JUDGMENT
P.S. Bajaj, Member (J)
1. The above captioned appeals have been preferred against the common Order-in-Original dated 10.9.2002 vide which the Commissioner of Customs has ordered the confiscation of the imported goods with option to get the Same redeemed, determined the value of the goods for assessment purposes and also imposed penalties of various amounts, as detailed therein.
2. The appellants No. 1 is a firm of which appellants 2 and 3 are partners, while appellant No. 4 is the authorised representative of the firm. The firm imported fresh iron/steel bars/rods in 12 containers and filed Bill of Entry 587 dated 6.4.2000 at CFS, Ludhiana. But misdeclared the goods as heavy melting scrap (HMS) (quantity 254.870 MTs; and undervalued the same to avail the benefit of customs duty. The officers of DRI acting on specific information visited CFS, Ludhiana and examined all those containers in the presence of Vivek Walia, appellant, authorised representative of the firm and two Chartered Engineers, Shri J.S. Oberoi and Shri Rajesh Shori. On examination, all the containers were found to contain fresh bars and rods of iron and steel of the
length varying from 4′ to 12′ and diameter 10 mm to 28 mm. The officers also noticed that one container was already opened and some pieces of bars and rods were found to have been loaded from that container in a truck. All the goods alongwith the truck were seized under Section 110 of the Customs Act. For getting expert opinion, the goods were got examined from the chartered engineers named above, who submitted their reports that the imported goods had been manufactured from prime raw material and not defective or secondary. Shri Vivek Walia, authorised representative of the firm in his statement also disclosed that the goods had been purchased by the firm from M/s. Sara Universal, New Delhi on high sea sale basis. He also admitted that the goods had been found to be new MS rounds of different sizes and length and that there was misdeclaration of the goods in the Bill of Entry, The statement of Jagga Singh, Driver of seized truck was also recorded who stated that he brought the truck inside CFS premises and loaded the bars and rods in the containers on the direction of Sanjay Chaudhary, the appellant. Thereafter, statement of Sanjay Chaudhary, appellant was also recorded who also disclosed that his brother Pradeep Chaudhary is running a CHA firm in the name of M/s. Pooja Travel and Cargo at Ludhiana while he himself is in the business of transport and owned two trucks. He, however, failed to offer any explanation as to why the driver of the seized truck had named him who got the goods from the Container loaded in the truck without any permission of the competent authority. Shri Gursharan Singh, owner of the truck in his statement also denied his knowledge about all the above said facts. Raj Kumar Goyal, appellant failed to appear before the authorities during the investigation inspite of issuance of notices to him.
3. On 11.5.2000, the firm requested for provisional release of the goods, to the Commissioner of Customs and the same was allowed on the stipulated terms and conditions. But the firm insisted for the provisional release, as requested vide letter dated 31.5.2000, i.e. delivery of the goods after mutilation and treating the goods as scrap. On completion of the investigation, show cause notices were issued to all the appellants proposing confiscation of the goods and imposition of penalties. The firm in the reply, denied by the allegations made therein by the Department and also questioned the correctness of the reports of the chartered engineers and maintained that they were entitled to the release of the goods after mutilation and denial of this right to them was contrary to the Board’s direction dated 16.6.95. They also denied their knowledge that the imported goods were not heavy melting scrap, but fresh iron/steel bars/rods as they had purchased the same on high sea sale basis and bona fide acted on the information regarding the nature of the goods contained in the shipping documents and commercial invoice. No reply to the show cause notice was filed by Vivek Walia and Sanjay Chaudhary, appellants.
4. The learned Commissioner did not accept the version of the firm and its partners, appellants 2 and 3 and passed the impugned order.
5. The learned Counsel has contended that there was no misdeclaration and under-valuation of the goods by the firm and its partners named above as they purchased the goods on high sea sale basis and that the goods even in a situation of misdescription and under-valuation, should have been delivered to them after mutilation. The Counsel has further contended that the value for the assessment purposes had not been arrived at correctly in accordance with Rule 8 of the Customs Valuation (Determination of Price of Imported Goods) 1988 (hereinafter referred to as “Valuation Rules, 1988”). Regarding imposition of penalties, the Counsel has argued that the same deserves to be set aside as there was no malafide intention on the part of any of the appellants to evade payment of customs duty.
6. On the other hand, learned SDR has reiterated the correctness of the impugned order.
7. We have heard both sides. So far as the misdeclaration of the goods and under-valuation of the same in the Bill of Entry filed by the authorised representative of the appellant’s firm is concerned, it stands amply proved on the record. The goods declared in the Bill of Entry were heavy melting scrap (HMS). But on examination of the goods, the same had been found to be fresh iron and steel bars and rods. The report of two chartered engineers viz. Sh. Rajesh Shori and Sh. J.S. Oberoi remains unquestioned on the record. They had given in the reports, in detail the description of the goods, diameter, length of the MS rounds. No expert opinion has been produced by the appellant firm to dispute the correctness of their reports and as such there exists no cogent reasons to discard the same. From their report, it is quite evident that the imported goods were MS rounds/fresh iron/steel bars/rods of various lengths varying from 4′ to 20′. These were not scrap as declared in the Bill of Entry by the firm. The learned Counsel has not been able to assail the findings of the Commissioner in this regard on any material ground before us.
8. The contention of the learned Counsel that the misdescription of the goods was not intentional as the firm purchased the same on high sea sale basis from M/s. Sara International P. Ltd. cannot be accepted, as after the alleged purchase, the appellant firm has to be treated as an importer and it was for the firm to make correct declaration regarding the nature of the goods imported. The Bill of Entry was filed by the authorised representative of the firm viz. Vivek Walia (appellant) who even in his statement accepted that there was misdeclaration regarding the description of the goods in the Bill of Entry. None out of the appellants 2 and 3 who are partners of the firm, the appellant No. 1, had the courage to appear before the adjudicating authority to establish their bona fide in making declaration about the nature of the goods in the Bill of Entry. On account of their non-appearance, an inference can be safely and legally drawn to the contrary that they had every knowledge about the true nature of the imported goods, but intentionally made the wrong declaration through the authorised representative in the Bill to Entry.
9. Since there was misdeclaration regarding the description/nature of the goods, they were liable to be confiscated under Section 111(m) of the Customs Act. Therefore, the impugned order of the Commissioner in this regard, in our view is perfectly valid and legal. The redemption fine assessed by the learned Commissioner for getting the goods redeemed also cannot be said to be in any manner arbitrary or exhorbitant, being of only Rs. 2 lakhs. The goods being MS bars and rods had been also rightly ordered to be classified under Sub-heading 7214.20 of the First Schedule appended to Customs Tariff Act, by the adjudicating authority. We do not find any illegality in this regard in the impugned order,
10. The contention of the Counsel that the goods should have been released after mutilation and treated as scrap for all intends and purposes including that of value assessment cannot be accepted, keeping in view all the above referred facts and circumstances. The firm and its partners and the authorised representative named above, have in the first instance tried to hoodwink the Customs authorities. They intentionally misdeclarated the goods in the Bill of Entry as steel scrap whereas the goods were fresh iron/steel bars/rods, etc. with the sole intention to avoid payment of appropriate customs duty in respect thereof. When they had been caught, they have come up with this plea that their goods should be mutilated and treated as scrap. It is well settled that one who seeks equity must come with the clean hands. No relief based on equity can be extended under the law to a person who had been found guilty of fraud, suppression and misdeclaration. Therefore, keeping in view the conduct of the appellants, their prayer for mutilation of the goods and treating them as scrap could not be accepted. The ratio of the law laid down in Global Shiptrade (P) Ltd. v. Commissioner of Customs, Kandla, 2002 (142) ELT 152 and Antartic Industries Ltd. v. Collector of Customs, Kandla, 1999 (W8) ELT 496 (Tri.) referred by the Counsel is not attracted to the case of the appellant. In the first case, heavy melting scrap was imported, but the containers contained old and used rusty pipes, but there being no evidence to show that such pipes were serviceable, mutilation was allowed and it was observed that the goods were only meant for melting and could be treated as waste and scrap. Similarly, in the second case on examination, the goods were found to contain 80% old used and rusted pipes of different sizes and for that reason the goods were allowed to be delivered to the importer after mutilation as scrap and not as pipes. But such are not the facts and circumstances in the present case. The imported goods had been found to be manufactured from prime raw material and are fresh iron/steel bars/rods which are serviceable and it can be used for construction of buildings, even, as is evident from the report of the chartered engineers. Similarly, the ratio of law laid down in S.K. Metal Co. v. Commissioner of Customs, New Delhi, 2001 (138) ELT 86 referred by the Counsel is not attracted to the case of the appellants. In that case the goods imported were found to be unused zip sliders and there was misdeclaration regarding the description of the goods. But
there was no evidence to show that the importer had not entered into contract with the supplier for supplying scrap and that the misdeclaration was intentional. Under these circumstances, the mutilation of the sliders was allowed in order to treat the imported goods as scrap. But in the light of the facts and circumstances detailed above, the request of the appellants for mutilation had been rightly turned down.
11. In Maharashtra Overseas Enterprises v. Commissioner of Customs, Mumbai, 2003 (55) RLT 353 referred by the Counsel, there was misdescription of the goods as the imported goods were acrylic plastic sheets, but the description declared was off-cuts. Since the imported goods were not of prime quality, the mutilation of the same was allowed. But in the case in hand, the imported goods had been found to be of prime quality and misdeclaration was intentional. For the reasons/facts detailed above, no benefit of the ratio of law laid down in Madan Lal Steel Industries v. Union of India, 1991 (56) ELT 705 can be also extended to the appellants for allowing mutilation of the goods and treating the same as scrap for the purpose of valuation. In the light of the discussion made above, the Board’s directions vide F. No. 446/9/95-Cus dated 16.6.95 referred by the Counsel is also of no avail to the appellants in view of the nature of the goods imported by them by making a false declaration as scrap.
12. The ratio of law laid down in Tata Iron and Steel Co. Ltd. v. Collector of Central Excise 1996 (53) ECC 104 (SC) : 1995 (75) ELT 3 by the Apex Court that the classification of the material cannot be made on the basis of size of the goods, is not applicable to the appellant’s case. In the instant case on examination of their goods by two chartered engineers, the same had been found to be not scrap but the goods which had been manufactured from prime raw material and could be used for the construction of the buildings keeping in view their length, size, and diameter. The offence of misdeclaration committed by them cannot be condoned under the law by allowing mutilation and treating the goods as scrap. As observed above, a fraudulent person does not deserve any leniency under the law. Therefore, keeping in mind the conduct of the appellants, the goods imported by them could not be treated as scrap by allowing mutilation so as to extend them any concession in the payment of customs duty.
13. The penalties under Section 112(a) of the Customs Act, in our view, had been rightly imposed on all the appellants. Appellants 2 and 3 are partners of appellant firm No. 1 in whose name the Bill of Entry was filed and they have failed to prove their bona fide. Appellant No. 4 acted as authorised representative of the appellant firm No. 1 and he had been also rightly penalised. Sanjay Choudhary, appellant had been penalised as he attempted to help the other appellants in removing the goods from CFS premises, Ludhiana in a clandestine manner by bringing the truck in that premises. He even helped the driver of the truck in loading some of the goods from one container in the truck, for taking away from the premises. He being an active a better had been
also correctly penalised under Section 112(a) of the Act. Therefore, penalties imposed on all the appellants by the adjudicating authority are upheld.
14. However, regarding the valuation of the imported goods for assessment purposes, the impugned order of the adjudicating authority cannot be sustained and the matter deserves to be sent back for redetermination. No doubt the value has been ordered to be determined under Rule 8 of the Valuation Rules, 1988 and to this extent, the impugned order of the adjudicating authority is perfectly valid. But the adjudicating authority has not determined the value as per the requirement of this Rule. The adjudicating authority has taken the value by keeping in mind the selling price of the goods in India, at Rs. 7.68 per kg. But Sub-section (2) of the said Rules prohibits the determination of the value on that basis. Therefore, the impugned order of the adjudicating authority in this regard is set aside.
15. In the light of the discussion made above, except regarding determination of the value of the goods, the impugned order of the adjudicating authority is upheld. For determination of the value afresh in terms of Rule 8 of the Customs Valuation Rules, the matter is sent back to the adjudicating authority who will also afford an opportunity of hearing to the appellants. The appeals of the appellants accordingly stand disposed of in these terms.