Custom, Excise & Service Tax Tribunal
3. Shri Vineet Kumar Saggar vs C.C., Amritsar on 25 June, 2013
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066 COURT NO. II Reserved on: 14/01/2013 Pronounced on:25/06/2013 Customs appeal No. 448-460/2006 [Arising out of common Order-in-Original No. 37/Cus/05 dated 6.1.2006 passed by the Commissioner of Customs, New Delhi] C/448-460/2006 1. M/s. Contessa Commercial Co. (P) Ltd. 2. Shri Raj Kumar Kishorepuria 3. Shri Anil Kishorepuria 4. M/s. SRM Pvt. Ltd. 5. M/s. Varun Enterprises 6. Shri Sunil Kishorepuria 7. M/s. ASK Exports 8. Shri N.D. Garg 9. Shri Manjit Singh 10. Shri Shambhu Kumar 11. Shri Vinod Garg 12. Shri Sanjeev Kumar 13. Shri Vineet Kumar Saggar Appellants Vs. C.C., Amritsar Respondent
C/149-153/2007 [Arising out of common Order-in-Original No. 37/Cus/05 dated 6.1.2006 passed by the Commissioner of Customs, New Delhi] C.C., Amritsar Appellant Vs.
1. M/s. Contessa Commercial Co. (P) Ltd.,
2. M/s. SRM Pvt. Ltd.
3. M/s. Varun Enterprises
4. Sri Kumar Gupta
5. Sri P. N. Pandey Respondents Present for the Assessee : Shri Prabhat Kumar & Shri Kamaljeet Singh, Advocates None appeared for Respondents 4 and 5 Present for the Respondent: Shri N. Pathak, D.R. Coram: Honble Shri D.N. Panda, Judicial Member Honble Shri Rakesh Kumar, Technical Member FINAL ORDER NO. 56729-56746/2013 Per D.N. Panda BACK GROUND OF THE CASE When it came to the notice of Revenue that 4 (four) exporting appellants in Table 1 below viz., (1) M/s. Contessa Commercial Co. (P) Ltd., 113, Park Street, Kolkata, (2) M/s. ASK Exports, 113, Park Street, Kolkata, (3) M/s. SRM (P) Ltd., 113, Park Stree, Kolkata, and (4) M/s. Varun Enterprises, D.N. Singh Road, Bhagalpur were indulged in making fraudulent claims of Drawback making misdeclaration of description of goods as gear cutting tools of Cobalt bearing high speed steel and heat resistance rubber tape as against inferior nature and quality thereof exported through CFS (OWPL), Ludhiana, in different consignments, thorough investigation into the history of their exports was made.
1.1 On chemical testing of the goods declared as gear cutting tools of cobalt, that was found to be made of low carbon steel as per IS226 i.e. mild steel and were without cobalt. The CTL Mumbais report dated 05.09.2000 in respect of seven samples drawn from the goods declared as heat resistant rubber tension tape stated as follows:
Each of seven samples is in the form of cut piece of grey coloured tape. Each is composed of natural rubber, carbon black, in organic filters and additives. It breaks when stretched. Each is not vulcanised. Therefore, the sample is considered as compound of pre-vulcanised compound rubber. 1.2 It was found that all the four exporter appellants had made export of inferior quality of goods and aggregate value thereof was as depicted in column (3) of the Table below. Duty Drawback to the extent indicated against each appellant as per Column (4) of the Table below was paid to them while certain claims of drawback of the value by each such appellant as depicted in column (5) of the Table remained pending sanction as mentioned against each:
Sr. No. (1) Name of the Firm/ Company (2) Total Export Value (FOB) in Rs.) (3) DBK availed (4) DBK claim Pending (5)
1.
M/s. Contessa Commercial Co. (P) Ltd., Kolkata 3,0,91,466 85,26,423 18,08,700
2. M/s. ASK Exports, Kolkata 3,04,95133 1,09,1910 40,63,500
3. M/s. SRM (P) Ltd., Kolkata 59,54,315 13,55,000 Nil
4. M/s. Varun Enterprises, Bhagalpur 2,79,65455 60,30,800 30,35520 Total 9,45,06369 2,68,31323 89,07,720 1.3 Show cause notice was issued to the above four appellants with Annexure A-1 to A-4 relating to drawback already paid proposing recovery thereof and to deny drawback of the amount pending sanction exhibited by Annexure B-1 to B-3 of that notice.
1.4 Preliminary investigation revealed that one Shri Vinod Garg and Shri N.D. Garg who are appellants 1 and 2 in Table 5 herein below were master minded persons to defraud Customs authorities making misdeclaration of description of goods in the shipping bills acting on behalf of four exporting appellants, procuring inferior goods from non-existent firms to enable the exporters to claim higher draw back. Similarly, Shri Manjit Singh who is appellant No.6 in Table-5 was a known person of Shri N.D. Garg and a conduit to occasion fraudulent exports procuring fake invoices from the firms mentioned in the invoices which were non-existent. Such invoices were used to claim higher draw back.
1.5 Shri Sanjeev Kumar who is Appellant No.3 in Table-5 was connected with M/s. Krishna Harware and Mills Stores and fabricated invoices for occasioning above fraudulent exports for making undue claim of draw-back.
1.6 Shri Sambhu Kumar Appellant No.4 in Table-5 claiming to be proprietor of M/s. Jindal Alloys which supplied the exported goods was instrumental to provide fabricated documents as to procurement of misdeclared goods from that concern for export.
1.7 Similarly, Shri Vineet Kumar Saran Appellant No.5 in Table-5 connected with M/s. Jindal Alloys was also instrumental to occasion fraudulent export.
1.8 Shri Sandeep Kumar Appellant No.6 in Table-5 being connected to M/s. Jyoti Steel was instrumental to provide fabricated documents to occasion the aforesaid misdeclared export committing fraud against Revenue.
1.9 When the investigating authority found all the above persons in Table-5 hereinafter were concerned and intimately connected with each other to defraud Customs making fraudulent claim of drawback through mis-declaration of description of goods, they were brought to adjudication along with appellants 5, 6, and 7 of Table-1 who were their directors/partners of appellants 1 to 4 of that Table for appropriate consequences under law.
DIFFERENT APPEALS AGAINST ADJUDICATION CONSEQUENCES 2.1 Learned Adjudicating Authority examining various evidence on record completed adjudication against all the above concerns and persons by common adjudication order No. 37/Cus/05 dated 06.01.2006 dated 6.1.2006.
2.2 Appeals as depicted in the following Table-1 below were preferred by the exporter appellants as against order of adjudication:
TABLE-1 S.No. Name of the Party (1) (2)
1. M/s Contessa Commercial Co. (P) Ltd.
2. M/s ASK Exports
3. M/s SRM (P) Ltd.
4. M/s Varun Enterprises
5. Shri Raj Kumar Kishorepuria
6. Shri Anil Kumar Kishorepuria
7.
Shri Sunil Kumar Kishorepuria 2.3 Appellants in sl. No. 1 to 4 in Table-1 fraudulently claimed higher duty draw back on exports made by them. When such exports were questionable, draw back claim was denied and undue claim of draw back already availed in the past was ordered to be recovered. Appellants in sl. No. 5 to 7 of Table-1 owned the concerns at sl. No. 1 to 4 of that Table. All of them came in Appeal to Tribunal against the adjudication consequences. These appellants were represented by ld. Counsel Sri Prabhat Kumar.
2.4 Learned Adjudicating Authority ordered following consequences against appellant no. 1 to 4 in adjudication:
(i) Export of gear Cutting Tools of Cobalt Bearing High Steel and Hear Resistant Rubber Tension Tapes, made by M/s. Contessa Commercial Co (Pvt.) Ltd, M/s. A.S.K. Exports, M/s S.R.M. (Pvt.) Ltd. and M/s Varun Enterprises of aggregate value Rs. 5,04,59,061/- [Total of col-2 of Table-2 and 3 depicted below in this order i.e. Rs.3,55,89,478+Rs.1,48,69,583] on which drawback of Rs. 1,48,15,372/- (Rs. 122,76,059 at Col.4 of Table-2 below in this order + Rs.25,39,313 at Col.4 of Table-3 below in this order) were found to be misdeclared for which those were confiscated under Section 1139(d), 113(i) and 113(ii) of Customs Act, 1962. However such goods having been exported and not being available for confiscation, redemption fine of Rs. 30,00,000/- (Rs. Thirty lakhs only) was imposed under Section 125 of the Customs Act, 1962. Draw back claim on the export was not disbursed.
TABLE-2 DRAW BACK AVALIED AND PENDING IN RESPECT OF GEAR CUTTING TOOLS OF COBALT BEARING HIGH SPEED STEEL Appellants Value of goods on which draw back was availed Amt. of drawback availed Value of goods on which draw back claim is pending Amt. of drawback claim is pending.
(1) (2) (3) (4) (5)Contessa Commercial 1,23,22,805 53,60,423 Nil Nil ASK Export 1,78,07,796 76,75,500 66,09,905 40,63,500 SRM (P) Ltd.
Nil Nil Nil Nil Varun Enterprises 54,58,877 25,15,500 56,66,154 25,00,020 TOTAL 3,55,89478 1,55,51,423 1,22,76,059 65,63,520 TABLE-3 DRAW BACK AVALIED AND PENDING IN RESPECT OF HEAT RESISTANT RUBBER TENSION TAPES Appellants Value of goods on which draw back was availed Amt. of drawback availed Value of goods on which draw back claim is pending Amt. of drawback claim is pending.
Contessa Commercial 55,72,163 22,86,000 14,31,688 10,10,700 ASK Exports 60,77,432 32,43,600 Nil Nil SRM (P) Ltd.
6,44,489 4,95,000 Nil Nil Varun Enterprises 25,75,499 14,55,300 11,07,625 5,35,500 TOTAL 1,48,69,583 74,79,900 25,39,313 15,46,200
(ii) Aggregate duty drawback claim amounting to Rs. 81,09,720/- (Rs. 65,63,520+Rs.15,46,200 appearing in Column 5 of Table 2 and 3 above) made by M/s. Contessa Commercial Co (Pvt.) Ltd, M/s S.R.M. (Pvt.) Ltd. and M/s Varun Enterprises as mentioned in para 96(i) of adjudication order was disallowed. Gaskets valued at Rs. 2,92,31,936/- detailed in para 95(iv) of adjudication order were not confiscated and recovery of duty drawback of Rs. 38,00,000/- claimed and availed was dropped. Drawback claim of Rs. 7,98,000/- pending on account of Gaskets was ordered to be sanctioned, if otherwise admissible.
(iii) Aggregate duty drawback amounting to Rs.2,30,31,323/- (Rs.155,51,423+Rs.74,79,900 appearing in Col.3 of Table 2 and 3 above) availed by Appellants 1 to 4 in Table-1 aforesaid viz., M/s. Contessa Commercial Co (Pct.) Ltd, M/s. A.S.K. Exports, M/s S.R.M. (Pvt.) Ltd. and M/s Varun Enterprises was ordered to be recovered alongwith interest under Rule 16 of Customs & Central Excise Duty Drawback Rules, 1995, read with section 75 not being admissible. Appropriation of Rs. 49.30 lakhs deposited by Noticee No. 1 to 7 (in SCN) was ordered to be adjusted against the amount ordered to be recovered.
(iv) Penalty of Rs. 20,00,000/- (Rupees Twenty five lakhs only) was imposed on M/s Contessa Commercial Co. (p) Ltd. 113 Park Street, Kolkata under Section 114(iii) of the Customs Act, 1962.
(v) Penalty of Rs. 25,00,000/- (Rupees Twenty Five lakhs only) was imposed on M/s ASK Exports, 113 Park Street, Kolkata under Section 114(iii) of the Customs Act, 1962.
(vi) Penalty of Rs. 3,00,000/- (Rupees Three lakhs only) was imposed on M/s SRM (P) Ltd, 113 Park Street, Kolkat5a under Section 114(iii) of the Customs Act, 19962.
(vii) Penalty of Rs. 12,00,000/- (Rupees Twelve lakhs only) was imposed on M/s Varun Enterprises, D.N. Singh Road, Bhagalpur under Section 114(iii) of the Customs Act, 1962.
2.5 So far as appellant Nos. 5 to 7 depicted in the Table-1 aforesaid are concerned, they faced following consequence of penalty in adjudication:
(A) Penalty of Rs. 15,00,000/- (Rupees Fifteen lakhs only) was imposed on Sh. Raj kumar kishorepuria, R/o 3, Hanger Fort Street, Kolkata under Section 114(iii) of the Customs Act, 1962.
(B) Penalty of Rs. 20,00,000/- (Rupees Twenty lakhs only) was imposed on Sh. Anil kumar kishorepuria, R/o 3, Hanger Fort Street, Kolkata under Section 114(iii) of the Customs Act, 1962.
(C) Penalty of Rs30,00,000/- (Rupees Thirty lakhs only) was imposed on Sh. Sunil kumar kishorepuria, R/o 3, Hanger Fort Street, Kalkata under Section 114(iii) of the Customs Act, 1962.
3.1 Revenue represented by learned DR came in appeal against following 3 Respondent exporters as well as 2 Respondent individuals connected to the questioned exports as tabulated in Table-4 below:
TABLE-4 Sl.
No. Name of the party Appeal No.
1.
M/s. Contessa Comm. Co. P. Ltd.
C/149/2007
2. M/s. Varun Enterprises C/150/2007
3. M/s. SRM (P) Ltd.
C/151/2007
4. Shri Kumar Gupta C/152/2007
5. Shri P.N. Pandey C/153/2007 3.2 In respect of first three Appeals of Revenue, its grievance is that learned Adjudicating Authority should not have dropped proceedings on Gasket against the Respondents. These Respondents were represented by Sri Prabhat Kumar, Advocate In appeals at sl. No. 4 and 5 of the Table, grievance of Revenue is that proceedings against these two respondents should not have been dropped in adjudication by the Authority without bringing them to penal consequences of law. These were represented by none.
4. Following appellants appearing in Table-5 below being concerned and connected with questionable exports, facing penalties of the quantum mentioned against each u/s 114 (iii) of Customs Act, 1962 came in appeal before Tribunal and they were represented by Shri Kamal Jeet Singh, advocate:
TABLE-5 Srl.
No. Name of the party Penalties imposed u/s 114(iii) of Custom Act 1962
1.
Sh. Vinod Kumar Garg 8,00,000
2. Sh. N.D. Garg, 8,00,000
3. Sh. Sanjeev Kumar 1,00,000
4. Sh. Shambu Kumar 1,00,000
5. Sh. Vaneet Kumar 1,00,000
6. Sh. Manjit Singh 2,00,000 INVESTIGATION AND RESULT THEREOF Enquiry revealed that the 4 exporter appellants appearing in Sl. No. 1 to 4 of Table-1 aforesaid made false drawback claims on the basis of false, fictitious and fraudulent invoices/documents issued by the suppliers M/s. Garg Forging & Casting Ltd., M/s. Jyoti Steel, M/s. Jindal Alloys, M/s. Krishna Hardware & Steel, and M/s. Krishna Steel, showing that they had supplied the impugned goods.
5.2 Enquiry further revealed that appellants in Table 1 to 4 and 5 to 7 of Table-I and Appellants 1 & 2 of Table-5 had hand in glove to make export of inferior goods from Ludhiana and false claim of draw back was made on the basis of fake invoices. Aggregate drawback amount of Rs. 2,68,31,323 was unduly availed by the appellants in sl. no. 1 to 4 above of Table-1.
5.3 Outcome of investigation as appearing in Para 43 of the adjudication order was:
(A). M/s Contessa Commercial Co. (P) Ltd. 113, Park Street, Kolkata, exported substandard goods of FOB value of Rs. 3,00,91,466/- mis-declaring the same as gear cutting tools of cobalt bearing high speed steel, heat resistant rubber tension tape and gaskets from CFS (OWPL), Ludhiana involving draw back amount of Rs. 85,26,423/- was recoverable and drawback claim of Rs. 18,08,700/- pending was inadmissible.
(B). M/s ASK Exports, 113, Park Street, Kolkata, had exported substandard goods of FOB value of Rs. 3,04,95,133/- mis-declaring the same as gear cutting tools of cobalt bearing high speed steel and heat resistant rubber tension tape from CFS (OWPL), Ludhiana availing undue claim of draw back amount of Rs. 1,09,19,100/- which was recoverable and claim of draw back of Rs. 40,63,500/- pending was inadmissible.
(C). M/s Varun Enterprises, D.N. Singh Raod, Bhagalpur had exported substandard goods of FOB value of Rs. 2,79,65,455/- mis-declaring the same as gear cutting tools of cobalt bearing high speed steel, heat resistant rubber tension tape and gaskets from CFS (OWPL), Ludhiana making undue claim of draw back amount of Rs. 60,30,800/- was recoverable and claim of draw back of Rs. 30,35,520/- pending was inadmissible.
(D). M/s SRM (P) Ltd, 113 Park Street, Kolkata had exported substandard goods of FOB value of Rs. 59,54,315/- mis-declaring the same as heat resistant rubber tension tape and gaskets from CFS (OWPL), Ludhiana of aggregate availing under claim of draw back of Rs. 13,55,000/- was recoverable.
(E). The amount of drawback claimed by M/s Contessa Commercial Co. (P) Ltd. ASK Exports, M/s Varun Enterprises and M/s SRM (P) Ltd. was admitted by Sri N.D.Garg to be undue as that was much more than the market price of the goods.
(F). Sh. Sunil Kishorepuria, Chief Executive/Partner of the aforesaid four concerns i.e., in sl. No.1 to 4 in Table-1 in his voluntary statements dated 21-08-2002 & 22-08-2002 admitted commitment of fraud in connivance with S/Sh. Vinod Garg and N.D. Garg of Ludhiana exporting above-referred mis-declared goods in consideration of commission of 3% of total import turnover and allowing Sh. N.D. Garg to use the names of above four appellant concerns in the export and defrauded Revenue. He not only admitted the fraud committed but also surrendered all the pending claims of drawback (which was worked out to be Rs. 89,07,720/-) in column 5 of the Table appearing under Para 4.1 aforesaid. He admitted to pay back the drawback already claimed fraudulently on the mis-declared exports which was worked out to be Rs. 2,68,31,323/- (Ref: as appearing in Column 4 of the Table under Para 4.1 aforesaid) Admitting such fact, he also partly returned Rs. 49,30,000/- for the illegal claim of drawback amount received.
(G). Sh. Vinod Garg and N.D. Garg actively colluded with Kishorepuria group to make export by aforesaid four appellant concerns tabulated in sl.No1 to 4 of Table-1 obtaining fake invoices and also manipulating bank transactions through a racket making mere paper transactions facilitating opening of benami bank accounts to accommodate receipt and payments relating fictitious transactions.
(H). Four firms namely M/s Jyoti Steel, M/s Jindal Alloys, M/s Rama Krishna steel Traders, M/s R.K. Steel Traders were from Mandi Gobindgarh and M/s Krishna Hardware & Mill Store from New Delhi never existed at the addresses given in the invoices submitted by the group companies/firms of Kishorepurias showing purchase of gear cutting tools of cobalt bearing high speed steel, heat resistant rubber tension tape and gaskets from such fake concerns floated by S/Sh. Vinod Garg.
(I). Sri N.D. Garg created above 5 (five) fake firms to generate paper transactions showing purchase of exportable goods and those were created in the names of chosen persons of S/Sh. Vinod Garg and N.D. Garg of Ludhiana. Kishorepuria group of companies, Kolkata were aware of such non-existent firms. All these firms had issued bogus invoices without actual sale and delivery of any goods. The invoices were fictitious and false documents to cover up the mis-declared exports of firms/companies of Sh. Vinod Garg and N.D. Garg of Ludhiana as well as all by Kishorepuria group of companies, Kolkata.
(J). None of the firms of Mandi Gobindgarh and New Delhi appeared before Investigation nor deposed during investigation. They did not submit any purchase invoice on the basis of which they had sold their goods to the exporting appellants. Fictitious sales were made on papers without any goods moved form those firms which was corroborated from the reports of the Sales Tax authorities. All the firms were using fictitious Sales Tax Registration numbers and such firms were nonexistent at the addresses appearing on the fraudulent invoices. Shri Vaneet Saggar in his statements dated 23-08-2003 and 24-08-2003 corroborated fake transactions made through the false documents.
(K). The goods exported mis-declaring as gear cutting tools of cobalt bearing high speed steel, heat resistant rubber tension tape and gaskets by four exporting concerns of Kishorepurias were similar/identical to the goods exported by six fake firms of S/Sh. Vinod Garg and N.D. Garg of Ludhiana and a part of which was seized by DRI on May-June 2000 and on chemical test those were found to be cut pieces of mild steel and prevulcanised rubber with a value much lower than declared by the exporter. S/Sh. Sunil Kishorepuria, Manjit Singh and N.D. Garg admitted such fact in their statements.
(L). Manjit Singh, an authorised person of Sh. Vinod Garg dealing with central excise matters was found to be director in various concerns of S/Sh. Vinod Garg and N.D. Garg. In his voluntary statement dated 06-08-2002 and 07-08-2002 he admitted that he was also getting the goods cleared from Customs on behalf of four concerns of Kishorepurias of Kolkata.
(M). There was evidence of reverse payments to Sh. N.D. Garg by M/s Jyoti Steels through bearer cheques number 623535 and 623536 both dated 18-01-2000 for Rs. 4,83,800/- and Rs. 5,16,200/- respectively from their account number 20103 maintained in State Bank of Hyderabad, Ludhiana showing nexus between them.
(N). Sh. Vinod Garg and Sh. N.D. Garg in collusion with S/Sh. Raj kumar Kishorepura, Anil Kumar Kishorepuria, Sunil Kumar Kishorepuria, Sanjeev Gupta, Vineet Kumar, Shambhu Kumar, Kumar Gupta, P.N. Pandy and Manjit Singh had exported mis-declared goods in the name of four concerns of Kishorepurias of Kolkatta over-invoicing such goods and managing Customs clearance to avail higher amount of drawback. Such fact was corroborated from the test reports of representative samples drawn from the consignments seized by DRI during May/June 2000 at Ludhiana and Mumbai, in respect of similar/identical export of goods of six fictitious firms of Vinod Garg of Ludhiana, which were earlier cleared by Customs staff of CFS (OWPL), Ludhiana and found on testing by CRCL, Mumbai to be goods other than what was described in the shipping Bills.
(O). Sh. Vinod Garg managed exports made by his six fictitious firms as well as exports of M/s Contessa Commercial Co (Pvt) Ltd. M/s Varun Enterprises, M/s A.S.K. Exports and M/s S.R.M. (Pvt) Ltd., colluding with the Customs officers following dubious practice. Non appearance and non-submission of requisite information and records/documents by S/Sh. Vinod Garg, N.D. Garg, Snajeev Kumar Gupta, Shambju Kumar, Vineet Kumar, Kumar Gumta, P.N. Pandy and Manjit Singh, in spite of repeated notices and summons proved that they had no defence against their fraudulent activities and fake sale of gear cutting tools of cobalt bearing high speed steel, heat resistant rubber and gaskets made to Kishorepuria group of concerns.
(P). The market value of the exported goods was much less than the amount of drawback claimed and received by four firms/companies of Kishorepurias of Kolkata. Accordingly such drawback claim was not allowable as per section 76 of the Customs Act, 1962. This was corroborated by Sh. N.D. Garg in his statements dated 25.8.2003 (in para 41 of SCN). Further, the fact that Kishorepurias surrendered the pending drawback claims (Rs. 89.07 lakh) and paid back a part of drawback availed fraudulently, proved mis-declaration of the goods and value as well as commitment of fraud.
(Q). As per Rule 9 of Central Excise & Customs duty drawback Rules 1995 M/s Contessa Commercial Co. (Pvt). Ltd M/s Varun Enterprises, M/s A.S.K. Exports and M/s S.R.M. (Pvt) Ltd failed to satisfy the Investigating Authority that their drawback claims were genuine.
(R). On scrutiny of shipping bills, it was evident that the Customs staff posted at CFS (OWPL), Ludhiana form Inspector to Deputy Commissioner colluded with the above exporters and failed to draw samples from each consignment/shipping bill acted in violation of the instructions as sample was required to be drawn from goods covered by each shipping bill where the amount of drawback per shipping bill was Rs. 1 lakh and above and where admissibility of the drawback could not be decided on the basis of visual examination of the case. As the consignment exported was declared as gear cutting tools of cobalt bearing high speed steel, heat resistant rubber tension tape and gaskets which were entitled to one of highest rates of export incentives and which on visual examination could not be confirmed as per declaration, the instructions for drawl of samples from each shipping bills as given in circular number 34/95-Cus dated 6.4.95 issued under F. No. 609/34/95-DBK by the Govt. of India, Ministry of Finance, Department of Revenue, New Delhi, were not followed. False claim of drawback by the exporters was abetted by Customs officers which was corroborated from the statement of Manjit Singh, an employee of Vinod Garg and N.D. Garg.
(S). The claimants submitted fake Bill of Ladings to Customs authorities for claiming drawback payments as M/s IIC Container Line Pvt. Ltd. 2, Church Lane, Kolkatta confirmed the fake nature thereof.
EXTENT OF EXAMINATION BY ADJUDICATING AUTHORITY
7. Against the aforesaid result of investigation, show cause notice was issued bringing home the appellants in Table-1 and Table-5 and Respondents in Table4 aforesaid to the fold of law for adjudication. On examination of reply to SCN and evidence, learned Adjudicating Authority dealt with the gravity of the matter involved in the aforesaid appeals elaborately in Para 83 of his adjudication order exhibiting his extent of examination and findings based on cogent evidence.
7.1 The offending exported goods when claimed to be procured from Jyoti Steel, Mandi Gobindgarh, Jindal Alloys, Mandi Gobindgarh, Ram Krishna Steel Traders, Mandi Gobindgarh and Krishna Hardware & Mills Store, New Delhi inquiry was conducted to ascertain existence of these concerns and also to assess genunity of the transactions. Inquiry revealed that Krishna Hardware Mills & Store did not exist at the given address. The telephone number mentioned in its invoice belonged to Shyam Metal of Chowri Bazar. When inquiry was done with Shyam Metal, whereabouts of Krishna Hardware & Mills Store could not be stated by that concern. This proved that fabricated documents were procured to show procurement of goods from Krishna Hardware & Mills Stores.
7.2 Inquiry was conducted to locate to find Jindal Alloys, Jyoti Steel and Ramakrihsna Steel. It was revealed that Jindal Alloys was non-existent at the given address. Similarly, neither Rama Krishna Steel nor Jyoti Steel existed at the given address. Further inquiry revealed that none of these firms were genuine.
7.3 Inquiry conducted with Sales Tax authorities of Mandi, Gobindgarh proved that Jindal Alloys, Jyoti Steel and Rama Krishna Steel mentioned bogus sales tax registration numbers on the invoices produced by aforesaid appellant exporters. It was also informed by sales tax authorities that registration taken by Ramakrishna Steel Traders was cancelled w.e.f. 20th August, 2000.
7.4 Inquiry conducted with State Bank of Hyderabad proved that Jindal Alloys, Jyoti Steel, Rama Krishna Steel Traders and Krishna Hardware & Mills Store accounts were maintained with that bank. Shri Vinod Garg & Shri N.D. Garg had floated Jindal Alloys, Jyoti Steel, Ramakrishna Steel & Krishna Hardware & Mills Store to issue fraudulent sales bills invoices and black money earned was routed through the bank accounts of above benami concerns who accounts were maintained with State Bank of Hyderbad by name lenders. This has been brought out clearly when account of different concerns as tabulated below were examined by investigation:
Name of the firm Account No./Date of Opening Proprietor Introducer Date of closing of account Jindal Alloys, Kanganwal Road, VPO-Jugiana, Ludhiana 20125 29.7.2000 Shambhu Kumar S/o Jagdish Poddar N.D. Garg 21.08.02 Jindal Alloys, Plot No.11358, Gali No.3, Partap Nagar, Near Sangeet Cinema, Ludhiana 25037 15.02.2000 Vineet Kumar S/o Vasudev Saggar N.D. Garg 29.05.00 Jyoti Steels 684-Industrial Area-B, Ludhiana 20103 04.01.2000 Sanjeev Kumar S/o Gian Chand N.D. Garg 29.05.00 Rama Krishna Steel Traders, 11358, Gali No. 3, Partap Nagar, Near Sangeet Cinema, Ludhiana 25039 15.02.2000 N.G. Garg S/o Sh. Shri Ram Manjit Singh 29.05.00 Krishna Hardware & Mill Store, 11358, Gali No. 3, Partap Nagar, Ludhiana 250038 15.02.2000 Sanjeev Kumar S/o Gian Chand Manjit Singh 29.05.00 Krishna Hardware & Mill Store, Kanganwal Road, VPO Jugiana, Ludhiana 20124 28.07.2000 Paratap Nath Pandy N.D. Garg 29.05.00 7.5 Jindal Alloys was found to be floated by Shri Vineet Kumar sagar and its bank account was opened by the introduction of Shri N.D. Garg. That account was linked with the account of Jindal Alloys. It was found that Shri Vineet Kumar Saggar was Director in Garg Industries Ltd., Adhunik Alloys Ltd. & Kartik Overseas Ltd. which were controlled by Shri Vinod Kumar Garg and N.D. Garg. Account of Jindal Alloys bearing No. 250037 was operated by Sambhu Kumar and that was linked with the account No. 20125 operated by Vineet Kumar.
7.6 Bank account No. 25038 in the name of Krishna Hardware and Mill Stores was operated by Shri Sanjeev Kumar. That was opened by introduction of by Shri Manjit Singh who was Central Excise clerk of Garg Forging & Casting Ltd. He was name lender to Vinod Kumar Gar and N.D. Garg as well as Kishorpuria group who were connected with the Appellant exporting companies/concerns under appeal in this batch of appeals. Sanjeev Kumar was connected with the concerns controlled by Vinod Kumar Garg and N.D. Garg and the group of companies controlled by Kishorpria group of Kolkata.
7.7 The proprietor of Krishna Hardware & Mills Store was Pratap Nath Pandey. He was also a name lender. He was operating bank account No. 20124 with State Bank of Hyderbad.
7.8 Sanjeev Kumar was name lender proprietor for Jyoti Steel and he was operating bank account No. 20103 with State Bank of Hyderbad. Jyoti Steel was non-existent and fictitious. It bank account was opened by introduction of N.D. Garg.
7.9 Bank account number 25039 was opened in the name of Ram Krishna Steel Traders with State Bank of Hyderabad. That was opened by its proprietor N.D. Garg and introduce for opening the back account was Manjit Singh who was authorised excise clerk of SRG Forge Overseas. Said Ramakrishna Steel Traders had issued fabricated invoices of sale of goods misdeclared as gear cutting tools of cobalt bearing high speed steel and heat resistant rubber tension tape to Kishorpuria group of companies.
7.10 Jindal Alloys had issued fabricated invoices showing goods misdeclared as gear cutting tools of cobalt bearing high speed steel to Kishorepuria group of companies. Similar, Krishna Hardware & Mills Store had issued fabricated invoices showing sale of goods misdeclared as gear cutting tools of cobalt bearing high speed steel and heat resistant rubber tension tapes to Kishorepuria group of companies.
7.11 Materials on record proved issuance of fictitious invoices by above non-existent trading concerns and goods were misdeclared as gear cutting tools of cobalt bearing high speed steel and heat resistant rubber tension tapes. Kishorpuria group of companies made false claim of high drawback while the goods meant for export were found to be inferior quality goods on testing technically. Which were subject matter of fictitious purchases from above concerns under fake invoices. Claiming the misdeclared goods purchased from fictitious firms, the exporting company/concerns procured inferior goods from different sources and those goods were meant for export to make undue claim of high rate of drawback.
7.12 Fictitious firm having been created by Vineet Kumar Garg and N.D. Garg they were master mind behind the fraudulent export. They extended their hands to Kishorepuria group of companies to make undue claim of high rate of drawback with hand in gloves of each other.
7.13 Shri Manjit Singh was conduit in processing the export documents. Shri Sambhu Kumar, Sanjeev Kumar and Vineet Kumar Saggar being name lenders to the fictitious firms were abettors to the fraudulent exports made to claim higher of drawback unduly. CRCL report proved that the goods meant for export were inferior and high rate of drawback was claimed falsely.
8. Learned Adjudicating Authority upon assessment of strength of evidence precisely determined the drawback disbursed to be recoverable and drawback pending sanction deniable as tabulated in Table-6 as under in terms of Para 96 of adjudication order:
TABLE-6 DRAW BACK AVALIED AND PENDING IN RESPECT OF GEAR CUTTING TOOLS OF COBALT BEARING HIGH SPEED STEEL + HEAT RESISTANT RUBBER TENSION TAPES EXPORTED NOTICEE WISE Noticee (1) Amt. of drawback already availed (2) Pending sanction of amt. of drawback claims (3) Total amt. of drawback claimed (4) Contessa 76,46,423 10,10,700 86,57,123 ASK 1,09,19,100 40,63,500 1,49,82,600 SRM 4,95,000 Nil 4,95,000 Varun 39,70,800 30,35,520 70,06,320 Total 2,30,31,323 81,09,720 3,11,41,043 ARGUMENTS ON BEHALF OF ASSESSEES 9.1 Learned Counsel Shri Prabhat Kumar appearing for the parties in Table-1 and parties in sl. No. 1 to 3 of Table - 4 submits that when exports were made without seizure of goods, there cannot be any apprehension of export of inferior quality thereof to deny the drawbacks pending sanction and recover the drawback legitimately paid to the appellant. When the officers of the department did not speak anything against quality of goods exported at the time of check as is apparent from their statement summarised in Para 33 of the impugned order, nothing can be held against the appellant and allegation of export of inferior quality goods cannot be made subsequent to export. There were genuine purchases of the goods from the market as the appellant company was merchant exporter and the goods purchased were of better standard and quality for which drawback at proper rate was claimed. All the goods having under gone check by the customs authority, the appellant exporter and the Directors/Partners thereof cannot be imputed to charge at a later stage alleging that they had hand in glove with each other to export inferior quality goods. Cross examination asked for was not allowed and the averments came out in cross examination in the cases examined were not considered by the Adjudicating Authority.
9.2 In was further submitted by Sri Prabhat kumar that CRCL Report cannot be relied upon evidence by Revenue as none of the customs officers examining the goods proved the exports to be misdeclared to claim undue drawback and failure to allow cross examination of the witnesses of Revenue, adjudication does not sustain.
9.3 It was also argued by learned Counsel that suppliers did not speak against the appellant exporter of Director/Partners thereof. All the export realisation were made and came through bank account. Even all the four suppliers of the exported goods appeared before the learned Adjudicating Authority to explain that the entire supply was bona fide and no inferior goods were supplied by them. Therefore all the appeals in sl. No. 1 to 7 of Table-1 to this order may be allowed.
9.4 So far as appeals of Revenue against Respondents in sl. No.1 to 3 of Table-4 of this order is concerned it was submitted that ld. Adjudicating Authority did not find any thing wrong with these respondents in export of Gasket for which he dropped proceeding against such export rightly with cannot be reopened by Revenues demerited appeal.
10.1 Shri Kamaljeet Singh, learned Counsel appearing on behalf of the appellants in Table No.5 of this order submits that they are not liable to penalty for no wrongful involvement in the exports. Neither they deliberately acted to defraud customs nor acted in defiance of law. They made genuine transactions with the exporters and goods of proper quality was procured from existing concerns. They did not deliberately supply any inferior goods to the appellant exporters. There were also no abatement done for which they cannot be brought to the penal consequences of law. Their role was only to expedite export and provide assistance of procurement of the goods exported. They have not involved themselves knowingly to procure the goods of inferior quality from any non-existent concern nor were the goods supplied by them overvalued. They were all proper dealer of goods for which bona fide purchases were made. Therefore, imposition of penalty on them under Section 114 (iii) of Customs Act is contrary to law.
11.1 Learned A.R. Shri Pathak on behalf of Revenue brought out that all the four exporters in sl. No. 1 to 4 of Table-1 to this order were family concerns of Kishorepuria group and controlled by them. That was one man show. The exports made by those appellants during January, 2000 to May, 2000 were found to be of inferior quality goods as proved by laboratory report of CRCL, Mumbai. There was deliberate mis-declaration of description of goods exported and the goods described in the shipping bills differed in quality. Fake invoices were procured from non-existent dealers to make higher claim of drawback by the appellant exporters without disclosing real source of purchases. When the investigation detected all fraudulent activities, not only the exporter appellants came up to return back part of the drawback availed but also admitted to forego their drawback claim pending. It is full proof case of Revenue that papers were only fabricated to show that procurements were genuine. Seller of the exported goods who have issued invoices were proved to be non-existent and the invoices were proved to be fake and fabricated. Testimony of various witnesses lent credence to the case of Revenue. Benami Bank Accounts were operated by both the Gargs with their conscious knowledge to impress Revenue that there were real transaction made while all fake transactions were only made to defraud Revenue. All the assessee appellants had hand in glove to be enriched at the cost of Revenue. The appellant in sl. No.5 to 7 of Table 1 were gainer of undue claim of drawback and fostered misdeclared goods to be exported. So also they were consciously involved in the undue claim of draw back. Therefore, all the 7 appeals in Table-1 to this order may be dismissed.
11.2 It was also submission of Revenue that drawback should not have been allowed on gaskets by learned Adjudicating Authority for which Revenue has been aggrieved. When there was export of inferior gaskets made by respondent exporters at sl. No.1 to 3 of Table-4 to this order learned Authority should not have dropped the proceedings against them. Similarly, exonerating Respondents 4 and 5 of that Table i.e., Shri Kumar Gupta and Shri P.N. Pandey from penal consequences of law was unwarranted as they were conduits to facilitate the misdeclared and fraudulent export of inferior quality goods to enable the exporters to make gain from the claim of higher drawback against inferior goods exported. They should have been penalised.
11.3 So far as appellants in sl. No.1 to 6 of Table-5 of this order is concerned it was submitted by Revenue that appellants at sl. No.1 and 2 of that Table were master minded persons who connived with the merchant exporter to procure inferior quality goods from market and facilitated export thereof. Appellants in sl. No. 3 to 6 were instrumental to appellant 1 and 2 of Table-5 to act on their instructions and open bank accounts to route black money to accommodate fake purchases from non existent dealers. They were name lenders to appellant No.1 and 2 of Table-5. All the 4 appellants equally contravened law and had hand in glove with Appellant 1 and 2 to be their servant to do mischief against Revenue. Therefore their appeal should be dismissed.
12. Heard both sides and perused the record.
13.1 Result of investigation as depicted herein before remained uncontroverted except mere plea of technical report not relevant and cross examination not allowed. Appellants 5 to 7 Table-1 aforesaid had hand in glove with the master minded appellants in sl. No.1 and 2 of Table 5 to procure inferior goods from unknown source misguiding the investigation that those were procured from the fictitious concerns named by investigation in its result of investigation summarised herein before and fake invoices fabricated by all of them.
31.2 Investigation made through enquiry and found that Revenue was defrauded by undue claim of DEPB benefit by Kishorpuria group consisting appellants 5 to 7 of Table-1 aforesaid under close understanding with appellants 1 and 2 of Table 5. Entire investigation result depicted at the our set and adjudication finding brought out truth and close connection of entire racket acting in defiance of law making fraudulent export to claim undue benefit of DEPB claim. When reinvestigation gathered cogent evidence against Kishorpuria group, they came forward to surrender part of the DEPB claim made by them and deposited the same with investigation. Their contumacious conducts came to broad day light.
13.3 Revenue proved its case in minute detail and established truth by fruitful investigation result to make its story very believable. The conduits in sl. No.3 to 6 of Table 5 were found to be involved in the entire team of racketeers to defraud Revenue and they hand tools of appellants 1 and 2 of Table - 5. None of the appellants in Table 1 and 5 proved to be innocent and failed to lead cogent evidence to disturb adjudication finding. They did not repel any of the arguments of Revenue with cogent evidence. Forceful argument of Revenue established adjudication finding to be fair and justified and remained uncontroverted by the appellants in Table 1 and 5 aforesaid.
14.1 Apex explaining the term concerned appearing in section112 of the Customs Act, 1962 in the case of Sachidananda Banerji V. Sitaram Agarwala 1999 (110) ELT 292 (SC) laid down the law holding that the term concernedis to be given wide interpretation and even if a person has no physical connection with the offending goods, he is liable if he is interested or consciously takes any steps to promote an illegality. It has been held by apex Court in the case of RadhaKishan Bhatia V. UOI 2004 (178) ELT 8 (SC) that it is immaterial what meaning be attributed to the word concerned. It can have the meaning interested and it may also have the meaning involved or engaged or mixed up. It has further been laid down in the case of Bhagwanb Swarup and Others V. State of Maharashtra - AIR 1965 SC 682 that an agreement between the conspirators need not directly prove the offence of conspiration which can be established by either direct or circumstantial evidence.
14.2 In the present case, the Appellants in Table 1 and Table 5 resorted to fraud consciously by their ill design as was found by investigation and adjudicating authority. Their conscious knowledge of mis-declaration as to description of the goods as well as value of the export made from India was proved when they had intention to make ill gain from undue claim of DEPB. Motive of all these appellants was oblique to promote illegality.
14.3 Investigation discovering truth by extensive enquiry brought out neatly the intimate connection of the racket and their conscious involvement to benefit each other. The Appellants in Table 5 were so keenly involved with Kishorepuria group, that they became abettor causing serious prejudice to the Customs which cannot be denied. Having echoing evidence on record by investigation, establishing live link and close proximity of the above appellants inference drawn by the Adjudicating Authority cannot be disturbed against them since presumption of innocence was countered by Customs by the presumption of guilt which could not be assailed by the appellants.
14.4 Department is not required to prove its case with mathematical precision to a demonstrable degree; for, in all human affairs absolute certainty 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 mans estimate as to the probabilities of the case.
14.5 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 v. 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 extremely 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.
14.6 The standard of proof in a civil case is preponderance of probabilities. In a civil case there is no burden cast on any party similar to the one in a criminal proceeding. Following the ratio laid down in CIT v. Durga Prasad More - 82 ITR 540, 545-47 (SC) it may be said that science has not yet invented any instrument to test the reliability of the evidence placed before a Court or a Tribunal. Therefore, the courts and Tribunals have to judge the evidence before them by applying the test of human probabilities. Human minds may differ as to reliability of a piece of evidence. But in that sphere the decision of the final fact finding Authority is made conclusive by law. The normal rule which governs civil proceedings is that a fact can be said to be established if it is proved by a preponderance of probabilities. A fact is said to be proved when the court either believes it to exist or considers its existence so probable that a prudent man ought, under the circumstances of the particular case to act upon the supposition that it exists. The belief regarding the existence of a fact may thus be founded on a balance of probabilities. A prudent man faced with conflicting probabilities concerning a fact situation will act on the supposition that the fact exists, if on weighing the various probabilities he finds that the preponderance is in favor of the existence of the particular fact. As a prudent man, so the court applies this test for finding whether a fact in issue can be said to be proved. When learned Adjudicating Authority followed principles of preponderance of probability in other cases, His failure to follow such principle makes his adjudication making the respondent charge free is faulty and is liable to be set aside.
14.7 Escapement of misdelcared goods resulting in fraud against Customs (Revenue), proved from governing facts, attendant circumstances and conduct of the parties using fraudulent documents for export, cannot be brushed aside accepting the plea that Customs failed to check the goods exported nor the same tested at the time of export. If such plea is entertained, the economy will be in jeopardy and fraud against the State shall perpetuate. Secrecy and stealth being covering guards of ill designed act, it is normally hardship for Revenue to unravel every link of the process. Revenue successfully corroborated mala fide of Appellants when material facts and evidence relating to their ill design remained in their special or peculiar knowledge.
14.8 When fraud surfaces, that unravels all. Revenues stand is fortified from the Apex Court judgment in the case of UOI v. Jain Shudh Vanaspati Ltd. - 1996 (86)E.L.T. 460 (S.C.). So also fraud nullifies every thing as held by Apex Court in CC v. Candid Enterprises - 2001 (130) E.L.T.404 (S.C.) and in the case of Delhi Development Authority v. Skipper Construction Company (P) Ltd - AIR 1996 (SC) 2005. Escapement of offending goods from notice of Revenue was result of fraud against Revenue. The frauds committed by the perpetrators of the offence were in close connivance with the Customs Officers. The Apex Court in the case of S P Chengalavaraya Naidu v. Jagannath - AIR 1994 SC 853 and in the case of Ram Preeti Yadav v. UP Board of High School and Intermediate Education - AIR 2003 SC 4268 has held that no court in this land will allow a person to keep an advantage which he obtained by fraud.
14.9 White collar crimes committed under absolute secrecy shall not be exonerated from penal consequence of law following Apex Court judgment in the case of K. I. Pavunny v. AC, Cochin - 1997 (90) E.L.T.241 (S.C.). An act of fraud on Revenue is always viewed seriously. Fraud and collusion vitiate even the most solemn proceedings in any civilized system of jurisprudence. It is a concept descriptive of human conduct either by letter or words, which includes the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letter.
14.10 It has been held by Apex Court in the case of Commissioner of Customs, Kandla v. Essar Oil Ltd. - 2004 (172) E.L.T. 433 (S.C.) that by fraud is meant an intention to deceive; whether it is from any expectation of advantage to the party himself or from the ill will towards the other is immaterial. The expression fraud involves two elements, deceit and injury to the deceived. Undue advantage obtained by the deceiver, will almost always call loss or detriment to the deceived. Similarly a fraud is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by anothers loss. It is a cheating intended to get an advantage. (See S.P. Changalvaraya Naidu v. Jagannath [1994 (1) SCC 1].
14.11 In a leading English case i.e. Derry and Ors. v. Peek (1886-90) All ER 1 what constitutes fraud was described thus: (All ER p. 22 B-C) fraud is proved when it is shown that a false representation has been made (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly, careless whether it be true or false. This aspect of the matter has been considered by Apex Court in Roshan Deen v. Preeti Lal [2002 (1) SCC 100] Ram Preeti Yadav v. U.P. Board of High School and Intermediate Education [2003 (8) SCC 311], Ram Chandra Singhs case (supra) and Ashok Leyland Ltd. v. State of T.N. and Another [2004 (3) SCC 1]. Suppression of a material document would also amount to a fraud on the court (see Gowrishankar v. Joshi Amha Shankar Family Trust, [1996 (3) SCC 310] and S.P. Chengalvaraya Naidus case AIR-1994 SC-853. No judgment of a Court can be allowed to stand if it has been obtained by fraud. Fraud unravels everything and fraud vitiates all transactions known to the law of however high a degree of solemnity.
15 Misdeclaration of descriptions and value was proved. So, also undue claim of DEPB proved from the aforesaid discussions for which appeals of appellants in sl. No. 1 to 7 in Table-1 and appellants in sl. No. 1 to of Table-5 are dismissed.
16. So far as appeal of Revenue is concerned ld. Adjudicating Authority did not discussed in minute detail nor given finding on the export of gaskets and consequence of law arose in respect of such export. Therefore, Revenue appeal against respondents 1 to 5 in Table 4 aforesaid are remanded to ld. Adjudicating Authority who shall issue notice to them for re-adjudication taking grounds of appeal of Revenue into account. Respondents are entitled to reasonable opportunity of hearing.
(Dictated & pronounced in the Open Court on 25/06/2013) (RAKESH KUMAR) (D.N. PANDA) TECHNICAL MEMBER JUDICIAL MEMBER *Satish 14 2 C/448-460/2006 & C/149-153/207