ORDER
J.H. Joglekar, Member (T)
1. The facts leading to the present appeal, in brief, are as follows:
1. On receipt of information that contraband goods were concealed in one container and two cases covered under bill of entry No. 81/24, the officers examined the contents thereof under a panchanama. The bill of entry showed the name of importer as M/s. Anish Kumar & Company, 602, Sharda Chambers, New Marine Lines, Bombay. The clearing agents were Y.G. Mani & Company, CHA 11/38. The bill of entry had been noted but was not assessed. The examination of the container resulted in recovery of undeclared electronic goods such as V.C.R., Cassette deck, Tunnel amplifier, sewing machine etc. These goods were found concealed below the declared goods. These goods valued at Rs. 17,000/-(Rupees Seventeen Thousand) (CIF) and Rs. 51,000/- (Rupees Fifty One Thousand) (market value) were seized. The declared goods namely automobile parts were examined and counted and compared with the quantities shown in the invoices. The check resulted in recovery of certain automobile parts which were not declared and shown in the bill of entry or in the invoices. These goods were also seized. The goods which were declared were also seized. The search of the two boxes resulted in the recovery of undeclared electronic goods and air compressors. These were also seized. The total value of the goods so seized was Rs. 65,72,420/- (Rupees Sixty Five Lakhs Seventy Two Thousand Four Hundred and Twenty). Follow up investigation were conducted including searches of residential and office premises of the concerned persons and recording of their statements.
2. Shri Dharamdas Mehta in his statement stated that he was the Manager of M/s. Anish Kumar & Company. They were exporters of the textiles against which they had received additional licences. Shri Nalin Vora proprietor of Nahlin Corporation approached them for import of motor vehicle parts against these licences. At Nalin Vora’s instance M/s. Anish Kumar & Company opened letter of credit with the bank. On receipt of funds amounting to Rs. 2,20,000/- the documents were retired. Shri Vora paid them Rs. 6,800/- towards this transaction. Shri Vora paid them Rs. 30,000/- as premium on their licence. Further amount of Rs. 50,000/- was paid by Shri Vora towards contingent liability towards sales tax but that these cheques bounced. M/s. Anish had entered into a High Sea Agreement with Shri Nalin Vora. He deposed that the clearing agents were appointed by Shri Nalin Vora. The negotiations for purchase of the parts was made with the suppliers by Shri Vora. He stated that the signatures on the declaration were not made by any of the partners of Mr. Anish Kumar & Company.
3. Mr. Anil Kumar Mehta the Managing Director of Anish Kumar & Company in his statement claimed that they had given the permission of using their import licence to the extent of Rs. 2,00,000/- for a premium of 15%. He confirmed the deposition made by Mr. Dharmadas Mehta and claimed that they had no role to play in placement of order or in negotiations of purchase.
4. Mr. Sunil Marva, Manager of the C.H.A. deposed that the bill of entry with declaration duly signed were received by them from Shri Nalin Vora. Regarding the contents and excess found in the consignment, he professed ignorance.
5. Six statements of Mr. Nalin Vora were recorded during the period 10.5.1985 to 6.8.1985. He deposed that he was purchasing motor vehicle parts on high sea sale basis, that prior to this consignment two more imports were made by him. He denied having purchased the licence from M/s. Anish Kumar & Company. He claimed that the only payment made to the suppliers was through the banking channel. He agreed to have visited the suppliers during his visit to USA to meet his family members. He did not accept having signed the declaration on the back of the bill of entry. He denied having any role in the unauthorised importation of undeclared goods. He stated that the correspondence with the suppliers was in the name of M/s. Anish Kumar & Company. He denied having told the supplier or his relations abroad to send the undeclared contraband goods. He claimed that he came to know of the existence of excess goods on 14/15.5.1985. He thereafter contacted the suppliers by telex on 19.5.1985. On 20.5.1985 the suppliers communicated back stated that the goods were sent by mistake.
5. On 6.11.1985, a show cause notice was issued to M/s. Anish Kumar & Company, Nehmalin Corporation, Anil Kumar Mehta & Nalin Vora. The Collector of Customs (Preventive) adjudicated the case vide his order dated 4.5.1986. In his order the Commissioner held that the negotiations for purchase and prices were made with the supplier by Anish Kumar & Company. He held that the transactions between Anish Kumar & Company and Nalin Vora was not that of the sale of licence but was of sale of goods. He held that Shri Nalin Vora was responsible for the acts of sending goods in excess quantity of goods than shown in the invoices and for sending concealed consumer goods in the container. His belief was based on the fact that Shri Nalin Vora had personally supervised the packing of the container. The Collector rejected the later case made by Shri Nalin Vora that the suppliers by mistake had sent excess goods. He observed that the correspondence itself was suspect. He remarked that the Department had also written to the suppliers for confirmation but the supplier had not responded. He rejected that claim of Shri Vora that the valuation of the items under seizure by the officers of Customs was excessive. In this belief he confiscated all the goods and imposed a penalty of Rs. 10,00,000/- (Rupees Ten Lakhs only) on Shri Nalin Vora.
6. This order of the Collector was set aside by the Tribunal holding that copies of the documents relied upon against Shri Vora had not been furnished to him. The case was remanded back to the Collector of Customs for de novo Adjudication.
7. The Collector in his de novo order dated 12.6.1989 held that Mr. Nalin Vora had purchased the additional licence from Mr. Anish Kumar & Company. He held that the agreement of High Sea Sale was manipulated.
8. In holding so he rejected the belief of the Collector in the earlier order that the goods were in fact imported by M/s. Anish Kumar & Company. He observed that the Tribunal having set aside that order, he was free to re-adjudicate on that issue. He observed that it was on record that Shri Vora has placed the order with the seller, that he had gone to the US and had visited the shippers office, and that he was present when the goods were packed. On this ground he held that the excess quantity of the automobile parts as well as the consumer goods were packed in the consignment with the knowledge of Shri Vora. On this ground he held that the goods are liable for confiscation and held Shri Vora liable to penalty. The present appeal arises out of his order.
9. Shri J.C. Patel argued the case of the appellant. Shri K.L. Ramteke represented the Department.
10. Shri Patel relied upon the Supreme Court judgement in the case of Banshikhar Laxman Prasad 1978 ELT (J) 385. The ratio of this judgement is that when the remand for de novo adjudication was made the appellant could not be subjected to greater penalty than had been adjudged against him in the original decision, in the event, the second adjudicator finds that the favourable directions obtained by the appellant were not warranted. I have perused this judgement. The Supreme Court did not make this observation at all, but in fact denied this suggestion. Counsel has wrongly relied upon the judgement which shows something in the headnote that does not exist in the body of the judgement.
11. In the appeal memorandum, a plea has been made that the Tribunal in remand proceedings had not set aside the finding of the first Collector to the effect that there was no sale of licence. I observe that when an order is set aside, it stands set aside in its entirety and that thereafter no part thereof can survive.
12. The first issue for decision is whether there was a sale of licence by M/s. Anish Kumar & Company to Nalin Vora. The statement that the licences were sold for a consideration of Rs. 30,000/- comes in the statement of Dharamdas Mehta, Manager of the licence holder. In the same statement, however, it has come out that it was their company that had imported the goods, and that they had made the payment of the shippers, although the funds were supplied by Shri Vora. In another statement it has come that intermittent discussions had been held by them with Mr. Vora. Mr. Vora in a written communication had indemnified them for any consequence or losses arising out of the import of these goods. All the money transactions were through official banking channels. Anil Kumar Mehta was the person who looked after import and export business of this unit. In his statement dated 4.6.1985 Mr. Anil Kumar does not speak of sale of the licence. The wordings used in the statement are……..”Accordingly Shri Vora was allowed to use Rs. 2,00,000/- (Rupees Two Lakhs only) licence facility to import motor vehicle parts against our licence for a premium of Rs. 30,000/-“. In the statement Mr. Anil Kumar deposed that the L.C. was opened by him, that correspondence made by them with the shippers on the advice of Mr. Vora. Several statements of Mr. Nalin Vora are on record. He mentioned that he was dealing with motor car parts, that he had earlier also utilised other peoples licences for importing such goods. He accepted having placed the orders. He accepted that he had gone to visit his family members in U.S.A.
13. There are some grey areas in the proceedings. It has not been established as to whose signature appeared on the bill of entry. Mr. Vora has dis-claimed having signed the declaration.
14. The evidence disclosed in the various statements indicates that the holders of the licence permitted Shri Vora to utilise the same for importing the goods which Shri Vora wanted. However, on record the importers were the licence holders. The invoices were in their name. The L.C. was opened by them and the remittances were made by the licence holders. It is correct that the motivation and the funds were supplied by Shri Vora but in such a situation it cannot be categorically held that there was a sale of licence.
15. The Collector on page 41 of his order mentions that Shri Anil Kumar Mehta had admitted the sale of licence in his deposition. It appears that the Ld. Collector has not read the statement correctly. I have extracted above that portion of the statement which relates to this transaction. The extract does not suggest any admission on part of Mr. Anil Kumar that the licence was sold to Mr. Vora. On this ground I hold that the evidence is not sufficient to establish sale of the licence and therefore the confiscation of the goods duly declared in the bill of entry under Section 111(d) of the Customs Act, 1962 does not sustain.
16. The declared goods are also subjected to confiscation under Sections 111(i) and 111(m) of the Act. These provisions are attracted where any goods are found concealed in a package or where there is misdeclaration. There is no change of concealment for the declared goods. The misdeclaration is therefore to be taken as relating to valuation of these goods.
17. The CIF value of the declared goods in the bill of entry was Rs. 2,15,224/-. This was re-appraised at Rs. 8,82,180/-. This forms the basis of the allegations under Section 111(m) as far as these goods are concerned. The Collector in the first order which was set aside by the Tribunal held that the revaluation was done by the Appraisers and the Assistant Collector and he found no reason not (to) place reliance on their findings. In the present order which is in dispute, the Collector mentioned the evidence of contemporaneous imports of similar items and valuation thereof was placed before him, but dismissed it on the ground that the suppliers were different. The importer had placed before him the price list of the suppliers for the contested goods. This was dismissed by him on the ground that it was not attested. He denied the demand of Shri Vora for cross examination of the Appraisers who had valued the goods on the higher side In this manner he held the valuation adopted to be fair and upheld the charge of under-invoicing. I find that the Ld. Collector erred in this decision. The law as to valuation of imported goods is fairly well settled. Where the transaction value is doubted it is for the department to show undervaluation by way of incontrovertible evidence indicating higher valuation of the same goods or similar goods or identical goods imported at a point of time near to the import of the contested goods. The Department in the case did not do so. The Ld. Collector placed reliance only on the valuation adopted by the Appraisers. The truth in their valuation could have been established in cross examination which the Ld. Collector denied. The evidence relied upon by Shri Vora to justify and support the prices quoted by him was summarily rejected by the Ld. Collector. In this situation it has to be held that the Department has failed to establish the charge of undervaluation of the declared goods and therefore that confiscation under Section 111(m) of the Act also does not sustain.
18. These goods are also alleged to be liable to confiscation under Section 119 of the Act This provision comes into effect when the goods are used to conceal contraband. I have seen the details as per the panchanama. The charge is raised on the observation that the goods were in quantities in excess of the declared quantities. The excess is substantial in brake lining and very minor in other items. Seen in prospective, the charge under Section 119 in the case of declared goods, sustains only in the technical sense, but does not justify order of confiscation.
19. In view of the analysis above, we hold that the charges levelled against declared goods totally valued at Rs. 2,15,224/- do not sustain. The order of confiscation and escalation of their value are set aside.
20. We now come to the motor vehicle parts which were found to be in excess of the declared quantity and quantity shown in the invoice. When recording his statement on 22.5.1985 Shri Vora was specifically asked as to who was responsible for these goods as well as the consumer goods found concealed in the consignment. He denied any knowledge as to who had sent the goods. He made a categorical statement as under:
I have not imported these goods. I do not know anything about them. Apart from these I have nothing to say about these goods.
In his further statement on 26.6.1985, he made the following claim, slightly different claim:
I have to state that the entire consignment consisting of one container and two cases and goods contained in the said container and two cases belong to me. On being asked I have to state that I had personally supervised the purchase of the material from USA and under my instructions these were stuffed in one container and two cases…..
Mere questions were asked when recording the statement dated 6.8.1985. Shri Vora consistently refused the suggestion that these goods were sent by the shippers on his instructions. In this statement he made a specific claim that the goods were packed and forwarded by the shippers. He stated that he had not given any instructions regarding packing. He deposed that he had not asked for the excess goods. He denied that he had received any list from the shippers or any other person detailing the excess goods sent.
21. In the statement Shri Vora deposed that on detection of excess goods he had sent a telex to the shippers. The shippers immediately reacted saying that goods which were meant for another person were wrongly shipped to Shri Vora. This claim was later taken up by the supplier with the Indian Consulate. The Indian Consulate also had taken up this issue, subsequently.
22. The present appellant has refused any connection with the excess automobile parts and also with the consumer goods concealed in the consignment. The shippers are not in appeal before me. Therefore the orders of confiscation of these goods sustain and are upheld. Since the confiscation of these goods is not contested, there is no need for me to consider the question whether the redetermination of their prices are correct or not.
23. We now come to the orders of imposition of penalty on the appellant.
24. We have earlier held that charge against the declared goods having been imported in contravention of the provisions relating to did not sustain. On that ground Shri Vora cannot be held liable to penalty. I have also held that charge of undervaluation of the declared goods was not sustainable. On this ground also no penalty could be imposed on Shri Vora. Now it remains to be seen whether Shri Vora was responsible for the importation of the excess automobile parts and/or the consumer goods.
25. The Collector has devoted substantial portion in discussing the aspect of penalty on the finding that Shri Vora had manipulated the import by having purchased the licence. As regards the excess unaccounted goods the Collector has held that Shri Vora had supervised the packing and shipment of the goods. On this ground he dismissed the claim made by the supplier that these goods had been sent by mistake. He made the following observation in the order:
I, therefore, hold that it is Mr. Nalin Vora, who had purchased these goods in USA, got them packed in the present consignment and have them shipped. He had full knowledge of the contents of the said container and the 2 packages as by his own admission he was staying in USA continuously for 3 months. I, therefore, reject the plea of alibi taken by Mr. Vora that the excess goods have been supplied by the suppliers by mistake. The manner in which the excess goods have been found to be packed and concealed in the packages and the container itself is sufficient to indicate that the excess goods have been packed and kept in the container in that manner and such a thing cannot happen by mistake. Accordingly to me, by no amount of effort Mr. Nalin Vora can prove his innocence in regard to the excess goods. I, therefore, hold that Shri Nalin Vora (is) liable to penalty under Section 112 of the Customs Act, 1962. As stated earlier, I am taking into consideration, Mr. Vora’s submissions regarding valuation, while determining the quantum of penalty.
26. In his statement dated 11.5.1985, Shri Vora had mentioned that he went to U.S.A. in September, 1984 and he returned in December 1984. During his stay in USA, he had placed the order for the goods with the suppliers. In his further statement dated 22.5.1985, he denied that he had imported the excess unaccounted goods. In his further statement on 6.8.1985 he denied any knowledge of the contraband. He denied having asked shippers or his relations in the USA to send these goods. He claimed that the good were packed and forwarded after his visit and not during his visit. It is his case that he came to know of the existence of these goods only on 14th/15th May, 1985. He however, deposed that he had supervised the stuffing of the container and the boxes. The relevant part of the statement has been extracted in para 20 above.
27. In this manner, we find that except for the statement highlighted above, Shri Vora’s statements are entirely exculpatory. In his earlier statement dated 22.5.1985, he had deposed having visited the shippers twice. On the second occasion he visited them when a telex was sent to M/s. Anish Kumar & Company to make amendment to the L.C. In this statement he gives his period of stay in USA from 6.9.1982 to 6.10.1982. The invoice is dated 27.11.1984 and the container was loaded on the ship on 12.12.1984. The port of loading was New York where the shippers are situated. While it is true that the goods were dispatched when Mr. Vora was not in station, there is his statement dated 26.6.1985 to the effect that he had personally supervised the purchase and the shipment of the goods contained in the one container and two cases. This statement is the basis of the Collector’s belief that Shri Vora was aware of the existence of the contraband. Subsequently a claim was made by the supplier that the goods were wrongly sent. The Customs had referred the correspondence back to the supplier on 23.8.1989. There was no response from the shipper to this letter. Thus, although there is no direct evidence to establish that it was Shri Vora who was responsible for the importation of undeclared and excess goods, the circumstantial evidence thus lends support to the Collector’s belief. However, the state of evidence does not justify the quantum of penalty imposed on the appellant.
28. The appeal is allowed in part. The orders of confiscation of the declared goods valued at Rs. 2,15,224/- are set aside. The orders of enhancement of the value of these goods are set aside. These goods are ordered to be cleared to the importers on payment of duty only.
29. The orders of confiscation of the consumer goods and of excess automobile parts are upheld.
30. The penalty imposed on Vora is reduced from Rs. 5,00,000/- to Rs. 2,00,000/- (Rupees Two Lakhs only).