Custom, Excise & Service Tax Tribunal
Shri Rajeev Khatri vs New Delhi Icd Tkd Export on 4 June, 2020
1
Customs Appeal No.51543 of 2018
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
NEW DELHI.
PRINCIPAL BENCH - COURT NO. II
Customs Appeal No. 51543 of 2018
[Arising out of Order-in-original No. 01/2018 dated 02.01.2018 passed by the
Commissioner of Customs (Export) ICD, Tughlakabad, New Delhi.]
Shri Rajeev Khatri S/o Sh. Pishori Lal ...Appellants
G Card Holder of M/s GND Cargo Movers
G-99, 2nd Floor, Mansarover Garden
New Delhi-110015.
Versus
Commissioner of Customs (Export) ...Respondent
ICD, Tughlakabad, New Delhi.
Appearance:
Shri B. L. Garg, Advocate for the appellant.
Shri H. C. Saini, DR for the respondent.
Coram:
Hon'ble Shri Anil Choudhary, Member (Judicial) Hon'ble Shri C.L. Mahar, Member (Technical) FINAL ORDER NO. 50682/2020 DATE OF HEARING: 08.11.2019 DATE OF DECISION: 04.06.2020 ANIL CHOUDHARY:
The issue in this appeal is whether the penalty of Rs.34,14, 020/- has been rightly imposed under Section 112(a) of the Customs Act.
2. Based on intelligence, DRI officers examined one container imported by M/s Pixel Overseas on 30.03.2013 at ICD, TKD, New Delhi covered under B/E No. 9699034 dated 28.03.2013. The B/E was filed through M/s GND Cargo Movers (CHA) and the appellant who was the employee, „G- card holder‟. The Appellant stated that the documents for the importation 2 Customs Appeal No.51543 of 2018 of the said consignment had been brought by one Shri Deepak Kapoor, who was the common friend of his and the CHA license holder;
3. On examination of the container, following goods were found:
(i) Gas stoves -514 pieces (ii) Refrigerant 22 (R-22) Chlorodifluoro methane gas -1088 cylinders (iii) Unidentified dried herbs - 1500 Kgs.
The goods were seized by the DRI officers under a panchnama dated 30.03.2013;
4. Search of the declared premises of M/s Pixel Overseas and the declared residential premises of Ms Saheem Khan, Proprietor, at House No. 78, 1st Floor, Laxmi Nagar, Delhi revealed that no firm/person existed/resided there; search of the residential premises of Shri Deepak Kapoor was conducted on 31.03.2013 which did not yield anything incriminating;
5. The Appellant, G Card holder of M/s GND Cargo Movers, in his statement dated 01.04.2013 (para 7.0, Page 87-88), recorded under Section 108 of the Customs Act, 1962, inter alia stated that:
(i) Shri Deepak Kapoor was a common friend of his and Shri Narinder Narula, the CHA, and used to bring clients for Customs clearance to their company;
(ii) Shri Deepak Kapoor had requested him to the file documents for clearance of the goods imported by M/s Pixel Overseas and after scrutiny, he informed Shri Deepak Kapoor that the documents did not contain PAN Card and attested copy of IEC of the importer which were required as per KYC norms and that the importer will be required to pay the duty either directly online or through cheque/ draft;
(iii) Shri Deepak had informed him that there were 1208 pieces of „two burner gas stoves‟ as declared in the import documents;3
Customs Appeal No.51543 of 2018
(iv) Shri Deepak came to him with the duty amount in cash and a bank draft of Rs. 48,800/- in the name of CONCOR and requested for keeping the cash and for paying the duty amount online through the CHA account till he arranges the duty amount in cheque from the importer and further informed that one Shri Sonu, employee of the importer was coming with the PAN card and the copy of IEC;
(v) The Appellant informed Shri Deepak that further action like examination of goods etc. will be undertaken by the Customs only after submission of the documents; he kept waiting but Shri Sonu did not turn up;
6. Shri Narinder Narula, -CHA and proprietor of M/s GND Cargo movers, in his statement dated 01.04.2013, inter alia, stated that he was not aware of online filing of the B/E No. 9699034 dated 28.03.2013 from his office, as he was out of station on that date; that he came to know about it only on his return; that the said B/E had been filed by Shri Rajeev Khatri, G Card holder his employee, and before filing Shri Khatri had neither informed nor consulted with him;
7. Shri Deepak Kapoor, in his statement dated 01.04.2013, inter alia stated that:
In February 2013, he had met his friend Shri Vivek who resided in China and was doing business as forwarding agent; Shri Vivek introduced him to Shri Ramesh Gupta, Director of M/s G T Sky HK Ltd., China and informed him that Shri Ramesh Gupta was also having forwarding company and that they (Shri Deepak Kapoor and Shri Ramesh Gupta) may need help of each other in future; In the first week of March 2013, he got a call from one Shri Sonu identifying himself as representative of Shri Ramesh Gupta in Delhi; Shri Sonu further informed that one container of gas stoves was being imported by M/s Pixel Overseas for which Shri Deepak was to arrange clearance against a payment of Rs. 7500/-;4
Customs Appeal No.51543 of 2018 It was also decided that Shri Sonu shall pay expenses towards Customs duty, Shipping Line charges and miscellaneous expenses; Shri Sonu handed him over the documents like Invoice and Packing list issued by M/s GT Sky HK Ltd. Hongkong in the name of M/s Pixel Overseas for import of 1208 two burner gas stoves, Authority letter and Bill of lading;
He asked Shri Sonu to provide other documents like Bank Statement of M/s Pixel Overseas, PAN Card, IEC Certificate, declarations etc.; He approached Shri Rajeev Khatri of M/s GND Cargo Movers as he had acquaintance with him and Shri Narinder narula, CHA the and proprietor of the said company and handed over the said documents to him on 26.03.2013 for the clearance of the said goods, which Shri Rajeev Khatri agreed to do on payment of Rs. 5500/- towards agency charges;
Shri Rajeev Khatri asked him (Shri Deepak) for submission of the remaining documents; though Shri Sonu promised to provide the documents, he never turned up.
8. Statement of Ms. Saheema Khan @ Saheema Khan , W/of Anis Khan, 220 A, J Extension, Laxmi Nagar, Delhi-92, Proprietor of M/s. Pixel Overseas was recorded on 13.08.2013 wherein she, inter alia, stated that:-
- She opened the said company in the name of M/s.Pixel Overseas in February, 2012 and was running the same from a rented premises at N-60, Jagat Ram Park, Main Bazar, Laxmi Nagar, Delhi-110 092;
- She got IEC for the said company on 18.07.2012 and was in business of export of carpets to Dubai;
- She was the sole proprietor and had employed four persons;
- Mr. Izhar Khan was looking after the work of purchases and bank account etc. while other employees assisted her;
-Her CHA was M/s.Exim Cargo Services, Patli Gurgaon and she had never imported or exported any goods from China or any other country except Dubai;
- After seeing the panchnama dated 30.03.2013 along with other documents, she stated that she had seen the said documents for the first time and she was not aware on whose instructions these 5 Customs Appeal No.51543 of 2018 documents were prepared, she has not given any instructions to CHA, M/s.GND Cargo Movers to file B/E on behalf of her company, the signatures of proprietor affixed on the letter of authorisation were not hers and the letter head used was also not her company‟s letter head;
- Her company, M/s. Pixel Overseas had no concern whatsoever with the recovered and seized goods vide panchnama dated 30.03.2013 and somebody had unauthorisedly made use of the name of her company and IEC;
- She had never exported or imported any goods from China and had never dealt with gas cooker, refrigerant -22 gas cylinder and dried herbs;
9. In her further statement dated 16.08.2013, Ms. Saheema Khan @ Saeema Khan W/o Anis Khan, 220 A, J-Extension, Laxmi Nagar, Delhi-92, inter-alia, stated that:
- In February, 2012, Mr. Izhar Siddique @ Khan, a family friend offered her to open a company in her name, for which he would get an IEC in her company‟s name, and in turn she will be given Rs.20,000/- - Rs.25,000/- per month as commission in cash and somebody else would be using the said IEC and he would take 50% of that commission amount;
-Shri Izhar Siddique @ Khan informed her that one Shri Ramesh Wadhera was using her IEC and she was introduced to Shri Wadhera at his office at E-513, 3rd Floor, Sector 7, Near Ramphal Chowk Dwarka;
-Shri Wadhera and Shri Izhar Siddique told her that in future, office address would be shown on her residential address. However, till date she had not received any correspondence in the name of her company at her residential address;
-She had asked Shri Wadhera and Shri Izhar Siddique @ Khan to close her account and get the IEC cancelled, but they had not done so. Shri Wadhera was handling entire work of import and export undertaken by the company. They used to get blank letter heads of the company and blank cheques signed from her;6
Customs Appeal No.51543 of 2018
-Shri Izhar Siddique was aware of entire activities of Shri Wadhera. She was not aware of the address of Shri Ramesh Wadhera;
-The signatures on papers relating to import of containerno.HLXU 9239078 including the authorisation letter issued in the name of GND Cargo Movers were not hers;
-As instructed by Shri Ramesh Wadhera, she had in her statement dated 13.08.2013, fasely mentioned the names of employees and also falsely stated that Shri Izhar Siddique @ Khan was looking after the entire work of purchasing and bank accounts. She had falsely stated that her CHA was EXIM Cargo Service Patli;
-She was not aware as to how many persons were employed in her company and how they were paid. She was also not aware as to who was the CHA for the company. She knew that Ramesh Wadhera was running the company and Shri Izhar Siddique was in constant touch with him;
10. Searches were conducted at the office and residential premises of Shri Ramesh Wadhera but nothing incriminating was recovered; during search of the office cum residential premises of Mr. Izhar Siddique @ Khan, certain documents relating to M/s Pixel Overseas were recovered;
11. As per the market enquiry, the value of seized goods was Rs. 1,36,56,080/- as per Table 6 of the impugned order;
12. Import of the undeclared goods namely R-22 Gas Cylinders and Salaam Mishri was allegedly an "illegal import" in terms of Section 11A(a) of the Customs Act, 1962 and these goods were allegedly "prohibited" goods in terms of Section 2(33) of the Act and were liable to confiscation under Section 111(d), (f), (g), (i), (j),(l) and (m) of the Act; the Gas Stoves had been imported without following the provisions of the Legal Metrology Act, 2009 which rendered the Goods "prohibited" for 7 Customs Appeal No.51543 of 2018 import and further as the goods had been undervalued and also used for concealing the undeclared goods, the same were liable to confiscation under Section 111 (d), (f), (g),(i), (j),(l) and (m) of the Act read with Section 119 of the Act.
13. In view of the above alleged outcome of investigations, the impugned Show Cause Notice was issued to the following parties/ persons:
(i) M/s Pixel Overseas, (ii) Mr. Izhar Siddique @ Izhar Khan, (iii) Shri Ramesh Wadhera, (iv) Shri Deepak Kapoor and (v) Shri Rajeev Khatri. The Appellant, was asked to show cause as to why penalty should not be imposed upon him under Section 112 & Section 117 of the Customs Act, 1962, alongwith proposal of confiscation.
14. Findings: The Adjudicating authority recorded the following findings regarding the Appellant (para 68 of the order)-
"Shri Rajeev Khatri (Noticee No. 5) is a G Card holder with M/s GND Cargo Movers, CHA, and is responsible for filing the said B/E. He has filed the said B/E without verifying the antecedents of the importer and doing the complete KYC. Further, he has not even informed his CHA about the factum of filing the said B/E. It is a fact admitted by him in him statement that at the time of filing the B/E, he has not got the duly attested copy of PAN Card and IEC of the company. These documents were never made available to him. Further, he himself did not know the importer or its proprietor and has not caused any verification of residential/office premises of the importer. Further, he has accepted the amount towards payment of Customs duty in cash, instead of getting the same paid through online payment or in cheque/ draft. Further, Shri Rajeev Khatri has failed to inform the concerned Deputy Commissioner of Customs in respect of the said short comings in the filing of import documents and Bill of Entry. Thus, from his conduct, it is quite evident that Shri Rajeev Khatri was aware of the things which led to irregular filing of this B/E for the illegal imports made."
15. In the impugned order, the Adjudication authority while absolutely confiscating the R-22 Gas Cylinders and the "Salaam Mishri" valued respectively at Rs. 88,78,080/- and Rs.37,50,000/- under Section 111(d),
(f), (g), (i), (j), (l) and (m) of the Customs Act, 1962 and absolutely confiscating the „Two gas burner Gas Stoves‟ valued at Rs. 10,28,000/- 8
Customs Appeal No.51543 of 2018 under Section 111(d), (f), (g), (i), (j), (l) and (m) read with Section 119 of the Customs Act, 1962 and holding M/s Pixel Overseas liable to penalty of Rs. 2,04,84,120/- under Section 112(a) & 114AA; Mr. Izhar Siddique @ Izhar Khan and Shri Ramesh Wadhera liable to penalty of Rs. 1,36,56,080/- each, under Section 112@ and Shri Deepak Kapoor liable to a penalty of Rs. 34,14,020 under Section 112(a), also imposed a penalty of Rs. 34,14,020/- on the appellant under Section 112(a) of the Customs Act, 1962.
16. Being aggrieved on imposition of penalty, the appellant is before this Tribunal.
17. Ld. Counsel for the appellant urges that the Adjudicating Authority observed that the appellant was aware of all the affairs, which led to filing of the bills of entry for the alleged illegal imports made. Section 112 provides for penalty on two types of persons, viz -
(a) A person, who by his act or omission in relation to any goods renders the goods liable for confiscation under Section 111 of the Act or abets the doing or omission to do such an Act or;
(b) A person, who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner, dealing with any goods, which he knows or has reason to believe, are liable to confiscation.
18. The lapses on the part of the appellant can at worst be termed as negligence in discharge of his obligations under the CBLR. However, the Revenue has failed to adduce any evidence of deliberate involvement or connivance of the appellant in the mis-declaration. Therefore, the charge of abetment on part of the appellant to render the goods liable to 9 Customs Appeal No.51543 of 2018 confiscation is unsustainable. Thus, the appellant is not liable to penalty under Section 112 (a) of the Customs Act, 1962.
19. Secondly, on the basis of aforementioned findings, which are self- contradictory, inasmuch as the appellant has been charged of not knowing the importer/proprietor and at the same time has been alleged to have aided /abetted the importer in his wrong doings. It is a matter of ordinary prudence that one cannot connive with a person he does not know or has not met. Further, the appellant, as the employee of the CHA firm, G-Card Holder, has only filed the bill of entry on the basis of the documents received by him from the representative of the importer. There is no allegation of forging or manipulation of any documents by the appellant. Further, there is no case or allegation that the appellant knowingly made wrong declaration in the bills of entry on behalf of the importer. Further, there is no statement by any co-noticee or other person suggesting connivance or knowledge of any mis-declaration on the part of this appellant. Further, the appellant accepted the documents from Shri Deepak Kapoor as he was known to him and also having acquaintance with Shri Narinder Narula, the Proprietor of M/s.GND Cargo Movers (CHA Firm). Further, the appellant had asked for authenticated copies of the documents like Pan Card, IEC, etc., which were promised to be delivered by the said Mr. Deepak Kapoor. Further, as instructed by Shri Deepak Garg, one Mr. Sonu talked with him and promised to provide the said documents, however, he never turned up.
20. Further, there is no allegation nor finding that this appellant has made any extra ordinary monetary gain, in his personal capacity. Admittedly, this appellant has received only Rs.5,500/- on behalf of the 10 Customs Appeal No.51543 of 2018 CHA firm, being their agency charges, for clearance of the container/imported goods. It is further urged that there is no offence in receiving the clearance business through known intermediary. So far the allegation that the appellant has accepted the clearance work directly from Shri Deepak Kapoor without even informing Mr. Narinder Narula, Proprietor of CHA firm. It is urged that Mr. Deepak Kapoor was a known - intermediary and on several occasions had brought business to Shri Narinder Narula or clearance. Such work was regularly accepted and handled by the CHA firm. Further, by way of practice, all the work done by the firm is informed to the proprietor Mr. Narinder Narula, henever he is out of station, by one of the employees. Only for the reason that this appellant has not given direct information to Mr. Narinder Narula about the disputed consignment, does not lead to inevitable conclusion of the connivance with Shri Deepak Kapoor or with the actual importer, Shri Ramesh Wadhera. Further, the named importer, Mrs. Saheema Khan, Prop. of Piexel Overseas has been found and traced by the Revenue in the course of investigation. Mrs. Saheema Khan has also accepted that she is the holder of IEC and further, she was in the partnership in the Import and Export business with Ramesh Wadhera, through her staff, Mr. Izhar Khan.
21. Further, the appellant had informed the intermediary clearly that work like examination etc. shall be handled only on the receipt of the balance sheet/ KYC documents. Further, as required by Regulation 11 (n) of CBLR 2013, the appellant has exercised reasonable diligence by verifying the correctness of the importer/exporter Code on DGFT site and also verified other documents i.e. Voter I Card, which were found in order. 11
Customs Appeal No.51543 of 2018
22. It is inappropriate interpretation on the part of the Adjudicating Authority that under Regulation 11 (n) of CBLR, it is required to make physical verification of his clients address, IEC No. and other KYC documents.
23. Further, the ld.Counsel has relied on the following case laws:-
In case of Procedural infraction covered under CHA Regulations, penalty under Section 112(a) of the Customs Act
1. Adani Wilmar Ltd. -2015 (330) ELT 549 (Tri.-Ahmd.)
2. Universal Agency - 2006 (202) ELT 702 (Tri.-Kolkata) CHA not liable for mis-declaration by importer without cogent evidence of knowledge:
1. Deepak Kumar vs. Commissioner of Customs, ICD, New Delhi-2017 (358) ELT 854 (Tri. Del.)
2. Prakash Poonia vs. Commissioner of Customs, Kandla 2010 (252) ELT 442 (Tri. Ahmd.)
3. Premier Instruments & Controls Ltd.-2008(227) ELT 139 (Tri-
Chennai) Where there is no abatement, applicant not liable to penalty under Section 112(a) of Customs Act, 1962:
4. Kunal Travels (Cargo) - 2017 (354) ELT 447 (Delhi)
5. Deepak Kumar - 2017 (358) ELT 854 (Tri.-Delhi)
6. Lohis Travels & Cargo- 2015 (330) ELT 689 (Tri.-Delhi)
7. Adani Wilmar Ltd. - 2015(330) ELT 549 (Tri.-Ahmd.) CHA not liable for mis-declaration by importer, without cogent evidence of knowledge:
8. Brijesh International - 2017(352) ELT 229 (Tri.-Delhi) 12 Customs Appeal No.51543 of 2018
9. Vivek Joshi - 2004 (178) ELT 526 (Tri.-Mumbai)
10. Moriks Shipping & Trading P.Ltd.-2008(227)ELT 577
11. Universal Agency -2006 (202) ELT 702 (Tri.-Kolkata) No statement by any Co-Noticee or other persons suggesting connivance or knowledge of any mis-declaration on part of appellant:
12. Prakash Poonia -2010 (252) ELT 442 (Tri.-Ahmd.)
13. Premier Instruments & Controls Ltd.- 2008 (227) ELT 139 (Tri.-Chennai) Receiving Documents through trusted intermediary amounts to no offence:
14. Unison Clearing Pvt. Ltd.-2015(329) ELT 269 (T-Mum.)
15. L.M.S. Transport Co. -2014 (299) ELT 368 (Tri- Mum.) Importer's Address found to be correct and existing ; it was not appellant's responsibility to conduct physical verification:
16. Thawerdas Wadoomal -2008 (221) ELT 252 (T-Mumbai) 17 Setwin Shipping Agency - 2010(250) ELT 141 (Tribunal-
Mumbai)
24. Opposing the appeal, ld. Authorised Representative for the Department relies on the findings in the impugned order. He further urges that the appellant has admittedly handled the clearance work without caring to receive the proper documents complying with the KYC requirements and further, has erred in receiving the documents for clearance through an intermediary - Deepak Kapoor, without knowing the actual importer, nor taking care to know the actual importer with reasonable diligence before filing the bills of entry, and thus, abetted in the offence of the import of the prohibited goods. 13
Customs Appeal No.51543 of 2018
25. Having considered the rival contentions and on perusal of the records, it is evident that the appellant-CHA firm had known the said Shri Deepak Kapoor - Intermediary, who was bringing them the clearance work on regular basis. Further, the said Shri Deepak Kapoor was also known to Mr. Narinder Narula, Proprietor of the CHA firm. The appellant, being employee of the CHA firm, placed great reliance on Mr. Kapoor and thus, was negligent in ensuring the KYC compliance.
26. Further, the appellant under the influence of Mr. Deepak Kapoor, filed the bills of entry without completing the KYC formalities. Further, from the appreciation of the facts and on perusal of the impugned order, it is evident that no case of connivance is made out against the appellant /employee i.e. no allegation or finding of any additional gain or reward received by him. At best, it appears that this appellant has unknowingly abetted or been instrumental in the nefarious activity of the import of the prohibited goods, by the actual importer - Mr. Ramesh Wadhera, and the lender of the IEC code. In this view of the matter, I find that the penalty imposed is very high and disproportionate to the offence by this appellant. Accordingly, the penalty imposed under Section 112(a) of the Customs Act is reduced from Rs.34,14,020/- to Rs.10,00,000/-. This appeal is allowed in part. The appellant is entitled to consequential benefit.
(Pronounced on 04.06.2020).
(Anil Choudhary) Member (Judicial) (C. L. Mahar) Member (Technical) ckp.