Custom, Excise & Service Tax Tribunal
Graphite India Limited vs Nhava Sheva on 15 December, 2010
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI APPEAL NO: C/10/2010 [Arising out of Order-in-Original No: 36/2009 DATED 16/10/2009 passed by the Commissioner of Customs (Export), Nhava Sheva.] For approval and signature: Hon'ble Shri P.G. Chacko, Member (Judicial) 1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? : No 2. Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? : Yes 3. Whether Their Lordships wish to see the fair copy of the Order? : Seen 4. Whether Order is to be circulated to the Departmental authorities? : Yes Graphite India Limited ...Appellant Vs Commissioner of Customs (Export) Nhava Sheva ...Respondent
Appearance:
Mr. Dinesh Kumar Agrawal, Consultantfor the appellant Mr. S.S. Katiyar, Authorised Representative (SDR) for the respondent CORAM:
Hon'ble Shri P.G. Chacko, Member (Judicial) Date of decision: 15/12/2010 ORDER NO: ____________________________ The appellant is engaged in the business of export of graphite products. They filed two shipping bills on 27/08/2008, bearing Nos. 6614652 and 6614655 under DEPB scheme for export of "mixed graphite products, unmachined graphite rods of GLM-50" of various sizes. One consignment was bound for Sweden and the other for Thailand. "Nuclear grade graphite/carbon having a purity level better than 5 parts per million (ppm) Boron equivalent and with a density greater than 1.5 gram/cc in quantities exceeding 30 MTs in any period of 12 months" was not permitted by the EXIM Policy to be exported without specific licence issued by the competent authority, viz: Department of Atomic Energy, (DAE), Government of India. Other grades of graphite/carbon were freely exportable. In the present case, the customs authorities apprehended misdeclaration of the goods to get over licensing provisions and, therefore, subjected both the consignments to examination in the presence of the exporter's CHA. Representative samples were drawn in the presence of representatives of the company and forwarded to Bhabha Atomic Research Centre (BARC) for test. The BARC's test report dated 30/09/2008 showed the density of the goods to be 2.01 gm/cc and its Boron equivalent to be 1.87 ppm. The report further observed thus:
"These specifications of the graphite are meeting the specifications indicated in SCOMET (Special Chemicals, Organisms, Materials, Equipment and Technologies) List."
2. The customs authorities found the goods to be in category 'O' of the SCOMET list and, therefore, the goods were seized under Section 110 of the Customs Act in the absence of export licence from the Department of Atomic Energy. After investigations, the Commissioner of Customs (Export) issued a show-cause notice to the appellant proposing to confiscate the goods under Section 113(d) of the Act and to impose penalties on them under Sections 114 and 117 of the Act. The proposals were contested. Before the adjudicating authority, the appellant produced two licences from the Department of Atomic Energy (DAE) and staked a claim for clearance of the consignments for export under such licences. In one of these licences, DAE authorised export of 4.58 MTs of the "prescribed substance", viz: unmachined graphite rods and blocks of various sizes and dimensions as given in Annexure II, to a Swedish company for use in mechanical, electrical and metallurgical applications such as sintering plates, degassing rotors, crucibles and fixtures for glass industry. The second licence issued by DAE authorised export of 5.340 MTs of the prescribed substance viz: unmachined graphite rods and blocks of various sizes and dimensions as given in Annexure II, to a Thai company for the same use. Without prejudice to their claim for free exportation of the goods, the appellant produced the above licences with the alternative request for permission to export the goods to the Swedish and Thai companies. The adjudicating authority, after rejecting the request for export of the goods under the aforesaid licences, ordered confiscation of the goods under Section 113(d) of the Customs Act on the ground that no valid export licence was produced for the export of the nuclear grade graphite/carbon. A fine of Rs. 3.6 lakhs was also determined by the Commissioner under Section 125 of the Customs Act to be paid by the appellant for redeeming the goods in lieu of confiscation. A penalty of Rs. 1.25 lakhs was also imposed on them under Section 114(i) of the Act. Both the consignments were thus allowed to be taken back to town on payment of the adjudged dues.
3. The counsel for the appellant submits that the appellant had been making similar exports of identical commodity without licence since long ago and that the department has not found any offence or mistake in relation to such exports. It is submitted that the present dispute is the first of its kind. It is further submitted, that when the department doubted the correctness of the declaration made by the appellant, they got representative samples of their product tested by various other agencies, who found the Boron equivalent far above 5 ppm. Samples of the product were, thus, got tested by the Indian Institute of Technology, Bombay (IIT), National Metallurgical Laboratory, Jamshedpur and Celabor, Belgium. The counsel has referred to the test reports issued by these agencies, which indicate the Boron concentration to be above 5 ppm. It is submitted that, on the basis of these test reports, the appellant made a request to DGFT under the RTI Act to get information about the standards for testing purity of graphite samples. The DGFT, after obtaining the requisite information from the DAE, informed the appellant that the standard method available for boron analysis in nuclear grade graphite/carbon was 'ASTM-C-781-08' and that solution standards were available with M/s. E Merck, India. It is submitted that the appellant also approached BARC for a clarification of their test results which were relied on by the customs authorities. The BARC thereupon held discussions in a group of scientists and formulated a method for analysis of graphite. Counsel submits that this method (Autoclave Leaching Method) was made available to the IIT who conducted experiments by following the guidelines issued by BARC and reported net boron contained in graphite samples to be 26.56 ppm. The test report of IIT, dated 20/11/2008, is available on record. An anonymous letter dated 22/11/2008 addressed to Professor Lahiri of the IIT, listing out the aforesaid guidelines of BARC is also seen on record. Referring to all these documents, the counsel submits that, at least, the benefit of doubt ought to have been given to the appellant by the adjudicating authority.
4. Learned SDR has opposed the above plea by submitting that all samples for test were done by the appellant behind the back of the department and that there is no material on record to indicate correlation between the export-consignments and the samples drawn by the appellant for being tested by other agencies. It is further submitted that nothing contained in the anonymous letter dated 11/11/2008 addressed to Professor Lahiri of IIT can be relied on and consequently the test report dated 20/11/2008 of IIT, based on the so-called guidelines contained in the anonymous letter, is also unreliable. In any case, the Revenue is armed with BARC's test report on samples of the export-goods which were drawn in accordance with law and in the presence of representatives of the exporter, and the same requires to be accepted.
5. I am in perfect agreement with these submissions of the SDR. For the valid reasons stated by him, the BARC's report is authentic and hence there is no room for doubt. It would follow that there is no question of grant of benefit of doubt to anybody. The alternative test reports produced by the appellant admittedly pertain to samples drawn by themselves without involving the department. Such reports cannot be relied upon.
6. The learned counsel, at this stage, submits that the goods are not available in the form it was presented to the customs authorities. This would mean that the licences of DAE produced by them are of no use. The grounds raised in this appeal on the strength of these licences are infructuous.
7. In this scenario, one has got to fall back upon the question whether the confiscation ordered by the Commissioner is legally correct or not? I have already found that the BARC's test report indicating the Boron concentration in the test samples of the goods to be below 5 ppm, is authentic and its evidentiary value cannot be discounted in the manner sought to be done by the appellant. The goods were presented for exportation without valid licence and hence liable to confiscation in terms of Section 113(d) of the Act. The only question to be considered in this context is whether the redemption fine of Rs. 3.6 lakhs imposed by the Commissioner can be considered to be reasonable. The total FOB value of the goods, was over Rs. 23.96 lakhs. The fine imposed by the Commissioner appears to be around 15% of the value of the goods which cannot be considered to be unreasonable. The Commissioner imposed a penalty of Rs. 1.25 lakhs on the appellant under Section 114 of the Act, which works out to 5% of the FOB value of the goods. I do not see any reason to interfere with any part of the Commissioner's order.
8. In the result, the appeal gets dismissed.
(Dictated in Court) (P.G. Chacko) Member (Judicial) */as 8 8