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TAXAP/1810/2010 9/ 9 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 1810 of 2010
=========================================================
GAUTAM
SILK MILLS PVT LTD & 1 – Appellant(s)
Versus
COMMISSIONER
OF CENTRAL EXCISE & CUSTOMS – Opponent(s)
=========================================================
Appearance
:
MR
PARESH M DAVE for
Appellant(s) : 1 – 2.
None for Opponent(s) :
1,
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE AKIL KURESHI
and
HONOURABLE
MS JUSTICE SONIA GOKANI
Date
: 01/07/2011
CAV
ORDER (Per : HONOURABLE MS JUSTICE SONIA
GOKANI)
1.
Appellants, being aggrieved by the order of the Customs, Excise &
Service Tax Appellate Tribunal (“CESTAT” for short) dated
1st May 2008, have challenged the same in the present Appeal
preferred u/s. 130 of the Customs Act, 1962 (“hereinafter
referred to as Act”) proposing the following questions of law :
(a) Whether the Appellate
Tribunal is legally correct in upholding penalties of amounts in
excess of Rs.1000/- u/s. 114 of the Customs Act, 1962 against the
appellants in the facts of this case ?
(b) Whether the order of
the Appellate Tribunal holding the appellants liable for penalty is
legally correct and justified in the facts of this case ?
To
capsulize the facts of the present appeal:
2. Appellant-
Company has been engaged in the business of undertaking dutiable
processes like bleaching, dyeing, finishing etc., on textile fabrics.
The appellant also carry out the said process on job work basis. It
is averred in the present appeal memo that the appellants processed
certain fabrics of one M/s. Sonu Exports whose two consignments of
processed fabrics were removed from the appellants’ factory under
invoices dated 22nd
April,1998 issued by M/s. Sonu Exports; as a Merchant Exporter.
Excise duties were not discharged and goods are cleared from AR-4
Nos. 13/98-99 and 14/98-99 both dated 24th
April, 1998 and signed by merchant exporter.
3. It
is further averred that these goods were received at Mumbai Port,
where the customs authorities initiated enquiry into the affairs of
M/s. Sonu Exports which is merchant exporter. On the ground that the
fabric found from the container in which they were brought to the
port were less than the quantity
shown in the export documents. Investigation was undertaken and
eventually a show cause notice was issued on 21st
November, 2001 proposing the action against M/s. Sonu Exports and its
partners and also against the appellants.
4. After
duly adjudicating contentions raised by both sides, the Commissioner
of Central Excise & Customs in its Order-in-original dated 29th
March, 2004 confiscated the fabrics and imposed penalty on the
merchant exporter as well as on its partners, of the
appellant-company u/s. 114 of the Customs Act, penalty of Rs.
5,00,000/- had
been imposed and personal penalty of
Rs.1,00,000/-
on the second appellant; who is Director of the first company. The
present appellant preferred an appeal before Appellate Tribunal,
having been aggrieved by the Order-in-Original, which came to be
decided by the Appellate Tribunal by its order dated 1st
May, 2008 whereby, it reduced penalty on the appellant-company to
Rs. 1,00,000/- and Rs.20,000/- by holding that the appellant was
aware of the design of merchant exporter of indulging in the illegal
activities as two consignments of the fabric in question were stuffed
in container for export purposes at appellants’ factory.
5. Being aggrieved by this
impugned order of the CESTAT, the present appeal is preferred raising
the aforementioned questions of law .
6. Heard learned counsel
Mr.P.M.Dave with Mr.Dhaval Shah, who have strenuously and forcefully
argued before this Court that the present appellant-company and its
Director by no stretch of imagination could be visited with the
penalty for breach made by the merchant exporter. As there is
absolutely no role to be played by the appellant; except processing
the fabric of merchant exporter in the factory. And as goods were
cleared from the appellant’s factory for exports under AR-4, no
penalty could be levied on the appellant. They also emphasized
reiteratively that appellant-company and Director had enjoyed in the
business circle a very high reputation all throughout these years.
The findings of the Tribunal are bereft of any sound logic and valid
basis, it must be interfered with.
7. On
duly considering the submissions of learned counsel and closely
perusing the orders of adjudicating authorities and materials brought
forth in the present Appeal, this Court is of the firm opinion that
the appeal deserves dismissal, as there being no question of law to
be determined by the Court.
8. Before
examining the order of the Tribunal, it would be apt to mention that
section 114 of the Customs Act provides for penalty if anyone
attempts to export goods in the manner contrary to law.
Section
114 of the Customs Act, 1962 reads thus-
Penalty
for attempt to export goods improperly, etc –
Any
person who, in relation to any goods, does or omits to do any act
which act or omission would render such goods liable to confiscation
under section 113, or abets the doing or omission of such an act,
shall be liable –
in the case of goods in
respect of which any prohibition is in force under this Act or any
other law for the time being in force, to a penalty (not exceeding
three times the value of the goods as declared by the exporter or
the value as determined under this Act) whichever is the greater;
in the case of dutiable
goods, other than prohibited goods, to a penalty (not exceeding the
duty sought to be evaded or five thousand rupees) whichever is the
greater;
in the case of any other
goods, to a penalty not exceeding the value of the goods, as
declared by the exporter or the value as determined under this Act,
whichever is the greater)
9. This
charging provision of penalty shall have to be considered in light of
the fact proved before the adjudicating authorities. This whole thing
was noticed on the basis of specific intelligence with regard to the
short shipment in the export consignment in respect of two
consignments stuffed into the container on 21st
April, 1998 under two AR4. This was in relation to M/s. Sonu Exports
whose partner admitted that fabrics were of inferior quality. Inspite
of issuance of several summons, partner of M/s. Sonu Exports never
went for the examination of goods lying in the container at Bombay,
and resultantly, when the same was examined in the presence of two
independent witnesses on 24th
May, 2001, it was found that the same was short by many L.Mtrs. and
the quality of fabric was also found to be inferior.
9.1 It
also further emerges from the findings of the Tribunal that Appellant
No.2 pleaded ignorance about any shortage of material in container.
However, the conclusion drawn by the Department was that the
appellant was responsible to ensure that both the quantity and
quality of goods stuffed in the container was the same, as described
in the documents and invoice of AR-4. It is also needed to be noted
at this stage that container was
opened after three years under the supervision of the Central Excise
Officer to certify the quantity. The Commissioner also relied on the
statement of Shri Ashok Kumar Khetan partner of M/s. Sonu Exports. He
had claimed duty drawback in respect of 27 shipments without
receiving foreign exchange.
10. It
was also argued before the Tribunal that only evidence available
against the present appellant was the statement of co-accused and in
the said statement Mr. Khetan had explained the modus operandi
and other relevant details. Tribunal arrived at the conclusion that
the shortage of quantity could not have happened without knowledge
of present appellant and its Director; in as much as stuffing was
done in the factory of appellant and that no tempering of seal of
container was found which continued to remain sealed after loading
at the factory. It concluded that the appellant was aware of the
misdeed of M/s.Sonu Exports. Considering this as the connivance on
the part of the present appellant, the Tribunal deemed it fit to
impose the penalty. However, keeping in mind, the value of fabric
mis-declared and consequential benefit to the merchant exporters, it
considerably reduced the penalty of both the appellants.
11. It
was also argued before this Court that penalty could be visited by
invoking provision of Section 114
of Customs Act. In case of dutiable goods as defined under the
Customs Act, to mean any goods which are chargeable to duty and on
which duty has not been paid. However, there being mixed questions of
law and facts and same having been extensively dealt with by the
Tribunal, this Court sees
no ground to interfere with the order of Tribunal.
12.
Before concluding, one or two aspects need further emphasis.
Reliance placed by the Tribunal on the version of partner of M/s.
Sonu Exports, is not a co-accused but a co-defendent. And, in wake of
other overwhelming circumstances and evidences, even if this solitary
statement of partner of merchant export is not given its due
weightage, the same in no manner add any advantage to the cause of
appellants of accepting their innocences. It would be needed to make
a mention of the fact that even under the prosecution u/s. 135 of the
Customs Act, statement of co-accused; if is not retracted, the same
can be relied upon by considering the attending circumstances.
Present proceedings, not being the criminal proceedings and as
mentioned hereinabove, the statement of Mr. Khetan being that of a
co-defendant and not of a co-accused, authorities sought to be relied
upon by the learned counsel of the appellant would not come to their
rescue. This Court is of the opinion that
the Tribunal, though could have confirmed levying of penalty at a
higher rate, it had taken a moderate view by reducing the same. With
all the findings narrated and discussed hereinabove, this Court has
no reason to interfere with the same in the present Appeal.
Resultantly, this appeal fails and is dismissed.
{Akil Kureshi, J.}
{Ms. Sonia Gokani, J.}
Bina*
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