Custom, Excise & Service Tax Tribunal
M/S Dalumi Hong Kong Ltd vs Commissioner Of Customs, Csi Airport, ... on 24 June, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Appeal No. C/167 & 304/11 (Arising out of Order-in-Original No. Commr/PMG/Adjn/11/2010-11 dated 10.02.2011 passed by the Commissioner of Customs, CSI Airport, Mumbai). For approval and signature: Honble Shri P.G. Chacko, Member (Judicial) Honble Shri Sahab Singh, Member (Technical) ======================================================
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 : Yes 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? ====================================================== 1. M/s Dalumi Hong Kong Ltd. 2. Commissioner of Customs, CSI Airport, Mumbai Appellants Vs. 1. Commissioner of Customs, CSI Airport, Mumbai 2. Shri Parez Hender Valmore 3. M/s DHL Express (India) Pvt. Ltd. 4. M/s Dalumi Diamond Manufacturers Respondents Appearance: Shri S.S. Sekhon with Shri R.D. Wagley Shri B.P. Pereira, Advocate JDR for Appellant No. 1 for Appellant No. 2 Shri B.P. Pereira JDR for Respondent No. 1 CORAM: SHRI P.G. CHACKO, MEMBER (JUDICIAL) SHRI SAHAB SINGH, MEMBER (TECHNICAL) Date of Hearing: 23 & 24.06.2011 Date of Decision: 24.06.2011 ORDER NO. WZB/MUM/2011 Per: P.G. Chacko
These appeals are directed against the Commissioners order confiscating diamonds under Section 113 of the Customs Act, 1962 with option for redemption by M/s DHL Express (India) Pvt. Ltd. (one of the respondents in the Revenues appeal) on payment of fine of Rs.30 lakhs and imposing a penalty of Rs.30 lakhs on Shri Perez Hender Valmore (another respondent in the Revenues appeal) under Section 114 of the Act.
2. 616.547 carats of cut and polished diamonds valued at Rs.2,85,24,926/- had been seized by the officers of the Directorate of Revenue Intelligence (DRI) from the possession of M/s DHL Express (India) Pvt. Ltd. (DHL for short) on 25.8.2010. A packet containing the diamonds concealed in a sports jacket had been brought to DHL (Courier) by Shri Perez Hender Valmore for export to Italy. He had also furnished a declaration to the courier to the effect that the packet contained garments and other personal goods only. The courier prepared an Airway Bill with the above person as the consignor and one Shri Giorgio Borrelli (Italy) as the consignee. Shortly after preparation of the Airway Bill, DRI officers stepped in, having received intelligence to the effect that diamonds were likely to be couriered through DHL. After inspecting the goods, the DRI officers seized them under a Panchanama. The valuation of the seized diamonds was got duly done under subsequent Panchanama on 26.8.2010. Subsequently, on 27.8.2010, the Managing Director and Asia Sales Manager of M/s Dalumi Diamonds (Dalumi Hong Kong Ltd.) came to the DRI office and informed that they had imported the diamonds for an exhibition held at Goregaon, Mumbai. They also gave an account of what happened to the diamonds imported by them for the said exhibition. They had imported a total quantity of 4422.395 carats of diamond valued at over US $ 59.9 lakhs, which were cleared at Customs. 887.244 carats of diamond were found to have been stolen whereupon a First Information Report (FIR) was filed with the Police. Documentary evidence of lawful import of the goods was also submitted to the Police. 37.21 carats of diamond were also found missing but the same was omitted to be reported to the Police. Indian Police recovered 305.46 carats of diamond on 26.8.2010. 616.547 carats of diamond were recovered by DRI taking the total recovery to 922.007 carats of diamond. DRI recorded a statement of the Managing Director of M/s Dalumi Diamonds under Section 108 of the Customs Act on 27.8.2010, wherein he stated that he had come to India to participate in an exhibition at Goregaon, Mumbai. He also stated the aforesaid facts relating to theft and recovery of diamonds. He further stated that he had identified the diamonds seized by DRI to be a part of the diamonds imported for the purpose of exhibition. It appeared to the DRI that Shri Perez Hender Valmore attempted to export 1641 pieces of cut and polished diamonds illegally by concealing the same in the aforesaid courier packet without declaration. Therefore, a show-cause notice was issued by the DRI alleging that the diamonds had been attempted to be exported illegally and hence liable to confiscation under Section 113(d), (e) & (i) of the Customs Act read with relevant provisions of the Foreign Trade (Development and Regulation) Act/Rules and that the noticees were liable to be penalized under Section 114 of the Act. Shri Perez Hender Valmore did not respond to the show-cause notice. M/s Dalumi Diamonds, in their reply to the show-cause notice, claimed ownership over the diamonds and prayed for permission to redeem the same. It was in adjudication to this dispute that the Commissioner passed the impugned order.
3. As already indicated, one of the appeals is by the Revenue, wherein the limited challenge is in relation to the learned Commissioners decision to give option for redemption of the diamonds to the courier. The appellant submits that the Commissioner ought not to have given the option to DHL to redeem the diamonds without waiting for the decision of the Criminal Court which was already seized of the case relating to ownership of diamonds. It is submitted that the option given to the courier to redeem the goods is contrary to the spirit of Section 125 of the Customs Act as there was rival claim for possession of the goods on the strength of ownership. In the appeal of the Revenue, one of the three respondents is Shri Perez Hender Valmore, who is stated to be an absconder. In any case, today, there is no representation for Shri Perez Hender Valmore despite notice. Another respondent in the Revenues appeal is DHL (Courier). Again, there is no representation for this party despite notice.
4. The learned Advocate, representing M/s Dalumi Diamonds Manufacturers, submits that DHL has not claimed the diamonds. In this connection, he produces a copy of letter dated 8.3.2011 by DHL addressed to the Commissioner of Customs, which says thus We write to inform you that DHL Express (India) Pvt. Ltd. will not exercise the option of paying fine in lieu of confiscation. There is no penalty on DHL, who, therefore, is not aggrieved by the Commissioners order. The contesting respondent in the Revenues appeal is Dalumi Diamonds Manufacturers. We are told that the correct name of this party is Dalumi Hong Kong Ltd. Appeal No. C/167/2011 was filed by M/s Dalumi Hong Kong Ltd., who are represented today by the learned Counsel. In this appeal, the limited prayer of the appellant is to recognize their ownership and order that the diamonds to be released to them. They have also requested for permission to re-export the goods in terms of Notification No. 3/89-Cus dated 9.1.1989 by condoning the delay beyond the prescribed period of six months.
5. We have heard the learned Counsel for M/s Dalumi Hong Kong Ltd. (appellant in Appeal No. C/167/11 and one of the respondents in Appeal No. C/304/11) and the learned JDR representing the Revenue.
6. The two issues arising for consideration are (a) Who is the owner of the confiscated diamonds, (b) Are the diamonds liable to confiscation under Section 113 of the Customs Act?
7. Learned Counsel has brought on record a copy of the learned Additional Chief Metropolitan Magistrates final judgment in C.C. No. 927/PW/2010, which was passed under Section 265F of the Criminal Procedure Code on 24.5.2011. Para 3 of the operative part of the learned Additional Chief Metropolitan Magistrates order reads thus: -
3. It is directed under Section 452 of Cr.P.C. that the seized diamonds i.e. 305 carats laying with Investigating Officer and 619 carats laying with DRI (Directorate of Revenue Intelligence) shall be returned to the complainant Guy Yehskil Yas. It appears from the records that Mr. Guy Yehskil Yas is Asia Sales Manager of M/s Dalumi Hong Kong Ltd. Learned Counsel points out that the judgment passed by the learned Additional Chief Metropolitan Magistrate under Section 265F of the Cr.P.C. is final as per Section 265G of the Cr.P.C. subject to Articles 136, 226 and 227 of the Constitution of India. Learned JDR acknowledges the fact that the diamonds in question have been directed by the Criminal Court to be released to M/s Dalumi Hong Kong Ltd. It would, therefore, appear that the first issue framed by us (relating to ownership of the goods) does not survive.
8. The question, now, is whether the diamonds confiscated by the learned Commissioner and offered for redemption by the Courier were liable to confiscation under Section 113 of the Customs Act. If the diamonds are held so liable, the owner can redeem the same subject to the provisions of Section 125 of the Customs Act. Otherwise, the diamonds should be unconditionally released to the owner.
9. Learned Counsel has argued with reference to the provisions of Section 113 of the Customs Act that there was no attempt to export the goods and hence the provision is not invocable. He submits that the filing of declaration by Shri Valmore with the courier may, at best, be considered as an act preparatory to export of the goods. However, such preparation would not amount to attempt to export the goods. Attempt to export can be made only subsequent to the preparation. In other words, according to the learned Counsel, the attempt starts after the preparation ends. In this connection, support is claimed from the following decisions: -
(i) Ranjit Export Private Ltd. Vs. Collector of Customs, Madras 1985 (21) ELT 353 (Mad)
(ii) Ramakrishna Aggarwal Vs. Collector of Central Excise & Customs, Orissa 1989 (39) ELT 183 (Ori)
(iii) Kashmiri Vs. Collector of Customs 1992 (57) ELT 284 (Tri)
(iv) Sheesh Narain Agarwal Vs. CCE, Nashik 1995 (76) ELT 207 (Tri).
Learned Counsel has relied on the interpretation given in the aforecited cases to the expression attempt to export. In his view, an attempt to export any goods should be reflected by positive acts like bringing of the goods to the customs area, filing of shipping bill etc. In the absence of such acts in this case, it cannot be held that the diamonds were attempted to be exported. In this manner, it has been argued that clauses (d), (e) and (i) of Section 113 of the Customs Act are not applicable. Therefore, the goods are liable to be released unconditionally to the owner adjudged by the Criminal Court.
10. Learned JDR submits that the declaration filed with the courier by Shri Valmore was one under Regulation 4(2) of the Courier Imports and Exports (Clearance) Regulations, 1998. It is submitted that the scheme of export through Courier includes the filing of such declaration. Had the courier not been intercepted by the DRI, the goods would have been exported. Therefore, according to the learned JDR, the filing of the declaration being part of a whole scheme embodied in the aforesaid regulations is liable to be recognized as attempt to export the goods. If that be so, the diamonds are liable to be confiscated in terms of clause (d) of Section 113 of the Act. In so far as option for redemption of the goods is concerned, it is submitted that this aspect can be reexamined by the Commissioner.
11. We have given careful consideration to the submissions. It cannot be denied that the declaration of Shri Valmore was filed with the Courier under Regulation 4(2) ibid. The regulations were promulgated by the CBEC under Section 157 of the Customs Act, 1962. The filing of the declaration is, therefore, to be recognized as an act done for a statutory purpose. At this juncture, we have got to examine the statement given by an employee of the Courier (statement dated 8.9.2010), wherein he stated inter alia that, when he realized that he had not checked the parcel properly, he contacted his Manager and informed him that a parcel was booked by a person of foreign origin and that he had only his hotel address. He further stated that he was, thereupon, asked by the Manager to do profile manifesting of the shipment, which he did. Learned Counsel has placed much significance on this part of the statement of the Couriers employee. According to him, this statement would indicate that the Courier did not want to proceed with the dispatch immediately. In other words, no attempt to export the goods can be alleged against the Courier. However, Counsel himself would confess that he does not know what profile manifesting is. It is, nonetheless, pointed out that the witness was not called upon to explain the meaning of the term. The benefit of doubt should be given to the Courier. We find that the very profile of the issue debated before us was not put across to the lower authority.
12. In so far as Shri Valmore (consignor) is concerned, he filed declaration with the Courier and left the counter. Obviously, his intention was to export the goods through Courier. The question whether the Courier had any intention to export the goods as agent of the consignor should be considered by the Commissioner as it was not examined in the impugned proceedings.
13. If, before the adjudicating authority in de novo proceedings, M/s Dalumi Hong Kong Ltd. can establish that the so-called profile manifesting of the parcel indicated their intention not to export the goods, they can surmount clause (d) of Section 113 of the Act. They have to discharge this burden of proof before the original authority. In so far as clauses (e) and (i) of Section 113 of the Act are concerned, we have no hesitation to hold that these provisions are not applicable. Admittedly, the parcel wherein the diamonds were found concealed was not brought within the limits of any customs area for the purpose of exportation. Hence clause (e) is inapplicable. Again, it is not in dispute that no shipping bill was filed in respect of the goods. Therefore clause (i) is also not applicable. The only question to be considered by the Commissioner is whether clause (d) is attracted. Section 113(d) reads thus: -
The following export goods shall be liable to confiscation:-
xxxxxxxxxxxxxxxxxxxx
(d) any goods attempted to be exported or brought within the limits of any customs area for the purpose of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force; Learned Counsel has emphatically submitted that as the goods were not brought within the limits of any customs area for any purpose whatsoever, clause (d) cannot be applicable. Obviously, the opening part of the said clause has been overlooked by the learned Counsel. Any goods attempted to be exported is an independent leg of clause (d). The adjudicating authority has to determine whether the diamonds were attempted to be exported contrary to any prohibition imposed by or under the Customs Act or any other law for the time being in force.
14. If, upon proper application of mind to the facts of the case and the evidence on record, the learned Commissioner finds that the Courier did not make any attempt to export the goods as agent of the consignor, the goods cannot be confiscated and will be liable to be released unconditionally to the owner. On the other hand, if it is found that there was an attempt by the Courier as agent of the consignor to export the goods, clause (d) of Section 113 of the Act would get attracted. However, option for redemption of the goods is liable to be given to the owner under Section 125 of the Customs Act in lieu of confiscation, particularly as the Criminal Court has ordered release of the goods to a functionary of Dalumi Hong Kong Ltd. In our view, the Criminal Courts direction to release the goods to the owner will not preclude the Commissioner functioning under the Customs Act from imposing the condition as to redemption fine.
15. The request of M/s Dalumi Hong Kong Ltd. for re-export of the goods in terms of the relevant Notification is also liable to be considered by the learned Commissioner. We are of the view that, in the facts and circumstances of this case, the delay of re-export is liable to be condoned.
16. In the result, we allow these appeals by way of remand with a request to the Commissioner to pass a speaking order as the issues remitted. In the circumstances of this case, the case should be disposed of with utmost expedition, at any rate within a period of three months from the date of receipt of this order.
(Dictated and pronounced in Court)
(Sahab Singh) (P.G. Chacko) Member (Technical) Member (Judicial)
Vks/
1