2004 (97) ECC 564 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

West Zonal Bench : Mumbai

Shri S.S. Sekhon, Member (T) and Shri T. Anjaneyulu, Member (J)

Classique Enterprises & Ors

Versus

Commissioner of Customs, Mumbai

Applications No. C/S/1187 to 1191/2004 in Appeals No. C/414 to 418/2004

[Arising out of Order-in-Original No. COMMR/MCT/4/2004 dated 27.1.2004/4.2.2004 passed by the Commissioner of Customs, Mumbai]

Stay Order No. S/196-200/WZB/2004/C-III
Order No. A/608-612/WZB/2004/C-III, dt. 30.7.2004, Certified on 2.8.2004

Confiscation & Penalty (Customs)

Smuggled good seized -- Without label of foreign origin -- These watch movements of Chinese origin consisting of Japanese parts are to be valued. The valuation done by the department on a mis-placed finding without any material that the goods are of Japanese origin. The order has without any basis held that these watch movements are high quality Japanese origin and have proceeded to value them accordingly. The valuations are therefore not upheld and goods are not liable to confiscation and penalty -- Secs. 112, 111 of Customs Act, 1962.

Appeal allowed

PRESENT :

Mrs. S.S. Maniprakash, Adv. for the appellants.

Shri Bidhan Chandra, DR for the respondent.

Case Cited :

CC, Mumbai v. Triveni industries, 2003 (158) ELT 854 (Tri-Mum)........................... [Para 3]

Per : S.S. Sekhon

1. (a) Facts briefly, are, 41 packages arrived from overseas by Airmail. They were intercepted by the officers of Air Intelligence Unit on 14/15.5.2002 before they were presented by the Postal Authorities to the Proper Officer for assessment. Subsequently, only 27 packages were taken up for investigation. These 27 Airmail packages were consigned to four firms namely M/s May Flower, Impex, M/s Empress International, M/s Classique Enterprises, M/s Berlin Fashions. These firms are managed by Shri Shashi Arora as proprietor/partner. The goods contained in the Airmail package were seized for being misdeclared/not declared under panchanama on 21.5.2002 and after they were inventorised and valued. The goods consigned to M/s May Flower Impex were valued at Rs. 27,90,380 CIF, Rs. 19,80,420 CIF, respect of goods consigned to M/s Express International, Rs. 27,56,760 CIF and Rs. 18,86,805 CIF in respect of goods consigned to M/s Classique Enterprises and M/s Berlin Fashions respectively. The goods were thus collectively valued at Rs. 93,94,365 CIF and Rs. 1,40,91,547 LMV.

(b) It is alleged that in respect of the consignments of "watch movements" no Invoice/Bill or any other documents nor any value or quantity, nature and quality or country of origin was found declared on the Customs Declaration Form. In the case of goods declared as "glass stones," the value declared on the customs declaration form was Hong Kong $250. The value declared on each consignment/lot was the same in Hong Kong $ 250, though quantity varied from 12.9 kgs. to 20 kgs. No supporting commercial invoice/bill was found.

(c) From the residential premises of Shri Shashi Arora, searched various incriminating documents were seized which according to the department prove and also give the details regarding the modus operandi of the attempts to bring in goods through Post-Parcels by evading Customs duty. The enquiries made reveal that Shri Shashi Arora was master minding the entire operation and was attempting to import the said goods by mis-declaring both value and quantity.

Three documents, which the department has relied upon, very strongly are:

(i) a page found in a file from residence, in which Shri Shashi Arora has requested on Shri Dilip Bhai (Sri Dilip Agarwal or Shri Dilip Sujan) to send through speed post parcels various items to the above said four firms.

(ii) another sheet of paper in which Shri Arora directs the exporter to describe of goods as "Glass Stones" and the value of each parcel is shown as HK $ 250. The quantity to be sent is shown as 20 kgs. of Glass Stone of each weighing 5 to 10 kgs. of small packets therein.

(iii) A letter addressed to Shri Dilip Bhai, wherein the word `Euro' has been disfigured with a ball point pen giving rise to a suspicion regarding Shri Arora's attempt to conceal the true value.

(c) Statements were recorded mainly from Shri Shashi Arora and Shri Dilip Bhai, whereas four statements were recorded from Shri Shashi Arora on the following dates i.e. 20.5.2002, 24.5.2002, 1.6.2002 and 5.6.2002, statement was recorded from Shri Dilip Sujan on 5.6.2002. As per these statements, a case is made out that Shri Shashi Arora has admitted all the allegations made by the department through his voluntary statement and Shri Dilip Sujan has denied any knowledge and involvement in these transactions.

(e) It is also alleged that the cup chains, chattans imported are all `Oktent quality' (of European origin) and therefore the value of these goods has to be taken as the one at which such branded goods are to be assessed.

(f) Based on these investigations, the department effected seizure of the impugned goods and show caused for confiscation and imposition of penalties under the relevant sections of the Customs Act.

2. Submissions were made on behalf of the appellants before the Commissioner adjudicating the issue and after hearing the appellants passed the impugned order was passed, enhancing the value of `Glass Stone' parcels, confiscating the movements absolutely and imposing fine and penalty on Shashi Arora. Hence these appeals.

3. After hearing both sides, considering the material on record, it is found--

(a) Out of 27 post parcels, 10 were containing watch movements and 17 were found to have glass stones/chattans. Since the parcels were coming in official foreign mail bags and were duly accounted in the Postal Records they were not and cannot be considered unmanifested parcels imported and attempted to be cleared clandestinely. In the normal course, as per procedure established by law, such parcels were required to be dealt with and cleared from Customs Controls as per the provisions of "Rules Regarding Postal Parcels and letter packets from Foreign Posts in/out of India." This enactment stipulates, mail bags containing the parcels shall be appropriately labeled and as such will be allowed to land, pass, either with or separately from the regular mails at the Foreign Parcel Department of Foreign Post in the case of port of Bombay as Rule 1 of the rules. The Post Master at the Bombay Postal Wharf was thereafter required to present a memo showing number of parcels and Parcel Bills to the proper officer alongwith the senders declarations or declarations despatch notes etc. & thereafter the Parcels were required to be assessed as per Rules 2(b) to (7) & detention seizures, if required resorted to under rule (8). This prescribed procedure under the rules is not followed. The arbitrary findings and reliance placed by the Ld. DR, on prohibition issued under Section 11 of the Customs Act, 1962 vide notification of G of I. FD (C.R) Notification No. 78 Customs dated 2nd August 1938 as amended by 151 Customs dated 24.12.1938 & 44-Cus dated 26.7.94 is not called for and cannot be upheld. These notifications, also provide for the declarations of true nature, value and contents of Post Parcels imported to be sent separately. The invoices carrying the contents of these 27 parcels have since been produced and would have been produced before the Proper Officer were required to be therefore considered. The same has not been done by the Proper Officer. No contravention of Section 111(d) is therefore caused and confiscation thereunder is called for in the facts of this case, when the interception seizure has been effected even before reaching the stage and Customs barrier where a declaration required under Section 83 of the Customs Act, 1962 was to be made. The Revenue authorities are as much bound by the provisions of these Rules and the Customs Act provision as all others. The act of seizure etc. made by Airport Intelligence Officer is premature and is without jurisdiction in this case and we find force in the appellants plea on this account. The same is upheld to call for to set aside the order impugned consequent to such an act.

(b) It has to be observed, that unseemly haste is shown, by AIR Intelligence Officers, in this case, following the findings of this Tribunal in the case CC Mumbai v. Triveni Industries, 2003 (158) ELT 854 (Tri-Mum) where the bench had observed with respect to an act of Directorate of Revenue Intelligence Officer on intercepting `Imported Post Parcels' of watch movements, as --

"8 We observe that the whole procedure followed by DRI is erroneous. The post parcels were addressed to someone in Ahmedabad. Had the DRI not shown such unseemly haste, the goods would have been handed over to the proper officer of Customs by postal authorities as set out in the Rules referred to elsewhere in this order and as per Section 83 of the Customs Act and that officer would have followed the procedure set out in the Rules. He would have dealt with the parcels in the manner presented...."

Thereafter the bench went on to find and rule--

"............The goods are therefore not liable to confiscation under Section 111 (d) of the Customs Act as held by Commissioner (Appeals). The goods are not also liable to confiscation under Section 111 (d) of the Customs Act as held by Commissioner (Appeals). The goods are not also liable to confiscation under Section 111 (d) of the Custom Act as held by Commissioner (Appeals). The goods are not also liable to confiscation under Section 111(m) as the invoices subsequently produced contained all particulars......." (underlining supplied)

Following the same and in facts, in this case, when Directorate of Revenue Intelligence Officers act is considered to be erroneous and in haste, Air Intelligence Officer cannot escape that remark for similar act. The confiscation under 111(m) is not upheld. The same is to be set aside.

(c) The re-valuation arrived and reasons to deny the value of glass stone found by the Commissioner are --

2. 10 The Ld. Advocate pointed out that the panchanama of the said goods revealed that the contents of the postal packages and the declaration made on the labels affixed on the packets are the same which are mentioned in the Annexures to the said panchanama, value mentioned in the Customs Declaration Forms in respect of imitation glass stone is HK$ 250 for each consignment, however the weight of each consignment varied between 12.9 kg. to 20.1 kg. Therefore, the allegation pertaining to mis-declaration in value is without basis. I find that the contents in respect of 17 packages have been declared as `IMITATION' in the accompanied Customs Declaration Forms. Further, the said Customs Declaration Forms indicates that the goods are of Chinese make, having declared value as 250 HKD for each parcel of weight ranging from 12.9 kgs. to 20.1 kgs. Shri Shashi Arora in his statement recorded on 20.5.2002 and 24.5.2003 inter alia admitted that he placed orders in the month of April 2002 to Shri Dilip Sujan. He stated that he does not know any exporting firm in China or Hong Kong and the goods were dispatched by Shri Dilip Sujan as per his order in his statement dt. 1.6.2002, he stated that his friend Dilipbhai sells glass chattans in Hong Kong and he (Dilip bhai) imports glass chattans from Europe. Me (sic, He) further stated that two parcels of glass chattans he received from the said Dilipbhai six months back. He admitted that the glass chattans imported by him are of ORIENT quality. He further Stated that Dilip Sujan had procured the said consignment from Europe. On being confronted with a letter (dt 2u Oj 2002) which was received from his wife Smt. Kanchan Arora on (18 (>> 2002)* by the Customs Officers alongwith a file containing other documents, he admitted that through the said letter he had instructed the said Dilipbhai to show the value of each parcel as 250 HKD and on confronting another letter in the said file he admitted that the word `EUR' was scratched by him in order not to let the value to be known by others. The total value for 17 parcels containing glass chattans and cup chains was declared as (17 x 250) HK$ = 4250 HKS or equivalent to Indian Rs. 27.625 only. It is an admitted fact that the seized goods are of European origin and of OKTENT make having a much higher value than the declared value.

2.11 The documentary evidences i.e. letters or notes handed over to the Customs Officers by the wife of Shri Shashi Arora indicate that the relation between Shashi Arora and his supplier (Dilipbhai) was not a normal relationship between a buyer and a seller in the international trade. The correspondence dt. 20.3.2002 addressed to Shri Dilipbhai by Shri Shashi Arora indicate that the said Shri Shashi Arora directed Shri Dilipbhai to assign the description of the goods as `glass stones' and the value of each parcel as 250 HKD and the weight of the each consignment around 20 kgs. On confronting with the said correspondence dated 20.3.2003, Shri Shashi Arora has admitted that the contents of the said letter were true and that such direction was given to the supplier by him. The letter dt. 20.3.2003, directing the said Shri Dilipbhai and the admission of Shri Shashi Arora in his statements that he ordered to the supplier in the month of April and the arrival of the postal consignment by Thai Airways in the month of May (14.5.2003), reveal that the consignment of glass stone were imported by Shri Shashi Arora as per his orders. Shri Shashi Arora has not contradicted the fact that the impugned goods were opened on the basis of a his direction given to the supplier. The value declared on the (Customs Declaration Forms (of glass chattans and cup chains total 4250 HK$ equivalent to Indian Rs. 27,625) was as per the directions and the instructions of the buyer Shri Shashi Arora, so also the description and the quantity of the goods. The accompanying documents to the parcels containing glass chattan, cup chains etc. did not include any invoices, packing list or certificate of origin or any documents to disclose correctly the value, quantity, nature and description of the goods. The label or Customs Declaration Form whereon the consignor had made declaration on behalf of the importer were not the correct declaration as discussed above. Therefore, I find that the goods were mis-declared with regard to the value, quantity (wt) and description and country of origin, on the direction of Shri Shashi Arora on behalf of his 4 companies in the name of which the subject import taken place. Shri Shashi Arora did not disclose the name of any real supplier other than Dilipbhai. He stated that he acted as an agent of Shri Dilipbhai, one Bhayuji and Gutaman for promotion of the business in India for which he was to receive commission. No invoice from the supplier of the goods was furnished leaving any scope of further verification of the declared value by the department.

2.12 It already been discussed in the preceding paras that the said declaration made on the Customs Declaration Form accompanying the consignment has to be treated as Entry in terms of Section S2 (sic, 52) of the Customs Act, 1962. The importer vide their letter 6th August 2002 and 16th August 2002 submitted photocopies of invoices No. 4102, 4103, 4104, 4105 all dated 13 5.2002 addressed to Classique Enterprises & Empres international, both of 12 A. Sett Minor, Pedder Road, Mumbai 400026, INDIA and the May Flower Impex and Beneton Fashion both of 43 Queens Road, Ruby Compound, Mumbai 400002. declaring the unit price per kg. at the rate of 600 US $ and containing the description of the goods as glass stone and stone chain. Made in China Total value declared on the said photocopies of the invoices was ISS 4 US $ equivalent to Rs. 91,374 (approximately) for 314 kgs. glass stone and cup chains Vide the said letter which they submitted alongwith the above-mentioned photo copies of invoices, it was stated that the con