Custom, Excise & Service Tax Tribunal
M/S Sanjeev Woollen Mills & Ors vs Cc, New Delhi on 1 November, 2013
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
DIVISION BENCH
Court No.2
Appeal No. C/250-253/2008-CU
M/s Sanjeev Woollen Mills & Ors..... Appellant
Vs
CC, NEW DELHI Respondent
(Arising out of Order-in-Original No. /MDS/08 dated 11/01/2008 passed by the Commissioner of Customs, New Delhi) Present for the Appellant : Shri L.P. Asthana, Advocate Present for the Respondent: Shri I. Baig with Shri V.P. Batra, AR Reserved on: 03/05/2013 Pronounced on:01/11/2013 Coram: Honble Mr.D.N.Panda, Judicial Member Honble Mr.MANMOHAN SINGH, Technical Member FINAL ORDER NO.58166-58169/2013 PER: D. N. PANDA
1. This appeal is in second round of litigation before Tribunal arising out of denovo adjudication consequent to final order No.967-470/2005-Cus dt. 17.10.2005.
2. The appellant M/s Sanjeev Woollen filed Bill of Entry No. 110713 dt. 19.01.90 for clearance of 96,085 kgs. of goods packed in 315 bales said to contain synthetic waste/soft quality with predominance of Acrylic staple fibre with wide variation in denier and length containing both drawn and un-drawn fibres and clearance was sought without payment of duty seeking benefit under Notification no.117/88 dt. 29.09.89 against import-export pass book No.0002325 dt.29.08.89. The goods were supplied by M/s Hall filed Machinery Brokers, Textile Fitters Agent and Worsted Machinery Consultant, West Yorkshire, England.
3. In terms of the licence and Import Export Pass Book, the appellant was authorized to import goods of description synthetic waste/soft quality with pre-dominance of acrylic staple fibre with wide variation in denier and length, containing both drawn and un-drawn fibres.
4. Directorate of Revenue Intelligence investigated into the above import based on a specific information that the consignment contained prime acrylic staple fibre but not the goods allowed for import. Initial examination of container no. SSXU-232477/0 made on 22.02.90 revealed that all the 24 bales packed in the container were found with labels of manufacturer which showed that the goods were Acrylic Staple Fibre of denier 2.5 and 3 (one bale having only one denier) and of fibre length of 110 mm. The label also indicated the serial number, gross and net weight of the bale giving description of the goods as: ACRYLIC STAPLE FIBRE, COMMERCIAL QUALITY, BGIGHT S.W.M. 3.0 DTEX, V 110 MM BRIGHT, BALE NO.42, GROSS WEIGHT 299.1 Kgs.
5. When the goods on physical examination were found to be misdeclared, the consignments were seized and samples were drawn following due process of law and provisional release of goods was allowed on exclusion of bond and bank guarantee.
6. One set of representative samples drawn from the consignment was sent for testing of M/s Indian Petro Chemical Ltd. (IPCL), Baroda vide D.O. No.DRI-23/5/90-DZU dated 9.03.90 through the Chief Resident manager of IPCL, New Delhi. M/s IPCL were specifically asked to ascertain whether the material was Acrylic Fibre or Synthetic waste/soft quality and also indicate the percentage of acrylic, the denier as well as staple length of the material.
7. M/s Indian Petro Chemicals Ltd., (IPCL), vide their letter dt.22.06.90 submitted the test report for 48 samples indicating as under:-
Sample No.1 Testing of samples (48 nos.) drawn from a consignment said to contain synthetic waste/soft quality with pre-dominance of acrylic staple fibre with wide variation in denier and length containing both drawn and undrawn fibre.
A. Physical tests indicate the following:
1. Physical appearance: No entangled fibre was onserved. Appearance is more like virgin fibre staple Percentage of long fibre/short etc., which is a regular feature in synthetic waste products, is not observed in samples under testing.
2. Denier: Range 2.5 to 4.2 Majority of fibre fall around 3.0.
To get natural effect like wool, deniers of acrylic fibre are usually mixed for blending.
3. Length: Variable cut fibre suitable fro worsted spinning mills.
A verage length around 90-110 mm. Marking on able alos indicates V.110 mm (V stands for variable cut)
4. Strength and Elongation: Results indicate absence of undrawn fibre. Such results normally aply to blend of shrinkable and non-shrinkable acrylic fibre.
B. Chemical tests indicate the following:
i) Samples contain acrylic fibre.
ii) Dye ability of samples are comparable to dye ability of virgin acrylic fibre under normal dyeing conditions. Dyed samples are already submitted to DRI.
C. Commercial judgment/opinion based on above test/inspection of samples.
In view of the above findings, it may be concluded that the characteristics of samples under testing are more like virgin acrylic fibre rather than waste products.
8. In response to summons dated 26.02.90, M/s World Wide Cargo Care Pvt. Ltd. vide their letter No. Ref. WWCC: Delhi: H 145:90 dated 29.03.90, submitted the details received from their Principals C.M.A. as under:-
(i) B/L issued by C.M.As Agent in Barcelona, Spain on the basis of instructions received from booking freight forwarding company, decalred that freight was payable at destination and that cargo description was Acrylic staple fibre commercial quality bright.
(ii) Cargo shipped on M.V. Ville Le Neptune 9514 Ex BCN, Vessels ports of calls after Barcelona were Le Harve/ Rottoerdam/ Felistow/ Antwerp I Marceille/Naples/Jeddah/Mina Qaboos where cargo was discharged. It then connected with relay vessel Villa De Dubai 2110 from Mina Qaboos to Bombay.
(iii) The Spanish freight forwarding company withdrew the containers themselves from empty stock of CMA in Barcelona, presented them to Shippers premises and returned them full to Quay Barcelona in readiness for shipment. No bond was issued, as is the local common practice. Exporters loaded the containers themselves.
(iv) Freight up to Bombay was (as mentioned in point (i) above) initially declared by Spanish forwarder as collect. However, U.K. based shipper chose to pay freight to CMA, U.K. Agents Bradford U.K., M/s Liner Shipping Agencies. It was Liner Shipping, who amended OB/Ls in U.K. to read Freight Prepaid and also the Cargo description to read Synthetic waste/soft quality with pre-dominance of acrylic staple fibre with wide variations in Denier and length, containing both drawn and undrawn Fibres on the basis of UK Shippers instructions. M/s World Wide Cargo further stated that the practice of a shipper arranging export from a country other than that of their business address, was not uncommon. Also, CMA and their agents acted purely on instructions received from Exporters as their agents, with all documents being issued on the basis of instructions received, and as indicated on Bills of lading themselves Description of marks, packages and goods as stated by shipper, shippers load stow and count.
These details wer based on telex dt. 27.02.90 sent by M/s World Wide Cargo Care to M/s CMA and the reply received from M/s CMA on 01.03.90.
9. From the foregoing, it appeared that in case of import of goods in 13 20 containers, vide Bill of Lading No.BCMIOOI758, the B/L was issued by CMAs agent in Barcelona on the basis of instructions received from booking freight forwarding company, declaring that freight was payable at destination and that cargo description was Acrylic staple fibre commercial quality Bright. This cargo shipped from port M.V. Ville-De Naptune 9514 Ex Barcelona, reached Hina Quaboos, where cargo was discharged and the connected with relay vessel ville De-Dubai-2110 from Hina Quaboos to Bombay. The containers were stuffed in shippers premises in Barcelona. It is evident that freight upto Bombay was initially decalred by Spanish Forwarders as collect. However, U.K. based Shipper chose to pay freight to CMA UKs agent in Bredford, UK, M/s Liner Shipping Agencies. It also appeared that it was Liner Shipping who amended the description on the Bill of Lading to read as Synthetic Waste/Soft Quality with pre-dominance of Acrylic staple fibre with wide variation in denier and length containing both drawn and undrawn fibres on the basis of UK Shippers instructions. It is significant to note that the description 0f goods as given initially in the bill of lading i.e. Acrylic Staple Fibre Commercial Quality Bright tallied with the actual markings on the labels found on the bales at the time of examination of the goods under panchanama and also with the findings of the test report.
10. In view of the test report referred to above, from the letter dated 26.02.90 of M/s World Wide Cargo Pvt. Ltd., telex dated 01.03.90 of M/s CMA to M/s World Wide Cargo and telex dated 27.02.90 sent by M/s World Wide Cargo to M/s CMA as well as the mode of packing and specifications given on the manufacturers label, found to be pasted on the bales of material imported vide B/E no. 110713 dt. 19.01.90, it appeared that the goods were acrylic fibre of specific denier, staple length, Bright and commercial quality, against the declared description of synthetic waste/soft quality with pre-dominance of Acrylic staple fibre with wide variation in denier and length, containing both drawn and un drawn fibre. It also appeared that the goods did not merit duty free clearance under notification no.117/88 against Import-Export Licence No.PF/0002325 DT.29.09.89.
11. In course of investigations, various CIF prices of Imported Acrylic fibre and quotation for Acrylic Fibre, showing price in Korea and Taiwan during August to November, 1989 were obtained. The lowest price noticed for acrylic fibre during the relevant period was Y 215 per kg. (Exchange rate Rs.I00 = Y 847.50). Calculated at this price, the CIF value of 96085 kgs came to Rs.24,36,716/- (Rupees twenty four lakhs thirty six thousand seven hundred sixteen only).
12. In view of the foregoing, it appeared that 96085 kgs. Of virgin acrylic fibre, of CIF of Rs. 24,36,716/- was liable to customs duty under chapter Heading 5503.30 amounting to Rs. 53,39,836.59. It also appeared that the goods had been mis-declared in respect of description as well as value with an intention to evade payment of Custom duty amounting to Rs. 53,39,836/-, rendering these goods liable to confiscation under Section 111(m) of the Customs Act, 1962. It further appeared that in the absence of a valid import licence, the goods were also liable to confiscation under section 111(d) read with section 3(2) of the Import and Export Control Act, 1947 read with Section 11 of Customs Act, 1962 and Section 3 of Import Control Order, 1955. It further appeared that the noticees and their partners had knowingly and wilfully mis-declared the description and value of goods which rendered the goods liable to confiscation under Section 111. Accordingly, the noticee and their partners, S/Sh. S.P. Goyal, R.K. Goyal, H.L. Goyal and Sanjeev Goyal appeared to have rendered themselves liable to penalty under Section 112 of Customs Act, 1962. Since the goods in question had already been released provisionally to the noticee and were not available for confiscation, it appeared that the noticee and their partners were liable to pay fine in lieu of confiscation under the provisions of Customs Act, 1692.
13. Considering submissions of appellants, result of chemical laboratory report, result of cross examination materials available on record ld. Adjudicating authority was satisfied that there was deliberate mis-declaration of goods imported and completed readjudication with following consequences:
(i) 96,085 kgs. virgin acrylic fibre mis-declared as synthetic waste/ soft quality and CIF Value thereof mis-declared were confiscated under Section 111(d) read with Section 3 (2) of Import and Export Control Act, 1947 and Clause 3 of the Import Control Order, 1955 and also under Section 111 (m) of the Customs Act, 1962.
(ii) The goods imported having been provisionally released on execution of Bond for payment of duty for an amount of Rs.1 crore and on furnishing a Bank Guarantee of Rs.22,00,000/- fine of Rs.5,00,000/- (Rupees Five Lakhs) was ordered lieu of confiscation. (iii) Customs duty of Rs.53,39,836.59 was confirmed on 96,085 kgs. of acrylic fibre, which was already released to the appellant provisionally at the time of import.
(iv) Penalty of Rs. 15,00,000/- (Rupees Fifteen Lakhs) was imposed on M/s Sanjeev Woollen Mills and penalty of Rs. 1,00,000/- (Rupees One Lakh) was levied each on each the partners of M/s Sanjeev Woollen Mills namely S/Sh. S.P. Goyal, Sanjeev Goyal and R.K. Goyal under section 112(a) of the Customs Act, 1962.
(v) Duty, fine and penalty demanded in terms of adjudication was ordered to be recovered enforcing the Bank Guarantee and the Bond executed by the importer appellant.
14. Ld. Counsel for the appellant submitted that staple fibre is defined by Chapter Note 55 of the HSN Classification; the goods imported were not the virgin acrylic staple fibre but were synthetic waste/ soft quality of the prescribed denier and entitled to be imported duty free under Notification No.117/88. Forty-eight samples were sent for testing and that created fiction as to virgin acrylic staple fibre. Nothing came out in favour of Revenue in cross-examination of CRCL experts and memory deficiency of the expert caused prejudice to the appellant. Merits of the appellant was appreciated by the Tribunal while remanding the matter of the appellant in first round of litigation. Similarly on self same goods imported, appellant was granted relief as reported in 2006 (194) ELT 333 (Trib.- Delhi). In para 7 of the reported decision Tribunal examined HSN Explanatory Note to Heading 55.03 and in para 8 of the order it was appreciated that the evidence on record showed that the goods were waste only but not acrylic staple fibre. Therefore, the consignments involved in the present appeal being of the similar nature there should not be any doubt. It was further argued that when the Notification benefit is not in question and one sample was only tested by IPCL without giving to any doubt on the length of sample no denial of the benefit of exemption free duty can be ordered.
15. The partners of the appellants were not at all instrumental to make any mis-declaration of the goods. Therefore, they should not be penalized. Accordingly neither duty demand nor penalty shall sustain.
16. On the other hand Revenue submits that during investigation it was revealed that the appellant managed the goods to be declared as synthetic waste before the goods reached India. That has been elaborately dealt in the adjudication order and corroborated by the comparison of the labels affixed on the consignments and evidence recorded in the said order. Even the test report revealed that the goods to be virgin for which the appellant cannot claim that to be waste. There was deliberate mis-declaration in view of active involvement of the appellant in such act which was proved from the evidence gathered from the cargo handlers. Ld. Adjudicating authority has not left any scope for doubt bringing entire evidence to record beginning from the bill of lading stage till the bill of entry proving the mis-declaration of description of goods. Labels on the consignment were conclusive evidence corroborated by bill of lading and export documents.
17. It was pleaded by Revenue that as against the virgin goods imported when those were declared to be waste and well corroborated by test report of the IPCL, the goods imported cannot be ruled out to be virgin acrylic staple fibre. The instructions under which the goods in transit were manipulated to be declared as waste came to record and the appellant could not rebut such manipulation. Therefore, appellants have no case to plead any benefit from the reported decisions cited above when fraud surfaced. In the cited decision the fact of questionable modus operandi of the appellant not being recorded, the present case does not fall within the four of that decision. Therefore, the appeals should be dismissed.
18. Heard both sides and perused the records.
FINDING AND CONCLUSION OF TRIBUNAL
19. From the uncontroverted evidence of shipment of virgin acrylic staple fibre by exporter and subsequent manipulation made to the documents in transit at the behest of the importer, it is established that the appellant importer mis-declared the imported goods in the bill of entry as waste to get the duty free benefit by the notification aforesaid. That is corroborated from the test reports of CRCL New Delhi & IPCL Baroda. Examination of the goods stuffed in container no. SXSU 232477/0 revealed that all the 24 bales packed in the container were with manufacturers labels indicating that the goods were acrylic staple fibre commercial quality of denier of 2.5 and 3 and fibre length of 110 mm.
20. The contention that acrylic staple fibre were of commercial quality which was in consonance with the description of their pass-book did not merit consideration since the goods imported were predominantly virgin staple fibre with wide variation in denier and length. Plea of commercial quality meaning no prime quality or first quality/ grade is of no relevance for the reason that virgin acrylic staple fibre are by their nature different goods. Further, variation in denier does not indicate that the goods imported were waste when test results proved other wise. The argument that it was the trade practice to give different names to the quality is arbitrary and baseless.
21. Fraudulent act of manipulation of the description of the goods in transit by the appellant importer and persons connected thereto resulted in deliberate mis-declaration of the description and value of the goods imported. Duty exemption was availed under Notification No. 117/88 unlawfully when that was not due to the appellant. The fraud so committed against Revenue proved oblique motive of the appellant. Enquiry conducted with M/s World Wide Cargo and M/s CMA UK Agents established that Bill of lading No. BCM/001758 was issued by CMAs agent in Barcelona on the basis of instructions received from the booking and freight forwarding company and the description of the cargo was declared as Acrylic Staple Fibre, Commercial Quality BRIGHT and the cargo was shipped from Barcelona and was routed through Dubai. Containers were stored in shippers premises at Barcelona and freight was indicated as Collect. But the UK based Shipping Agent paid the freight to CMAs agent in Bradford. Investigation result revealed that M/s Linear Shipping Containers had amended the description on the Bill of Lading to read as Synthetic Waste/ Soft Quality with predominance of staple fibre with wide variation in denier and length and containing drawn and undrawn fibre. The real description of the goods Acrylic Staple Fibre Commercial Quality Bright was deliberately changed on the basis of the UK Shippers instructions.
22. The initial descriptions on the bill of lading tallied with the markings on the labels which were found on the bales at the time of examination of the goods and that remained unrefuted by appellants. No evidence was led to discard such finding. Laboratory test result and investigation result brought out misdeclaration and connivance of the UK Shippers was established from the letter dt. 26.02.90 of M/s World Wide Cargo Pvt. Ltd and telex dt. 01.03.90 of M/s CMA to M/s World Wide Cargo and Telex dt. 27.02.90 sent by M/s World Wide Cargo to M/s CMA. Had there been no malafide, entire manipulation of transit documents would not have occurred. All that was done was at the behest of the appellant. Test report of M/s IPCL, Baroda communicated vide letter dt. 22.06.90 and report of CRCL, New Delhi dated 26.02.98 proved the characteristics of samples tested was more like virgin acrylic fibre than waste products and 44 samples under reference were not waste.
23. Suppression of a material fact would also amount to a fraud on the court [(see Gowrishankar v. Joshi Amha Shankar Family Trust, (1996) 3 SCC 310 and S.P. Chengalvaraya Naidus case (AIR 1994 SC 853)]. Fraud unravels everything and fraud vitiates all transactions known to the law of however high a degree of solemnity. When fraud is established that unravels all. [Ref: UOI v. Jain Shudh Vanaspati Ltd. - 1996 (86) E.L.T. 460 (S.C.) and in Delhi Development Authority v. Skipper Construction Company (P) Ltd. - AIR 1996 SC 2005]. Any undue gain made at the cost of Revenue is to be restored back to the treasury since fraud committed against Revenue voids all judicial acts, ecclesiastical or temporal. So also no Court in this country can allow any benefit of fraud to be enjoyed by anybody as is held by Apex Court in the case of Chengalvaraya Naidu reported in 1994 (1) SCCI:AIR1994 SC 853. Ram Preeti Yadav v/s U.P. Board High School and Inter Mediate Education (2003) 8 SCC 311.
24. A person whose case is based on falsehood has no right to seek relief in equity [Ref: S.P. Chengalvaraya Naidu v. Jagannath, AIR 1994 SC 853]. It is a fraud in law if a party makes representations, which he knows to be false, and injury ensues therefrom although the motive from which the representations proceeded may not have been bad.[Ref: Commissioner of Customs v. Essar Oil Ltd., (2004) 11 SCC 364 = 2004 (172) E.L.T. 433 (S.C.)].
25. When material evidence establishes fraud against Revenue, white collar crimes committed under absolute secrecy shall not be exonerated as has been held by Apex Court judgment in the case of K.I. Pavunny v. AC, Cochin - 1997 (90) E.L.T. 241 (S.C.). Customs Act, 1962 and Customs Tariff Act, 1975 are not merely taxing statutes but are also potent instruments in the hands of the Government to safeguard interest of the economy. One of its measures is to prevent deceptive practices of undue claim of fiscal incentives.
26. It is evident from record that the appellant followed dilatory tactics calling the experts for cross examination and ultimately did not yield any result out of that except embarrassing them putting irrelevant questions running into more than hundred. The appellant failed to prove that the exporter exported waste but not virgin goods. Neither process of examination carried out by testing experts was proved to be faulty nor the credibility of the test reports impeached. Textile expert revealed the technicalities of the goods. That remained unrebutted by the appellant. Malafide of the DRI Officers was all along been recited by the appellant without that being proved.
27. Ld. adjudicating authority found the technical experts impartial to the test and never acted malafide. Similarly DRI acted bonafide bringing the vital evidence to prove contumacious conduct of the appellant. But the appellant abused the process of law causing embarrassment to the technical experts and DRI officials in cross examination. Flimsy plea was that the goods were merely of different length and commercially called as waste.
28. Manipulation of the transit documents detected by the DRI with full proof could not be repelled by the appellant. Such self speaking evidence brought out the ill design of the appellant. It acted to the detriment of the Revenue deliberately suppressing the material fact. Entire discussion and finding of the ld. Adjudicating authority brings out how he applied his mind proving that there was deliberate mis-declaration committing fraud against Revenue. Such reasoned and speaking order establishing deliberate mis-declaration should sustain.
29. Appellant failed to gain any benefit from the citation made in view of Crystal laboratory test findings and fraud committed against Revenue in the manner aforesaid. As no fraud can occur without human intervention, the persons connected to the illicit import were rightly brought to fold of law for penal consequence of law.
30. In view of above observation and finding all the appeals are dismissed. MA if any filed stands disposed and stay order passed earlier stand vacated.
(Pronounced in the open court on 01/11/2013)
(MANMOHAN SINGH) (D.N. PANDA)
TECHNICAL MEMBER JUDICIAL MEMBER
*satish*
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