Custom, Excise & Service Tax Tribunal
Commissioner Of Customs vs ) M/S Tallaja Impex on 11 November, 2011
,CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, FKCCI COMPLEX, K.G. ROAD,
BANGALORE 560009.
COURT II
DATE OF HEARING : 11/11/2011
DATE OF DECISION : 11/11/2011
Customs Appeal Nos. 1411, 1412, 1413,
1158 & 1159 of 2010
[Arising out of Order-in-Appeal Nos. 23, 24 & 25/2010 (H-II) Cus dated 31.3.2010 and Order-in-Appeal Nos. 07 & 08/2010 (H-II) Cus dated 25.02.2010, both passed by the Commissioner of Customs, Central Excise & Service Tax (Appeals-II), Hyderabad)
For approval and signature:
Honble Shri M. Veeraiyan, Member (Technical)
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 the 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
Commissioner of Customs, Appellant
Hyderabad.
Vs.
1) M/s Tallaja Impex Respondents
2) Sri K. Sai Prasad
3) Sri D. Lakshminarayana
4) M/s ARK Logistics Services (P) Ltd.
5) Sri B. Nageswara Rao Appearance S/Shri S. Ravichander and D.S. Kanthraj, DRs for the appellant (department) Shri B.V. Kumar, Advocate for the respondents, M/s Tallaja Impex, Sri K. Sai Prasad and Sri D. Lakshminarayana.
Ms. Anjali Agarwal, Advocate for the respondent, M/s ARK Logistics Services (P) Ltd.
None appeared for the respondent, Sri B. Nageswara Rao.
CORAM : Honble Shri M. Veeraiyan, Member (Technical) ORDER No..Dated 11/11/2011 PER : M. Veeraiyan 1.1 Appeal Nos. C/1411/10, C/1412/10 and C/1413/10 are filed by the department against the order of the Commissioner (Appeals) Nos. 23, 24 & 25/2010 (H-II) Cus dated 31.3.2010 with respondents M/s Tallaja Impex, Shri K. Sai Prasad, Partner of M/s Tallaja Impex and one Shri D. Lakshminarayana. These orders have been passed on appeals of these three respondents against the order of the Original authority No. 71/2009-Cus. dated 3.12.2009.
1.2 The appeal Nos. C/1158/10 and C/1159/10 are against the order of the Commissioner (Appeals) Nos. 7 & 8/2010 (H-II) Cus dated 25.2.2010 with M/s ARK Logistics Services (P) Ltd. and Shri B. Nageswara Rao as respondents. The impugned order has been passed by the Commissioner (Appeals) against on appeals by the respondents against the same order of the original authority No. 71/2009-Cus dated 3.12.2009.
1.3 Cross objection No. 33/2011 is filed by M/s Tallaja Impex in appeal No. C/1411/10 and the same is basically in support of the order of Commissioner (Appeals) and does not claim any relief other than what has been granted by the Commissioner (Appeals).
1.4 All these 5 appeals arise out of a common order-in-original and involve common facts and therefore, these appeals are disposed of by this common order.
2. Heard the learned Departmental Representatives, S/Shri S. Ravichander and D.S. Kanthraj for the appellant (department). Heard the learned Advocate, Shri B.V. Kumar for the respondents M/s Tallaja Impex, S/Shri K. Sai Prasad and D. Lakshminarayana; and heard the learned Advocate, Ms. Anjali Agarwal for the respondent, M/s ARK Logistics Services (P) Ltd.
3.1 The relevant facts, in brief, are that the respondent, M/s Tallaja Impex has imported six consignments during the period May 2007 to September 2007 declaring them to be Mini Fridges and Vacuum Pumps. Investigation was undertaken based on specific information that Shri D. Lakshminarayana has imported refrigerant gases like R-22, R-134A, R-406A etc. which are Ozone Depleting Substances from Singapore and without having necessary licence. According to the investigation, Shri Lakshminarayana has imported the said goods in the names of M/s Tallaja Impex, M/s Om Sai Enterprises and M/s Selection Enterprises (Shri Lakashminarayana is the proprietor of M/s Selection Enterprises). In fact, it was alleged that IE code was taken in the name of a non-existing person using manipulated documents (There have been separate proceedings in respect of imports in the names of M/s Selection Enterprises and M/s Om Sai Enterprises). A show-cause notice dated 25.6.2008 was issued proposing confiscation of 600 gas cylinders (300 cylinders of R-22 gas and 300 cylinders of R-143A gas) imported by M/s Tallaja Impex and proposing imposition of penalties on all the respondents.
3.2 The original authority passed the following order :-
(i) I absolutely confiscate the goods viz., 300 cylinders containing R22 gas (13.6 Kgs each) with a value of Rs. 3,56,476/- (Rupees three lakh fifty six thousand four hundred and seventy six only) and 300 cylinders containing R134A gas (13.6 Kgs each) with a value of Rs. 3,05,551/- (Rupees Three lakh five thousand five hundred and fifty one only) under section 111(d) and 111 (f) of the Customs Act, 1962 read with Section 11 ibid, I order the disposal of seized cylinders in terms of Boards letter vide F. No. 711/79/2000 Cus (AS) dated 26th December 2001.
(ii) I impose a penalty of Rs. 2,00,000-00 (Rupees Two lakhs only on M/s Tallaja Impex, Secunderabad under Section 112 (a) of the Customs Act, 1962.
(iii) I impose a penalty of Rs. 1,00,000-00 (Rupees One lakh only) on Sri D. Lakshminarayana alias Suresh, Proprietor of M/s Selection Enterprises under Section 112 (b) of the Customs Act, 1962.
(iv) I impose a penalty of Rs. 75,000-00 (Rupees Seventy five thousand only) on Sri K. Sai Prasad, Partner of M/s Tallaja Impex under Section 112 (b) of the Customs Act, 1962.
(v) I impose a penalty of Rs. 25,000-00 (Rupees Twenty five thousands only) on Sri B. Nageswara Rao, Clearing Executive, M/s ARK Ligistics Services (P) Ltd. under Section 112 (b) of the Customs Act, 1962.
(vi) I impose a penalty of Rs. 25,00,000-00 (Rupees Twenty five thousands only) on M/s ARK Logistics Services (P) Ltd. under Section 112 (a) of the Customs Act, 1962.
3.3 All the respondents filed appeals before the Commissioner (Appeals) and the Commissioner (Appeals) has set aside the order of the original authority in respect of all the respondents and allowed their appeals and hence, the department is in appeals before the Tribunal.
4.1 The learned DR appearing for the department (in appeal Nos. C/1411/10, C/1412/10 & C/1413/10) reiterating the grounds of appeals submits that Shri D. Lakshminarayana has clearly admitted having imported the impugned goods using the name of three firms including M/s Tallaja Impex. He has specifically admitted having imported 600 cylinders in three containers in the imports made in the name of M/s Tallaja Impex. However, he could not specify under which Bills of Entry those containers were cleared. The Commissioner (Appeals) has set aside the order without going to the merits of the case and erroneously held that there was confiscation of non-existing gas cylinders by the original authority. He further submits that even if the goods are not available for confiscation, since the violations are established, penalties on the importer and the partner of the importing firm and penalty on Sri D. Lakshminarayana who is the master mind are fully justified and the same should not have been set aside.
4.2 The learned DR representing the department in the other two appeals submits that M/s ARK Logistics Services (P) Ltd., CHA and Sri B. Nageswara Rao, Clearing Executive were knowingly involved themselves in the import of the impugned goods without licence. Hence, the penalties on them should not have been set aside.
5.1 The learned Advocate, Shri B.V. Kumar appearing for the first batch of the respondents submits that the original authority has gone under a presumption that there was seizure of 600 gas cylinders imported in the name of M/s Tallaja Impex. The Commissioner (Appeals), on the basis of submissions made on behalf of the importer/respondents got factual verification done and held that there was no seizure of any gas cylinders imported in the name of M/s Tallaja Impex and therefore, the entire proceedings were vitiated. Apparently, the original authority got the facts wrongly in view of similar imports of other firms, namely M/s Om Sai Enterprises and M/s Selection Enterprises in respect of which there was seizure and that Sri D. Lakshminarayana might have played a role in their imports. He also submits that the order of the original authority suffers from violation of principles of natural justice inasmuch as the prayer of cross examination of S/Sri Lakshminarayana, S. Nagalinga Raju and Nageswara Rao as sought by the main importer, M/s Tallaja Impex was denied. The finding of the original authority, that M/s Tallaja Impex was seeking cross examination for the purpose of dragging of the proceedings was factually incorrect. Relying on statement of the said co-accused persons without cross examination is not permissible. In this regard, he relies on decision of the Honble High Court of Gujarat in the case of CCE Ahmedabad Vs. Chhajusingh S. Kanwal [2011 (272) E.L.T. 202 (Guj.)] and decision of Allahabad High Court in the case of CCE, Meerut-1 Vs. Paramarth Iron Pvt. Ltd. [2010 (260) E.L.T. 514 (All.)] 5.2 The learned Advocate also submits that six of the consignments imported by M/s Tallaja Impex were already cleared after examination by Customs authorities and the statements of examining officers which were in favour of the party have not been appreciated.
5.3.1 The learned Advocate appearing for M/s ARK Logistics Services (P) Ltd. submits that the partners of CHA had no knowledge of mal-practice having done by M/s Tallaja Impex in respect of the impugned consignments. It is possible that the Clearing Executive, Sri Nageswara Rao might have in his own capacity dealt with some other consignments which were not authorized by CHA. Drawing attention to the statement of Sri S. Anil Kumar, Partner of CHA, she submits that the partner did not have any knowledge about mal-practice having done by M/s Tallaja Impex. As a CHA, they have filed Bills of Entry based on the documents given by the importer and that there was no malafide attributable on their part.
5.3.2 She also submits that in respect of the alleged violation in relation to imports by the above firms, the Commissioner by a proceedings under CHA Licensing Regulations, had revoked the CHA licence. However, the Tribunal, appreciating that an employs misconduct cannot result in revocation of licence, allowed the appeal of the CHA vide order reported in 2010 (261) E.L.T. 648 (Tri.-Bang.)].
5.3.3 In view of the above, serious charge of abetment of smuggling warranting penalty, as held by the original authority, is not sustainable.
6.1 I have carefully considered the submissions from both sides and perused the records. The show-cause notice proposed confiscation of 600 cylinders imported in the name of M/s Tallaja Impex. There is no mention of any seizure of consignments imported in the name of M/s Tallaja Impex. The original authority not only ordered absolute confiscation of 600 cylinders but also ordered to dispose of the seized cylinders in terms of Boards letter vide F. No. 711/79/2000-Cus (AS) dated 26th December 2001. The verification caused by the Commissioner (Appeals) revealed that there was no seizure of goods involved. However, perusal of the records indicate that Sri Lakshminarayana has admitted importing 600 gas cylinders by hiding them in some of the six consignments imported in the name of M/s Tallaja Impex. This statement of Sri Lakshminarayana has not been shown to have been retracted. On the other hand, Sri K. Sai Prasad, Partner of M/s Tallaja Impex has agreed with the statement given by Sri Lakshminarayana. When Sri Sai Prasad, Partner has himself admitted the import as alleged in the show-cause notice, and when he has not retracted his statement, the need for permitting cross examination of co-accused, in my considered opinion, is not necessary. In a quasi judicial proceedings, strict rules of evidence need not to be followed. Cross examination cannot be claimed as a matter of right. Of course, no offence should be established merely based on the statement of third party and without corroborative evidence and without granting cross examination of person whose statement alone is relied upon. In the present case, the importation of 600 gas cylinders stands admitted by Sri D. Lakshminarayana and the same stands corroborated by a partner of M/s Tallaja Impex. In these circumstances, the gas cylinders imported in six consignments are liable for confiscation. However, as rightly pointed out by the learned Advocate for the importer, when the goods are not available, the questions of confiscating the same and the disposal of non-available goods by the department do not arise. However, Shri Lakshminarayana and M/s Tallaja Impex, admittedly, have knowingly involved themselves in importing 600 gas cylinders in the past. It is also admitted that they did not have the requisite licence for importing the consignments. Therefore, penalties on them are warranted.
6.2 As regards the role of M/s ARK Logistics Services (P) Ltd., neither the show-cause notice nor the order of the original authority indicate any specific complicity in the import of prohibited items in the name of M/s Tallaja Impex. Further, as pointed out by the learned Advocate for M/s ARK Logistics Services (P) Ltd., the proceedings under the CHA initiated by the department by way of revoking the licence for violation of CHA Licensing Regulation also stands set aside by the Tribunal. In view of the above, restoring penalty imposed by the original authority on the CHA as prayed by the department does not arise.
6.3 As regards the penalty imposed on Sri Nageswara Rao, the learned DR submitted that he had rendered advice for manipulation of the documents for clearance of the offending goods. Therefore, penalty on him is warranted.
6.4 Though penalty on M/s Tallaja Impex is warranted, in the facts and circumstances of the case, no separate penalty on the partner is justified.
7. In view of the above, the appeals are disposed of as follows :-
(a) Setting aside the confiscation of non-available gas cylinders by the Commissioner (Appeals) is upheld. However, the Commissioners order setting aside the penalty imposed by the original authority on M/s Tallaja Impex is set aside and order of the original authority in this regard is restored. While restoring the order of the original authority, the penalty is reduced from Rs. 2,00,000/- (Rupees Two lakhs only) to Rs. 75,000/- (Rupees Seventy five thousands only).
(b) The order of the Commissioner (Appeals) in setting aside the penalty on Sri D. Lakshminarayana is set aside and the order of the original authority in this regard is restored and while restoring the penalty, the same is reduced from Rs. 1,00,000/- (Rupees One lakh only) to Rs. 75,000/- (Rupees Seventy five thousands only).
(c) The order of the Commissioner (Appeals) insofar as the same related to setting aside the penalties on Sri B. Nageswara Rao, Clearing Executive of M/s ARK Logistics Services (P) Ltd. is set aside and the order of original authority is restored.
(d) The order of the Commissioner (Appeals), insofar as setting aside the penalty on M/s ARK Logistics Services (P) Ltd. and on Sri K. Sai Prasad, Partner of M/s Tallaja Impex are concerned, the same are not interfered with.
8. The cross objection filed by M/s Tallaja Impex is also disposed of.
(Pronounced and dictated in the open court) (M. Veeraiyan) Member (Technical) /vc/