Customs, Excise and Gold Tribunal - Tamil Nadu
M/S. Steel Tubes Of India, M/S. Si ... vs Cc, Trichy on 15 March, 2001
Equivalent citations: 2002(80)ECC401, 2001ECR123(TRI.-CHENNAI)
ORDER
Shri S. L. Peeran (Oral)
1. All these three appeals arise from a common Order-in-Original No.7/96 dated 28.6.96 by which the Commissioner of Customs after due consideration of the allegations made in the show cause notice dated 6.2.95 and the replies filed by all the three parties, upheld the charge of mis-declaration in the shipping bill of galvanised pipes and tubes and attempting to export improperly under the cover of shipping Bill No.2673/21.1.95 and held that the goods are liable for confiscation under Section 113 (d) and 113 (i) of the Customs Act read with Section 50 (2) of the Customs Act & under Section 18 (1) A of Foreign Exchange Regulation Act and Rule 14 (2) of Foreign Trade (Regulation) Rules 93 issues under Section 19 of the Foreign Trade (Development and Regulation Act) 92. As the goods were not physically available for confiscation, having been released provisionally for export on the strength of the bond executed by the exporters on bank guarantee of Rs.2,23,820/-, therefore he has only proceeded to impose penalty of Rs.7,00,000/- on Siddhartha Tubes Ltd., Rs.5,00,000/- on Steel Tubes of India Ltd. and Rs.1,00,000/- on Hari & Co.
2. The allegation against Siddhartha Tubes Ltd. is that they are merchant exporters and Steel Tubes of India Ltd. is manufacturer while Hari & Co. is CHA agent. Siddhartha Tubes Ltd. and Steel Tubes are held to be liable for penalty under Section 114 (i) of the Customs Act and so also Hari & Co. under the same provision. He has also ordered for taking action under CHA Licencing Regulation 1984 against Hari & Co.
3. The argument was advanced by Shri C. Chidambaram appearing for Siddhartha Tubes Ltd. on 14.3.2001, by Shri A.K. Jayaraj, Ld. Adv. For Hari & Co. and Shri Bhaskar appeared for Steel Tubes India Ltd. and made their arguments today.
4. Ld. D.R. Shri Arumugam pointed out that the issue of imposing of penalty for mis-declaration of shipping bill is a settled issue in terms of the Larger Bench judgment of the Tribunal rendered in the case of Om Prakash Bhatia Vs. CC, Delhi [2001 (127) ELT 81]. He further pointed out that the this very bench on a similar allegation of mis-declaration of AR 12s and shipping bills upheld the charge of imposition of penalty and the Revenue appeals were allowed and penalty was enhanced as in the case of Ratan Exports Industries ltd. Vs. CC Chennai [2000 (123) ELT 808]. Ld. DR also made submissions that this Ratan Exports judgment has since been confirmed by the Apex Court as can be noticed from 2001 (127) ELT A448/149.
5. Ld. Consultant and counsels took time to study these judgments and respond to the same and hence the matter was taken up today f or consideration. On behalf of the Steel Tubes India Ltd. Shri T.K. Bhaskar along with Mr. John Advocate advanced the arguments. Shri Bhaskar Ld. Advocate submitted that Steel Tubes of India Ltd. although had obtained the licence, however, they had granted the work of manufacture to Siddhartha Tubes Ltd. and they had no direct nexus to the offence and charge and charge as the entire consignment was packed for export and declaration filed by Siddhartha Tubes. He also pointed out that it is Hari & Co. who are the CHA agent who had handled the matter. He initially took the stand that in the circumstances and the pleas raised by Steel Tubes India Ltd., there was no scope for imposing penalty. However, on being shown the judgments already noted above, he did not press for that argument but confined to the argument for even in the case where penalty is imposable, it is not mandatory that in every case penalty is required to be imposed. It is his submission that the gravity of offence is a criteria although mens rea may not be one of the conditions. It is his submission that the Steel Tubes India Ltd. was not to gain anything by mis-declaring the quantum of export. He submits that there was no allegation in so far as the quality of the goods were concerned. The allegation was very minor in as much as the declaration was that the goods were weighing 224 MT. while on actual weighment, it turned out to be 163.250 MT. He submits that the appellants had explained as to how this discrepancy had arisen. It was their contention that in the AR 4 they had mentioned the number of bundles and not the weight and they had taken an approximate weight of each of the bundle to arrive at the figure of 224 MT. However, such mathematical errors do arise and there was no intention to evade any law or to make any profit in the mis-declaration of the quantum of the goods. It is his contention that the appellants Steel Tubes India Ltd. had given the work of galvanisation to Siddhartha Tubes. However, they did carry out a portion of the manufacturing activity. He submits that after galvanization, the goods were sent directly from Siddhartha Tubes. Therefore, there was no role played by Steel Tubes Ltd. or any connivance in taking advantage of the provisions of DEEC scheme. He points out that even as per the show cause notice, the discrepancy was to an extent of 61.65 MT. and the duty free benefit worked out in the show cause notice was only Rs.3,91,553/-. After consulting the party who was present in the Court, he submitted that already they have pre deposited Rs.1,00,000/- and in view of the party having suffered losses, leniency be shown and penalty be restricted to that amount.
6. On behalf of Siddhartha Tubes Ltd., Ld. Consultant Shri Chidambaram had already advanced his arguments yesterday and today he is not present. Therefore, we take his arguments as advanced yesterday before the Court. The argument raised by Ld. Consultant was that they had not declared the weight in the AR 4 and they had only given the d e tails of bundles. They had taken the figures on the basis of the approximate weight of each of the bundle and there was no intention to misdeclare or to evade duty. He further pointed out that the amount of duty free amount that would work out was very negligble i.e. Rs.3.91 lakhs and the penalty of Rs.7,00,000/- imposed is very high and not in keeping with the charge brought out.
7. Ld. Advocate Shri A.K. Jayaraj took us through the show cause notice and pointed out that the show cause notice restricted the charge in para 9 for only suspending the licence of CHA. Even in para 7, the Commissioner had only stated that the CHA in view of his lapse made himself unfit to transact business in the Custom House. He points out that there was no allegation for imposing penalty under Section 114 (i) of the Act and therefore, the Commissioner has proceeded beyond the allegation made in the show cause notice. He points out that the Apex court in the case of GTC Ltd. Vs. CCE [1997 (94) ELT 9] have clearly laid down that the order of adjudication should confine itself to the allegations made in the show cause notice. He further relies on the Tribunal ruling rendered in the case of Brindavan Agro Industries Ltd. [1998 (98) ELT 284] and also Prince Khadi & Woollen Handloom Production Co-operative Industrial Society Vs. CCE [1996 (88) EIT 637/SC]. He submits that penalty imposed on the CHA is not justified and not as per the allegation made in the show cause notice and hence the same is required to be set aside.
8. Shri Arumugam, Ld. DR points out that the charge of misdeclaration has been established and therefore the citations referred to as already noted above fully applies to the facts of the case. In terms of Section 114 of the Act, 5 times penalty can be imposed. He submits that in the present case the penalty has not been imposed to that extent. He further submits in all these type of cases which involves economic offence, the Court should not show any leniency and the penalty imposed should be confirmed in view of the law having been clearly laid down by the Apex Court while confirming the judgment of Ratan Exports Industries Ltd. as cited supra. He points out that in the Ratan Exports, penalty of Rs. 1,00,000/- imposed was enhanced to Rs.10,00,000/- by the Tribunal in the Revenue appeal and the party's appeals were dismissed. He points out that these very arguments were considered by the Tribunal in the Ratan Exports case and the same have been rejected. He further points out that Ratan Exorts' case has taken into consideration several judgments of Delhi High Court and other Tribunal judgments. He seeks for confirmation of the order. On a specific query from the bench as to how penalty can be imposed on Hari & Co., the CHA, as no specific allegation for imposing penalty has been alleged in the show cause notice, Ld. DR reiterated the findings arrived at by the Commissioner.
10. On a careful consideration of the submission, we notice that the merit of the case is not seriously challenged in the matter in view of the law having been crystallised and well laid down by the Larger Bench judgment of the Tribunal in the case of Om Prakash Bhatia Vs. CC (supra) wherein it has been clearly laid down that for over-invoicing or mis-declaration in an export matter, the violation is deemed to have been established for the purpose of imposing penalty. This view had already been affirmed earlier by this very bench in the case of Ratan Export Industries Ltd. This judgment has since been confirmed by the Apex Court. There is no serious dispute with regard to the misdeclaration of 224 MT. of goods and on actual weighment, the weighment turned out to be only 163 MT. Therefore, on merits the appellants do not have any case for consideration. All the three counsels have also not pressed their case on the aspect pertaining to merits.
11. The only question advanced by Ld. counsel Shri Bhaskar is that in the fact and circumstances of the case and the allegation made thereunder, there is no case for imposition of penalty on Steel Tubes Ltd. We have considered this plea. We notice that the DEEC licence was obtained by Steel Tubes Ltd. and the exports were completed by them. They had carried out large extent of manufacturing activity and the merchant manufacturer was only carrying out the last portion of the activity of galvanizing. Therefore, his plea that there is no involvement of Steel Tubes India Ltd. is not in terms of the defence taken or in the form of evidence on record. We have to only consider the plea made that in the facts and circumstances, there was no case for imposing higher penalty for the reason that even as per the show cause notice the duty benefit that would have accrued was only Rs. 3.9 lakhs. Ld. counsel also disputed this fact and stated that his party is now without any business and have suffered serious loss. The parties are due more than Rs 90 lakhs to them and he submits that even this working out of duty benefit has not been established by any evidence. They dept have taken contemporaneous rates without disclosing the current rates adopted for arriving at this value. There is some substance in the argument. Hence, we are of the considered opinion that there is a case made out for reduction of penalty in the matter. Therefore, we, on a detailed consideration, pass the following order in the following terms:-
(a) The charge of mis-declaration is affirmed and confirmed in terms of the impugned order;
(b) The charge that penalty is imposable on Siddhartha Tubes Ltd. and Steel Tubes of India Ltd. is confirmed. However, in the facts and circumstances and the amounts of duty benefit shown that would have accrued only Rs.3,91 lakhs, we think it proper in the interest of justice to reduce the penalty on Siddhartha Tubes Ltd. to Rs.5,00,000/- (Rupees five lakhs only) and on Steel Tubes of India Ltd. to Rs.2,00,000/- (Rupees two lakhs only);
(c) As regards penalty of Rs.1,00,000/- on Hari & Co., we have gone through the show cause notice and notice that the show cause notice was confined only to the allegation as to why the CHA licence should not be suspended as seen from para 9. Even in para 7 of the show cause notice, there is no allegation to proceed to impose penalty. The allegation made in para 7 is also that by their action they have made themselves unfit to transact business in the Custom House. There are separate provisions under the CHA on which the authorities can proceed on this allegation. There is no allegation for penalty. Ld. Counsel relies on the Apex Court judgment of GTC Industries and other citations already noted which would apply to the facts of this case. In that view of the matter, the penalty imposed on Hari & Co. is set aside.
12. In the net result, the impugned order is modified to the extent that penalty on Siddhartha Tubes Ltd. is reduced to Rs.5,00,000/- (Rupees Five lakhs only) and on Steel Tubes of India Ltd. to Rs. 2,00,000/- (Rupees Two lakhs only) and penalty on Hari & Co. is set aside. Ordered accordingly.
(Pronounced & dictated in open Court)