ORDER
Chittaranjan Satapathy, Member (T)
1. Heard both sides at length. The learned advocate for the appellants prays for waiver of pre-deposit on the following grounds : –
(A) SCN for extended period issued by the Asst. Commissioner (237) instead of Commissioner in the case of Saraf Fabrics Ltd. v. CC.
(B) Commissioner (Preventive) Mumbai, instead of CC (Ahmedabad), not accepting the exports made from Porbander (Gujarat) as valid. DEECs also completed by ACC Porbander in the case of Montana Valves & Compressor (P) Ltd.
(C) Commissioner (P) Mumbai, instead of CC, Nheva Seva/Mumbai Port from where the imported goods had been cleared, adjudicating the case 1997 (73) ECR 348 (T) in the case of Informatika Software (P) Ltd. v. CC, (P) Calcutta.
(D) Despite corrigendum to SCN (389) making it adjudicable only by CC, Nhava Sheva) & CC, (Imp), Mumbai, CC, (P) adjudicating the case. in the case of Krishna Filament Ltd. v. CCE, Mumbai-III & 2001 (137) E.L.T. 1223 (T) in the case of Consolidated Enterprises v. CC, (G), Mumbai.
(E) Unlike in the previous O-IN-O (156), duty being demanded from the applicant (102) and not from the importer, who had filed the Bs/E (784-820). and cleared the goods (895-939).
(F) Even otherwise, demand completely barred by limitation in the absence of any charge of collusion between the customs officers and the applicant when the shipments had admittedly taken place under the physical supervision of customs officers in the case of Surendernath Nundy (P) Ltd. v. ACC, and in the case of Godrej Soaps Ltd. v. CCE, Mumbai. No finding given by CC (P) on this ground.
(G) Exports from Porbander not admitted as valid despite the absence of any charge of collusion in the SCN, Proper Customs Officers, (who had physically supervised the exports) not being allowed cross-examination; receipt of inward remittances, payment of customs duty (407) on arrival of the consignments at foreign port (841, 843), drawal of samples at Porbundar Port, CC, Ahmedabad & CCE, Rajkot’s favourable verification reports, warfage report (852-853) etc. (Ground ‘I’) in the case of Stylemen v. CC, Trichy. (H) CBI’s favourable and detailed report (as also referred in the Tribunal’s Remand Order dated 19-10-1995) (106-108) neither supplied (410) nor relied upon (75).
(I) Cross-examination of Porbunder Customs & Rajkot Central Excise officers not allowed despite repeated requests and justification (419, 410, 414, 416). 2001 (136) E.L.T. 9 (Bom.) in the case of Gyan Chand Sant Lal Jain v. UOI.
(J) Firm having poor liquidity, not doing business and suffering losses for many years.
(K) Regarding penalty on Shri Hitesh Shah (101), the law laid down is that no penalty is leviable on an employee. in the case of O.P. Agarwal v. Commissioner of Customs, Kandla. Even otherwise, penalty not imposable for dealing with goods after their importation. in the case of Ashwin Mehta v. CC, (P) Mumbai.
(L) Penalty on Nikhil Gandhi (102) & Bhavesh Gandhi (101) not sustainable in the absence of any allegation in the SCN of any knowledge on their part that the goods were liable to confiscation, or their having dealt with the goods.
2. The learned D.R. strongly opposes the prayer, refers to the very detailed order passed by the adjudicating Commissioner and cites the following case laws:
(1) Ratan Exports & Industries Ltd. v. Commissioner 2001 (127) E.L.T. A48 (S.C.).
(2) Ratan Exports & Industries Ltd. v. Commissioner of Customs, Chennai 2000 (123) E.L.T. 808 (Tribunal)
(3) Roopkala Export Corporation v. Union of India
(4) Rajiv Woollen Mills (P) Ltd. v. Collector of Customs
(5) South India Exports v. Joint Director of Foreign Trade 2004 (177) E.L.T. 57 (Mad.).
(6) Akai Impex Ltd. v. Commissioner of Customs, Mumbai
(7) De-Nocil Corporation Protection Limited v. Commissioner of Cus., Mumbai .
(8) Faridabad CT Scan Centre v. D.G. Health Services
3. After considering submissions from both sides and perusal of case records, we are of the view that the adjudicating Commissioner has painstakingly considered various points raised by the appellants and has arrived at his findings after weighing the available evidence which prima facie cannot be considered unreasonable. We also find that the adjudicating Commissioner has not prima facie acted beyond his Jurisdiction. Further, we are of the prima facie view that the department not proceeding against errant Customs officials cannot absolve the appellants from the consequences of their action. Similarly, non-supply of the CBI report, if any, cannot be fatal as the same has not been relied upon. Hence, we are of the view that the appellants do not have a case for complete waiver of the pre-deposit in their favour. However, considering the financial hardship pleaded by the learned advocate, we direct the first appellant to pre-deposit 25% of the duty amount and direct the other 3 appellants to pre-deposit 10% of the penalty amounts imposed on them within 6 weeks from the date of receipt of this order and report compliance on 28-2-06. Subject to compliance with the above directions, pre-deposit of the balance amount shall remain waived during pendency of the appeal.
Sd/-
(Chittaranjan Satapathy)
Member (T)
T. Anjaneyulu, Member (J)
4. I have carefully gone through the proposed order recorded by the ld. Member (T). However, on perusal of case records and submissions made by both sides, I cannot persuade myself to agree to the order proposed by my ld. brother.
5. The Commissioner of Customs (Preventive), Mumbai, confirms the customs duty on the inputs imported duty free under the DEEC Scheme against the advance licences and diverted to the local market on the ground that the entire exports of 515 MTs of Cupronickel fillings made from Porbander Port in Gujarat are bogus and fictitious. On the contrary, there is sufficient evidence on record to prove the exports. Basically, the fact has been acknowledged in the Show Cause Notice itself. The investigations conducted by the R & I Division of the Preventive Collectorate have clearly shown that the exports effected by the appellants are genuine and true. M/s. Fairlong Engineering Co. Pvt. Ltd. are engaged in the manufacture and sale of marine engineering goods and in fact they were one of the largest suppliers of the goods to the Indian Navy. The Excise and Sales Tax officials have visited their factory and also perused the records maintained by them. No objections were raised at any time about the manufacturing activities of the disputed goods and their export. M/s. Metropolitan Industries also tendered M/s. Fairlong Engineering Co. Pvt. Ltd. to supply goods for export. The exports made by them were cross checked by the Customs, Port, Octroi and Central Excise authorities. They had followed a regular AR-4A procedure for exports. There is evidence on record from abroad to show import of exported goods, including remittances of the amounts for the exported goods.
6. One of the serious objections in this appeal is about the jurisdiction exercised by the Commissioner of Customs (Pre.), Mumbai, in adjudicating the matter and coming to the conclusion that the exports were not made through the Port of Porbander, which was in the jurisdiction of the Commissioner of Customs (Pre.), Ahmedabad, at the relevant time. Abundance of case law has been cited on this aspect.
7. The case was remanded earlier on the specific direction to discuss about the effect of the CBI findings and also to supply copy of the report to the appellants. Admittedly, the details of the report were not discussed and copy of the report was not supplied. The reasoning given by the Commissioner of Customs (Pre.) Mumbai, in his impugned order at Para 27 does not stand to the merit.
8. There is denial of the opportunity to cross examine the material witnesses with reference to the authenticated documents of the exports. The Hon’ble Supreme Court in the case of Sound N. Images v. C.C. has held that the fax message cannot be made the basis of valuation of goods particularly when the importer’s request to cross examine the alleged offer is declined. The Hon’ble Supreme Court in another judgment in the case of Lakshman Exports Ltd. v. Collector of C. Ex. has held that in reply to the Show Cause Notice, the assessee has specifically asked for cross examination of the representatives of the two concerns to establish that the goods in question has been accounted for and the matter was remanded with a specific direction after setting aside the order. Therefore, particularly when the documentary evidence regarding exports is authentic as admitted in the Show Cause Notice and the conclusions are drawn on the testimony of the witnesses, not giving opportunity to cross examine the witness, has been prima facie vitiated the impugned order.
9. All these factors referred above constitute a strong prima facie case in favour of the appellants and in my considered view, this is a fit case to grant complete waiver of pre-deposit of duty and penalty, including other appellants and stay the recovery of the same, pending disposal of the appeal.
Sd/-
(T. Anjaneyulu)
Member (J)
10. The following difference of opinion is placed before the Hon’ble President. CESTAT in terms of Section 129C(5) of the Customs Act, 1962:
(1) Whether the first appellant shall be directed to pre-deposit 25% of the duty amount and the other three appellants shall be directed to pre-deposit 10% of the penalty amount as held by the Hon’ble Member (Technical)
OR
(2) Complete waiver of pre-deposit of duty and penalty amounts shall be granted as held by the Hon’ble Member (Judicial)
(Pronounced in Court on 3-1-2006)
Sd/- Sd/-
(T. Anjaneyulu) (Chittaranjan Satapathy)
Member (J) Member (T)
Krishna Kumar, Member (J)
11. Perused the order recorded by Member (Technical) and Member (Judicial). I agree with the order recorded by Member (Judicial) for the following reasons:
(i) When the exports have been made from the Porbundar Port in Gujarat, the Commissioner of Customs (Prev) at Mumbai cannot question the same as it falls out of his jurisdiction.
(ii) Officers under whose jurisdiction the said Port lies have confirmed the exports.
(iii) The Show Cause Notice for the extended period has been issued by the Asstt. Commissioner instead of Commissioner, as such, the show cause notice is not valid in the case of Saraf Fabrics Ltd. v. Commissioner of Customs (Prev.), Mumbai.
(iv) The Commissioner (Prev) Mumbai has adjudicated the case instead of Commissioner Customs, Nhava Sheva Port, from where the imported goods have been cleared.
(v) Despite the corrigendum dated 18-10-1994 to show cause notice authorizing Collector of Customs, Nhava Sheva to adjudicate. Collector of Customs (Prev.), Mumbai has adjudicated the case which totally falls beyond” his jurisdiction and as such the impugned order is illegal.
(vi) The duty has not been demanded from the importer. (vii) The duty demand is completely barred by the limitation.
(viii) Exports from Porbundar not admitted as valid despite the absence of any charge of collusion in the show cause notice. Proper Customs Officers had physically supervised the exports at Porbundar was not allowed cross-examination, receipt of inward remittance has been effected. Payment of Customs duty on arrival of consignment at foreign port, samples at Porbundar Port for freight verification report and wharfage report have been ignored by the Commissioner. CBI favourable report as mentioned in the Tribunal’s remand order dated 19-10-1995 has been ignored.
(ix) Cross-examination of Porbundar Customs and Rajkot Central Excise Officers has not been allowed inspite of repeated request.
(x) The Firm has suffered business loss for the last several years and has no liquidity to meet any pre-deposit direction.
Sd/-
(Krishna Kumar)
Member (J)
MAJORITY ORDER
12. The pre-deposits of duty and penalty amount are waived.
(Pronounced in court