2005 (98) ECC 340 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

New Delhi -- Bench-NB(A)

Shri V.K. Agrawal, Member (T) and Shri P.S. Bajaj, Member (J)

Yash Exports Inc. & Vinod Kumar

Versus

CC, Lucknow

Appeals No. E-611-612/03-NB(A)

[Arising out of Order-in-Original No. 4/Commissioner/Lucknow/2002 dated 17.1.2002 passed by the Commissioner Customs, Lucknow]

Final Order No. 1011-1012/04-NB(A), dt. 20.9.2004, Certified on 5.10.2004

Confiscation/Redemption fine and Penalty (Customs)

Misdeclaration -- PVC soles -- Over-invoiced -- Appellant firm mala fidely produced invoices of Star Trading Company in order to show the purchase of the goods from that company and the genuineness of the price detailed therein, but on enquiry it revealed that said company did not exist and having no bank account even at that time -- Goods were found to procured from Agra -- Even the firm appellant No. 1, itself, floated be its proprietor `SM' was found to by bogus/fictitious -- Confiscation redemption fine and penalty upheld.

PRESENT :

Shri Rajiv Kashyap, Adv. for the appellants.

Shri S.M. Tata, SDR for the respondent.

Cases Cited :

1. Commissioner of Customs v. Prayag Export, 2003 (110) ECR SC...................... [Para 4]

2. J.P. Jaiswal & Ors. v. CC Lucknow, 2004 (112) ECR 461.................................. [Para 4]

3. Om Prakash Bhatia v. CCE Delhi, 2003 (88) ECC 457...................................... [Para 4]

Per : P.S. Bajaj

The above captioned two appeals have been filed against the common Order-in-Original vide which the Commissioner of Customs has ordered the confiscation of the goods and imposed penalties on the appellants as detailed therein. The appellant No. 1 is a proprietorship concern of Shri Sudhir Malik who is carryout (sic, carrying) out export business. One container containing the export consignment of PVC. soles, after clearance by the Customs officers from the Inland Container Depot, was intercepted on 25.3.99 by the officers of the DRI on receipt of information that the consignment was grossly over-invoiced. The container was brought back in the premises of ICD. The driver of the trailer who was carrying that container to Mumbai, was questioned by the officers. The container was opened and the goods PVC soles were examined. On examination, it was found that 570 cartons of PVC soles of 57,000 pairs approximately valued at Rs. 2.36 crores (FOB value) were being exported by the firm appellant No. 1. The representative samples were drawn from cartons and sealed separately. The original, duplicate and triplicate copies of shipping bills on which assessment was made in respect of that export consignment, together with the invoices and packing lists and copy of the purchase order, were resumed by the officers for investigation. The CHA Shri G.P. Jaiswal was also interrogated for having presented the shipping bills for export of the goods under the DEPB Scheme. He disclosed the name of one Ramesh Kumar Mishra who handed over the shipping bills and related documents to him for submission before the Customs authorities. The officers thereafter interrogated Shri Rakesh Mishra who disclosed that the goods belonged to Shri Sudhir Malik, proprietor of the firm (appellant No. 1) who wanted to export the same.

2. On completion of the investigation, the show cause notice was issued to Shri Sudhir Malik, proprietor of firm appellant No. 1 as well as to appellant No. 2 and others namely, Shri Rakesh Mishra, Rajiv Sethi, J.P. Jaiswal, Rakesh Srivastava, Vinod Kumar for confiscation of goods and imposition of penalty. The Commissioner through the impugned order adjudicated the show cause notice.

3. We have heard both the sides.

4. The learned Counsel has at the every outset contended that on account of over-valuation of the goods, the export of which was not prohibited at that time under the law, no order regarding the confiscation of the same could be legally passed. Therefore, the impugned order regarding the confiscation of the goods deserves to be set aside, on this ground alone. He has placed reliance on the ratio of law laid down in J.P. Jaiswal & Ors. v. CC Lucknow, 2004 (112) ECR 461. But we are unable to subscribe to this contention of the learned Counsel being wholly mis-conceived. The Apex Court in the case of Om Prakash Bhatia v. CCE Delhi, 2003 (88) ECC 457 : 2003 (155) ELT 423 has defined the expression `prohibited goods' attempted to be exported, as appearing in Section 113 (d) of the Customs Act. It has been observed by the Court "that where the goods attempted to be exported had been over-invoiced, those would fall within the ambit of 'prohibited goods' under Section 113(d) of the Customs Act and confiscation of the same can be legally ordered. When the conditions required to be specified before or after the clearance of the goods are not fulfilled by the exporter/importer, the goods sought to be exported/imported by him would become 'prohibited goods' within the meaning of sub-section 2(33), Section 113 (d) of the Act." In view of this judgment of Apex Court, the observation of the Tribunal in J.P. Jaiswal case (supra) to the contrary that on account of over-valuation of the export goods, no confiscation can be ordered, cannot be applied. In that case, the Tribunal has no doubt referred to the case of Commissioner of Customs v. Prayag Export, 2003 (110) ECR SC but the ratio of law laid down in the said case by the Apex Court is of no avail to the appellants in views of the latest pronouncement of the Apex Court in Om Prakash Bhatia case (supra) which is more specific, detailed, and direct on the issue involved in the present case.

5. On merits, the earned Counsel has not been able to assail the findings of the adjudicating authority that the goods attempted to be exported by appellant No. 1 were highly over-invoiced, with a view to extract illegal, wrongful, gain under the DEPB Scheme from the Government. The appellant No. 1 submitted invoices of Star Trading Company, Lawrence Road, New Delhi to prove the purchase of the goods (PVC soles) at the rates indicated therein but the investigation revealed that those invoices were bogus and even the said firm did not exist at all at the given address. The market enquiry rather revealed that the goods were in fact procured from Agra by the firm appellant No. 1 and the same were made out of re-cycled scrap. The market price was much less than the declared value in the invoices and shipping bills. The learned Counsel has not been able to challenge the findings of the adjudicating authority in this regard on any ground before us.

6. The Counsel has, however, lastly contended that the firm appellant No. 1 acted in a bonafide manner in declaring the price of the goods sought to be exported and there was no intention to defraud the Government. But in our view, this contention of the Counsel is without any merit. It can be rather safely concluded from the evidence brought on record that the firm appellant No. 1 acted in a mala fide manner. The firm produced the invoices of Star Trading Company in order to show the purchase of the goods from that company and the genuineness of the price detailed therein, but on enquiry it revealed that the said company did not exist and had no bank account even at that time. The goods were found to had been procured from Agra. Even the firm appellant No. 1, itself, floated by its proprietor Sudhir Malik, had been found to be bogus/fictitious. Therefore, the question of acting bonafide in declaring the price of the exported goods by the firm and its proprietor did not arise.

7.1 No other contention has been raised by the Counsel for assailing the correctness of the impugned order of the adjudicating authority on merits. Therefore, we do not find any ground to interfere with the same regarding the confiscation of the goods in question.

7.2 However, the penalty imposed on the firm appellant No. 1 is on higher side. The amount of penalty imposed on Shri Sudhir Proprietor of appellant firm is Rs. 60 lakhs whereas benefit under the DEPB scheme to that extent had not been availed by him. The redemption fine for getting the confiscated goods redeemed imposed by the adjudicating authority is Rs. 2,50,000. Therefore, keeping in view all the facts and circumstances, the penalty on Shri Sudhir Malik is reduced to Rs. 30 lakhs. The redemption fine imposed in our view, is quite reasonable and the same is upheld.

7.3 On Shri Vinod Kumar appellant No. 2, penalty of Rs. 50,000 has been imposed, but we do not find any justification of the imposition of this penalty under Section 114(i) under the Customs Act on him. He is not relation of Shri Sudhir Kumar Malik who is the sole proprietor of the firm (appellant No. 1). He did not submit any shipping bill or other related documents for the export of goods with the customs authorities. No vital role has been attributed to him in the attempt made by Shri Sudhir Malik to the export of the goods by over-invoicing the same. It is also not the case of the department that he was to share the booty which Shri Sudhir Malik was to get under the DEPB Scheme, from the Government, if he had succeeded in his unholy mission on exporting the confiscated goods. Therefore, we set aside the penalty on Shri Vinod Kumar, appellant No. 2.

8. In view of the discussion made above, the impugned order except for the modification in the penalty is upheld against appellant No. 1 while it is set aside against appellant No. 2. The appeals of the appellants accordingly stand disposed of.

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