ORDER
P.G. Chacko, Member (J)
Page 0102
1. These appeals are against an order of the Commissioner of Customs (Trichy). The operative part of the impugned order reads as under:
Page 103
ORDER
1. 1000 Nos. of Mobile Phones of Nokia 3315 with accessories, etc., valued Rs. 31.2 lakhs are confiscated under Sections 111(d), 111(I) & 111(m) of the Customs Act, 1962. However, the same are allowed to be redeemed on payment of a fine of Rs. 6 lakhs (Rupees six lakhs only) and on payment of appropriate duty leviable thereon;
2. Following penalties are imposed under Section 112 of the Customs Act:
(i) Satheesh of M/s Rs. 50,000/-
Max Telelinks, (Rupees Fifty
Chennai thousand only)
(ii) N.B. Mohammed Rs. 50,000/-
of M/s Royal (Rupees Fifty
Telecom, Chennai thousand only)
(iii) T.S. Kamalakannan Rs. 50,000/-
of M/s Lotus (Rupees Fifty
International thousand only)
Services, Chennai
Shri Alumkulam Satheesh, Proprietor of M/s Max Telelinks (appellant in C/175/2004) had filed Bill of Entry No. 2038 dated 19.11.2003 for clearance of goods declared as “Computer Cabinets with SMPS”. The invoice [issued to M/s Max Telelinks by the suppliers viz. M/s Airtel Telecom, (Dubai) LLC] No. 52/110/1692 dated 14.11.2003 produced by the party described the goods as “Computer Cabinets with SMPS” and indicated the quantity of the goods as 37 pieces of one model and 10 pieces of another model. This invoice also contained a mention of “Air Waybill No. FSS 010358 dated 14.11.2003”. This Air Waybill, which also was filed along with the Bill of Entry, was found to be pertaining to carriage of 552 kgs. of “ELECTRONIC GOODS (25 CTNS PACKED INTO 3 PALLETS)” by Air India Flight No. AI 447/15.11.2003 from Singapore to Madras. It was issued by M/s Freight Solutions (S) Pte Ltd., Singapore. But Dubai was the Country of Origin and Port of Shipment declared in the Bill of Entry, which indicated the gross weight of the goods as 552 kgs. The above Air Waybill number was also mentioned in the Bill of Entry. When the cargo was examined at ICD, Pondicherry on 20.11.2003 by an officer of Customs in the presence of the CHA, 3 wooden pallets were found separately covered with polythene paper and wrapped with plastic strips, with adhesive labels displaying the above Air Waybill number and other particulars. All the 3 pallets, upon being opened and examined, were found to contain a total number of 1000 pieces of “Nokia 3315” Mobile Phones in a total number of 50 cartons. Though these goods were not declared in the Bill of Entry, the total weight of these 1000 pieces of Mobile Phones with accessories and packing materials was found to be 552 kgs., which figure tallied with the weight of goods declared in the Bill of Entry. It appeared to the Customs authorities that M/s Max Telelinks had deliberately misdeclared Mobile Phones as “Computer Cabinets” with intention to evade Customs duty of Rs. 4.37 lakhs. Hence the goods were seized under a mahazar dated 20.11.2003. During the investigation at ICD on 20.11.2003, another set of documents relating to another consignment imported by M/s Max Telelinks was also noticed. The officers and the custodian of ICD identified this consignment consisting of 4 wooden pallets, which Page 0104 had been warehoused at ICD on 18.11.2003. The stickers on these 4 wooden pallets displayed thus: “Polar Air Cargo – Airway Bill No. 403 6431 4025 -Destination MAA – total number of pieces – 4 and HAWB No. 11488/D/L 47771/03”. The officers opened and examined the 4 pallets which were found to contain “Computer Cabinets” (37 pieces of one model and 10 pieces of a different model) and also 50 pieces of SMPS. The goods weighed 523.5 kgs. as against the declared weight of 627 kgs. After the above seizure of cell phones, M/s Max Telelinks filed another Bill of Entry dated 20.11.2003 for clearance of 1000 pieces of “Nokia 3315” Mobile Phones. This Bill of Entry was accompanied by (i) Purchase Order No. 22/03-04 dated 13.11.2003 (ii) Photocopy of HAWB No. FSS 010358 issued by M/s Freight Solutions (S) Pvt. Ltd., Singapore and (iii) Invoice No. 52/110/1693 dated 14.11.2003 of M/s Airtel Telecom (Dubai). The Bill of Entry declared Singapore as the Country of Origin and Port of Shipment. The gross weight of goods declared therein was 552 kgs. The Customs officers, on a comparison of the 2 invoices (No. 52/110/1692 and No. 52/110/1693, both dated 14.11.2003) found that both the invoices had been signed by one person for M/s Airtel Telecom (Dubai) and that there was some discrepancy between his signatures. Statements of Shri Alumkulam Satheesh were recorded on 21.11.2003 and 10.12.2003 under Section 108 of the Customs Act. In his statement dated 21.11.2003, Shri Satheesh confessed that he had planned to import 1000 Nos. of “Nokia 3315” Mobile Phones etc., and cleared the same by misdeclaring as “Computer Cabinets with SMPS”. He also stated that Shri N.B. Mohammed, Managing Partner of M/s Royal Telecom, Chennai (Appellant in C/176/2004) was the actual owner of the imported goods and that he (Shri Satheesh) was only a dummy. In his second statement dated 10.12.2003, Shri Satheesh stated inter alia that he had given a letter to Chennai Customs, at the instance of Shri N.B. Mohammed, requesting for permission to re-export the goods. Statements of Shri N.B. Mohammed were also recorded on 21.11.2003 and 12.12.2003. In the first of these statements, Shri N.B. Mohammed stated that he had been importing Mobile Phones through Air Cargo Complex, Chennai and ICD, Pondicherry, for the past one year; that his CHA was Shri T.S. Kamalakannan of M/s Lotus International Services, Chennai (appellant in C/170/2004); that all the Mobile Phones so imported were brought to his showroom for retail sale; that he knew Shri Alumkulam Satheesh through his CHA; that he introduced Shri Satheesh to Mr. Murtaza of M/s Airtel Telecom (Dubai) and that he had no involvement in the above import of 1000 pieces of Mobile Phones. He denied ownership of the said goods. In his second statement, Shri N.B. Mohammed stated that he helped Shri Satheesh in marketing the imported goods. Statements of Shri T.S. Kamalakannan were also recorded on 21.11.2003 and 11.12.2003. He stated that he was the CHA for M/s Max Telelinks, who used to import only electronic goods viz. “Mobile Phones”, “Computer Cabinets with SMPS” etc. He admitted that it was he who introduced Shri Alumkulam Satheesh to Shri N.B. Mohammed.
Page 0105
2. After completing the investigations, the Commissioner issued a show-cause notice to the appellants proposing to confiscate the 1000 pieces of Mobile Phones under Section 111 of the Customs Act and also proposing penalties on the appellants under Section 112 of the Act. In their replies to this notice, the appellants retracted their earlier statements and contested the proposals for confiscating the goods and imposing penalties. Ld. Commissioner rejected these retractions and, mainly on the basis of the confessional statements of the parties, held that the goods had been misdeclared with intent to evade payment of duty. Accordingly the impugned order was passed.
3. After examining the records and hearing both sides, I find that the confiscated Mobile Phones were released to M/s Max Telelinks on payment of the redemption fine fixed by the Commissioner and that their request for permission to re-export the goods does not survive. Ld. Commissioner has confiscated the goods under Section 111(d), (i) and (m) of the Customs Act. But he has not spelt out the reasons for confiscation with reference to these provisions. What appears from the impugned order is that ld. Commissioner has heavily relied on the statements of S/Shri Alumkulam Satheesh and T.S. Kamalakannan. Though the Commissioner was right in rejecting the belated retractions of these statements, he could not establish corroboration between the ‘confessional’ statements of Shri Alumkulam Satheesh and the plain facts of the case. It appears from the facts on record that M/s Max Telelinks had simultaneously imported 2 consignments, one consisting of “Computer Cabinets with SMPS” and the other consisting of “Nokia 3315” Mobile Phones with accessories. The Bill of Entry dated 19.11.2003 was filed for clearance of the “Computer Cabinets with SMPS” and the other Bill of Entry dated 20.11.2003 was filed for clearance of the Mobile Phones. Each Bill of Entry was accompanied by the supplier’s invoice, copy of the Air Waybill etc. Both the goods were supplied by M/s Airtel Telecom (Dubai) EEC, whose Invoice No. 52/110/1692 dated 14.11.2003 issued to M/s Max Telelinks covered 37 pieces of “Computer Cabinets with SMPS” of one model and 10 pieces of “Computer Cabinets with SMPS” of another model. This description and quantity of the goods mentioned in invoice No. 1692 were found to tally with the description and quantity of goods declared in one of the 2 Bills of Entry. The other invoice (No. 52/110/1693 dated 14.11.2003) issued to M/s Max Telelinks by M/s Airtel Telecom (Dubai) covered 1000 pieces of “Nokia 3315” Mobile Phones. The description and quantity of the goods mentioned in this invoice squarely tallied with the corresponding particulars declared in the other Bill of Entry. Conspicuously, however, the two invoices contained identical entries with regard to Air Waybill. Both the invoices mentioned “Airway Bill No. FSS 010358 dated 14.11.2003”. Apparently, it was this entry in Invoice No. 52/10/1692 that generated doubts in the minds of the Customs officers. Had Air Waybill No. 11488 been mentioned instead of Air Waybill No. 10358 in invoice No. 52/110/1692, there would have been hardly any room for doubt. Ld. Counsel for Shri Alumkulam Satheesh submitted that the wrong mention of Air Waybill particulars in invoice No. 52/110/1692 relating to “Computer Cabinets with SMPS” was a mistake on the supplier’s part. This has been Page 0106 the consistent stand of M/s Max Telelinks. I am inclined to accept this explanation of the importer inasmuch as the Department has no ease that, if Airway Bill No. 11488 is substituted for Air Waybill No. 10358 in invoice No. 52/110/1692, still there will be discrepancy between entries in the various import documents pertaining to the goods imported by M/s Max Telelinks. A mere correction of Air Waybill number in the relevant invoice would obliterate the confusion. In the circumstances, it cannot be said that there was misdeclaration of Mobile Phones as “Computer Cabinets”. The impugned order does not state cogent reasons for holding that Mobile Phones were misdeclared as “Computer Cabinets”. Ld. Commissioner has found in his order, “… actually the goods imported may be ‘some high valued – high duty items’ and substitution of high valued cargo, (possibly Cell phones) by locally procured cabinets has taken place during transshipment from Chennai to ICD, Pondy …”. I have not come across any evidence supporting this finding. In the absence of misdeclaration, the Mobile Phones were not liable to confiscation under Section 111 and consequently, no penalty was liable to be imposed on the importer.
4. Ld. Commissioner has found that Shri N.B. Mohammed was the actual importer of Cell Phones and that Shri Alumkulam Satheesh was only a ‘paid importer’. In any of his statements, Shri N.B. Mohammed did not claim ownership of the goods. On the other hand, he denied having had anything to do with the goods. There is also no material on record to show that Shri N.B. Mohammed had paid consideration for the goods. Ld. Commissioner says – “In the instant case, from the sequence of events, it is conclusively proved that Shri Satheesh is only a paid importer and Shri N.B. Mohammed is the actual importer of Cell phones…”. But no “sequence of events” is seen to have been stated in the impugned order, in support of the finding. Nothing has been brought out in the order to show that Shri N.B. Mohammed did something which rendered the Cell Phones liable to confiscation. Hence the penalty on Shri N.B. Mohammed is also liable to be set aside.
5. A similar penalty was imposed on the CHA also. Shri T.S. Kamalakannan and his advocate apparently promised to submit detailed argument notes to the adjudicating authority, but neither of them submitted any such notes. In the circumstances, it was held, Shri T.S. Kamalakannan played a major role in the attempt to misdeclare the goods and clear the same without payment of duty. This finding is also far from tenable inasmuch as there is no misdeclaration, nor any explanation of “major role” in the impugned order. Nothing has been brought out to show that the CHA dealt with the Mobile Phones in a manner which rendered the goods liable to confiscation. In the circumstances, no penalty could have been imposed on him.
6. In the result, the order of the Commissioner confiscating the “Mobile Phones with accessories” and imposing penalties on the appellants is set aside. The appeals stand allowed.
(Operative part of the order was pronounced in open court on 13.12.2005)