ORDER
P.S. Bajaj
1. These three stay applications arise out of appeals bearing Nos.E/17-19/2001-NB which have been preferred by the appellants against the common order in original dated 5.10.2000 passed by the Commissioner of Customs vide which he had imposed penalties of different amounts, as detailed therein on them besides ordering confiscation of the goods.
2. Stay application No.C/57/2001-NB has been filed by appellant no.1, Shri Ashwani Kumar in A.No.C/17/2001-NB vide which he had prayed for waiver of penalty of Rs.5 crores imposed on him under Section 114 read with Section 113 of the Customs Act. While stay application No.C/58/2001-NB has been moved by the appellant no.2, M/s.Agemo Leather Components (P) Ltd. in A.No.E/18/2001-NB and they have sought waiver of pre-deposit of penalty of Rs.1.75 crores and of Rs.75 lakhs imposed on them under Section 114 of the Customs Act. The third stay application No.C/59/2001-NB has been filed by appellant no.3, M/s.Sukumar Chemicals (P) Ltd. in A.No.E/19/2001-NB and they have sought waiver of pre-deposit of penalty of Rs.1.25 crores and of Rs.75 lakhs imposed on them under Section 114 of the Customs Act.
3. The facts giving rise to these stay applications may briefly be summed up as under:
4. The appellants were engaged in the export of readymade garments and other goods. A specific information was received against them were exporting old and used garments in the garb of readymade garments, at a highly inflated prices, to avail excess duty drawback. In pursuance of that information, Central Excise Preventive Officers of the Central Excise & Customs Meerut-II Commissionerate made investigation at Moradabad on 14.9.98. During investigation, it revealed that three containers were provided by CONCOR to the appellants for factory stuffing vide shipping bill Nos.5243, 426, 5242, 5247, 5248, 427, 5244, 5245 and 5246 all dated 11.9.98. Thereafter one container duly sealed with Customs one time lock seal and shipping line seal, was found outside the Customs bonded area ready for despatch. That container was escorted back to the Customs bonded area by the ICD Moradabad officers. That container was opened on 15.9.98 in the presence of Ashwani Kumar, appellant and other officers and found to contain old, used, soiled and torn clothes mainly tops, children wears, salwar, kurtas etc. instead of shirts and skirts as declared in the shipping bill No. 5243 dated 11.9.98. Similarly, the second container was also opened and examined and it was also found to contain old, used, soiled and torn clothes and few of them bore brand labels like made in USA, Hongkong, Taiwan etc. whereas in the shipping bills the goods were shown as shirts. This container also contained watches in 10 wooden boxes. The third container was taken up for examination on 16.8.98 and it was found to contain skirts which were made up of old, used and washed transparent cheap nylon fabric and these were not in fact skirts. Apart from these 10 wooden boxes containing watches were also found in that container. The premises of the firms appellants nos.2 and 3 were also searched and cartons containing similar clothes duly packed and labelled were found lying there. Those goods alongwith the goods recovered from the 3 containers, were all seized The statements of the persons found present in the premises of the appellants were also recorded. Shri Mohd.Shah Alam Khan, the owner of the premises situated at Prince Road, Moradabad, in his statement disclosed that the firm by the name M/s.Agemo Leather Components no.1 was found to be responsible for the activities of the firms (appellants nos. 2 and 3). It was also found that the wrist watches which were intended to be exported under shipping bills No.426 and 427 both dated 11.9.98, were of the approximate value of Rs.200/- per watch, whereas the appellants overvalued those watches by Rs.1000/- per watch. This inflated value was given by them with a view to take the benefit of duty drawback Rs.35,53,200/-.
5. The appellants were found to have violated the provisions of Export Policy 1997-2000, Drawback Rules, 1975, DEPB Rules, Foreign Trade (Development and Regulation) Act, Foreign Exchange Regulation Act and Customs Act, they were accordingly issued show cause notice. In reply to that notice, they avered that the seizure of the goods was illegal as the goods were purchased by them from the market from various companies and no duty drawback was claimed by them so far. They denied of having contravened the provisions of any rules, Regulations or Act. They also avered that the value of the goods given was correct and not inflated. The Commissioner, however did not accept their version and through the impugned order directed the confiscation of the seized goods and imposed penalty of various amounts, as detailed above, on the appellants.
6. The learned counsel for the appellants were while arguing on the stay applications, have contended that the show cause notice issued was vague as no particular provisions of Rules or Regulations alleged to had been contravened by the appellants were, mentioned therein and the penalty imposed is more than the three times value of the seized goods as assessed by the customs authorities. The value of the goods declared by them was correct and not in contravention of the provisions of the Foreign Trade (Development & Regulation) Act or of any other Rules, Regulations or the Act. No drawback had been claimed so far by the appellants. The goods lying the premises could not be legally seized and confiscated as at that time no attempt was being made to export them. Therefore, the impugned order of the Commissioner is apparently illegal. The appellants have a strong prima case. The counsels also have pleaded financial hardship of the appellants for claiming total waiver of the penalty amounts for the proposes of hearing of the appeals.
7. On the other hand, the learned SDR has reiterated the correctness of the impugned order of the Commissioner and contended that the impugned order is perfectly valid and no case for total waiver of the penalty amounts is made out in favour of the appellants.
8. We have heard both the sides and gone through the record.
9. So far as the seizure of the goods from the three containers i.e. 77550 pcs. of clothes claimed as skirts, 49816 pcs. of clothes claimed as skirts and shirts and 9979 pcs. of Quartz watches from the three containers in which those were stuffed for export purposes and regarding which the shipping bills were filed by the appellants, is concerned the same has not been much controverted and contested before us at this stage. The seized goods found, did not correspond to the description as given in the shipping bills and most of the goods were found to be torn/worn out clothes which were claimed to be shirts and skirts. The price quoted of these clothes was also found to be highly inflated. Similarly, the price 9979 pieces of watches was also found to be inflated. All these facts are evident from the bare perusal of impugned order of the Commissioner. The inflated price as is clear from the impugned order was given with a view to claim duty drawback.
10. The question as to whether the seizure of the goods was illegal and the price quoted was not inflated and that there had ben no violation of the rules, Regulations or the Act by the appellants, cannot be determined at this stage. Prima facie the impugned order of the Commissioner cannot in any manner termed as illegal/unsustainable under the law. The perusal of the order shows that the appellants no.1 on behalf of both the firms appellants nos.2 and 3 attempted to export old and used garments in the garb of readymade garments at highly inflated prices with an obvious motive and greed to avail excess duty drawback. It would not be out of place to mention if the attempt was not foiled by the Customs authorities timely he would have succeeded in exporting the old and used garments and brought bad name to the country and also succeeded in claiming excess drawback from the Government. After going through the impugned order and the material on file, we do not find that any prima facie case is made out in favour of the appellants for allowing them the complete waiver of the pre-deposit of the penalty amounts as imposed on them by the Commissioner. The equity and balance of convenience are also in our view, not in favour of the appellants keeping in view their conduct and the nature of the acts and omissions committed by them.
11. The plea of the appellants regarding financial hardship also cannot be on the face of it, taken to be true so as to allow them total waiver of the pre-deposit of the penalty amounts. By merely alleging that they were running in losses and their goods of substantial value had been detained/confiscated by the Customs authorities itself is not enough to prima facie accept that they were facing financial hardship.
12. However, keeping in view the facts and circumstances of the case and the issue involved and the interest of Revenue we direct appellant no.1 Ashwani Kumar to make pre-deposit of Rs.1 crore (Rupees one crore) towards the penalty out of the total penalty of Rs.5 crore (Rupees five crore) and appellant no.2, M/s.Agemo Leather Components Pvt. Ltd. to make pre-deposit of Rs.75 lakhs (Rupees seventy five lakhs) out of the penalty amount of Rs.1.75 crore (Rupees one crore and seventy five lakhs) and further of Rs.20 lakhs (Rupees twenty lakhs) out of the penalty amount of Rs.75 lakhs (Rupees seventy five lakhs) and appellant no.3, to make pre-deposit of Rs.50 lakhs (Rupees fifty lakhs) out of the penalty amount of Rs.1.25 crores (Rupees one crore and twenty five lakhs only) and further of Rs.20 lakhs (Rupees twenty lakhs) out of the penalty of Rs.75 lakhs (Rupees seventy five lakhs) All these deposits shall be made by the appellants within eight weeks from the date of receipt of the copy of the order. On making these deposits the pre-deposit of the balance penalty amounts shall stand waived and recovery stayed till the disposal of the appeals. However, in case they failed to make these deposits, their appeals shall become liable to be dismissed under Section 129-E of the Customs Act.