Custom, Excise & Service Tax Tribunal
Ruchika International vs Commissioner Of Customs on 28 April, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No.C/782, 836 to 839, 843 & 845/09 (Arising out of Order-in-Original No.Commr/Cus/03/08-09 dated 30/04/2009 passed by Commissioner of Customs, Pune) For approval and signature: Honble Mr.M.V. Ravindran, Member (Judicial) Honble Mr. P.S. Pruthi, 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? ========================================
Ruchika International V.K. Agarwal S.K.Agarwal Appellants M.K.Agarwal A.J Ghode N.N.Borase C.S.Bolkute Vs. Commissioner of Customs, Respondent Pune Appearance:
Shri.Vipin Jain, Advocate, Shri Prashant Patankar, Advocate, Shri L.G Kulkarni, Consultant & Shri D. Mithra, Advocate for appellants Shri.V.K.Singh, Spl. Counsel, for respondent CORAM:
Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. P.S. Pruthi, Member (Technical) Date of Hearing : 28/04/2015 Date of Decision : /2015 ORDER NO Per: M.V. Ravindran
1. All these appeals are filed against Order-in-Original No.Commr/Cus/03/08-09 dated 30/04/2009 passed by Commissioner of Customs, Pune. Since all the appeals raise a common question of law and fact, they are being disposed of by common order. These appeals are as under:
S.No. Appeal No. Name of the appellant
a) C/839/09 Ruchika International
b) C/836/09 V.K. Agarwal
c) C/837/09 S.K. Agarwal
d) C/838/09 M.K. Agarwal
e) C/843/09 A.J Ghode
f) C/845/09 N.N. Borase
g) C/782/09 C.S.Bolkute
2. Appeals of Shri.A.J. Ghode, Shri N.N. Borase and Shri C.S.Bolkute are for imposition of penalties on them and they were departmental officers; while Ruchika International is an exporter and Shri V.K. Agarwal, S.K. Agarwal & Shri M.K. Agarwal are partners of the said firm.
3. The relevant facts that arise for consideration are based on intelligence that M/s.Ruchika International was involved in illegal exports and fraudulently claiming undue DEPB benefits by way of willful mis-statement of FOB value of textile article/fabrics exported. One live consignment of M/s.Ruchika International, which arrived for export through ICD, Miaraj was intercepted and the samples from the consignment were drawn under Panchnama to ascertain the correctness of the description. The samples were tested in the laboratory of Bombay Textile Research Association, Mumbai (BTRA), who vide their report dated 31/07/2006 stated that the PMV of the product as Rs.96/- per meter and it was noticed by the departmental officers that the FOB value as declared in the shipping bill by the exporter was Rs.284/- per meter. Thorough investigation was undertaken and the documents relating to the earlier exports made by M/s.Ruchika International were scrutinized and the samples, which were drawn by the earlier authorities were called for. It was noticed that no samples were drawn. After recording various statements, Revenue issued a show-cause notice to M/s.Ruchika International for wrongful claim of DEPB benefits on fifty shipping bills. The departmental officers were also issued show-cause notice for imposition of penalties under the provisions of Section 114 of the Customs Act, 1962. All the appellants herein contested the show-cause notice on merits and also on limitation. The adjudicating authority did not agree with the comments raised and held against M/s.Ruchika International, its partners and also against the three departmental officers. The DEPB credit, which was allowed to the appellant, M/s.Ruchika International was reduced, penalties were imposed on all other appellants as also on M/s.Ruchika International.
4. Ld. Counsel Shri V.P Jain along with Shri Vishal Agarwal appeared for M/s.Ruchika International and its partners thereof while Shri Prashant Patankar, Shri L.G. Kulkarni and Shri D.Mithra, Advocate appeared for the departmental officers.
4.1 Shri Vipin Jain would submit that the allegations in the show-cause notice are that the name of the consignment on the bill of entry filed in port of discharge is different, description is not matching, value declared on the shipping bills is ten times higher than the value declared on bill of entry at port of discharge; BTRA test report shows the contents, weight and the possible ex-factory value; received sale proceeds from non-banking channel, i.e. exchange houses, forged BRCs were submitted to DGFT and purchase invoice of textile articles, which is non-existence. It is his submission that all these allegations have been suitably addressed to by the appellant inasmuch as the DEPB, which were claimed were post export and the cancellation of the DEPB licence was not on the ground of over valuation of the goods, the amounts which were received were from M/s.Al Fardan Exchange House has to be treated as remittances were made against the exports made by the appellant through the proper banking channel. It is his submission that there was no evidence except the photocopies of the tabulated chart signed by the author to hold against the appellant that overseas inquiry report was indicative of over valuation, he would submit that the overseas inquiry report was not furnished at all. The BTRA report on which reliance was placed can only help the department as to ascertain whether the goods sought to be exported were technically textile articles or otherwise and the BTRA is not competent to report on the composition of the product sought to be exported. The invoices of the unit manufacturing textile articles is situated in GIDC, the address which was given to the investigating authorities at the beginning itself and it was not investigated. Instead of verifying the said premises, the office premises was verified and the conclusion was drawn that the such unit is non-existent. He would then take us through the entire case records and submit that all these allegations which have been upheld by the adjudicating authority are incorrect. It is his submission that main issue and the entire findings of the adjudicating authority is based on an overseas inquiry, which allegedly revealed that FOB value declared in the shipping bill by almost ten times higher than the declared value in the bill of entry. He would submit that the inquiry report was not given to the appellants but two charts C-1 & C-2 (Annexure to page No.122 of paper book), which was prepared in India by the officers were given. It is his submission that overseas inquiry information cannot be considered as documents in terms of Section 139C of the Customs Act, 1962. It is his submission that the adjudicating authority has neither determined the value inasmuch the adjudicating authority has rejected the value declared by the appellant, but did not determine the value based upon identical or similar goods, being exported from India. It is his submission that one of the findings is that the appellant had submitted forged BRCs for getting the DEPB for which he would submit that this forgery was done by the consultant. It is his submission that the adjudicating authority was aware of the similar goods were exported at or around same price by the appellant located in various jurisdiction of the same authority and hence did not bring on record of such information while the appellant had produced an order-in-original dated 21/12/2009 passed by the Commissioner of Customs in an identical issue of very same appellant, M/s.Ruchika International, FOB value of Rs.270/- per meter was accepted. It is his submission that the said order was not contested by the Revenue. He would then try and show us the similarities in the said order as to the products exported there and the products exported in this case. It is his further submission that the entire sale proceeds have been received by the appellant through the Central Bank of India and Union Bank of India and both banks issued certificates; the same is realized through proper banking channels in Nostro Account of their Bank at New York. It is his submission that the adjudicating authority did not understand the functioning of the international banking channels and hence, has come to a wrong conclusion. It is his submission that the penalties imposed on M/s.Ruchika International and its partners is incorrect as there is no value, which has been determined to come to a conclusion of quantum of penalties.
4.2 Ld. Counsel appearing on behalf of the departmental officers would draw our attention to the fact that a charge against the appellant is of collusion and connivance with the exporter based on the grounds of allowing clearances of shipping bills without permissions from Headquarters, without maintaining of register of records of shipping bill and without drawing samples. It is the submission that there is no evidence on record that these departmental officers played any role in exporters alleged act, if any, which were beyond their knowledge and jurisdiction and as such the case made out against the exporter by the DGFT and customs have no remote nexus with the charge of collusion and connivance. It is the submission that one of the departmental officers was proceeded against in a disciplinary proceedings within the department for negligence of duty but the Chief Commissioner, Pune as appellate authority vide order dated 18/11/2014 dropped all the charges except for non drawing of samples from the export consignments; the charges of allowing exports without permission and/or maintenance records are held unproved by the competent authorities on the basis of facts; hence, these grounds have no place in the current proceedings. They would submit that the CBECs Circular No.10/97-Cus dated 17/04/1997 puts no condition of samples drawing and further Customs Notice No.75/2001 dated 22/06/2001 puts only optional condition of samples drawing for all kinds of exports. It is his submission that there are no short or non compliance on the question of samples drawing as per CBEC Circular. It is his submission that the fact of non-drawal of samples cannot be attributed to charge of collusion and connivance; when the fraud, if any, is attributed to exporter and is totally separate and distinguishable on the facts. They would rely upon the judgements of the Tribunal in the case of Sunshine Overseas vide Final order No.A/1152-1166/WZB/AHD/2010 dated 16/08/2010, set aside the penalties imposed on the departmental officers. They relied upon the following decisions:
a) CC, New Delhi Vs. MI Khan 2000 (120) ELT 542 (T)
b) CC & CE, Hyderabad Vs. Rajiv Kumar Agarwal 2007 (217) ELT 392 (T)
c) GH Industries Vs. CCE, Ahmedabad 1997 (94) ELT 483 (T)
5. Learned Special Counsel Shri V.K. Singh after giving the overall picture submit that the modus operandi undertaken by the appellant, M/s.Ruchika International submits that investigation of the case was started in August 2006 and inquiry of the purchaser from whom the textile articles were purchased, the seller was not having business at the given address. It is his submission that in February 2007, M/s.Ruchika International and its partners informed the department that documents were lost and produced copy of FIR and did not respond to the summons issued to them. It is his submission that even if the documents were lost, records like accounts, etc. were available which were not produced nor were purchase details produced which was available. He would submit that the expert body BTRA has ascertained the value which is based upon the technical expertise cannot be discarded as BTRA is recognized by the Ministry of Textiles. He would then submit that actions of the exporter and their partners are very suspicious inasmuch as they have forged the remittance certificates and got DEPB licence from DGFT. It is his submission that if transactions are genuine, there is no reason to forge BRCs, purchases could not be verified as no information was available. As regards the penalties imposed on the officers, it is his submission that these officers have played manipulative roles and hence penalties have been imposed on them.
6. We have considered the submissions made at length by both the sides and perused the records.
6.1 On perusal of the records, we find that the adjudicating authority, while discarding the value of the goods which have been exported, has relied upon mainly the overseas inquiry conducted, certificate of BTRA and the action of the exporters regarding submitting false BRCs for obtaining DEPB licence, is erroneous for more than one reason.
6.2 Firstly, we find that the Charts C-1 & C-2 annexed to the show-cause notice purportedly supposed to be collated from the overseas inquiry does not have any signature of the officers. It is pertinent to note that these reports as per Chart annexed at C-1 & C-2, the basis was not divulged to the appellant to defend against such inquiry. In our considered view, the adjudicating authority should have given copy of the overseas inquiry conducted by the department, if any, so that the appellant could have defended or put forth his views on the same. To that extent, we find that the order seems to have been passed in violation of the principles of natural justice.
6.3 Secondly, we find that the samples which were drawn by the departmental authorities on the consignments which was intercepted and sent to BTRA, the queries were regarding the technical description of the samples whether they would fall under the category of textile and textile articles; but it seems BTRA had opined that the goods are particular description and additional information as to the correct ex-factory value was also given. At this stage, we have to record that goods sought to be exported were suit length and valuation as declared by the appellant was Rs.284/- per meter, while the department has worked out the value of Rs.23/- per meter for DEPB benefits. How this value is worked out is not forthcoming from the records. We also find that the adjudicating authority has not redetermined the value based upon any acceptable norms as per the Customs Act. It is also to be recorded that identical consignments of textile articles was exported by the same M/s.Ruchika International and the value declared was accepted by the department in order-in-original dated 31/12/2009 which we were informed was not contested in the higher judicial forum. This relevant fact is not properly addressed to by the adjudicating authority in correct perspective in the impugned order.
6.4 Thirdly, we also find that no contemporary value on identical or similar goods were brought on record in order to ascertain the contemporaneous prices of the goods sought to be exported. In the absence of above, we find that the impugned order is passed in violation of principles of natural justice and needs reconsideration by the adjudicating authority in respect of M/s.Ruchika International and their partners.
6.5 As regards the penalty imposed on the departmental officers, we find that the penalties have been imposed on them under the provisions of Section 114 of the Customs Act, 1962, The said penalties are imposed on the ground that the appellant had abetted the over valuation of the goods exported. In the entire records, we find that there is no abetment on the part of officers inasmuch as all the shipping bills were signed after examining the documents which were attached. The shipping bills and the documents attached and produced before these three departmental officers were indicating the prices, which they felt were correct in the facts of these cases and being recently posted may have lacked in training in clearance of export goods even otherwise, the only violation which was highlighted in the impugned order was these officers have indicated that they have drawn the samples and maintained the records, but in fact they have not done so; for the charge of abetment. In our view, violation to perform the duty of scrutinizing or examining, non-drawing of samples, at the best can be held as dereliction of duty which can be proceeded in terms of Central Civil Services Rules, 1965. On this also we find that one of the Officers case Chief Commissioner has dropped the proceedings initiated against Shri.A.J Ghode. We find strong force in the contention raised by the learned Counsel for the officers that the issue is covered by the ratio of the decision in the case of DM Julka, in final order No.A-1152-1166/WZB/AHD/2010. The decision of the Tribunal in the case of MI Khan (supra) Rajiv Kumar Agarwal (supra) are considered to have a binding effect and we do not find any reason to deviate from a such a view . In the facts and circumstances of these cases we have to hold that the officers were not in collusion or connivance with the exporter for over valuation of the goods sought to be exported.
7. In view of the foregoing, we find that the impugned order imposing penalties on these officers under the provisions of Section 114 of the Customs Act, 1962 is unwarranted and unsustainable. The appeals filed by the three departmental officers are allowed.
8. Accordingly, in view of the foregoing, the appeals are disposed off as under:
i) The appeals of Ruchika International and its partners are allowed by way of remand to adjudicating authority, who will reconsider the issue after following principles of natural justice; keeping all the issues open;
ii) the appeals of three departmental officers are allowed.
(Pronounced in Court on ) (P.S. Pruthi) Member (Technical) (M.V. Ravindran) Member (Judicial) pj 1 2