Custom, Excise & Service Tax Tribunal
Him Logistics Private Limited vs New Delhi Icd Tkd Export on 6 November, 2018
1
Appeal No. C/51161, 52268 & 52269/2018-DB
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL, NEW DELHI, PRINCIPAL BENCH, COURT NO. II
Date of Hearing: 30.08.2018
Date of Decision: 06.11.2018
Appeal No. C/51161, 52268 & 52269/2018-DB
[Arising out of Order-in-Appeal No. OIO-03/2018 dated 06/02/2018
passed by Commissioner of CUSTOMS (EXPORT)-NEW DELHI (ICD
ITC)]
M/s Him Logistics Private Limited
Shri Kshitiz Sharma
M/s Balaji Overseas Appellants
Vs.
C C-NEW DELHI ICD TKD EXPORT Respondent
Appearance:
Shri Avijit Dikshit (For M/s Him Logistics) & Sh. Akhil Maggu & Sh. Shubhankar Jha & Sh. Vikas Sareen, Advocates (for M/s Balaji Overseas & Sh. Kshitiz Sharma) for the Appellant Shri Sunil Kumar, DR for the Respondent CORAM:
Hon'ble Shri Anil Choudhary, Member (Judicial) Hon'ble Shri Bijay Kumar, Member (Technical) FINAL ORDER Nos. 53248 - 53250/2018 Per Anil Choudhary:
The appellants are in appeal against the impugned order in original passed by the Commissioner of Customs, (Export) ICD TKD, New Delhi dated 15th February, 2018 whereby duty, penalty with confiscation, have been demanded.
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2. The appellant, M/s Balaji Overseas is the importer, Mr. Kshitij Sharma is partner of M/s Balaji Overseas and M/s Him Logistics are the forwarding agents who have liaisoed between the appellant, M/s Balaji Overseas and the CHA - KVS Cargo.
Appellants Duty Demand Penalty
M/s Balaji Overseas Rs. 1,30,00,377/- 5,00,00,000/-
u/s 112/114 AA
M/s Kshitiz Sharma NA 10,00,00,000/-
Partner u/s 112/114 AA
M/s Him Logistics Pvt. NA 12.5 Lakhs
Ltd.
3. The appellant filed the Bill of Entry for the goods as in following table:
(The table numbers are referred as per the impugned order) Table 2: Details of Goods as per Declaration filed vide B/E No. 3866704 dated 11.01.2016 Container No. Description Name of Total (A4 Plain Copy Paper Cartons Packet Weight C&F 80 GSM (Kgs) White) (US$) GESU4740611 One Pac=500 2700 13500 27000 21,870 sheets One Carton (5 Pac) 10 Kgs MANU5758717 One Pac=500 2700 13500 27000 21,870 sheets 3 | C/51161, 52268 & 52269/2018-DB One Cartoon (5 Pac) 10 Kgs Total 5400 27000 54000 43,740
4. As per the Show Cause Notice it has been alleged that the appellant Balaji Overseas have indulged in evasion of custom duty by resorting to mis declaration of the goods under import.
5. As per the show cause notice it has been alleged that the appellant Balaji Overseas have indulged in evasion of custom duty by resorting to mis declaration of the goods under import.
6. Upon inspection of the aforementioned containers by DRI, during examination, a short quantity of declared goods was found, and a large quantity of undeclared/misdeclared goods being food supplements, was found as follows:-
Declared Goods Found in Containers by DRI during examination on 13.01.2016 Container No. Description No. of Packets Total Cartons Number per Catron of Packets GESU4740611 Multi office 521 5 2605 stress free paper 80 GSM A4 MANU5758717 516 5 2580 (500 sheets) Total 1037 5185
4 | C/51161, 52268 & 52269/2018-DB Undeclared Goods found in container by DRI during Examination on 13.01.2016 S.No. Description Cartons Pcs/Cartons Total (Pcs) Container No. GESU4740611
1. On Gold Standard 250 4 1000 100% Whey Protein Isolates Powder (Net Wt lbs/2.27 Kgs)
2. N O Explode Pre 200 6 1200 Work Out ignitor Dietary Supplement (Net Wt 1.047 lbs/667 gms) 3 Ultra Premium 25 4 100 Protien Matrix Syntha 6 protein Powder (Net Wt lbs/2.27 Kgs) 4. Isopure Zero Carb 125 4 500 protein Powder (Net Wt 7.5 lbs/3.4 Kgs) 5. Ultra Premium 224 4 896 Protein Matrix Syntha 6 Protein (Net Wt 5 lbs/2.27 kgs) 6 Ultimate Nutrition 251 4 1004 Pro star 100% Whey Protein (Net Wt 5.28 lbs/2.39 kgs) 7 Isopure Zero Carb 14 6 84 5 | C/51161, 52268 & 52269/2018-DB Protein Powder (Net Wt 3 lbs/1.36 Kgs) 8 Isopure Zero Carb 11 6 66 Protein Powder (Net Wt 3 lbs/1.36 Kgs) 9 Universal 37 12 444 Glutamine Dietary Supplement (Net Wt 300 gms) 10 Muscle Tech 250 4 1000 (Zipper Premium Bag) Complete Protein Dietary supplement (Net wt 4 lbs/1.81 kgs) CONTAINER No. MANU 5758717 1 Animal PUMP 49 12 588 Dietary Supplement 30 Packs 2 Animal PAK 51 12 612 Dietary Supplement 44 Packs 3 ON Essential 93 6 558 Amino Energy Dietary Supplement (Net Wt 95 oz/270 gms) 4 Animal cuts Dietary 30 12 360 Supplement 43 packs 5 Muscle Tech 89 6 534 Platinum 100% Creatine Powder (Net Wt 0.88 6 | C/51161, 52268 & 52269/2018-DB lbs/400 gms) 6 ScivationXtend 50 12 600 BCAAS Dietary Supplement (Net Wt 3.9 lbs/1.80 Kgs) 7 Muscle Tech Nitro 200 4 800 Tech Dietary Supplement (Net Wt 3.9 lbs/1.80 kgs) 8 MHP Xpel Dietary 27 6 162 Supplement (80 Capsules) 9 MHP Glutamine-SR 26 6 156 12 Hour Dietary Supplement (Net Wt 10.6 Oz/300 gms) 10 Muscle Tech 46 6 276 Platinum 100% Glutamine Dietary Supplement (Net Wt 10.65 Oz/302 gms) 11 MHP BCAA 10 X 44 12 528 Dietary Supplement (Net Wt 10.6 Oz/300 gms) 12 BSN Amino X 256 6 1536 Dietary Supplement (Net Wt 15.3 Oz/435 gms) 13 BSN Hyper FX 100 6 600 Dietary Supplement (Net Wt 9.84 Oz/279 gms) 7 | C/51161, 52268 & 52269/2018-DB 14 MHP Xpel Dietary 73 6 438 Supplement (80 Capsules) 15 ISO Sensation 299 2 598 Protein Supplement (Net Wt 5 lbs/ 2.27 Kgs) 16 Twinlab KAOS 20 12 240 Fuel Pre Workout Dietary Supplement 9 Net Wt 14.3 Ozs/405 kgs) 17 Universal 13 12 156 Glutamine Dietary Supplement (300 gms) 18 Scivation Xtend 12 12 144 BCAAS Dietary Supplement (net Wt 41.4 Oz/1.174 kgs) 19 Isopure Low Carb 109 6 654 Protein Powder (Net Wt 3 lbs/1.361 Kgs) 20 Labrada Muscle 110 2 220 Mass Gainer (Net wt 192 Oz/12 lbs/5.443 kgs) Containing Beef Proteins, as follows 21 Muscle Meds Ultra 13 13 156 Concentrated Carnivore Beef Aminos 100% Beef Protein (300 tablets) 22 Muscle Meds 250 4 1000 Bioengineered Beef Protein Isolate Carnivor (Net Wt 4 8 | C/51161, 52268 & 52269/2018-DB lbs/1.808 kgs) 23 Muscle Meds Ultra 87 12 1044 Concentrated Carnivore Beef Aminous 100% Pure Beef Protein (300 tablets) 24 Muscle Meds Mass 200 2 400 Anabolic Beef Protein Garnier (Net Wt. 10.19 lbs/4.625 kgs)
7. It is further alleged that the goods under import were either misdeclared in terms of value description and quantity or not declared at all by the importer. Accordingly, the goods were seized by the officers under reasonable belief that the same are liable to confiscation under the provisions of the Customs Act 1962. Statements of Mr. Kshitij Sharma, Partner of M/s Balaji Overseas was recorded on 13th January, 2016 wherein he allegedly admitted the mis-declaration regarding import of goods/food supplements.
8. Another statement of Mr. Kshitij Sharma was recorded on 14th January, 2016 wherein he stated that the goods covered under the Bill of Entry No. 3866704 was the first consignment imported by M/s Balaji Overseas. That the order for supply of food supplements was placed telephonically, on Mr. Mukul @ Mike, who was working with Sea Efforts Ltd., China. Further, he approached the CHA- M/s Him Logistics Pvt. Ltd., New Delhi and submitted KYC and other documents like invoice, etc., for customs clearance. He further stated 9 | C/51161, 52268 & 52269/2018-DB that he was aware that for import of food supplements, the same requires NOC from FSSAI before clearance. Mr. Sharma was shown by the officers, the print out of similar food supplements available on various internet sites wherein the retail prices of the respective items offered in India was mentioned. Based on such data, he was shown a calculation chart of the value and duty of the food supplements imported by him, as listed in the tables herein above. That the value and duty was calculated on the basis of the data from the internet and the duty on these items was worked out at Rs. 1,51,62,942/-. Mr. Kshitij signed on calculation sheet, as having seen the same. He further stated that although he had given the documents for clearance to M/s Him Logistics Pvt. Ltd., he did not know how the Bill of entry was filed on his behalf by another CHA-KVS Cargo, New Delhi. Mr. Sharma was further shown a chart showing details of previous import of food supplements during the year 2013 & 2014 by M/s Kshitij International.
9. As it appeared to the officers that the appellant Kshitij Sharma was involved in smuggling of food supplements, he was placed under arrest on 15.1.2016 under Section 104 of the Customs Act and was later on granted bail by the CMM, New Delhi vide order dated 15th March, 2015.
10. The statement of Mr. Sameer Jha F-card holder & proprietor of CHA - M/s KVS Cargo was recorded, who inter alia stated- The KYC documents for the said consignment were handed over to them by Him Logistics Pvt. Ltd. They undertake customs clearance work in respect 10 | C/51161, 52268 & 52269/2018-DB of the clients recommended by M/s Him Logistics Pvt. Ltd. The statement of Director of M/s Him Logistics Pvt. Ltd, Mr. Ashok Sharma was also recorded, wherein he stated that M/s Balaji Overseas, through its partner Mr. Kshitij Sharma, engaged them for clearance of consignment in question. And as their license was under suspension they requested M/s KVS Cargo-CHA. Further the duty for the said consignment as per the Bill of entry, was paid through them. Statement of Mr. Narender Kumar Sharma, partner of M/s Balaji Overseas, was recorded, who inter alia stated that the work of the partnership firm is looked after by his son, Mr. Kshitij Sharma, as he does not attend to the work due to ill health. In the search at the premises of the M/s Balaji Overseas on 11th March, 2016, nothing incriminating was found. The appellant, M/s Balaji Overseas, also filed copy of correspondence received from Sea Efforts Ltd., the shipper dated 9th March, 2016 and 6th March, 2016 to the effect that due to oversight, unintentionally the goods meant for some other clients got mixed, resulting in mistake in shipment. Sea Efforts Ltd. also accordingly requested the appellant to apply for re-export for sending the goods back to them. However, the appellant applied for provisional release of the seized goods vide letter dated 11th April, 2016. The provisional release was allowed vide communication dated 23rd August, 2016, by the Department on the following terms.
Payment of Customs duty of Rs. 6,60,675/- as declared in the Bill of Entry No. 3866704 dated 13.01.2016 11 | C/51161, 52268 & 52269/2018-DB Submission of Bond of Rs 2,34,81,523/- equivalent to re- determined value of seized goods i.e. food supplements not containing beef proteins and A4 plain copy paper; Furnishing of Bank Guarantee of Rs. 40,87,525/- equivalent to 30% of differential Customs duty of food supplements not containing beef proteins and A4 plain copy paper; Furnishing an undertaking that the importer will not dispute the identity of the seized good;
11. It appeared to Revenue that the value of the undeclared imported goods found concealed with the declared goods, under Section 14 is not available, as there is no declared transaction value. Hence in terms of Section 14 (2), value shall be determined as per the Customs Valuation (Determination of Price of Import Goods) Rules, 2007, hereinafter called 'the Valuation Rules'. It appeared to Revenue that under Rule 3 of the Valuation Rules transaction value of identical goods or similar goods can be adopted. As the data for value of identical/similar food supplements is available in Customs NIDB of Directorate General of Valuation, the same will be considered. Further in terms of Notification Number 49/2008-CE(NT) issued under Section 4A of the Central Excise Act, food supplements are classifiable under tariff item 21069099, are subject to assessment on the basis of 'retail sales price' (RSP) for purpose of levy of 'Additional customs duty. This Notification prescribes for an abatement of 35 per cent from the RSP for determination of the value for levy of CVD. The value of food supplements as available on the internet, where the country of origin was US, imported at various ports in India, was taken and accordingly 12 | C/51161, 52268 & 52269/2018-DB the food supplements not containing beef, as per table herein above was valued at Rs. 2,29,03,044/- and the duty payable was determined at Rs. 1,28,73,481/-, as follows:
Table 6B: Duty on Food Supplements Not Containing Beef S. Descrip Quanti Unit RSP Assessa BC CV Ed HS Total tion ty price ble D D u E Total No Value Ces Ces AC Value s s D I ii Iii iv v Vi=iii*i Vii= Vii= Xi X=0 Xi= Xii=vii v o.3* iii*v =0. .01* 0.04 +vii+i v *0. 02* (vii *(vi x+x+xi 65*. (vii +vii i+vi 125 +vi i) ii+i
ii) x+x )) 1 ON 1000 1036 304 104720 314 247 112 561 231 60155 Gold .85 5 9 166 406. 31. 5.72 36.7 6.2 Standar 25 45 8 d 100%
12. It further appeared that the value of food supplements containing beef cannot be determined under Rule 4 or 5 of the valuation Rules as import of beef in any form and import of products containing beef in any form is prohibited. In absence of identical or similar goods, the value was proposed to be determined in terms of Rule 7 (deductive value) taking into account the maximum retail price offered by e-
retailer M/s Amazon, for similar food supplements, and after allowing 13 | C/51161, 52268 & 52269/2018-DB deduction towards transport cost, insurance cost, customs duty, reasonable profits margins, etc. Taking the MRP (per unit price) from the internet, valuation was done, giving rebate of 35% on MRP, working the assessable value as follows- Assessable Value of Food Supplements Containing In Rupees Beef Total S.No. Description Quantity Total Assessable MRP MRP Value 1 Muscle Meds 156 206856 79143 Ultra 1326 Concentrated Carnivore Beef Aminos 100% Beef Protein (300 tablets) 2 Muscle Meds 1000 3558000 1361291 Bioengineered 3558 Beef Protein Isolate Carnivor (Net Wt 4 lbs/1.808 kgs) 3 Muscle Meds 1044 1384344 529650 Ultra 1326 Concentrated Carnivore Beef Aminos 100% pure Beef Protein (300 tablets) 4 Muscle Meds 400 400 160000 61216 Mass Anabolic Beef Protein Gainer (Net Wt 10.19 lbs/ 4.625 kgs) Total 5309200 2031300 14 | C/51161, 52268 & 52269/2018-DB The A4 size paper was valued on pro-rata basis, at the declared value. The total value of goods was thus Rs. 2,55,12,823/- as follows;- Value of Consignment imported in container No. GESU 4740611 & MANU 5758717 S No. Details Value in Rs 1 Food Supplements not containing Beef 2,29,02,860 2 Food Supplements containing Beef 20,31,300 Proteins 3 A4 Plain Copy Paper 5,78,663 4 Total 2,55,12,823
13. It is further alleged by the Revenue that the goods under import are liable for confiscation under Sections 111 (l) (m) and (n) the of Customs Act. Further against total duty payable Rs.1,41,58,860/- & Rs.1,26,896/-, appellant appeared to have paid Rs.6,60,790/-. Thus there appeared attempted evasion of duty to the tune of Rs.1,36,27,966/-. Further, the appellant also was liable to penalty under Section 112 and 114 AA of the Act. Accordingly, the appellant required to show cause why not the food supplements being (not containing beef) valued at Rs.2,49, 34,160/- and further Rs.20,31,300/- for food supplements containing beef, in terms of Section 14 of the Customs Act read with Rule 3, 4, 5 and 7 of the Customs Valuation Rules. Further, why goods be not confiscated, particularly the food supplements containing beef not confiscated absolutely. Further, A-4 plain copy paper having a value of Rs.5,78,663/- be not confiscated.
14. The show cause notice was adjudicated contest and the proposals confirmed. The food supplements not containing beef and the A4 paper 15 | C/51161, 52268 & 52269/2018-DB was held liable for confiscation under Section 111 (l) and (m). Further, the food supplement containing beef were held to be liable for absolute confiscation under Section 111(n) of the Customs act. As the food supplements and paper were released provisionally observed that as the goods are not produced for confiscation, under Section 125, these goods are not available for confiscation. though they are liable for confiscation. The bank guarantee furnished was ordered to be appropriated towards redemption fine that could have been imposed on these goods upon confiscation. The duty determined recoverable from the appellants, M/s Balaji Oversees and further appropriation of the amount already paid for Rs.6,60,790/- was ordered. A penalty of Rs.10 crore was imposed on the appellant, M/s Balaji Oversees under Section 112 and 114 AA of the Act and similarly penalty of Rs.5 crore was imposed on Mr Kshitiz Sharma. Further, penalty of Rs.12,50,000 was imposed on M/s. Him Logistics under Section 112 of the Customs Act.
15. Being aggrieved, the appellants are in appeal before this Tribunal the learned counsel for the appellant states that the allegations made against the appellant - importers are completely wrong without any basis. The appellant had mainly ordered for A-4 copier paper and never ordered for food supplement. It is only on account of the mistake on the part of the packing staff of the exporter/shipper that the goods meant for some other exporter in some other country, got mixed up with the goods of the appellant in the process of dispatch. This fact is supported by the admission in the letter of the foreign supplier wherein he had sought an apology as well as offer to take back the goods. This 16 | C/51161, 52268 & 52269/2018-DB fact was also stated before the court of the learned CMM Patiala House, New Delhi. There is no case of misdeclaration on the part of the appellant, there being a bona fide mistake. As such confiscation of goods and imposition of penalty is not warranted. The learned counsel further states that the so-called admission of Mr. Khittiz Sharma before the Customs officers was retracted before the learned CMM, wherein it has been recorded in the bail order dated 03.03.2016 that the partner Mr Khittiz Sharma was detained under unlawful custody and the statement was forcibly taken by the DRI officials. Further prayer was made to allow the re-export of the goods, however, the Customs Department did not respond.
16. As the appellant importers had suffered huge loss due to mix-up of the goods for error on the part of the exporter hence in order to recover the loss the appellant chose to get the goods under import released on provisional basis without prejudice to its right of contention that the goods were never in the knowledge of the appellant, being part of the consignment. That no adverse inference is drawable from the facts.
17. It is further submitted that appellant did not make any wrong declaration in the bill of entry as they were not aware about the wrong shipment from the exporter. It was only after the customs authority checked the shipment upon arrival they came to know about the goods which were not ordered by appellant/ importer. This is also evident that the appellant Sh. Khittiz Sharma was personally present on being called 17 | C/51161, 52268 & 52269/2018-DB by the DRI for examination of the goods on 13 January 2016. Had there been any malafide intention the appellant he would not have presented itself at the time of examination of the goods.
18. The impugned order is also bad on the ground that the order of confiscation is based on the retracted statement of Sh. Khittiz Sharma. The fact of retraction is evident from the order sheet dated 13 January 2012 from the court of the CMM, Patiala House and is further mentioned in the bail order dated 03.05.2016. It is established principle of law that a statement retracted cannot be considered as a confessional statement and cannot be relied upon for drawing adverse inference.
19. That the goods under import not containing beef have been valued by the respondents on the basis of NIDB. The learned counsel states that revenue have valued as per rule 3 and 4 of the Valuation Rules for the reason that NIDB data taken by the Department for similar/identical goods being imported in various ports throughout the country, contains food supplements which are imported from USA. Thus, these are not of Chinese origin as in the case of the appellant. That the goods manufactured and coming from China, are not identical or similar to goods from USA and hence prices are not comparable. Therefore, the value of the goods can only be computed under Rule 7 of the Valuation Rules, that is, the deductive value method which provide for - subject to the provisions of Rule 3 of the Rules, the goods being valued are identical or similar imported goods, are sold in India, in the condition imported at or about the time at which the declaration for 18 | C/51161, 52268 & 52269/2018-DB determination of value is presented, the value of imported goods shall be based on the unit price at which the imported goods or identical or similar goods are sold in the greatest aggregate quantity to persons who are not related to the sellers in India, subject to the following deductions: -
(1) either the commission usually paid or agreed to be paid or the addition is usually made for profits and general expenses in connection with sales in India of imported goods of the same class or kind (2) the usual cost of transport and insurance and associated costs incurred within India (3) customs duties and other taxes payable in India by reason of importation or sale of the goods.
(4) if neither the imported goods nor the identical or similar goods are sold at or about the same time of importation of the goods being valued, the value of imported goods shall subject to the provisions of sub-rule (1)(b) based on which the unit price at which the imported goods or identical or similar goods are sold in India at the earliest date after importation before the expiry of 90 days after such importation. (5) if neither the imported goods nor identical goods nor similar imported goods are sold in India in the condition imported, than the value shall be based on the unit price at which the imported goods after further processing are sold in the greatest aggregate quantity to persons who are not related to the seller in India.
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20. The value of goods as per the Department is valued at Rs.2,29,03,044/-, as per data taken from the Internet, which is an admitted fact by the Department, the value of goods cannot be taken under Rule 3 of Rule 4 of the Rules. Hence the goods are required valued under Rule 7 after allowing necessary deductions as stipulated. Thus value shall be as follows. Selling price in India, as reduced by -
i) 30% of custom duty
ii) percentage of commission 5%
iii) percentage of transportation 5%
thus at the gross value determined by the Department at Rs.2,29,03,044/-, will be as reduced by 40%, the value is worked out at Rs.1,37,41,826/-.
Further on the above value, their duty payable will be Rs.74,04,305/- (approx.).
21. The ld. Counsel for the appellant further submits that the value of the goods is taken as per data which is showing the value of USA origin goods. Since, the goods imported are of Chinese origin, they will be having some lesser value. Still the ld. Counsel for the appellant is calculating rebate @ 40% on the value of Rs.2,29,03,044/- as per Rule 7 of Customs Valuation Rules, 2007. The value calculated is as follows:-
"THE VALUE IS COMPUTED AS FOLLOWS:
The value of the goods as per the department is Rs.2,29,03,044/- which is taken from the internet, which is a fact admitted by the department in the subject show cause notice and as evident from the judgments cited above the value of the goods cannot be taken under Rule 3 and Rule 4 of the Customs Valuation Rules, 2007 20 | C/51161, 52268 & 52269/2018-DB and the necessary deductions as per Rule 7 of the Customs Valuation Rules, 2007 will be as follows:
i. 30% of the Customs Duty
ii. Percentage of commission: 5%
iii. Percentage of transportation: 5% Computation Table:
Sl. Value of Goods Deductions (as Exact value No. (as per mentioned above) as per Rule 7 department) 1 2,29,03,044/- 40% 1,37,41,826/-
(including customs
duty, commission
charges and
transportation charges)
Therefore, as per the above computation after deducting 40% from the internet value of the goods as taken by the department, the exact value as per Rule 7 of the Customs Valuation Rules, 2007 will be Rs.1,37,41,826/-, the duty payable on this amount will be Rs.74,04,305/- (approx.)"
22. It is further urged by the learned counsel that the learned Commissioner has erred in imposing separate penalties both on the partnership firm as well as on the partner under Section 112 (a) of the Customs Act. Reliance was placed on the ruling of Hon'ble High Court in the case of Praveen and Shah 2014 (305) ELT 480 and also in the case of Commissioner vs. Ruby Impex- 2010 (260) ELT 51.
23. It is further urged that section 112 (a) of the Customs Act provides for imposition of penalty for improper importation of goods - purely in relation to any goods on the person who abets to do any act which act or omission would render such goods liable for confiscation under Section 111 or abets the doing or omission of such an act. Under the facts and circumstances of the case, there is no deliberate act of 21 | C/51161, 52268 & 52269/2018-DB omission or commission on the part of the appellant's, penalty imposed is fit to be set-aside
24. Further, Section 114 AA provides - if a person knowingly or intentionally makes, sign or uses, or causes to be made signed or used, any declaration, statement or documents which is false or incorrect in any material particular, in the transaction of any business for the purposes of the Customs act, shall be liable to a penalty not exceeding 5 times the value of the goods.
25. Thus, no penalty under Section 114AA of the Act is imposable under the facts of the present case. It is evident that the appellant themselves were not aware of the fact, that the supplements are present in the import consignment and the same was subsequently clarified by the supplier/exporter. It is further urged that the penalty imposed on the appellant was mechanically, without application of mind.
26. The learned counsel further urges that the order of appropriation of bank guarantee furnished, for the purpose of provisional release, is bad as no redemption fine was imposed. Thus order to recover redemption fine from the bank guarantee is misplaced and fit to be set- aside.
27. Accordingly the learned counsel prays for allowing the appeal with consequential benefits.
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28. The learned counsel for the M/s Him Logistics Private Limited, appellant urges that the penalty of Rs 12.5 lakhs imposed upon them is bad and fit to be set-aside. It has been alleged that, Him logistics have actively and knowingly aided and abetted M/s Balaji Oversees and its partner, and thus they were hand in glove with them in the attempt to smuggle undeclared as well as prohibited goods. M/s Him logistics paid the customs duty for the said consignment on behalf of the importer - M/s Balaji oversees. They also handed over the customs KYC documents to M/s KVS Cargo - custom broker, in the aforementioned Bill of entry. That M/s KVS cargo filed the Bill of entry. The fact of handing over of KYC documents and other documents have been stated by the proprietor of M/s KVS cargo, as the said documents were delivered to them by Him logistics. Thus, the appellants have been held liable to penalty under section 112 of the Act.
29. The learned counsel further urges that appellants, M/s Him Logistics is neither the CHA nor the importer for the purpose of the present case. Neither M/s Him logistics have been held to be a co- importer along with M/s Balaji Oversees. Further it is by way of procedural practice that the CHA - customs broker deposits the customs duties on behalf of the importer on receipt of such amount from the importer, so as to facilitate clearance. Only for the act of payment of Customs duty and handing over import documents to M/s KVS cargo to file the Bill of entry, no case of violation of any of the provisions of the Customs act is made, nor under the customs broker regulations. Further in none of the statements recorded from several persons anybody else 23 | C/51161, 52268 & 52269/2018-DB alleged the complicity of Him logistics with M/s Balaji Oversees. As the customs broker license of Him logistics was not under operation, they requested Mr. Jha of KVS cargo to facilitate the clearance work, which is a normal practice not attracting any adverse inference. That no inference of abetement is attracted by merely facilitating introduction between M/s Balaji Oversees and M/s KVS Cargo. It is further urged that the basic condition precedents for imposition of penalty under Section 112 (b) of the Act are not available. The said Section provides - any person who acquired 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 under Section 111 shall be liable for penalty. Admittedly in the facts of the present case, appellant have not done any of the work or activity of omission or commission neither the appellant has dealt with the goods in any manner. Neither there is allegation that the appellant had knowledge of alleged misdeclaration by M/s Balaji Oversees and its partnership firm. Accordingly, the learned counsel prays for setting aside the penalty on M/s Him Logistics.
30. Opposing the appeals the learned AR appeared for the revenue, states that the averment of the appellant that they did not order for the food supplements and the same was on account of a mistake on the part of the packing staff of the supplier/exporter, is only an afterthought and not acceptable. Had there been a genuine mistake, the supplier/exporter would have informed the appellant importer well in advance as transit 24 | C/51161, 52268 & 52269/2018-DB time from China to India is minimum of 20 days. The bill of lading is dated 23 December 2015 and the container was examined by the Customs on 13th January 2016. Further, such plea of erroneous supply was neither made at the time of examination of the goods nor in the statement of Shri Kshitiz Sharma recorded on 13th and 14 January 2016. This plea was taken for the 1st time after about 2 months, based on the letters of the exporter dated 6th March 2016 and 9 March 2016. If the mistake was genuine, the supplier would have come to know about the blunder much earlier and later or sooner after the shipping. Further, the statement of the foreign supplier is not reliable as he may be hand in glove with the appellants. Further it is established law that in case of breach of a civil obligation, attracting penalty, existence of element of mens rea is not required for imposition of punishment/penalty.
31. So far the contention of the appellant that the statement of Kshitiz Sharma has got no evidentiary value in view of the retraction made, it is stated that such ground was not raised before the adjudicating authority. Mr Kshitiz Sharma did not complain of any ill treatment or coercion when he was produced before the CMM. Further Mr. Sharma did not inform about the retraction of his statement to the authority before whom he recorded the statement. Subsequent retraction cannot take away the effect of the statement recorded under section 108 of the Act, if the retraction of confession is not addressed to the officer before whom the statement was given. It was only during the bail proceedings he stated that the statements were obtained under duress and threat. Reliance is placed on the ruling of High Court in the case 25 | C/51161, 52268 & 52269/2018-DB of a CTO, Anti-evasion -I, Alwar vs Khandelwal Foods Products - 2018 (8) GSTL 112 (Raj.).
32. Further opposing the appeal of Him Logistics, the ld. AR for the revenue states that admittedly, M/s Him Logistics is not the custom broker in the case but they have unauthorizedly served the role of customs broker for vested interest. M/s Him logistics have in fact played the role of an agent for the importer - principal in this case. Not only they paid the duty levied on the goods for clearance of goods, they also paid the service charges to customs broker - M/s KVS Cargo. The appellant also raised the question about seizure of the imported goods which shows that they had vested interest in clearance of the misdeclared goods.
33. Having considered the rival contentions, we find, admittedly Mr Kshitiz Sharma had been importing food supplements in the past. This fact is evident from several bills of entry filed in the name of Kshitiz International. So far valuation as adopted by the revenue is concerned, we find that the undeclared/mis-declared goods, being of Chinese origin and manufacture, are not similar or identical to the goods manufactured in USA and imported from USA. Thus, we hold that the valuation done by revenue under rule 3, 4 and 5 is erroneous and the same is set aside. We further hold that the valuation of the goods in question being food supplements, not containing beef has to be done under rule 7 of the Valuation Rules (deductive method).
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34. The absolute confiscation of food supplements containing beef is upheld. The confiscation of food supplements not containing beef is also upheld but are redeemable on payment of duty (already released provisionally). However confiscation of A4 copy paper is set aside.
35. We further hold that as no redemption fine has been imposed by the ld Commissioner, the order of appropriation of the bank guarantee furnished towards redemption fine is bad and accordingly the same is set aside. We further direct that the said bank guarantee already encashed, shall be adjustable with the amount of customs duty payable, balance if any, with penalty.
36. In the facts and circumstances, we hold that the appellant M/s Balaji Overseas is liable to penalty under Section 112(a) read with Section 114AA of the Customs Act. However, such penalty is restricted to 100% of the duty sought to be evaded, as worked in terms of para 21 of this order. So for the penalty on the partner Mr Kshitiz Sharma is concerned, the same is set aside in view of the penalty confirmed on the firm. So far penalty on M/s Him Logistics under Section 112 of the Act is concerned, we hold that they have not done any act of omission or commission attracting the provisions of section 112 of the Customs Act. Accordingly the penalty on them is set aside.
37. Thus the appeal of M/s Balaji Oversees is allowed in part, appeal of Mr. Kshitiz Sharma and M/s Him Logistics are allowed. The appellants shall be entitled to consequential relief in accordance with 27 | C/51161, 52268 & 52269/2018-DB law. The appellant shall also pay the balance amount of duty and penalty, if any.
38. Thus, the appeals are allowed, in aforementioned terms.
(Pronounced on 06.11.2018) (Anil Choudhary) Member (Judicial) (Bijay Kumar) Member (Technical) Ckp