Custom, Excise & Service Tax Tribunal
4. Whether Order Is To Be Circulated To ... vs M/S Phonix Traders, M/S Trinity ... on 6 April, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
COURT:
II
Appeal No.C/29-32/2011
Arising out of: OIO No.KDL/COMMR/19/10-11, dt.30.12.10
Passed by: Commissioner of Customs, Kandla
For approval and signature:
Mrs. Archana Wadhwa, Honble Member (Judicial)
Dr. P. Babu, Honble Member (Technical)
1. Whether Press Reporters may be allowed to see the No
Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the Yes
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen
the order?
4. Whether order is to be circulated to the Departmental Yes
authorities?
Appellant:
M/s Phonix Traders, M/s Trinity Shipping, Shri Saju Perumal, Shri Solly Perumal
Respondent:
CC Kandla Represented by:
Shri P.V. Sheth, Adv. for the Assessee. Shri R. Nagar, SDR for the Revenue.
CORAM:
MRS. ARCHANA WADHWA, HONBLE MEMBER (JUDICIAL) DR. P. BABU, HONBLE MEMBER (TECHNICAL) Date of Hearing:06.04.11 Date of Decision:
ORDER No. /WZB/AHD/2011, dt.__________ Per: Archana Wadhwa:
All the four appeals are being disposed off by a common order as they arise out of the same impugned order passed by Commissioner. As per facts on record, M/s Trinity Shipping & Allied Services, a CHA firm filed shipping bill in respect of cargo of rice pertaining to M/s Phonix Traders. A quantity of 350 MTs of cargo of rice was carted in ware-house of CFS M/s Seabird Marine Services Pvt.Ltd., on the basis of check list dt.12.3.10 by the CHA. On a doubt, on prima facie examination, the rice appeared to be non-Basmati rice, though declared by the appellant as Basmati rice, and in as much as the export of non-Basmati rice is prohibited, the said consignment was put under detention.
2. Thereafter, a sample was drawn from the consignment and was sent for analysis at Regional Agmark Laboratory, Mumbai. As per the test report, dt.19.3.10, the rice was found to be non-Basmati rice. Thereafter, the detained quantity of 350 MTs was seized under the proper panchnama on 23.5.10. During the course of further investigations, statements of various persons were recorded. In his statement, Shri Solly Perumal, partner of M/s Phonix Traders recorded on 10.5.10, deposed that since they are also dealing with non-Basmati rice, Basmati rice and non-Basmati rice got mixed in his godown at Gandhidham and as such, there were no such intention on their part to export non-Basmati rice. He also admitted that he was aware of the fact that the export of non-Basmati rice was prohibited in view of Notification No.93(RE-2007)/2004-2009, dt.1.4.98 issued by DGFT.
Statement of Shri Saju Perumal, Director of the CHA M/s Trinity Shipping & Allied Services was recorded on 14.7.10, wherein he deposed that he was aware of export of non-Basmati rice is banned; that he was not aware that the goods in question were non-Basmati rice.
Subsequently, the statements of Shri Kalapi Joshi, Customs Clerk of the said CHA as also of Shri Ismail Osman Jat, H-Card holder of CHA were recorded. Statement of Shri Sandeep Bhagia, Branch Manager of CFS M/s Seabird Marine Services Pvt.Ltd. were recorded.
3. On the above basis, proceedings were initiated against the appellant for confiscation of the seized goods as also for imposition of penalties upon them. The said Show Cause Notice stand adjudicated by the Commissioner vide his impugned order confiscating the non-Basmati rice valued at Rs.1,44,43,485/- (Rupees One Crore, Forty Four Lakhs, Forty Three Thousands, Four Hundreds, Eighty Five only) with an option to redeem the same on payment of redemption fine of Rs.15 lakhs (Rupees Fifteen Lakhs only). In addition, penalties of Rs.5 lakhs (Rupees Five Lakhs only) each have been imposed on M/s Phonix Traders Ahmedabad under Sections 114 and 114AA of Customs Act, 1962. The adjudicating authority has further imposed separate penalty of Rs.3 lakhs (Rupees Three Lakhs only) on Shri Solly Perumal, Partner of M/s Phonix Traders under Section 114AA of Customs Act, 1962. Penalty of Rs.2 lakhs (Rupees Two Lakhs only) each stand imposed on M/s Trinity Shipping & Allied Services under Sections 114 and 114AA along with imposition of penalty of Rs.2 lakhs (Rupees Two Lakhs only) on Shri Saju Perumal, Director of M/s Trinity Shipping & Allied Services. The said order is impugned before us.
4. We have heard ld.Advocate appearing on behalf of the appellant. Ld.Advocate does not dispute the fact that consignment of rice declared as Basmati rice was, in fact, non-Basmati rice. As such, he fairly agrees that the same is liable to confiscation, but submits that redemption fine of Rs.15 lakhs (Rupees Fifteen Lakhs only) imposed upon the appellant is excessive and may be reduced. He also submits that separate imposition of penalty on M/s Phonix Traders under Section 114 and 114AA of Customs Act, 1962 are not warranted. Similarly, he submits that inasmuch as the partnership firm has already been penalized, there was no justification for imposition of penalty of Rs.3 lakhs (Rupees Three Lakhs only) on Shri Solly Perumal, Partner of M/s Phonix Traders.
5. Arguing on behalf of the CHA, ld.Advocate submits that the CHA was not aware of the fact that consignment of rice declared as that of Basmati rice was, in fact, of non-Basmati rice. As such, he submits that the penalty on said CHA was not justified. In any case, he submits that imposition of separate penalty under two provisions of Customs Act, 1962 i.e. 114 and 114AA for the same offence was not justified. Similarly, separate penalty of Rs.2 lakhs (Rupees Two Lakhs only) on Shri Saju Perumal, Director of CHA was not justified when penalties already stand imposed upon CHA firm. For the above proposition, he relies upon the Tribunals decision in the case of M/s Krish Agro Overseas, being Order No.A/1739-1740/ WZB/AHD/2010, dt.11.10.10, vide which, after taking into consideration the various factors, the redemption fine and penalties imposed upon exporters were reduced to 25% of the amount imposed by the Commissioner and the penalties imposed upon the CHA were set aside by extending the benefit of doubt to him.
6. Countering the arguments, ld.SDR appearing for the Revenue submits that admittedly, the consignment of rice in question is liable to confiscation and redemption fine of 15 lakhs (Rupees Fifteen Lakhs only) imposed by the Commissioner in respect of consignment totally valued at more than Rs.1 crore (Rupees One Crore) is justified. He also supports the impugned order of Commissioner for imposition of separate penalty under the provisions of Section 114 and 114AA on the ground that both provisions operate in different fields and invocation of the same, though for the same offence, is justified. As regards penalty imposed upon CHA, he draws our attention to the finding of adjudicating authority and to the latest Order No.A/368-370/WZB/AHD/2011, dt.3.3.11 passed in the case of M/s J.G. Agro Foods, vide which the penalties were upheld on the CHA.
7. After carefully considering the submissions made by both sides, we find that there is no doubt to the fact that the consignment declared as Basmati rice was found to be non-Basmati rice. Ld.Advocate appearing for the appellants has also not challenged that the same is liable to confiscation as held by adjudicating authority. However, he prays for reducing the redemption fine on the ground that there was no intention on the part of the exporter to export non-Basmati rice and the said act is due to the mix up of non-Basmati rice with Basmati rice in their godown.
8. We find no justification in the above plea of the appellant. As observed by the Commissioner, the appellant has nowhere produced any evidence to show that they were dealing with non-Basmati rice for the local traders and there was any mix up of the same in their godown. No evidence of local sales of non-Basmati rice has been produced before him. Otherwise also, we find that such types of cases are repeatedly coming before us, advancing the same plea of mistake and mix up of 2 types of rice in the godown. When an exporter is undertaking export of rice of about around Rs.1.5 Crore, no reasonable prudent man would commit such types of mistakes. The repeated detection of such types of cases leads us to believe that such action on the part of the exporters is intentional and non-Basmati rice is attempted to be exported in the guise of Basmati rice. We also note that the redemption fine of Rs.15 lakhs (Rupees Fifteen Lakhs only) fixed by the Commissioner for consignment of rice valued at Rs.1.44 crores (Rupees One Crore and Forty Four Lakhs only) cannot be held to be excessive.
9. As regards penalty of Rs.5 lakhs (Rupees Five Lakhs only) imposed on M/s Phonix Traders Ahmedabad under each of Sections 114 and 114AA of Customs Act, 1962, we find that the provisions of Section 114 are invocable when a person in relation to any goods does or commit to any act which will render such goods to confiscation. As such, inasmuch as M/s Phonix Traders tried to export prohibited goods rendering them liable to confiscation, the provisions of said Sections stand rightly invoked and penalty of Rs.5 lakhs (Rupees Five Lakhs only) stand rightly imposed upon them. We do not intend to interfere in the quantum of penalty of Rs.5 lakhs (Rupees Five Lakhs only) imposed upon M/s Phonix Traders under Section 114 of Customs Act, 1962, as we find the same to be reasonable.
10. However, when a person intends to do unlawful activity, in the process, he will make false declarations or documents or statements etc. The provisions of Section 114 would also cover such activity on the part of the defaulter. As such, we are of the view that imposition of separate penalty on the said appellant in terms of Section 114AA, which provides for wrong making of declaration, statements, would not be justifiable. We, accordingly, set aside the penalty imposed upon M/s Phonix Traders under Section 114AA of Customs Act, 1962.
11. Similarly, a separate penalty of Rs.3 lakhs (Rupees Three Lakhs only) on Shri Solly Perumal, Partner of M/s Phonix Traders under Section 114AA of Customs Act, 1962, when the partnership firm has already been imposed a penalty of Rs.5 lakhs (Rupees Five Lakhs only) would not be justified in the facts and circumstances of the case. We, accordingly, set aside the same.
12. As regards penalty imposed upon M/s Trinity Shipping & Allied Services, a CHA firm, we find that there is a finding of the Commissioner that Shri Saju Perumal, Director of CHA firm is a brother of Shri Solly Perumal, Partner of exporting firm. As such, it cannot be held that he was unaware of export of non-Basmati rice by Shri Solly Perumals partnership firm. We also note that in the above referred judgment of this Bench in the case of M/s J.G. Agro Foods, the Tribunal has observed that the facts of the case shows that the CHA was aware of the export of non-Basmati rice and has held him liable to penalty of Rs.2.5 lakhs (Rupees Two Lakhs, Fifty Thousands only) in that case. The position in the present case is worst, inasmuch as the CHA is a brother of partner of exporting firm. As such, we find that the said CHA M/s Trinity Shipping & Allied Services is liable to penalty.
However, imposition of separate penalties under Sections 114 and 114AA would not be justified for the same reasons which stand adopted by us for setting aside the penalty imposed under Section 114AA on M/s Phonix Traders. Similarly, a separate penalty of Rs.2 lakhs (Rupees Two Lakhs only) on the Director of CHA would also not be justified. As such, while upholding the imposition of penalty of Rs.2 lakhs (Rupees Two Lakhs only) on M/s Trinity Shipping & Allied Services, a CHA firm, imposed under Section 114 of Customs Act, 1962, separate penalty of Rs.2 lakhs (Rupees Two Lakhs only) on the said appellant under Section 114AA and penalty of Rs.2 lakhs (Rupees Two Lakhs only) on Shri Saju Perumal, Director of the CHA are set aside.
13. All the appeals are disposed off in above terms.
(Pronounced in Court on ______________)
(Dr.P. Babu) (Archana Wadhwa)
Member (Technical) Member (Judicial)
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