Customs, Excise and Gold Tribunal - Delhi
Poonam Plastic Industries vs Collector Of Customs on 18 March, 1988
Equivalent citations: 1989(39)ELT634(TRI-DEL)
ORDER I. J. Rao, Member (T)
1. The two questions arise in this appeal. One relates to the aspect of licence and another to the value of the goods imported by the appellants.
2. The appellants imported, under Bill of Entry No. 764/14, 30 M.T. Plastic Sheets and declared a value of DM 93,000/- (3,72,447.00) CIF. The Customs in a notice issued to the appellants (and others) alleged that the goods were mis-declared and that the value was under-declared. The suspicions of the Customs were aroused because in the invoice the goods were described as 30 M.T. Plastic Sheets, a description considered to be vague as particulars of brand, grade, nature of plastic, shade, manufacturer's name etc. were not given in the invoice. The invoice mentioned a lumpsum value but not value per M.T. Also the copy of the packing list of the suppliers (not the original), was not the xerox copy of the original copy retired from the Bank. Further the packing list described the goods as "C.N. Plastic Sheet" giving rise to the belief that the goods were Cellulose Nitrate Sheets. Further, the Customs noticed that in the Original Bill of Entry the goods were described as "Plastic Sheets, C.N. The letter C.N. were scored off later. On the reverse of the Bill of Entry there is a request (By Shri Rajesh Ramavatar Totla, according to the show cause notice) reading "Sir, Goods are Cellulose Nitrate Sheets covered under appendix-6 list 8 part I Item No. 13 of AM-84-85. Hence clearance may be allowed under OGL". The words "Cellulose Nitrate" appearing in the said endorsement were subsequently scored off and substituted by the word Plastic. (It is argued before us that the entire request was scored off).
3. In these circumstances it appeared to Customs that the importers wanted to get the consignment passed as Cellulose Nitrate Sheets under OGL and at concessional rate of duty by virtue of Exemption Notification No. 227/76-Cus. Plastic Sheets were liable to full duty of Customs which was roughly 3 times the concessional rate and included Additional duty of Customs also. Investigations were made and several premises were searched by the Customs. The show cause notice issued by authority gave the details of the allegations. After due process, the Collector of Customs adjudicated the matter and passed orders. He held that the importers intended to claim the goods under OGL and made a wrong declaration in the Bill of Entry so that the goods were in fact assessed under Heading 39.10/06 CTA read with Notification No. 227/76-Cus. at concessional rate. The Collector further recorded that the importers clearly admitted that the goods were HDPE Sheets and offered to produce import licence to cover the importation. However, as the L/C was not opened against these licences but under OGL, the offence under Section lll(d) of Customs Act, 1962 was clearly established, according to the Collector's order.
4. Insofar as value was concerned, the Collector relied on two pieces of evidence. One was the commission statement received by the indenting agents M/s. Darflow Enterprises, wherein the value of the goods against Invoice No. 45055 were shown as D.M. 2,63,500.00. He rejected the contention of the importers that this value was for 85 M.T. and not for 30 M.T. imported by them. The rejection was on the ground that the L/C was opened only for 30 M.Ts, and not for 85 M.Ts. The second piece of evidence considered and accepted by the Collector was that similar goods were imported and cleared in December, 1985 from the same supplier at the rate of DM 85 per Sq. Mtr. by Thermax Private Ltd. On this basis, he worked out the value of the consignment at Rs. 10,55,266.00 FOB. He confiscated the goods with an option for redemption on payment of a fine of Rs. 8,00,000.00, imposed a penalty of Rs. 2,00,000.00 and ordered that the value of the consignment be increased to Rs. 10,55,266.00 for purposes of assessment. Hence this appeal.
5. We heard, at various stages, Shri Kantawala and Shri Gujral, Advocates for the appellants. It was submitted by them that the Bill of Entry described the goods only as plastic sheets. It was emphasised that the appellants executed a test bond well in time and fully expected that the goods would be tested by Customs. It was explained that the letters "C.N." stood for "Colour Natural" and not for "Cellulose Nitrate". The Counsel submitted that at no stage was there any request for assessment at lower rates and submitted that even in the Bill of Entry the letters C.N. were not visible. It was stated for the appellants that the imported goods were plastic sheets and that the appellants stated before the Collector that they were ready to produce the necessary licences to clear the goods.
6. Denying any mis-declaration of value, the learned Counsel submitted that the Commission Settlement relied on by Customs was only provisional. It was explained that the Commission would be paid only after the entire consignment was imported whereas the appellants imported only 30 M.T. out of 85 M.Ts. It was also pointed out that the goods in question were imported in March, 1985 whereas the Commission settlement related, as stated therein, to fourth quarter of 1984.
7. It was also submitted by the learned Advocate that the department's reliance on a Bill of Entry by Thermax was wrong as the goods therein were component parts of machines made of plastic and classified under Heading 84.66(1) and were totally different from the goods concerned in this matter which were classifiable under Heading 39.04/06. They submitted that 7 or 8 imports of similar goods at similar values were pointed out by them and submitted that particulars of these were given at page 53 of the Paper Book. They pleaded that merely because the packing list mentioned "C.N.", all other evidence in favour of the appellants could not be ignored. It was further submitted that in any event the penalty and fine were excessive.
8. Shri Durghayya, the learned JDR opposing the arguments submitted that the appellants described the goods as "Plastic Sheet C.N." in the Bill of Entry and later scored out the letter, 'C.N.'. On the reverse of Bill of Entry, OGL was claimed and only Cellulose Nitrate Sheets could be imported under OGL. He submitted that in the invoice also the reference to the ITC Policy was the same as mentioned in the Bill of Entry and emphasised that the invoice did not give the unit price but only total price. The fact that the Customs House assessed the goods at concessional rate was proof that at the time of assessment the appellants claimed that the Sheets were made of Cellulose Nitrate. The learned JDR further pointed out that the appellants did not file any import licence with the Bill of Entry which showed that they intended to clear the goods under OGL.
9. In regard to value, Shri Burghayya submitted that there was no proof that an order was placed for 85 tonnes. He further pointed out that the two proforma invoices were filed and both carried the same serial number, one with the letter 'A' suffixed. Shri Durghayya further submitted that as there was no proof that the appellants wanted to import further 55 tonnes, the value shown in the Commission Sheet should be deemed to relate only to the present consignment and not to 85 M.Ts. The learned JDR argued that the Collector had recorded reasons in paragraph 28 of his order as to why the value in respect of Thermax import applied to the present import and was valid and acceptable. He further submitted that all the Bills of Entry cited by the appellants (page 53 of Paper Book) related to the import of granules and not Sheets.
10. In a rejoinder, Shri Gujral, the learned Advocate, referred to the letter of credit (copy not filed) and submitted that even in the Bill of Entry the request for OGL was scored out "on the very same day". He emphasised that the indemnity bond was accepted by the Customs before assessment and, therefore, there would be no question of misleading the Customs in any way. He emphasised that the Commission statement should not be relied on and pointed out that the Collector in his order (paragraph 28) did not give any particulars of the size of importation or any other details including Commission paid. He further pointed out that the value was worked out by Customs on the basis of weight and this was totally unacceptable and emphasised that only one Bill of Entry was relied upon by Customs.
11. We have considered the arguments of both sides. We have examined the Bill of Entry. The description given in column 6 thereof reads "Plastic Sheets". The letters thereafter cannot be read, having been obliterated. Scoring out also occurs on the request made on the reverse of the Bill of Entry for allowing the goods under OGL Item No. 13. There is a line drawn diagonally across this request but otherwise the request is legible. The learned Advocate for the appellants, Shri Gujral, stated that this request was cancelled "on the very same day". We don't understand how the appellants made this request for the goods being allowed under OGL without declaring the imported sheets, as "C.N. Plastic Sheets". The presence of the request itself lends support to the belief that the appellants had attempted to clear the goods by giving a wrong description. It appears that if the sheets could be passed subjected to a lower rate of duty and also given the benefit of the OGL. The learned JDR submitted that no licence was enclosed with the Bill of Entry; this is very significant. This claim is borne out by the Bill of Entry itself as no licence has been mentioned therein. On the other hand, the relevant column shows OGL and makes reference to the Appendix, list, and serial number of AM 84-85. That the appellants later executed a PD Bond is not relevant. This Bond should have been executed in the first instance. Their offer to produce a licence made before the Collector and before us does not impress us. The correct time to produce the licence was with the Bill of Entry. This Bill of Entry was assessed at concessional rate. We leave it to the Customs House to deal with the facts, if they have not already done so, about the events relating to this Bill of Entry. We merely observe that due to some reason there appears to have been created some difficulty in the way of the goods being cleared under OGL and under concessional rate. The Bill of Entry as filed does not show that the appellants have been totally honest.
12. We shall first clear the question of licence. Admittedly, the imported goods required an import licence. It is now nobody's case that the goods are under OGL. The appellants were prepared, after the proceedings commenced, to file the same. The Collector rejected the offer merely on the ground that the L/C was not opened with reference to an import licence. In our view, the Collector was not correct in this regard. As the appellants offered to file licences, he should have allowed them to do so and accepted or rejected the licences on merits. It has not been shown to us that there is anything in law which requires that a licence can be accepted only if it is mentioned in the letter of credit.
13. The next question is that of value. The Customs mainly relied upon two pieces of evidences. One was the Commission statement received by the Indenting Agents wherein the value of the goods against invoice No. 45055 was shown as DM 263500/-. The appellants vehemently opposed reliance being placed on this document. They submitted that this was only a provisional document, that it related to the total consignment of 85 M.Ts. and not to the present consignment of 30 M.Ts. alone and that it related to 4th quarter of 1984 whereas the goods were imported in February, 1985. As far as the reference to 4th quarter of 1984 is concerned, the objection does not seem to be valid. This document, copy of which was perused by us, shows that it was not a covering letter to payment of Commission, but only an indication thereto. From a careful perusal of it we also find that this certainly is not a provisional sheet. The learned Advocate pointed out the word "provisions" occurring in the document but this word seems to be merely the German equivalent of the English word "Commission". This is apparent from the document itself.
14. This document has some very important contents. The number of the invoice is given as 45.055. The Customer is shown as Poonam Plastic, the present appellant. The serial number given in the invoice dated 17.2.1985 is 045055, same as the number in this document. Therefore, this document can be relied upon as authentic. We note that this document was recovered by the Customs on search during the course of investigations.
15. We further note that even from the invoice it can be seen that the goods were ordered on 5.9.1984 (the date of proforma invoice) and irrevocable L/C was opened on 1.10.1984. In our view, these dates explain the reference to last quarter of 1984 occurring in the said document.
16. The appellants' argument is that the value and the commission appearing in this document relates to the total intended purchase of 85 M.Ts. and not to the actual purchase of 30 M.Ts. only. The appellants sought to reinforce their arguments with reference to a letter from the supplier addressed to Darflow Enterprises, the Indenting Agent. This letter dated 28th October, 1985 reads as follows:
"Re: Commission Gentlemen, We are in receipt of your telex of 25th October, 1985 with which you refer to the order for pe-sheets placed by our customer POONAM PLASTIC INDUSTRIES with us directly. As you will remember, we have got until today only the okay for shipment of the first lot of 30 tons (value DM 93.000,00) which has been shipped according to our invoice No. 045055 dated 7.2.1985. As per our mutual agreement, we have kept your commission for this shipment with us, as it should be paid after execution of the complete order only. Following your telex, we have now written out a cheque to pay your commission immediately for this first consignment:
Invoice value: DM 93.000,00 5% commission: DM 4.650,00 for DARFLOW Our cheque on DM 4.650,00 is enclosed.
We sincerely hope to have been of service to you, and we look forward with great interest to any information from your side when we can expect to deliver the balance of this order. Always at your service, We remain, Yours faithfully, PENNEKAMP + HUESKER KG"
We see that there is a marginal notation on the letter, unsigned, saying it was received from Darflow Enterprise along with letter of 15.11.1985. We do not know who received it. This is immaterial. However, it is interesting to note that if the commission sheet was prepared in 1984, last quarter, the supplier's letter dated 28th October, 1985 could be considered as an after-thought only. Besides, the present importation took place in February, 1985, the show cause notice was issued in August, 1985. The supplier's letter of 28th October, 1985, therefore, cannot be of any assistance to the appellants as this letter was not in existence at the relevant time and it does not inspire any confidence in the circumstances.
17. Coming back to the commissions statement, we see that it relates to the last quarter of 1984, does not mention any quantity, but mentions a value of DM 263500. We are unable to believe, as the appellants would like us to do, that provisional commission was worked out for goods which were not imported, for which no letter of credit was opened, and for goods for which no order had been placed. We further see that this commission statement was dated 11.6.1985, well after the goods were exported from Germany and received by the appellants. In June, 1985 the supplier could not have taken into consideration 85 tonnes of expected purchase instead of 30 tonnes accutally exported. For all these reasons, we hold that the commission sheet correctly represents the value of the imported goods. The appellants had grossly under-declared the value. They had also attempted to pass the goods without a licence and at concessional rate of duty by mis-declaring them as Cellulose Nitrate Sheets. But they were found out in time and then they have tend to retrace their steps.
18. The Collector's reliance on the importation done by Thermax was also examined by us. What seems to have impressed the Collector was that the supplier in that case was tie same, the dimensions of the goods were similar and that worked out as done in the Collector's order, the value would be approximately the same as in the present importation. The evidence of importation of Thermax is not as strong as desirable but it can, in the circumstances, do as a piece of corroborating evidence. We are aware of the difficulties the Customs face in ascertaining the correct value in circumstances when the deals are between two parties, the facts are not visible, and the transaction is covered by a veil of secrecy. Actual value cannot be proved with mathematical precision. In such conditions, reasonable help can be taken of the documents available and other circumstances. This was what the Hon'ble Supreme Court laid down in Collector of Customs, Madras and Ors. v. D. Bhoormull reported in 1983 E.L.T. 1546 (S.C.). We would like to reproduce the following from the Supreme Court judgment so that our view, which was influenced by the Supreme Court's decision, is made clear:
"Para-28(b):
The onus of proving the goods to be smuggled goods that initially lay on the Department, stood sufficiently discharged by the inevitable inference arising out of the totality of the circumstances in this case, which were appraised by the Collector in the light of the conduct of Baboothmull and Bhoormull, who gave conflicting and incredible explanations as to how they had come by these goods.
Para-28(c):
The source from which and the circumstances in which Bhoormull or Baboothmull acquired these goods, were facts especially within their knowledge, and on the principle underlying Section 106, Evidence Act, these facts had to be proved by them. They deliberately failed to disclose those facts or to give the necessary particulars of the persons from whom the goods were allegedly purchased, although such information was repeatedly requisitioned from Bhoormull by the Collector, and they were duty bound under Section 171-A to disclose it. This contumacious conduct of Baboothmull and Bhoormull strongly pointed towards the conclusion that the goods were smuggled stocks, and in that sense, the inference arising from the circumstances had shifted the onus on the Bhoormull to prove to the contrary.
Para-30:
It cannot be disputed that in proceedings for imposing penalties under Clause (8) of Section 167, to which Section 178-A does not apply, the burden of proving that the goods are smuggled goods, is on the Department. This is a fundamental rule relating to proof in all criminal or quasi-criminal proceedings, where there is no statutory provision to the contrary. But in appreciating its scope and the nature of the onus cast by it, we must pay due regard to other kindred principles, no less fundamental, of universal application. One of them is that the prosecution or the Department is not required to prove its case with mathematical precision to a demonstrable degree; for, in all human affairs absolute certainly is a myth, and as Prof. Brett felicitously puts it - "all exactness is a fake". El Dorado of absolute Proof being unattainable, the law, accepts for it, probability as a working substitute in this work-a-day world. The law does not require the prosecution to prove the impossible. All that it requires is the establishment of such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue. Thus legal proof is not necessarily perfect proof often it is nothing more than a prudent man's estimate as to the probabilities of the case.
Para - 31:
The other cardinal principle having an important bearing on the incidence of burden of proof is that sufficiency and weight of the evidence is to be considered to use the words of Lord Mansfield in Blatch \.Archar (1774) 1 Cowp 63 at p. 65 "According to the Proof which it was in the power of one side to prove and in the power of the other to have contradicted". Since it is exceedingly difficult, if not absolutely impossible for the prosecution to prove facts which are especially within the knowledge of the opponent or the accused, it is not obliged to prove them as part of its primary burden."
In the facts and circumstances as discussed, we order that the value of the imported goods be accepted at 2,63,500 DM. Earlier we had directed that if the appellants produced valid licences, they should be accepted without raising the technical ground that these licences were not mentioned in the letter of credit.
20. Taking all circumstances into consideration, we further order that the fine in lieu of confiscation be reduced to Rs. 5 lakhs and the penalty to Rs. 1 lakh. We order this reduction taking note of the increased Customs duty to be paid by the appellants, the amount of Customs duty sought to be evaded by the appellants, the time lag between the importation and possible release of the consignment and the consequential demurrage.
21. The appeal is disposed of accordingly.