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i) whether the impugned goods which are the subject matter of this case have been sent by the supplier to the importer through a genuine mistake in view of the goods actually ordered by the importer and if so

ii) the importer can be allowed to re-export the goods to the supplier without any penal action under the Customs Law.

Ld. Collector after drawing these issues went on to discuss the allegation of the department, in as much as the Deptt. alleged that the importer managed to fabricate evidence to show that they had already taken up the matter as regards the wrong supply of the goods on the basis of difference in the seal numbers on the containers vis-a-vis the seal numbers as shown in the Bill of Lading, with their supplier as early as 1.11.1991, only after the misdeclaration made by the importer had been detected by the department. In this behalf, the department had relied upon the statement of S/Shri R.S. Malik and M.S. Malik, the Directors of the CHA's firm, namely, M/s. Perfect Handling and Transport Ltd. wherein they had inter alia stated that the discrepancy in the seal numbers was noticed by the CHA's staff on 4.11.1991 and thereafter Shri Pawan Goel directed him (Shri Rajinder Singh Malik) to get it amended from the shipping line, which was done on 6.11.1991. The department had also relied upon the statement of the telex office after according to which no telex was made by the party from 30.10.1991 to 3.11.1993. The ld. Collector has noted that the importers denied this matter. In support of their contentions they had produced copies of the telex sent by them to their supplier on 1.11.1991 and the subsequent telexes sent back to them by their supplier confirming the wrong supply of the goods. They have also produced a copy of the telex dt. 1.11.1991 sent by them to their supplier M/s. Abu Shanab Metals Establishment, Jordan and proof of receipt by the aforesaid supplier, duly attested by one Shri N.G. Rao, Attache (Cons.) Embassy of India, Amman, stating "Seen the original in the Embassy of India, Amman. True copy attested". There is also a certificate endorsed on the body of this copy of the telex by Deputy Regional Manager, GATEX certifying that "answer back of the calling party 31-65666 of called party 23351 (Jordan) has passed through GATEX. Date/timing can be confirmed on receipt of the Nov. Bill". This certificate is dt. 6.2.1992. Another certificate showing the party had not received the Bill for their telex for the month of Nov. was also produced. As against this, the only evidence produced by the Department that no telex was sent by the importer to their supplier is Annexure-J to the show cause notice which according to the Collector appeared is a record of some calls made. The Collector held that it does not show the name of the party to whom it pertains. He has noted that the endorsement made on this sheet by one Shri S.S. Gokhar, DEC (GATEX) reads : "Calls made by Telex No. 3165666 RAUL IN for the period 30.10.1991 to 3.11.1991 were observed. There is no call made by the party from 1.11.1991 to 3.11.1991". The Collector has noted that this endorsement does not say that no calls were made to Jordan as alleged by the department. He has noted that it is further observed that the sheet of Annexure-J of the show cause notice mentions particulars of any 4 calls made on 30.10.1991 & 31.10.1991. There is no mention of calls made in November, 1991. Therefore, the Collector observed that on the face of it the endorsement made on the sheet by Shri S.S. Gokhar on 25.2.1992, without any official stamp saying that no calls were made by the party from 1.11.1991 to 3.11.1991, when the sheet does not indicate any calls made during Nov. 1991, does not appears to be in order. He held that it cannot be solely relied upon, especially in the face of evidence adduced by the importer. He held that the explanation given by the importer that they had sent a telex to their supplier on 1.11.1991 itself as soon as they came to know about the difference in the seal Nos. before the Customs examination which appears to be quite convincing. Hence he held that the importer had taken necessary action to inform the supplier about the discrepancy in seal Nos. before the discrepancy in the goods declared by the importer and those actually supplied was noticed on examination by the Customs Department. He held that as for the statements of the CHA's, there is no other independent evidence to corroborate the same, whereas on the contrary the evidence produced by the importer in his view is clinching enough to counter the statements of CHA's.

The SUNFLAME'S opinion is:

Some sample of unfinished brass casting in shape of burners have been shown to me by Custom Officer.

I am of the opinion that these can be used as burner in gas stove/cooking ranges after doing required further finishing/processing.

The market rates of these burners is Rs. 85/- to Rs. 90/- per kg. approx. in the market.

Ld. DR pointed out that the categorical opinion of the leading manufacturers is that the item imported is "unfinished brass casting in shape of burners". They have given a very clear and categorical opinion that the item can be used as "burner in gas stove/cooking ranges after doing the required further finishing/processing". They have also indicated the market value of the goods. Ld. DR pointed out that this evidence had not been controverted by the importer or the supplier till date. He also referred to the statements made by the parties namely Anil Goel and Shri Mohinder Singh Malik, wherein there was a clear admission that the seal was changed and amended by contacting the shipping agent. However, there was no allegation of tampering of the seal number. He also pointed out that the differences in the seal number was discovered only on 4.11.1991 and therefore the attempt by the importer to explain that he came to know about the difference in seal number on 1.11.1991 is clearly an afterthought and incorrect. He submits that the supplier by his letter dt. 11.11.1991 which is at page 109 of paperbook had written a letter to the importer expressing his surprise about the mistake in shipment to India of the goods meant for Germany. Pointing out to all these correspondence, Id. DR pointed out to several loopholes in the hand of the party and demonstrated that these correspondences are cover-up and made-up ones and it is without any corroboration. He submits that the Bill of Entry was filed on 28.8.1991 and therefore, it was quite clear that there was four months delay on the part of the importer and supplier to discover about the wrong shipment, which has not been explained at all. The importer got wind about the investigating agencies going to proceed against them and therefore, being fully aware about imported item being brass castings of burners in unfinished forms and not scrap, they have taken a stand of a wrong shipment. He also pointed out that the invoice and certificate of origin is dt. 3.9.1991. If there was a confusion in the shipment to Germany and India, then the supplier would not have remained silent for so long a period till the goods were sent for examination. Therefore, he submits that the importer imported "brass castings of burners in unfinished condition" and misdeclared the same as brass scrap "Honey" in order to take the benefit of the notification and availed duty benefit to a huge extent of Rs. 30 lakhs and above. He also pointed out that the material is not brass scrap and it does not come within the definition of scrap appearing in Section XV of the Customs Tariff Act. He pointed out to the definition of "Honey brass scrap" as per NARI/ISRI specifications and submitted that for a material to be shown as 'brass scrap honey' then the entire material should consist of brass castings, rolled brass, rods, brass, tubing and miscellaneous yellow brasses, including plated brass which should be free of manganese bronze, aluminium bronze, unsweated radiators or radiator parts, iron excessively dirty and corroded materials. In the present case, the item is not in such a nature and therefore, it is clear that the supplier and the importer colluded together to misdeclare the goods and clear the same as "Scrap". Therefore, he submits that the entire finding of the Collector is totally wrong on all issues. He also pointed out that the Collector had erred in rejecting the evidence and granting re-export. He also pointed out that the Collector had seriously erred in holding that there had been no sale in the matter. He also pointed out to the declaration in the Bill of Entry and about their deliberate attempt in misdeclaring the same. He pointed out that the importer was duty bound to have declared the goods correctly. He also pointed out that the other Directors had deliberately evaded summons and had not explained their conduct to the authorities. He also pointed out that the supplier's certificate from M/s. Petro Brass Factory is totally fabricated evidence for the reason that it is difficult to believe that 45 m.t. of brass castings of burners in unfinished conditions could be considered as rejects from a factory. It is pointed out that no factory would clear such huge extent of goods as rejects. He also pointed out that there was a discrepancy in weightage of 10 tonnes out of 45 tonnes and this itself clearly shows about the intention of the importer to misdeclare and clear the goods. He submits that the brass castings of burners in unfinished condition is not an OGL item and it is a licenced commodity. Therefore, it is his submission that it is not a case for re-export but a case for absolute confiscation and for imposition of penalty.

9. We have carefully considered the submissions made by both the sides and have perused the entire correspondence, show cause notice, finding of the Collector and the grounds made out by the lower authorities before us. As has been already extracted, the allegations against the importer is that the importer had deliberately misdeclared the quantity of goods covered under Bill of Entry No. 101585 dt. 25.10.1991 as 33.240 MTs instead of 43.675 MTs. They had also misdeclared the identity of the goods as "Brass Scarp Honey" instead of goods being "Brass Castings of Burners" classifiable under sub-heading 7419.99 instead of 7404 of the Customs Tariff. The value of the goods covered under the said Bill of Entry had been mis-declared and the department had valued at Rs. 34,94,000/- under Section 14 of the Act. It had also been alleged that on the basis of examination done by the customs, it appear that the imported goods are "brass castings of burners in finished and semi-finished condition and not brass scrap in terms of the definition in Section Notes 6(a) of Section XV of the Customs Tariff Act, 1962, which is as follows:

20. It is further noted that the supplier is supposed to have exported 45 MT of brass scrap honey to the German party. It is curious to note that the contract had not been finalised pertaining to price and payment and the price was said to be after analysing after arrival of goods at the buyers end. The manner in which the supplier was to supply the goods to the German party, without a proper contract, fixation of price, clearly discloses the minds of the supplier, that he was not to supply these goods to them and that the German party had been kept only as a front. This view is strengthened by the fact that the supplier has not placed any evidence to show that the goods meant for Indian party was mixed up. As, in fact, the goods of the Indian party had not been sent to Germany at all. The telex at page 177-A said to have been issued by the supplier to Metal Service, Jordan only stated that they have by these months chasing the whereabouts of the above containers and they were shocked to learn from the export cargo division in the port city that these containers had already sailed but in wrong vessel and finally reaching Bombay Port. It states that these containers were actually for Europe and had another contract with Indian buyer, during the same time for the same material and got mixed up with their Indian buyers on Nov. 1/91 with the same seal Nos. What was meant for them had reached Bombay. This telex clearly shows that the supplier had never informed the German party that it had the same seal Nos. It is seen from the importers plea that the seal Nos. were different. It is also seen that the contract of the Indian and German party is not of the same time, as the document shows the contract with German party was entered by telex dt. 30th July, 1991, as can be seen from page 174-A of the paperbook. While the Indian buyer had confirmed it by their telex dt. 27th July, 1991 which is at page 101 of the paper book and the telex states that this is further to the various discussions they had and the delivery period is shown as Sept.-Oct., 1991 whereas as per the German telex at page 174A the delivery is to be done by July/Aug., 1991. As can be seen from these telexes, the date of supply to the German party and the Indian party are quite different. The German party was to get their goods by Aug., 1991 and the price was to be fixed after arrival of their goods at Germany. While the Indian party was to get their goods by Oct. 1991 and the payment was against 365 DA through the importers banker Cairo Amman Bank. Therefore, there is a very clear discrepancy and contradiction in the supplier's story. The alleged contract entered into with Germany was in July, 1991. The goods said to have been purchased from M/s. Petra Brass factory was in August, 1991 in terms of the German contract and these goods were to have left before August, 1991 itself. The supplier has not sent the goods at all to the German party. He has accepted the Indian party's contract and had not sent the goods to the Indian party for delivery before Oct., 1991. It is very clear from these documents that the supplier had not made any arrangements for supplying the goods to the German party and it is very clear that the German party is being used as a front for cover up operation. If the supplier was to send the goods to Germany, then he should have purchased the goods before August, 1991. However, he has purchased the goods from M/s. Petra Brass Co. only in August, 91. It follows that these goods purchased by the supplier in August, 91 could not have been shipped before August, 1991 to German party. Therefore, the alleged goods purchased from Petra Brass Co. was meant for supply to the Indian party only, as the supply to the Indian party was to be completed as per telex at page 101 for delivery till Sept./Oct., 1991. The German party by their telex at page 177A clearly indicated that the seal number is the same. It is difficult to believe that such expensive and costly goods could be supplied to the German party without finalisation of the contract, without the price being paid at all. No supplier would supply the goods to distant places without fixing the price and that to agreeing to price fixation after test by the party at their end. If the buyer at the Germany rejected the goods then it would have only resulted in severe loss to the supplier and the consequences would be very grave. This is not an universal and international practice to supply the goods without entering into the contract, without price payment or without receiving any advance payments. Therefore, from all these documents it is very clear that the supplier and the Indian party had colluded and to keep the German party as a front to be used in case of any detection by customs authorities. It also follows that the supplier and the importer had colluded to misguide, misdeclare and undervalue the goods. The importer does not say that the contract was for a different goods and what has been supplied is totally different goods. Both the supplier and the importer clearly admit that the supply were against the contract. The importer having come to know about the possible initiation of investigation and proceedings send a telex on 1st Nov., 1991, when in fact, the proceeding had not been initiated by the department and no examination had been done. Therefore, the Learned DR's contention that there is a collusion and that there has been clear attempt to import of prohibited goods by misdeclaration undervaluing by showing less weight is fully proved.