Custom, Excise & Service Tax Tribunal
Tulsi Trading Co vs Commissioner Of Customs (Import), ... on 4 August, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Appeal Nos. C/362 & 388/10 (Arising out of Order-in-Original No. 177/2009 CC(I) JNCH dated 02.02.010 passed by Commissioner of Customs (Import), Nhava Sheva.) For approval and signature: Honble Mr. S.S. Kang, Vice President Honble Mr. P.R. Chandrasekharan, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No 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 :Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== Tulsi Trading Co Naresh Pandya Appellant (Represented by: Mr. Advani, Advocate) Vs Commissioner of Customs (Import), Nhava Sheva Respondent (Represented by: Mr. A.K. Prabhakar, JDR) CORAM:
Honble Mr. S.S. Kang, Vice President Honble Mr. P.R. Chandrasekharan, Member (Technical) Date of Hearing : 04.08.2011 Date of Decision: 04.08.2011 ORDER NO..
Per: P.R. Chandrasekharan
1. The appellant M/s Tulsi Trading Co, Masjid (West), Mumbai and Mr. Naresh Pandya, 501, Chandrabhushan Plaza, Kalyan (West), Thane District, have filed these appeals against the Order-in-Original No. 177/2009 dated 220.10.2010 passed by the Commissioner of Customs (Import), Nhava Sheva.
2. Facts of the case are that the Directorate of Revenue Intelligence, Mumbai undertook investigation about misuse of Import-Export Code (EC) in illegal imports of textiles and the investigation revealed that one Mr. Naresh Pandya had obtained 42 IECs in his own name or in the names of his relatives/friends from DGFT, Mumbai. One such IEC No. 0307043258 obtained by Naresh Pandya was in the name of M/s Tulsi Trading Co showing Dewang Pandya, son of Mr. Naresh Pandya, as proprietor. It was further revealed that M/s Tulsi Trading Co had imported three containers of polyester fabrics vide Bills of Entry No.764840 dated 8.3.2008, 764837 dated 28.3.2008 and 769634 dated 01.04.2008. Two of the consignments mentioned above had already been cleared, while the third was still pending clearance at the Nhava Sheva port. Examination of the consignment lying in the port revealed that even though the goods were described in the Bill of Entry as 100% polyester woven bleached fabrics, the goods contained not only bleached fabrics but also dyed polyester fabrics. The value of the goods imported were declared at Rs 30,09,459/- whereas as per the market survey conducted, the assessable value of the three consignments worked out to Rs 49,30,980/- indicating substantial undervaluation. The consequent amount of duty that seems to have been evaded amounted to Rs 20,09,664/- after taking into account the amount of duty already paid of Rs 5,90,936/-. The goods were seized vide a seizure memo dated 16.04.2008 and provisionally released to M/s Tulsi Trading Co on execution of a bond with a bank guarantee. On completion of the investigation, a show cause notice dated 26.03.2009 was issued to M/s Tulsi Trading Co, its proprietor Mr. Dewang Pandya and Mr. Naresh Pandya proposing to hold the goods imported vide the aforesaid Bill of Entry liable to confiscation under Section 111 (d) of the Customs Act, 1962 read with Section 7 of the Foreign Trade (Development & Regulation) Act, 1992. It was also proposed in the notice to classify, 37236.64 sq mtrs of dyed fabrics contained in the consignment, under Tariff Heading 55121910 as against the classification under Heading No. 55121120 declared in the Bill of Entry. It was further proposed to enhance the value of the goods from Rs 30,09,458/- to Rs 49,30,980/- under Rule 9 of the Customs Valuation Rules, 2007 read with Section 14 of the Customs Act, 1962 and also demanding differential duty of Rs 20,09,664/-. The show cause notice also proposed to impose penalties on M/s Tulsi Trading Co under Section 112 (a) and 112 (b) of the Customs Act, 1962, on Mr. Dewang Pandya under Section 112 and Mr. Naresh Pandya under Section 112 (a) of the Act. The show cause notice was adjudicated by the Commissioner of Customs vide the impugned order wherein he ordered reclassification of 37236.64 mtrs of dyed fabrics under Customs Tariff Heading No 55121910. The learned Commissioner also rejected the declared assessable value of Rs 30,09,458/- and redetermined the same at Rs 49,30,980/- under Section 14 of the Customs Act, 1962 read with Rule 9 of the Customs Valuation Rules, 2007. The imported goods were confiscated under Section 111 (d) and (m) of the Customs Act. The learned Commissioner further observed that Naresh Pandya was not the actual importer and the actual importer was not known/traceable and therefore, he did not give any option to redeem the goods on payment of fine. He accordingly ordered that the seized goods to be kept in the departmental godown for the disposal by the departmental authorities. He imposed a penalty of Rs 4 lakhs on Mr. Naresh Pandya under Section 112 (a) of the Customs Act, 1962. He however, refrained from imposing any penalty on M/s Tulsi Trading Co and Mr. Dewang Pandya. The appellants are before us against the impugned order.
3. The learned counsel for the appellant submits that as per the statements given by Mr. Naresh Pandya and Mr. Dewang Pandya, Mr. Naresh Pandya had undertaken the import activities in the name of M/s Tulsi Trading Co of which Mr. Dewang Pandya is the proprietor. The goods have been imported in the name of M/s Tulsi trading Co, as can be seen from the relevant Bills of Entry. Even though the goods have been imported at the behest of one Mr Pushparaj, who is not traceable, on the documents submitted with the Customs, the importer has been declared as M/s Tulsi Trading Co. The Honble High Court of Bombay in the case of Hamid Rahim Ansari vs Commissioner of Customs (Import), Nhava Sheva in Writ Petition No. 3288 of 2009 had, inter alia, held that if a person having a valid IEC number had paid Customs duty on the imported goods, the goods have to be released to such person notwithstanding the fact that the IEC number might have been obtained by misrepresenting the facts to the Ministry of Commerce and Industry and Director General of Foreign Trade. In such cases, the Customs authority cannot take any action and it is for the DGFT to act on any misrepresentation. The learned counsel submits that in the instant case, the goods have been imported in the name of M/s Tulsi Trading Co and the IEC number has been validly issued by DGFT and in the documents submitted to the Customs, M/s Tulsi Trading Co has been declared as the importer and hence the goods should be released to M/s Tulsi Trading Co subject to payment of duty. The learned counsel further submits that as regards redetermination of assessable value, the same had been on the basis of an alleged market survey the details of which are not available either in the Order-in-Original nor the details of such survey conducted provided to the noticees. The entire valuation appears to have been done on the basis of a statement prepared by the investigating agency and the said statement does not disclose the details of the market surveys conducted and the results of such survey and accordingly the disputed valuation had been done by the Commissioner. He further submits that during the personal hearing, they had submitted invoices and import documents relating to contemporaneous imports of similar goods before the adjudicating authority. The adjudicating authority has not taken cognizance of such evidence produced by the appellants and have dismissed the same by stating that the importer has not submitted any documents in this regard. According to the appellant, if the documents submitted by them relating to contemporaneous imports is taken into consideration, the total duty payable would work out to Rs 15,69,520/- and after the adjustment of duty already paid of Rs 5,90,936/-, the balance amount payable would be only Rs 9,78,584/- as against the amount of Rs 20,00,664/-determined by the adjudicating authority. In the light of these submissions, the learned counsel for the appellants submits that the impugned order passed by the adjudicating authority is not legally sustainable and therefore, the same deserves to be set aside.
4. The learned JDR appearing for the department reiterated the finding given by the adjudicating authority. He submits that Mr. Devang Pandya is the proprietor of M/s Tulsi Trading Co and in his submission before the adjudicating authority, he has clearly stated that he is not involved in any of the activities undertaken in the name of M/s Tulsi Trading Co and only his father has been undertaking the activities. Since the proprietor of the firm M/s Tulsi Trading Co has denied involvement in the import activities, they cannot be considered as importers and hence the confiscation of the goods without any option to redeem the same is correct in law, as the importer is not known.
5. We have carefully considered the rival submissions.
It is seen from the import documents that the importer has been declared as M/s Tulsi Trading Co. As per the definition of importer under Section 2 (26) of the Customs Act, 1962, importer in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes any owner or any person holding himself out to be the importer. In the instant case, part of the goods were seized before the clearance since it was lying in the Customs control and therefore, it cannot be said that M/s Tulsi Trading Co is not the importer. In respect of the goods seized from outside Customs premises, which have already been cleared, it is seen from the records that the goods were released to M/s Tulsi trading Co on execution of a bond and a bank guarantee. It is thus clear that it was from the possession of M/s Tulsi Trading Co that the goods were seized. Section 125 of the Customs Act mandates that in the case of goods which are not prohibited, the adjudicating officer shall give to the owner of the goods or, where such owner is not known, the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit. In the instant case, part of the seized goods has already been released to M/s Tulsi Trading Co and in respect of the goods, which are yet to be released, the importer is M/s Tulsi Trading Co. Therefore, the person from whose possession the goods are seized is clearly known. As the goods are not prohibited goods, the impugned order which has confiscated the goods without giving an option to redeem the same on payment of fine is not in accordance with the law and merits to be set aside. From the records of the adjudication proceedings, a copy of which has been submitted by the appellants before us, it is seen that the adjudicating authority had acknowledged receipt of documents relating to contemporaneous imports and had taken on record the same during the personal hearing held on 14.12.2009. The learned adjudicating authority had recorded thus:
There are number of contemporaneous imports with value as declared. He submitted list of such imports which is taken on record. However, the impugned order passed by the adjudicating authority does not refer to any of these documents and arrived at the assessable value based on some market survey conducted by the investigating agency. The so-called market survey is a sheet of paper wherein certain values are indicated without disclosing from whom these values were obtained and for what type of goods. Conclusion based on such incomplete reports cannot be legally sustained. Thus, we find that there are glaring mistakes and shortcomings in the impugned order.
6. In view of the above, we set aside the impugned order and remand the case back to the adjudicating authority for considering the matter afresh taking into account all evidences on record and after affording a reasonable opportunity to the appellants to make their submissions. Needless to say all the issues are kept open. Thus the appeals are allowed by way of remand.
(Operative part pronounced in Court.) (S.S. Kang) Vice President (P.R. Chandrasekharan) Member (Technical) rk 3