Custom, Excise & Service Tax Tribunal
Suresh Kumar J. Jain vs Commissioner Of Customs (Export), ... on 26 October, 2009
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL Nos. C/552/08 & C/935/08 (Arising out of Order-in-Appeal No. 186/SIIB(X)/2008/JNCH dated 16.5.2008 passed by Commissioner of Customs (Appeals), Nhava Sheva) For approval and signature: Hon'ble Mr. P.G. Chacko, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== Suresh Kumar J. Jain Appellant Vs. Commissioner of Customs (Export), Nhava Sheva Respondent AND Commissioner of Customs (Export), Nhava Sheva Appellant Vs. M/s. Panevel & others Respondent Appearance: None for assessee Shri T. Tiju, Authorised Representative (SDR), for Revenue CORAM: Hon'ble Mr. P.G. Chacko, Member (Judicial) Date of Hearing: 26.10.2009 Date of Decision: 26.10.2009 ORDER NO................................. Per: P.G. Chacko
One of these appeals was filed by Shri Suresh Kumar Jain claiming to be the proprietor of "M/s. Panevel". The other appeal was filed by the department. From the record of proceedings, it appears that the party had been taking adjournments from time to time. On 21.10.2009, by which time several such adjournments had been taken by the party, they once again requested for adjournment through a letter without personal appearance. The request was turned down and the SDR was heard, who was also directed to produce a copy of the Hon'ble High Court's order dated 21.4.2009 in Writ Petition No.3964 of 2009 filed by Shri Suresh Kumar Jain. Further hearing was then listed for 23.10.2009. In the interest of justice, the counsel for the party was informed about the posting. On 23.10.2009, the matter did not reach and consequently it is arising today for hearing. Today there is no representation for the party.
2. The learned SDR produces a copy of the Hon'ble High Court's order dated 21.4.2009. He also submits that the appeal filed by the department against the Tribunal's interim order dated 1.8.2008 is pending before the Hon'ble High Court. By the said order dated 1.8.2008, which was passed in appeal No. C/552/08, this Tribunal had directed that the goods in question be released to Shri S.K. Jain against revenue deposit of Rs.1.00 lakh. The Hon'ble High Court, in order dated 21.4.2009, directed that the Tribunal's order dated 1.8.2008 be implemented if the department did not obtain stay of the said order of this Tribunal in their appeal pending before the High Court, within two weeks from 21.4.2009. The learned SDR has pointed out that the department could not obtain stay within the time stipulated by the Hon'ble High Court and consequently the Hon'ble High Court's interim order for implementation of the Tribunal's order dated 1.8.2008 became absolute. Consequently, the goods in question were released to Shri S.K. Jain against a deposit of Rs.1.00 lakh. In this context, SDR intervenes to clarify that it was not a cash deposit. Instead, the party chose to furnish a demand draft for Rs.1.00 lakh. It is further submitted that the department has not accepted the above payment lest any acceptance of the demand draft should weaken the department's case for absolute confiscation of the goods. In the result, the goods went out of the departmental custody without deposit of any amount by Shri S.K. Jain. All this happened during the pendency of the department's appeals before this Tribunal and the Hon'ble High Court.
3. For purposes of the present appeals, I have examined the records and heard the learned SDR. I have carefully perused the grounds of both the appeals. It appears from the records that the Directorate of Revenue Intelligence (DRI) seized a consignment of red sanders from the premises of M/s. Royal Marine at MIDC, Taloja, Raigad District, Maharashtra in July 2004. One of the partners of M/s. Royal Marine informed the officers that the said goods had been deposited/stored by one Shri Suresh Kumar Jain. Shri Suresh Kumar Jain himself informed the DRI that the said red sanders had been deposited by him at the premises of M/s. Royal Marine on the instruction of his friend Shri Singaravelu who gave him transit permits of Andhra Pradesh Forest Department. Shri S.K. Jain produced the said transit permits to the DRI. From the documents so gathered by the DRI, it appeared that M/s. Bharat Trading Co., Chennai had purchased 50 MTs of red sanders in auction at the rate of Rs.24,000/- PMT. Transit permits were issued to M/s. Bharat Trading Co. by the Andhra Pradesh Forest Department for transport of the above quantity of red sanders from Kadapa to Mumbai. Certain officers of the Forest Department were deputed to escort the goods to its destination. The DRI officers of Mumbai made enquiries with their counterparts at Chennai and confirmed that M/s. Bharat Trading Co. had purchased the goods in auction from the Andhra Pradesh Forest Department and sold to M/s. Panevel, No.128-A, Nandlal Jani Marg, Eastern Chamber, Mumbai 400 009. They also found that the goods had been transported from Kadapa (Andhra Pradesh) to Mumbai under permission from the Forest Department authorities. In further investigations, the DRI recorded statements under Section 108 of the Customs Act from M/s. Bharat Trading Co., partners of M/s. Royal Marine, a representative of Shri Singaravelu, a partner of M/s. Modern Shipping Corporation, Mumbai (with whom Shri S.K. Jain was working prior to December 2002), officers of the Forest Department, Shri Ajit Satam (who was implicated by Shri Singaravelu in his statements) and Shri Singaravelu himself.
4. From the records of investigations, it appeared to the DRI that the aforesaid consignment of red sanders was stored at the premises of M/s. Royal Marine for exportation out of India. On examination, the consignment weighed 51.5 MTs and the same was valued at Rs.12.36 lakhs @ Rs.24,000/- PMT. It was at this stage that the consignment was seized. A show-cause notice was issued to confiscate the goods under Section 113(d) read with Section 135A of the Customs Act as also to impose penalties under Section 114 of the Act on all the noticees, viz. M/s. Panevel, Shri S.K. Jain, Shri Ajit Satam, Shri Manoj Jain, Shri M.G. Singaravelu and Shri S. Raju. The show-cause notice was contested. In adjudication, the Additional Commissioner of Customs (SIIB), Nhava Sheva ordered absolute confiscation of the goods under Section 113(d) of the Act and imposed a penalty of Rs.2.5 lakhs on M/s. Panevel under Section 114 of the Act. A separate penalty of Rs.2.5 lakhs was imposed on Shri S.K. Jain. Similar penalties were imposed on the other noticees as well. Shri S.K. Jain claiming to be the proprietor of M/s. Panevel preferred an appeal to the Commissioner (Appeals). It appears, there were no appeals by others. The learned Commissioner (Appeals), in a brief order, allowed the goods to be redeemed on payment of fine of Rs.1.00 lakh by Shri S.K. Jain and also reduced the penalty on him to Rs.50,000/-. The appellate authority also set aside the penalty imposed on M/s. Panevel. Against this decision of the Commissioner (Appeals), Shri S.K. Jain has filed one of the present appeals, challenging the fine and penalty imposed on him. On the other hand, in the department's appeal, the grievance of the appellant is that the learned Commissioner (Appeals) chose to permit Shri S.K. Jain to redeem the goods without establishing ownership. It is submitted that M/s. Panevel was not in existence and that Shri S.K. Jain could not establish any connection with M/s. Panevel.
5. Learned SDR submits that the statements of S/Shri Ajit Satam, Singaravelu, S. Raju and others indicated beyond doubt that the consignment of red sanders was clandestinely brought to Mumbai and stored in the premises of M/s. Royal Marine for the purposes of export to Singapore. It is submitted that the transit of the goods from Kadapa to Mumbai across the interstate borders was secured under fake documents. According to the learned SDR, the complicity of Shri S.K. Jain and others in the above illegal activities is fairly evident from the records. In any case, there is no evidence of existence of any firm by name "Panevel" or of Shri S.K. Jain having established ownership thereof. It is also pointed out that the learned Commissioner (Appeals) misinterpreted the expression "attempt to export" and thereby ruled out the applicability of Section 113(d) of the Act to the case on hand. It is submitted that the permission granted by the lower appellate authority to Shri S.K. Jain to redeem the goods on payment of fine of Rs.1.00 lakh is perverse. The SDR is of the opinion that this Tribunal should exercise its inherent powers to check illegal orders being passed by appellate authorities. According to him, the impugned order is one such order. On the other hand, in the appeal filed by the party, it is submitted that the goods were stored in a regular godown and were not secreted or hidden in any manner and that there is no evidence to show that the goods were intended to be exported from Nhava Sheva. The party has challenged the confiscation and penalty.
6. After giving careful consideration to the submissions, I find that the goods were released to Shri S.K. Jain by the department on the strength of an order passed by the Hon'ble High Court in Writ Petition No.3964 of 2009 filed by Shri S.K. Jain. The learned SDR has no case that the Hon'ble High Court's order was challenged before the Hon'ble Supreme Court. In the result, release of the goods to Shri S.K. Jain is absolute for all practical purposes. In this scenario, I am of the view that the department is estopped from contending that Shri S.K. Jain had nothing to do with M/s. Panevel to whom M/s. Bharat Trading Co. had sold the goods. This, however, would not automatically absolve Shri S.K. Jain of liabilities which might accrue to him under Section 113 of the Customs Act in the event of any prohibition/restriction in relation to the red sanders having been violated by him. Provisional release of the goods would not, by itself, obliterate a case for confiscation with attendant penalty. The appeal filed by the department before the Hon'ble High Court is against the Tribunal's direction for provisional release of the goods. The appeal filed by them before this Tribunal is also against such provisional release. No stay was obtained against the provisional release ordered by this Tribunal and consequently, in terms of the Hon'ble High Court's order in the Writ Petition, the goods were released to the party against production of a demand draft for Rs.1.00 lakh. If the demand draft was not encashed, the risk would be lying with the department.
7. Reverting to the order of the Commissioner (Appeals), I am satisfied that he chose to arrive at certain conclusions in favour of the party in a reckless manner without any kind of reasoning whatsoever. Before allowing release of the goods to Shri S.K. Jain, it was incumbent upon the appellate authority to establish ownership of Shri S.K. Jain over "M/s. Panevel" inasmuch as the goods were sold and consigned to M/s. Panevel by M/s. Bharat Trading Co. The case of the department is that "Panevel" was not in existence during the material period. The learned SDR has argued that S/Shri Manoj Jain and Singaravelu were involved in payment of the price of the goods to M/s. Bharat Trading Co. He submits that there is no evidence of Shri S.K. Jain having paid its price or done anything in support of his claim of ownership over the goods. The stand of the department is not coming out very clearly with regard to the ownership of the goods. In the circumstances, I am inclined to remand the case to the lower appellate authority, before which the party and the department may endeavour to prove their respective contentions.
8. In the result, the impugned order is set aside and these appeals are allowed by way of remand. The lower appellate authority is directed to pass fresh order in the case after giving both sides a reasonable opportunity of being heard.
(Pronounced in Court) (P.G. Chacko) Member (Judicial) tvu 1 10