ORDER
K. Sreedharan, J. (President)
1. Appellant herein is M/s. Benara Udyog Pvt. Ltd., Agra. They are engaged in the business of manufacture of bearings and crushes. They entered into an agreement with a foreign company known as M/s New Tech Engineering Service, 226-11, Jung Rim Dong Seo Ku, Taejeon City, South Korea on 24-5-1996 for getting the technical know-how with the approval of the Reserve Bank of India evidenced by letter No. EC.CO.FITT/19/12.51.00 (B-135)96/97, dated 11-7-1996. Total consideration as per that agreement for getting this technical know-how was US $ 1,50,000. The said amount was to be paid in instalments as specified in Clause 5 of that agreement. Pursuant to that agreement, technical drawings and designs were supplied under eight airway bills. For clearing the goods sent by those airway bills authorised courier DHL Worldwide Express filed bill of entry on 1-11-1996. The airway bills showed value at US $ 15. Those consignments were not cleared by the Customs authorities because of their suspicion regarding the valuation. The eight packages sent under the eight airway bills were opened in the presence of the importer’s representative and it was found that the drawings and technical documents have been imported as per the technical know-how agreement entered into between the appellants and the foreign company. Thereupon, show cause notice was issued on 2-4-1997 proposing to reject the invoice value of US $ 15 for the drawings and blue prints covered by each of the airway bill and real transaction value for the purpose of Section 14 of the Customs Act at US $ 40,000 be accepted. Noticee was also asked to show cause why the goods imported by the airway bills should not be confiscated and penal action under Section 112 of the Act should not be taken. Appellant disputed the stand taken by the Department in the show cause notice and even went to the extent of contending that they had nothing to do with the import of the goods for the clearance of which DHL Worldwide Express filed the bill of entry. Adjudicating authority rejected the contentions raised by the appellant and by order-in-original No. 63/A & R/VS/97, dated 26-9-1997 fixed the value of the goods at US $ 40,000 FOB, confiscated the same with option to redeem it on payment of redemption fine of Rs. 5 lakhs and imposed a penalty of Rs. 2 lakhs under Section 112 of the Customs Act.
2. The main argument advanced by learned counsel representing the appellant was that appellant had not authorised to DHL Worldwide Express, a courier, to file the bill of entry on their behalf and so, they are not the importers or the owners of the goods which landed pursuant to the eight airway bills. Learned counsel further submitted that the bill of entry filed by the courier and the examination conducted by the Customs authorities were not made available to them to make an effective representation regarding their ownership. Argument even went to the extent of saying that the appellants were not liable for any penalty under Section 112 of the Act because they did not do or omit to do anything which will warrant imposition of penalty under that Section. Before going into the question as to whether the courier acted in their own accord in filing the bill of entry without an authorisation by the appellant, we will first deal with the contention that appellants were innocent of all these transactions that took place between the Customs and DHL Worldwide Express courier.
3. Learned counsel’s arguments that the bill of entry filed by DHL Worldwide Express – the authorised courier was not on the authorisation given by them that copy of bill of entry and the examination note entered on its back were not made available to the appellant are factually incorrect. Annex-ure 3 to the show cause notice given to the appellant is “Courier Bill of Entry for Dutiable Goods” filed by DHL Worldwide Express. On the back of it was written report of “Examination of 8 packages”. The show cause notice with the annexures was received by the appellant. That show cause notice alongwith the annexures was filed before this Tribunal by the appellant. Annexure 2 to the show cause notice is a letter sent by the appellant to Airport Customs on 29-10-1996. That letter reads “We authorise Mr. D.V. Kumar, S/o Shri H.B. Kumar to represent our company for examination/verification of drawings/documents received against above consignments and/or any other work connected with the clearance of the same.” Signature of Shri D.V. Kumar seen in that letter has been attested to by Shri P.L. Jain, the Director of the appellant’s company. This Shri D.V. Kumar was present at the time of inspection of the eight packages. He signed the inspection report seen on the back side of the bill of entry as representative of the company. The company mentioned therein was the appellant and none other than this appellant. In view of these circumstances, it is too late in the day for learned counsel for the appellant to advance an argument that appellant was innocent of this import and that they had not authorised the DHL Worldwide Express to file the bill of entry.
4. After having taken part in the inspection and examination of the packages received under the eight airway bills, appellant cannot be allowed to contend that they did not authorise DHL Worldwide Express to clear the goods on their behalf. Nor can they advance an argument that they were not getting the consignment as importer or as owner. Appellant cannot be allowed to blow hot and cold at the same breath. So, we over-rule the contention advanced by the learned counsel before us that the appellant had nothing to do with the import of the eight packages covered by eight airway bills. We hold that the appellants were the importers and the owners of those packages.
5. The fact that appellant entered into an agreement with a foreign company in South Korea for getting the technical know-how is not in controversy. It was in pursuance of that agreement and that agreement alone, the eight consignments were sent by the foreign company to India under the eight airway bills made mention of in the bill of entry filed by the Courier. In that bill of entry, the courier made a declaration that they were authorised by the consignee, namely, the appellant before us to act as their agent for the clearance of the goods. That declaration made by the authorised courier taken alongwith Annexure 2 to the show cause notice, (the authorisation given by the appellant to Mr. D.V. Kumar to act on their behalf to effect the clearance) go to show that the eight packages came to India for the appellant and the appellant is the importer.
6. As per the know-how agreement entered into between the appellant and the South Korean firm, the documents containing the drawings and the technical know-how details are valued at US $ 40,000. When the agreement showed their value at US $ 40,000, the value shown in the airway bills at US $ 15 is nothing but mis-declaration of value. That mis-declaration was made in an attempt to avoid payment of customs duty. The goods which were so brought into India are liable for confiscation under Section 111(m) of the Act. The person who did act in such a manner as to make those goods liable for confiscation under Section 111 is liable to penalty under Section 112 of the Act. Appellant who made the mis-declaration regarding value of the eight consignments made those consignments liable for confiscation under Section 111(m) and hence personally liable for penalty under Section 112 of the Act. We would in this light, hold that the order passed by the adjudicating authority is unassailable and we do not find any reason to interfere with it.
7. Learned counsel representing the appellant brought to our notice a portion from S. Dutt Majumder’s ‘Customs Valuation – Law & Practice’ in support of his argument that the valuation adopted by the Customs authorities is not correct. The relevant portion reads “the customs value of drawings, other documentation and micro films containing information on technical know-how is based on the value of the material imported and is not to include the payment for the right to use the know-how, as the know-how in question is not needed for the production of the goods imported.” This observation was made by the author from ‘FINLAND (E) reference : TVR 288. TH 286/313/84, dated 1st July, 1986’. The reference made by the author is not before us. With reference to what material the above passage has been reproduced in the book is also not known. Further, para 10(i) of the show cause notice stated “the CIF value of Drawing & documents may not be taken equal to full value of know-how (US $ 40,000) as know-how comprises many items as listed in Article (i.e. clause) 1.2(a) & (b) of the know-how agreement and subsequently expanded in Article (i.e. clause) 2.1.1 to 2.1.7. In his opinion (opinion of Shri D.V. Kumar as seen in his letter dated 31-10-1996), the value of documents may be taken as equivalent to 25% of the know-how fees.” 25% of the know-how fees, even according to the appellant’s expert, must come to US $ 10,000. As against this US $ 10,000, the value shown in the airway bills was US $ 120. So, there was clear mis-declaration of value made with intent to evade payment of customs duty.
8. Another point raised by the learned counsel representing the appellant was that the Commissioner did not deal with mensrea of the appellant in the import of articles covered by eight airway bills in the entire order. Mens rea is a mental element. It is to be found out from the facts. It is borne out from the circumstance in the case. As per the know-how agreement, the value of the drawings comes to US $ 40,000. Appellant expert’s view is that the value of the drawings must be 25% of that US $ 40,000 which is US $ 10,000. As against this US $ 10,000, the appellant showed the value at US $ 120. This action proves the existence of mensrea. The mental element discernable from the facts is that appellant resorted to under valuation for avoiding payment of customs duty. So, the fact that Commissioner did not state in so many words that the appellant had the mensrea to mis-declare the value, is of no consequence as far as this case is concerned.
9. Before parting with the case, we would like to mention one aspect highlighted by the learned counsel before us. According to learned counsel, appellants are not interested in the drawings which are covered by the eight airway bills which led to the order impugned in this appeal. Independent of the drawings and the technical know-how contained in the eight consignments covered by the airway bills, it was argued that the appellant could set up the factory and the factory is in full swing. If that be the case, we are at a loss to understand as to for what purpose they entered into the agreement with the foreign collaborator with the permission of the Reserve Bank of India. If independent of this sanction they established the factory or developed the existing factory, we hold that the appellant used clandestine activities for getting the know-how, defrauding not only the Customs but also the Reserve Bank of India and also the Government of India.
10. We do not find any substance in this appeal. The appeal is dismissed.