ORDER
S.L. Peeran, Member (J)
1. In this appeal, the appellants have challenged the order-in-original dated 16-10-1985 passed by the Additional Collector of Customs, Delhi Airport, Delhi imposing penalty of Rs. 50,000/- under Section 114 and Rs. 1000/- under Section 117 of the Customs Act.
2. The facts of the case are that the appellants are manufacturers and exporters of Readymade garments. That in part fulfillment of a contract with their buyers M/s. Canard of West Germany, the appellants had submitted a While Shipping Bill (S/B) which was registered by the Customs as No. 11001 of 8-3-1985. The description of the goods on the S/B was –
“Cotton Powerloom Babycord Readymade Ladies blouses, skirts and dress as per our Invoice No. 43/285 dated 22-2-1985. GR, buyers order and packing list are attached.”
3. That on receipt of secret information on 12-3-1985, the Customs Officers visited Lufthansa German Airlines Cargo Warehouse for examination of the above mentioned consignment comprising of 58 packages valued at Rs. 2,12,900/-. The goods were lying in Customs cleared cargo section but the Airlines on demand expressed their inability to produce export documents as the consigner appellant had not handed over the same, as confirmed by M/s. Lufthansa German Airlines by their letter dated 13-3-1985. The Customs officers examined the goods in the presence of two independent witnesses and found to contain cotton powerloom RMG. A panchnama was drawn and statements recorded. The appellant-consigner could not produce the document as they contended that it was lost while being brought to the Airport. The Department’s office copy of the Shipping Bill was also found missing. A copy of the shipping bill was obtained for M/s. Apparal Export Promotion Council (AEPC) which showed that the goods had been declared as “Cotton Powerloom Baby Cord Readymade Ladies blouses, skirts and dress” as per invoice No. 43/285 dated 22-2-1985. The appellant-consigner, therefore, filed a fresh (a duplicate Shipping Bill No. 25789 dated 14-3-1985 in lieu of Shipping Bill No. 11001 dated 8-3-1985) giving similar description of the goods but omitting the words “Baby Cord”. The Customs Officers obtained the statements of one Shri G.S. Gill, Asstt. Manager (Export) of the appellant firm, who explained that original shipping bill had been lost by their employee, to that effect an FIR on 12-3-1985 had been lodged with the Police. Regarding the omission of the word “Babycord” in the declaration given in the subsequent shipping bill dated 14-3-1985, he explained that in the earlier shipping bill that word “Babycord” had been typed by mistake and that the mistake had been rectified when filling the duplicate shipping bill. They had been issued with Duty Exemption Entitlement Certificate (DEEC) book by Jt. Chief Controller of Export & Import in respect of ‘Baby Cord’. They tendered samples duly passed by Textile Committee in respect of the said consignment which were not of ‘Baby Cord’.
4. The Customs official likewise took the statement of Shri Yaspal Singh and made further investigation. They carried on the raids on the houses of the partner of the appellant firm and on the houses of the Executive of the firm – in the office and factory and also carried search of the baggage of the persons of Managing Partner on his arrival from abroad. The Customs officials did not discover any incriminating materials or documents. They discovered that appellants had imported 23.990 metres of Baby Cord textile against DEEC Book No. 106533 (Imports) issued by the Joint Chief Controller of Import & Export in terms of Government of India Notification dated 5-4-1982 (Appendix 19 of the Import & Export Policy Book) which the appellants were under obligation to export after manufacturing/conversion into garments against corresponding DEEC Book No. 10654 (Exports) issued by the same agency. The Customs officials found that the appellants had exported 8700 pieces of Baby Cord garment and that they had already exported 4400 pieces baring a balance of 4300 pieces.
5. The Investigating Officers persumed that the appellants had intentionally filed a white Shipping Bill giving descriptions of goods “Cotton Powerloom Baby Cord Readymade Ladies blouses, shirts and dress” in respect of the impugned consignment with the motive of claiming DEEC benefits and that the appellants were managing to clear the consignment through customs when the consignment was checked, they reported the missing of the shipping bill and filed green shipping bill. This was done with a view to claim drawback which was not claimed earlier. On the basis of these facts, which were revealed in the investigation, the Assistant Collector issued a show cause notice dated 8-5-1985 under Section 113 of the Act for alleged contravention of Section 50 of the Customs Act read with Clause 3 of the Export (Control) Order, 1977 as amended issued under Section 3 of Import and Export Control Act, 1947 on the ground that the appellants had mis-declared the description of the goods as ‘Cotton Powerloom Baby Cord Readymade Ladies blouses, shirts and dresses’ in the Shipping Bill No. 110001, dated 8-3-1985 whereas the subject goods were not found to be made of Baby Cord fabric. The show cause notice was also issued to M/s. Lufthansa German Airlines. The appellants in the meantime filed a case in CM. 1154/85 before the Hon’ble Delhi High Court and got the consignment under seizure released for export on 30-3-1985 by furnishing a guarantee.
6. The appellants by their reply dated 14-8-1985 contended that the words “Baby Cord” had crept in inadvertently in the Shipping Bill No. 11001, dated 8-3-1985 and that all other accompanying documents were free from such error; that the goods were as ordered by the buyer, as invoiced by the exporter and as certified by the Textile Committee; that the goods were examined by customs and found as declared by the exporter; that a white shipping bill was filed by inadvertence and by the time error was detected, it was too late to withdraw the shipping bill as they were racing against time to meet the deadline of 15-3-1985 on which date the letter of credit would have expired; that only after M/s. Lufthansa German Airlines had gone back on its promise made earlier on 8-3-1985 to lift its consignment on 11/12 night; that the purpose of foregoing drawback was lost; that as the goods could not be exported till the extended validity of letter of credit they applied for withdrawal of the white shipping bill and for filing green one instead; that no mala fide intention could be ascribed to this error; that even if the goods had been exported on white shipping bill DEEC benefit could not have been obtained inasmuch as various details/declarations have to be made on the observe and reverse side of the shipping bill and nothing had been done in this case; that after the white shipping bill was lost, permission of customs was sought for reconstructing and filing a fresh green shipping bill; that as the goods were in accordance with the export contract and were of the same sort, quality and specification as were borne out by physical examination, there was no violation of Clause 3 of Export (Control) Order, 1977; that unwitting mistake in the wording in the shipping bill cannot vitiate the nature of goods and as such no mis-declaration in terms of Section 50(2) or attempted to be improperly exported in terms of Section 113 of Customs Act, 1962 would have taken place; that as there was no breach of provisions of Clause 3 of Export (Control) Order, 1977 or Section 50(2) of Customs Act, 1962, no action was called for under Sections 1.13,114 and 117 of the Act and hence the appellants had prayed for dropping of the proceedings.
7. The Additional Collector held proceedings and it was participated by the appellants. One Shri Sidhu Singh, Customs Delhi Airport was examined. He confirmed that all the white shipping bills were entered in a register in C.R.U. He also produced the relevant register in which it was found that the impugned shipping bill was entered as Sr. No. 11004 and not at Sr. No. 11001 as indicated in the show cause notice. The witness had confirmed that no mention was made in register of the goods being covered under DEEC Scheme. The witness could not produce the register in which the entries of DEEC shipments of the appellants were made. The appellants had found fault in the Customs officials not providing this register, as it was of vital importance to them inasmuch as the entries of export made by them under DEEC Scheme was made in that register and that register would have disclosed that the details of the impugned shipping bill were not entered in that register and thus it would have confirmed that the goods for export were not under DEEC Scheme. The appellants had produced, in the enquiry before the Additional Collector, seven shipping bills alongwith relevant documents which were covered under DEEC Scheme to stress the point that the impugned shipping bill was entirely different from DEEC Scheme shipping bill. The appellants had further submitted before the Collector that all the seven shipping bills under the DEEC Scheme bore Code No. for garments made out of ‘Baby cord’ fabric i.e. Code No. 9500 was mentioned not only on the shipping bill but also on all the other documents i.e. invoice application for authentication of garments meant for export submitted to Textile Committee, Export Contract etc., but such details were not found on the impugned shipping bill. The appellants had contended that in absence of vital and important endorsement on the impugned shipping bill neither was it possible for them to claim benefits under DEEC Scheme nor was it possible for the Customs to allow such benefits. The appellants had further contended that the customs had allowed them to file a green shipping bill in lieu of a white one which was lost and that the same was processed like any other shipping bill, which indicated that there was nothing wrong with the white shipping bill filed earlier. The description of goods in green shipping bill was slightly altered to bring the description in line with that given in the other documents like invoice export contract, samples approved by Textile Committee.
7. The learned Additional Collector rejected the entire contentions of the appellants but however, exonerated the charges against the Airlines. The learned Addl. Collector held as “it is an admitted fact both by the Department as well as the exporter that there was mis-declaration in Shipping Bill No. 11001, dated 8-3-1985 (or 11004).” The declared description of the goods was “Cotton Powerloom Baby Cord Readymade Ladies blouses, skirts dress” whereas on examination the readymade garments of fabric other than “Baby cord” were found. In view of this the charge of mis-declaration stand established.
8. The Addl. Collector further observed that “it stands established that the exporter did not voluntarily approach Customs Department to correct the description. As a matter of fact, the exporter could even get the consignment cleared through customs. It was only when on receipt of the information, Airport Customs Preventive Officers on 12-3-1985 went to examine the consignment, it was found that the exporter, who in normal course, should have left the documents pertaining to the consignment with Lufthansa German Airlines Cargo Staff, did not leave the documents and later on came with plea of loss of documents. Simultaneous loss of customs copy of the shipping bill gives one an unavoidable impression that everything was not well with the consignment”. The Addl. Collector refused to believe the mis-description on shipping bill by words “Baby cord” as clerical, inadvertant or typographical error. He did not accept the arguments of the appellants that it was not possible for them to claim DEEC benefits although he bas observed in his order that “it is true that when the copies of the said seven shipping bills submitted by the exporter, are compared with the copy of the Shipping Bill relied upon by the Department, it is seen that various declarations/certificates required under DEEC scheme do not appear on the copy of the shipping bill No. 11001(11004), dated 8-3-1985 but I am unable to accept this argument as the copies of the shipping bills submitted by the exporter are Export Promotion copies on which exports are certified by Customs Department for various export benefits and certain detailed noting of Customs Department whereas the available copy of the Shipping Bill No. 11001(11004), dated 8-3-1985 is a copy obtained from AEPC which never have any endorsement by the Customs Department”. As the appellants did not bring any independent evidence in support of the purported clerical mistake, the Addl. Collector held the charges as proved and passed the impugned order imposing the penalty of Rs. 50,000/- under Section 114 and Rs. 1,000/- under Section 117 of the Act.
9. Sh. D.P. Anand, Advocate for the appellants, argued vehemently and assailed the impugned order. He argued that the Addl. Collector had passed his order on mere surmises and suspicion and without giving any cognent reasons had just drawn conclusions without any basis and had committed a grave irregularity in rejecting the various contentions of the appellants. Having believed the fact that the copies of shipping bills are compared with the ones issued by Department, the Addl. Collector had absolutely no reason to reject the contention of clerical mistake in the shipping bills. The advocate further argued that the non-production of register by the Department is a circumstances against the Department and the learned Addl. Collector should have drawn conclusions against the Department on their grave failures in non-production of documents or all other lapses which the Addl.Collector had noticed in the proceedings. Instead of so doing, he has penalised the appellants, which is totally unjustified and uncalled for. The advocate submitted that the bills had to be cleared by the customs on proper verification. The learned Collector was not justified in drawing inferences which were not based on any evidence. The learned Collector had proceeded on erroneous assumptions and based the impugned order which smacked of vindictiveness and motivated solely to punish the appellants for extraneous considerations. He further argued that the clerical mistake in inserting the words “Baby cord” was done inadvertently and that the white shipping bill had been presented by mistake in view of deadline for expiry of letter of credit. All other documents were in order and the copy obtained from AEPC clearly showed the details of consignment and proved the clerical mistake. The Addl. Collector should have believed the entire statement of the appellants but simply rejected it without arguing any reasons and hence sought for setting aside the impugned order. The imposition of penalty was harsh, unjustified and for bona fide clerical mistakes and such breaches, no penalty should be imposed. He relied upon the judgment of the Hon’ble Supreme Court passed in Hundustan Steel Ltd. v. State of Orissa as reported in [1978 (2) E.L.T. 151].
10. Smt. Dolly Sexana, learned Departmental Representative supported the order of the Addl. Collector and pointed out that the conduct of the appellants in reporting the missing of the shipping bill on the same day, when the consignment was checked, gave strong suspicion to disbelieve the version of the appellants and further the filing of wrong shipping bill and its immediate withdrawal with green shipping bill clearly indicated the party was trying to. export the garments by mis-description to get the benefit under DEEC Scheme. Hence, learned S.D.R. justified the imposition of the penalty in the case.
11. We have heard the parties of both sides, carefully perused the records and the impugned order. The question that arises for consideration is as to whether there is any contravention of Section 50 of the Customs Act read with clause 3 of the Export (Control) Order, 77 as amended issued under Section 3 of the Import and Export Control Act, 1947 on the ground that the appellants had mis-declared the description of the goods and whether there was any clerical or inadvertant error on the part of the appellants in filling the shipping bills and whether the penalty imposed is justified or not. We find from the records that the register which bears the entries of the shipping bill was not produced, by the Department. They have not given the reasons for non-production. The customs had certified the green bill produced by the appellants. They have also checked the goods with all the relevant documents and passed the same for clearance. The learned Collector has believed the statement of the appellants that they will not be able to claim any benefit without the endorsement on the impugned shipping bill. The bill had not been presented and no endorsement had been made by the Department. To prove their contentions that the goods tallied with the order of the customer and with other documents, they appellants had produced seven other shipping bills and also the copy of shipping bill from AEPC. We do not see any other proof required to prove the bonafide contentions of the appellants. The Department by not producing vital register have failed to discharge their burden of proving the facts to the contrary. Suspicion however, grave cannot take the place of proof. Mere coincidence of loss of shipping bill on the same day on which the consignment was checked is not sufficient to hold that the appellants intended to mis-declare the goods to take export benefit. The Expert Council has not lodged any complaint nor found any fault in the export documents. It has found the documents in order and have issued a copy of the shipping bill. Merely because the Department has not endorsed it the appellants cannot be blamed. The Addl. Collector has not given any reasons for disbelieving the statements of the appellants except to state that in view of mis-declaration, the charges stands established. The Department should go beyond this to establish the mala fides of the appellants. When all other documents were in order and the Department clears the documents and on some coincidents, it has proceeded to draw conclusions and penalise the appellants which is unfair. The action of the Department as well as the Addl. Collector in imposing the penalty appears on face of the record and on the facts of the case to be harsh, unjustified and unreasonable. On mere venial breach or clerical error such penalty cannot be imposed as has been observed in the ruling of the Hon’ble Supreme Court relied by the appellants in the case af Hindustan Steels Ltd. (supra). There is no mis-declaration in this case and the Department has not proved its charges. The contentions of the appellants that there was a clerical error in filling the shipping bill is acceptable in view of overwhelming other supporting documents produced by them. Therefore, the impugned order is liable to be set aside by allowing this appeal. The appeal is allowed and the appellants are entitled to refund of the penalty paid by them. The same should be refunded within three months from the receipt of this order by the respondents.