ORDER
Jyoti Balasundaram, Member (J)
1. The brief facts of the case are that M/s. Shyam Traders imported two consignments of paper described as ‘Printing Paper (Coated)’ and ‘Printing Paper’ under bills of entry No. 8000, dated 16-9-1994 and 8123, dated 22-11-1994 respectively and claimed clearance under advance licence Nos. 1524017, dated 1-11-1993 and 2322325, dated 10-1-1994 respectively. The description of the goods allowed under the first licence was ‘chrome paper (soft cup, wrapper/labels)’ and the description of the goods allowed under the second licence was ‘uncoated board of 200 gsm or paper up to 100 gsm”. The first consignment was tested and found to be uncoated paper sheet made of chemical pulp and was allowed clearance. Thereafter it appeared to the department that the imported goods did not conform to the description given in the licences and the goods imported under bill of entry No. 8000, dated 16-9-1994 were again tested on 15-5-1995 and found to be coated paper with 49.0 gsm. The Dy. Chief Chemist opined that the goods were carbonless paper and may find use in business forms permitting copies to be made without the need of carbon paper by handwriting or by printing.
2. Therefore show cause notice was issued on 13-7-1995 proposing recovery of duty on the ground that the goods being carbonless paper did not have any nexus with the export products as required under Notifications 203/92-Cus. and 204/92-Cus. both dated 19-5-1992 against which the licences had been issued and proposing loading of the value of the goods on the ground that the proforma invoices of both consignments showed that the sale price of the goods are higher than the invoice price. The notice also proposed confiscation on the ground that carbonless paper was consumer goods falling under negative list of Exim Policy 1992-97, the import of which requires a specific licence which was not produced by the appellants. The notice also proposed imposition of penalty against the importers as well as their partner Ashok Gupta and also against M/s. Utility Forms Pvt. Ltd. from whom part of the imported consignment was seized and M/s. Sinar Mas Pulp & Paper (India) Ltd., agent of supplier of the goods in dispute. The charges in the show cause notice are as under :
(i) Why the value of goods imported by M/s. Shyam Traders, 70-A, Kamla Nagar, Delhi and cleared vide bill of entry No. 8000, dated 16-9-1994 and 8123, dated 22-11-1994 should not be loaded to Rs. 11,37,035/-(CIF).
(ii) Why the classification of the goods should not be amended to Tariff Headings 4809.20 and 4816.20.
(iii) Why the duty amounting to Rs. 11,27,919/- should not be recovered under Proviso to Section 28(1) of Customs Act, 1962 on loaded value as per details indicated in Annexure ‘A’ after denying the benefit of DEEC book and advance licence from M/s. Shyam Traders, M/s. Sinar Mas Pulp & Paper (India) Ltd., M/s. Utility Forms Pvt. Ltd., and Shri Ashok Gupta.
(iv) Why the goods of worth Rs. 5,20,000 (MV) seized from M/s. Utility Forms Pvt. Ltd., which were imported by M/s. Shyam Traders, vide bill of entry No. 8000, dated 16-9-1994 and bill of entry No. 8123, dated 22-11-1994 should not be confiscated under Sections 111(d), 111(m) and 111(o) of Customs Act, 1962.
(v) Why penalty under Section 112 of the Customs Act, 1962 should not be imposed on :
(a) M/s. Shyam Traders, Delhi for misdeclaring the value and suppressing of specific nomenclature;
(b) M/s. Sinar Mas Pulp & Paper (India) Pvt. Ltd. for helping in under-invoicing and misdeclaring the goods;
(c) M/s. Utility Forms Pvt. Ltd., under whose possession the goods which are liable for confiscation under Sections 111(d), 111(m) and 111(o) were seized; and
(d) Shri Ashok Gupta for misdeclaring the value and suppressing of specific nomenclature.
3. The notice was adjudicated by the Commissioner of Customs, who confirmed the duty demand of Rs. 11,27,919/- against Shyam Traders and imposed penalty of Rs. 1,00,000/-, loaded the value of the imports to Rs. 11,37,035/-, held classification of the imported goods i.e., carbonless paper under Headings 4809.20 and 4816.20 of the Schedule to the Customs Tariff, confiscated carbonless paper seized from the premises of Utility Forms Pvt. Ltd., with option to redeem the same on payment of fine of Rs. 1,00,000/-and imposed penalty of Rs. 75,000/- on Shri Ashok Gupta, penalty of Rs. 50,000/- on M/s. Utility Forms Pvt. Ltd., and penalty of Rs. 25,000/- on M/s. Sinar Pulp & Paper (India) Ltd. He recorded no finding on the charge that the goods were consumer goods falling under negative list of relevant Exim Policy. Hence these appeals.
4. We have heard Shri K. Kumar, learned Counsel for M/s. Shyam Traders and Shri Ashok Gupta, A. Sherazi, learned Counsel for M/s. Utility Forms Pvt. Ltd., Shri Viraj Gupta, learned DR for the Revenue and perused the records.
5. The importers do not contest the finding that the goods imported under the relevant bills of entry are carbonless paper and we also note that this has been admitted by Shri Ashok Gupta, partner of the importer firm. However, they submit that the advance licence No. 2322325 covers import of paper up to 100 gsm and since the goods in dispute are undisputedly below 100 gsm and since the above mentioned licence was sufficient to cover import of both consignments for the purpose of value, the goods have been imported in terms of the licence and as the importers are transferees of advance licence, there is no requirement to establish nexus between the imported goods and the final products for the manufacture of which import of raw materials was required. In this connection he relies upon the decisions of the Tribunal in the case of Purulax Electric Pvt. Ltd. v. CC, Mumbai [2001 (138) E.L.T. 786 (T) = 2001 (46) RLT 97] which has been followed by the Tribunal in the case of CC, Mumbai v. Visakhapatnam Steel Plant and Ors. in Final Order No. CI/3676-3714/2001/WZB, dated 22-11-2001.
6. On the other hand the learned JCDR Moheb Ali contends that the conduct of the importers in deliberately misdeclaring the imported goods as printing paper coated/printing paper under the respective bills of entry and the correspondence between the foreign supplier and the importer in India would show that there was deliberate misdeclaration of description so as to bring in goods not covered by the licence in the sense that they were not and could not be used in the manufacture of the final products for which the original licence holder was licensed.
7. We, however, agree with the importers that there was no burden cast upon them to show that there was a nexus between the carbonless paper imported by them and the export product, namely, cigarettes under advance licence No. 1524017; and fluorescent board of 200 gsm and above under licence No. 2322325 in the light of the judgment cited (supra). We therefore set aside the finding that the benefit of Notification 204/92, dated 19-5-1992 is not available to the importers.
8. Coming to the charge of mis-declaration of value, we find that the goods have been invoiced @ US $ 700 M.T. whereas not only did the annexure attached to the proforma invoice clearly show higher prices but there is also evidence on record to show that balance money was transferred from the importer to the supplier in Indonesia through Shri Vijay Gupta. The contention of the importer that the telegraphic transfer of money made through Shri Vijay Gupta was not for the higher value of the goods but as a form of guarantee is also not acceptable as the correspondence on record clearly shows that the amount paid by Shri Vijay Gupta is not towards the guarantee but balance of the price. The case law relied upon by the learned Counsel is distinguishable – in these cases the only evidence relied upon by the Revenue to reject the transaction value was a proforma invoice, while in the present case in addition to the proforma invoice from the same supplier for the same goods, there is proof of payment of extra amount over and above the invoice price. We therefore agree with the adjudicating authority that the actual transaction value was US $ 1365/- PMT for Coated Back, US $ 1720/- PMT for Coated Front Back, and US $ 1175/- PMT for Coated Front and uphold the finding of mis-declaration of value.
9. We also uphold the applicability of the extended period of limitation in the light of our finding that the importers deliberately suppressed the value of the goods so as to evade payment of correct amount of duty. Penal action against the importer is therefore also justified; however, in view of our holding that the goods were covered by the licence we reduce the penalty imposed upon M/s. Shyam Traders to Rs. 50,000/-. The penalty on Shri Ashok Gupta is set aside in the light of the ratio of the decision of the Tribunal in the case of Chandrakant Sanghvi v. CCE – 2000 (121) E.L.T. 788, holding that penalty cannot be imposed both on the partnership firm as well as on its partners under Section 112 of the Customs Act, 1962.
10. Confiscation of the goods seized from the premises of Utility Forms Pvt. Ltd. is upheld for misdeclaration of value, irrespective of the fact that M/s. Utility Forms Pvt. Ltd. was bona fide purchaser for value, since the liability to confiscation is directly related only to the offending goods. However, we reduce the redemption fine to Rs. 50,000/-. We set aside the penalty imposed upon M/s. Utility Forms Pvt. Ltd., as their explanation that they did not object to the wrong description of carbonless paper as printing paper in bills and challans, which has been relied upon to hold that M/s. Utility Forms Pvt. Ltd. was a party to misdeclaration of the description because they had been purchasing duty paid carbonless paper not only from M/s. Shyam Traders but also from other manufacturers in India, which had been supplied to them under the description of ‘Coated Paper’ or ‘Self Copy Paper’ is plausible, and the difference in description between the order placed by them and the bills and challans of M/s. Shyam Traders is not sufficient to sustain the finding of collusion between M/s. Utility Forms Pvt. Ltd. and M/s. Shyam Traders.
11. The Penalty on M/s. Sinar Mas Pulp & Paper (India) Limited is sustainable as misdeclaration of value was within their knowledge since the price indicated in the annexure to the proforma invoice dated 14-6-1994 showed them as agents and further the evidence about additional balance payment in the form of letter from M/s. Sinar Mas Indonesia to Sinar Mas Pulp & Paper (India) Limited clearly shows that M/s. Sinar Mas Pulp & Paper (India) Limited were directly involved in undervaluation of the goods. However, having regard to the totality of the facts and circumstances we reduce the penalty to Rs. 10,000/-.
12. In the result appeals of M/s. Shyam Traders, M/s. Utility Forms Pvt. Ltd. and M/s. Sinar Mas Pulp & Paper (India) Ltd. are partly allowed as above, while the appeal of Shri. Ashok Gupta stands totally allowed.