Customs, Excise and Gold Tribunal - Mumbai
Imperial Trading Llc, Impex ... vs Commissioner Of Customs (Import) on 2 December, 2004
Equivalent citations: 2005(181)ELT29(TRI-MUMBAI)
ORDER Moheb Ali M., Member (T)
1. Heard both sides.
2. Martinho Paul Ferrao is a deputy manager (legal & secretarial) in the Great Eastern Shipping Company in Mumbai. He has been issues with a card bearing staff code No. 573 by the general manager of the said company which he invariably used for accessing his office and exiting therefrom. Tej Ram, senior intelligence officer, DR1, before whom Ferrao gave these and host of other details in his statement Under Section 108 of the Customs Act, knows how swiping of ID cards is relevant to the investigation he was conducting. One may ask him. Ferrao and his wife used to visit Akil A. Rassai, a friend whom Ferrao knows for ten long years. During one such visit, Akil shared a secret that import and export business is very lucrative. Particularly yam business is. Indeed! On the advice of Akil, Mrs. Ferrao started a proprietorship firm in the name and style of Impex Enterprises. The firm then imported two consignments of viscose rayon, filament yarn, filed two bills of entry, got them assessed, paid Rs. 11,54,100/- towards duty and awaited 'out of charge' by customs customarily accorded after examination of the goods.
3. The DRI officers, who knew that irrespective of what the declaration made by this importer says, the imported consignment would also contain approximately 3 MT of mulberry raw silk, were present during the course of examination of the goods. Deep in the 40' container the sleuths found 50 cartons of mulberry raw silk of Chinese origin. The existence of these cartons was not declared by the importer. They were seized along with 551 cartons of viscose rayon filament yarn used for concealing the fifty cartons as they were found to be liable to confiscation under the Customs Act. Akil Rassai knows all the nuances of yarn trade - who supplies, who buys, how to sell etc. etc. He also knows that one can import and export goods if one has an IE code allotted by the DGFT authorities even when one has only Rs. 10,000/- (which Mrs. Ferrao has) in one's bank account. So he strongly advised Mrs. Ferrao to import viscose yam filament yarn. He promised to look after everything, well almost every thing. We have already referred to his considered opinion that 'import export business' is very lucrative. It would be even more so, if some 50 cartons of mulberry raw silk of Chinese origin somehow conceal themselves in 551 cartons of viscose rayon filament yarn and escape duty.
4. Imperial Trading LLC, USA, supplied viscose rayon filament yarn from Dubai in this case. Someone by name Mike Cobb who runs this Trading LLC (whatever it means) is mentioned in despatches. Not seen, only heard. In the present case, goods of Chinese origin were shipped from Dubai to India and invoiced from America. These things do happen. Mike Cobb of Imperial Trading LLC being so far away from Dubai does not exercise strict supervision over the loaders who stuff the containers meant for various destinations. This is Mike Cobb's version of things as to how the offending goods made their way to India.
5. When the officers discovered 50 cartons of mulberry silk on 23.8.2003 in the container declared to contain 553 cartons of viscose rayon filament yarn, the person handling the import, Shri Akil Rassai, was totally shocked: He wanted to know from the supplier, to put it in his own words "what the hell is happening". In September 2003, that is, a little over a month after the seizure of 50 cartons of mulberry silk, someone for Imperial Trading LLC wrote to DRI, Mumbai, that it was all a mistake of a clerk and a few loaders that the fifty cartons in question got loaded in a wrong container in Dubai; that the mulberry silk cartons (50) were meant for shipment to U.K. and that the importer in India had neither paid for mulberry silk nor did the ownership of these goods ever pass from the supplier and therefore the supplier should be allowed to re-export the blessed cartons of mulberry silk.
6. The panchnama says that fifty cartons of mulberry silk were found at the bottom of the container safely concealed by cartons containing viscose rayon filament yarn; that these cartons were much bigger than the other cartons of viscose rayon filament yam (double the size) and the outer cartons were boldly inscribed with letters "Viscose Rayon Filament Yarn", and it is only when the cartons were ripped open, one finds mulberry silk. Imperial Trading LLC intended to ship these very cartons of mulberry silk to U.K.! The company has a rather strange way of shipping mulberry silk of Chinese origin to U.K. from Dubai sitting in America.
7. The Commissioner had none of this, while adjudicating the case. He absolutely confiscated mulberry silk Under Sections 111(f), 111(i), 111(j) and 111(1) of the Customs Act. He also confiscated 551 cartons of viscose rayon filament yam used for concealing the cartons of mulberry silk, Under Section 119 of the same Act, but gave an option to redeem them on payment of a fine of Rs. 5 lakhs, imposed a penalty of Rs. 2 lakhs on Impex Enterprises Under Section 112(a) and a penalty of Rs. 3 lakhs Under Section 112(b) on Akil A. Rassai who knows everything about yarn trade. Then, these appeals.
8. The appellant, Imperial Trading LLC, USA, whose clerks and loaders in Dubai sent the consignment meant for U.K. to India, has been claiming ownership of mulberry silk while accepting its liability to confiscation under the various Sections of the Customs Act even during the adjudication proceedings. Thus both the parties, the department and the appellant, agree that the goods in question are liable to confiscation. We observe that it is not merely due to the fault of clerks and loaders that mulberry raw silk landed in India. Something more than what meets the eye, as they say. The Commissioner absolutely confiscates the goods without assigning any reason as to why he does so. When there is a discretion either to confiscate the goods absolutely or allow them to be redeemed on payment of a fine, the adjudicating authority is required to give reasons as to why he prefers to do one instead of the other. He has not done so. The Commissioner has his own dilemma. He could not have allowed the goods to be redeemed by the importer, when the importer disclaims the goods. He didn't want the foreign supplier, whose clerks and loaders make silly mistakes, to have the goods either. So he absolutely confiscates the goods.
9. The request for re-export of the goods is made by one Zanrie K. on behalf of Imperial Trading LLC. Whether he or she is authorised to make such a request can be left to the posterity to decide. Suffice it to say that nobody doubts that Imperial Trading LLC made such a request and they seem to be the owners of the fifty cartons of mulberry silk. While we uphold the confiscation, we modify the order of the Commissioner and allow the goods to be re-exported by the rightful owner on payment of a fine of Rs. 3.00 lakhs.
10. Some arguments have been raised on behalf of the importers as to why viscose rayon filament yarn is not liable to confiscation Under Section 119 of the Customs Act. The Commissioner's contention is that these goods are liable to confiscation, as they have been used for concealing the smuggled goods. Since we hold that an attempt has been made to conceal mulberry raw silk, we uphold the finding that the goods used for concealing are liable to confiscation Under Section 119. Even in a case where the importer's personal liability is absent confiscation of goods used for concealing the smuggled goods is upheld (Vaku Sidi Patel v. CC (Pr) [1997 (96) ELT 192 (T-WZB)]. The manner in which the offending goods are concealed indicates that the importer is in know of things. We, therefore, uphold the confiscation of 551 cartons. In the facts and circumstances of the case, we however reduce the redemption fine to Rs. 1.00 lakh.
11. The Commissioner imposed a penalty of Rs. 2.00 lakhs on the importing firm Under Section 112(a) of the Customs Act. The appellant, M/s. Impex Enterprises, caused the import of goods which are liable to confiscation Under Section 111 Mens rea is not a necessary ingredient for imposing a penalty Under Section 112(a) of the said Act. However, having regard to the circumstances of the case, we reduce the penalty to Rs. 1.00 lakh.
12. A penalty of Rs. 3.00 lakh is imposed on Akil Rassai Under Section 112(b) of the Customs Act. We hold that the necessary ingredients of this section are absent in so far as Akil Rassai is concerned. There are conflicting statements. Whereas Mr. Ferrao says that Akil was responsible for all the actions of the importing firm, the latter claims that he rendered only infrastructural help, if one may call his help so, in importing the impugned goods. We therefore, set aside the penalty imposed on Akil Rassai Under Section 112(b) who believes that import and export business is lucrative, yet makes other people import goods from shadowy figures.
13. In fine the appeals are disposed off as follows:
(a) Confiscation of fifty cartons of mulberry raw silk approximately weighting 2910 kgs is upheld. Imperial Trading LLC are however allowed to re-export the same on payment of a fine of Rs. 3.00 lakhs.
(b) Confiscation of viscose rayon filament yarn Under Section 119 of Customs Act is upheld. Redemption fine is reduced to Rs. 1.00 lakh.
(c) Penalty on Impex Enterprises is reduced to Rs. 1.00 lakh.
(d) Penalty on Akil Rassai is set aside.
(Operative part pronounced in court)