[Order per : C.N.B. Nair, Member (T)]. - The appellant M/s. Mahalaxmi International Exports, imported during 1996 and 1997 some consignments of watch components at Jaipur. They were assessed to duty and allowed to be cleared by the Customs Authorities. Subsequently, three show cause notices were issued in 2001 by the Directorate of Revenue Intelligence alleging that those consignments had been under-valued and there-by evaded customs duty. The main evidence relied upon in support of the allegation was that customs authorities at Hong Kong had reported to Indian Customs (through consul at Hong Kong) that the actual prices of the consignments were higher than the invoiced amounts and that false invoice values were put down in the invoice under an understanding between the foreign supplier and the Indian importer. The Hong Kong Customs Authorities also forwarded export declarations filed (in respect of some consignments) by the foreign supplier before Hong Kong Customs in support of their report that the price declarations were false. The notices, therefore proposed to recover the evaded customs duty, to confiscate the imported goods and to impose penalty on the appellant.
2. M/s. Mahalaxmi International refuted the allegations and stoutly maintained that the invoice prices were the actual transaction prices and the original assessments, which had been made, based on those assessments were correct. They tried to pick holes in the evidence produced in support of the allegation by pointing out that export declarations were not available in respect of some consignments, the export declarations had not been authenticated, and no evidence had been produced to show that the appellant had paid the alleged differential prices. Appellant’s contentions were not accepted in adjudication and Commissioner of Customs, Jaipur passed his Order Nos. 26 to 28/2002, dated 18-10-2002 upholding the allegations and confirming the duty demand of about Rs. 17.71 Lakhs. The Commissioner also imposed an amount equal to the duty demanded as penalty on the importer. Further, the goods imported were confiscated and redemption fine of Rs. 20 Lakhs imposed. The present appeal is directed against those findings.
3. When the appeal came up for hearing learned Counsel for the appellant pointed out that the appellant had not been shown the relied upon materials during the adjudication proceedings even though the impugned order states that the appellant was given opportunity to inspect the relied upon documents; but they did not avail of the opportunity. In order to redress this grievance, we directed the Revenue Authorities to make available the relied upon documents. After perusing those materials the learned Counsel for the appellant has made his final submissions. Written submissions have also been filed.
4. The appellants have raised a wide range of defences. The very first relates to the reliability of the evidence procured by the Customs Authorities. It has been pointed out that in respect of 5 out of 11 Bill of Entries under which imports took place, export declarations have not been made available by the Hong Kong Customs Authorities. The appellants also have re-iterated their objections like export declarations have not been authenticated, the invoice relating to those export declarations have not been produced, the export declarations are not legible, they contained correction etc. The appellants have also submitted, relying on several decisions of Apex Court and this Tribunal [(1) (S.C.) = 1997 (21) RLT 587 (S.C.) GTC Industries Ltd. v. Collector of Central Excise, New Delhi, (2) (S.C.) = 1997 (18) RLT 537 (S.C.) CC, Bombay v. East Punjab Traders, (3) (T) = 2002 (51) RLT 846 (CEGAT - Kol.) V.K. Impex v. CC (Port), Kolkata, (4) (T) = 2001 (43) RLT 609 (CEGAT - Kol.) Md. Abdul Halim v. Commissioner of Customs, Calcutta, (5) (T) = 2000 (40) RLT 619 (CEGAT) Rajendra Sanghvi & Ors. v. Commissioner of Customs, Mumbai] that materials obtained abroad and unauthenticated cannot constitute the basis for proceedings.
5. The appellants have also submitted that the confiscation of the goods was not legally justifiable inasmuch as the goods had already been cleared and consumed and were not available for confiscation. The learned Counsel for the appellant has submitted that it is well settled that no redemption fine can be imposed in respect of goods, which are not available for confiscation [Ram Khazana Electronic & Ors. v. CC, AIR Cargo, Jaipur - (T) = 2003 (57) RLT 254 (CEGAT - Del.)]. The learned Counsel has also pointed out that since the charge of under-valuation is not sustainable, imposition of penalty was also not justified.
6. The learned SDR has emphatically denied the objections raised by the appellants. It is her submission that this is a clear case of deliberate under-valuation of goods so as to evade customs duty. She has also submitted that the whole fraud has been elaborately well planed inasmuch as, according to prior agreement, the appellant’s foreign supplier was under invoicing the goods, even as the appellant importer was making full payments for the goods. She has in this contest referred to the report dated 29th September, 1998 of the Hong Kong Customs. The learned SDR has pointed out that the under-valuation remains confirmed by the investigations carried out by the Hong Kong Customs. She also pointed out that in some of the cases, the Hong Kong Customs have also forwarded the export declarations filed by the Exporters and these export declarations showed much higher prices than the invoice prices. According to the learned SDR, the absence of export declarations in some cases, made no difference to revenue’s case inasmuch as the present case relates to different imports undertaken as a part of a conspiracy to under invoice watch part. According to the learned SDR, since the import of different consignments constituted parts of the same offence the material available could be treated as common evidence for all the imports and the case decided.
7. The learned SDR has further pointed out that the case law cited by the appellants has no application since it is well settled [ and (S.C.)] that export declaration could form basis for proceedings. Learned SDR also referred to the judgment of the Supreme Court in the case of Union of India v. Jain Shudh Vanaspati Ltd. [ (S.C.)] in support of the submission that release order under Section 47 does not stand in the way of short levy proceedings under Section 28 of the Customs Act or issue of show cause notice for confiscation and imposition of penalty.
8. We have perused the records and have considered the submissions made by both sides. The present proceedings by the Indian Customs Authorities is based on the evidence received by them from their counter parts at Hong Kong Customs. The appellants have raised several objections about the admissibility and reliability of the materials. But perusal of the materials, leaves us in no doubt that these objections cannot be accepted and that there should not have any hesitation in upholding the impugned findings. The main basis of the revised valuation is the report dated 29th September, 1998 from Hong Kong Customs and the materials furnished by them in support of the findings recorded in that report. We read the relevant portion from that report :-
“Our investigation revealed that there were double-invoicing arrangements in respect of eight of the nine invoices referred by you. The company issued the false invoices for customs clearance purpose. It also issued genuine invoices to the Indian importer for collection of payments. The Indian importer paid the invoiced amounts in the false invoices by D/P and settled the balances due by telegraphic transfer. For your easy reference, I now tabulate the particulars of these eight consignments in the attached Annex.”
9. The above report also has an annexure giving full details of the export consignments invoice wise. It is clear from the above report that the data about value has been furnished by Hong Kong Customs after detailed investigations. Undoubtedly, those investigations had gone into the depth of the transaction inasmuch as it has reported on all aspects of the transaction. It has stated that the foreign supplier “issued” the false invoices for customs clearance purpose. It also issued genuine invoices to the Indian importer for collection of payment. The report also points out that “Indian Importer paid the invoiced amounts in the false invoices by DP and settled the balance due by telegraphic transfer. The letter also makes it clear that the investigation covered 8 consignments particulars of which were tabulated in the annexure. From this, it is clear that the real transaction value between the parties has been ascertained by the Hong Kong Customs through a thorough investigation The appellant’s response has been only to protest their innocence and to pick some formal objections. We are of the opinion that the Revenue authorities were right in rejecting these objections and concluding findings based on the facts reported by the Hong Kong Customs authorities. This case is altogether different from the cases cited by the appellants in their defence. The decision of the Apex Court in CC, Bombay v. East Punjab Traders [ (S.C.) = 1997 (18) RLT 537 (S.C.)] case related to obtaining of some document from abroad by visiting customs officer and using that as evidence in customs proceedings. As against that, in the present case, the customs authorities of another jurisdiction have investigated the transaction at their end and have reported findings. Some documents have also been forwarded to substantiate those findings. This judgment of the Apex Court has no application to the present case. Similar is the position in respect of other decisions also. The present case is similar to the case of Orson Electronics Pvt. Ltd. v. Collector of Customs, Bombay [ (Trib.)] wherein the Tribunal held that export declarations filed by the exporters themselves in the exporting jurisdiction, constituted reliable evidence. This order has been confirmed by the Apex Court [ (S.C.)]. In the present case, apart from the export declarations, the transactions have been investigated by the Hong Kong customs authorities in depth and they have reported their findings. In these facts and circumstances we are convinced that the values reported by the customs authorities at Hong Kong constituted the correct transaction values of the goods under import and the goods were required to be assessed at those values. The initial short levy being the result of an elaborate fraud involving both the foreign supplier and the Indian importer, the duty was required to be recovered through proceedings invoking the extended period permitted under Section 28 of the Customs Act. In view of this, the duty demands made in the impugned order are confirmed. The deliberate nature of the fraud is clearly brought out by the report of the Hong Kong customs. That report states that the exporter had issued “false invoices” for customs purpose”. It also states that the Indian importer settled the entire payment. Such duplicitous conduct of the parties make them liable to penalty under Section 112(m) of the Customs Act as held by the Commissioner. Invoking of Section 114A of the Customs Act which came into force subsequent to some of the imports, makes no difference to the sustainability of penalty, since that section relates only to the quantum of penalty and not to liability to penalty. We are satisfied that in the deliberate nature of the offence, a penalty equivalent to the duty amount is not excessive at all. Further Section 112 permits penalty not exceeding the value of the goods.
10. We find merit in the appellant’s submission with regard to imposition of redemption fine. In the present case, the goods are not available for confiscation. Nor had they been originally cleared against a bond. In such a case, the law does not permit imposition of redemption fine as held by us in the Ram Khazana Electronic & Ors. v. CC, AIR Cargo, Jaipur (Supra).
11. In the view we have taken above, the appeal is partially allowed by setting aside the redemption fine. Rest of the order relating to duty and penalty and interest are confirmed.