation Act, 1973
and in IPC under Section 3 as well as 4, specific provision exists for trial
of citizens of India residing outside India and branches of company or
agencies located outside India but no such provision exists in Customs
Act and therefore in the absence of an identical provision in the Customs
Act, the same cannot be invoked against resident of foreign country
even though he/she was an Indian for which he prays to set aside the
order passed by the Commissioner of Customs.
4. In response to such submissions, Learned Authorised
Representative for the respondent department Mr Manoj Kumar argued
in support of the reasoning and rationality found in the order passed by
Appeal Nos. C/89693 & 89695/18
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the Commissioner of Customs but conceded that the Commissioner had
not dealt with the jurisdictional issue while confirming penalties under
section 112 of the Customs Act on the appellants.
5. I had heard the arguments at length on the other day and perused
the case record.
6. The issue of jurisdiction of Customs Act and its application to the
appellant is primarily challenged in the present appeal, besides the
legality of the Order of the Commissioner. Though the issue appears to
be small it has wide ramifications. No Municipal law can ever be
extended beyond the territorial boundaries of a country including its
continental self and exclusive economic zone, whether or not there is
express provision in the Act or statute to stretch the same beyond the
country's territory since the same would amount to encroachment upon
the territorial authority of other State. It is therefore, defined in the
Statute of the country that the said Act has its application within the
territorial limits of the country. Likewise in case of penal statute, it is
clearly defined that the "act or its violation" should have its effect and
consequence within the territorial limit of the said country. If violation
of provision of statute is committed within the said country, then the
consequence in conformity to the legal provision of the country would
ensue, no matter the violator is a resident of the country or an alien.
It is, therefore, necessary to determine if the "act or its omission"
committed is in violation of law and accordingly to punish the violator
Appeal Nos. C/89693 & 89695/18
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and not to determine if such violation has been committed by a legal
person based in the Country or not.
7. Sovereign country asserts extra territorial jurisdiction in criminal
laws though the principal basis of jurisdiction over crime is the territorial
principle which permits a State in control of its territory to prescribe,
adjudicate and enforce its law in the territory. The crime is said tobe
committed even partly in a state's territory when any essential
constituent element itself is consummated there. Therefore, when an
offence's adverse effect endangers a State's security or Government's
function, extra territorial jurisdiction is enforced. Customs law from an
international Criminal law prospective requires a consideration of the
classification between Crime law and administrative law and the same
is required to be placed under the administrative penal law though in a
legal sense it is not penal but nevertheless retributive (Gist has been
borrowed from the article titled "Criminal and Quasi-Criminal Customs
Enforcement among the U.S., Canada and Mexico" written by Bruce
Zagaris and David R. Stepp.)
8. In a nut-shell, the discussion above would reflect the principle
that whether violation of an act has an adverse effect to the State's
interest, the same violation is to be dealt by the State itself and the
violator is to be penalised irrespective of his/her nationality or place of
residence.. It is in this prospective, the jurisdiction of sovereign State
is to be understood though the general understanding of jurisdiction is
based on the nationality of the perpetrator since nationals of a State
Appeal Nos. C/89693 & 89695/18
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remained under the sovereignty and owe their allegiance to it even
though they are free to travel and reside outside its territory. It is in
this contest that Foreign Exchange Regulation Act 1973 prescribing
application of it to all citizens of India residing outside India and to
branches, agencies situated outside India is to be understood and also
application of section 4 of IPC in the cited judgements of the above
referred case laws. However, a comparison is required to be made
between Section 3 & Section 4 of the Indian Penal Code concerning its
application beyond the territorial jurisdiction of sovereign India. While
Section 4 deals with application of IPC to extra territorial offences,
Section 3 provides judicial power of punishment to any person for
violation of any Indian law. Such primary distinction is not noticeable
in the judgement of Shafeek P.K. v. CC, Cochin-2015 (325)ELT 199 cited
Supra.
9. It has also been argued by Learned Counsel for the appellant that
judgement of the Tribunal in the Hi Lingos Co. v. Collector of Customs
case has been confirmed by Hon'ble Supreme Court (reported at 1997
(95) E.L.T. A147 (SC) and it was the first decision on the jurisdiction
issue apart from C.K Kunhammed V. Collector of Central Excise &
Customs - 1992 (62) E.L.T. 146 judgement which had dealt with
application of Private International law on foreign nationals. However,
going by the findings in Hi Lingos' case, it can be noticed that penalty
under Section 112 was set aside not on the ground of jurisdiction and
there was a specific finding made by one of the members in the said
judgement at Para 4 (8) that such mis-declaration of description of
Appeal Nos. C/89693 & 89695/18
8
goods was within the mischief of Secton 112 Customs Act even though
the importers were in foreign country. Hon'ble Supreme Court had not
dealt with any of the aspects on merit, since the appeal was dismissed
for non-prosecution. Moreover no finding is forthcoming from the
judgement reported in 2017 (348) E.L.T. 168 (Tri. - Mumbai) in the
case of Narendra Lodaya v. Commissioner of Customs, Nhava Sheva as
to why settlement Commissioner had not dealt with the cases of foreign
nationals therein to make the said judgement a binding precedent for
the subsequent decisions of the Tribunal, besides the fact that stage
from which Customs Act is applicable was determined therein.
10. In the instant case appellants have subjected themselves to the
jurisdiction of Customs Act upon notice sent to them under Section 108
of the said Act which would have otherwise ensured through extradiction
process Appellant Prerna Singh had also confessed during regarding of
her statement as CEO of her company that appellant Seville Products
Ltd. used to raise two invoices for same import having law value and
high value recorded in those invoices which were despatched through a
computer of third party named Prakesh Menon for presentation of the
invoices having lower value before the Customs for payment of customs
duty and clearance and that the commercial invoice against which
payment was received was not shown to the customs. Meaning of word
abetment is "to help someone in wrong doing'. In the instant case such
wrong doing had its effect in the Mumbai Customs jurisdiction and
appellants had aided the importer in such wrong doing. Therefore,
penalty under Section 112 was rightly involved. Further Appellant
Appeal Nos. C/89693 & 89695/18
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Prerna had never rescinded from her statement and in view of Section
56 of the Indian Evidence Act, such admission needs no further proof
to hold appellants guilty of violation of the Section 112(a) of Customs
Act. Hence the order.
ORDER
11. Both the appeals are dismissed and order no. 11/2018-19 dated 23-8-2018 of the Commissioner of Customs (Import-II), Mumbai is hereby confirmed.
(Order pronounced in the court on 22-01-2020) (Dr. Suvendu Kumar Pati) Member (Judicial) John