[Order per : T.V. Sairam, Member (T) (for the Bench)]. - These are the appeals challenging the order of Commissioner of Customs, New Delhi dated 17/20-9-2004.
2. Briefly stated, in this case the appellant Shri Rakesh Chandna was apprehended at Calcutta Airport carrying US $ 45000 and Rs. 9000/- unauthorizedly. Along with money, several incriminating documents were also recovered from his possession, which has fueled further follow up action by DRI. Goods were seized from the appellant’s company premises on 23-5-2000 as the appellants could not produce documentary evidence to support their legal acquisition. The value of the goods seized was revised to Rs. 24,26,234/-.
3. During the course of investigation, a number of statements got recorded by the DRI from the appellant Shri Rakesh Chandna and also Shri Sanjeev Murgai, Manager of the Company, who is the brother-in-law of Shri Rakesh Chandna. Based upon the statement dated 24-8-2000 of Shri Sanjeev Murgai, the allegations were made that the imported goods namely, plywood, MDF Board, Veneers etc., had been under-valued by adopting a method, in which the supplier sent invoices and packing lists for a lower value and quantity and the same were used for the customs clearance. The correct description of the goods was stated to be ‘not declared’ to the Customs. When inflicted with the documents seized at Calcutta Airport from Shri Rakesh Chandna, Shri Sanjeev Murgai had stated that, it appeared that the goods imported by the appellant-company were misdeclared in terms of value as well as quantity for which they were not involved in any manner.
4. The record also indicated that several summons were issued to appellant Shri Rakesh Chandna (as many as seven in the year 2000) but he never bothered to appear before the authorities for recording his statement. It was only after the disposal of his petition by the Hon’ble High Court in January, 2001, he appeared for recording his statement. The statements were recorded on six occasions. But, the record reveals that he had not been consistent in his statement. When he was confronted from his documents seized from the Calcutta airport, he has stated that the signature was not his and therefore, he would not sign. However, on further query, he stated that the signature in the documents were his but refused to sign in documents shown by the department. After perusal of the document he approved that they belonged to them but refused to sign the same. It is however, a fact that the documents recovered from him on 25-6-07 at Calcutta Airport were signed and stood verified along with two independent witnesses.
5. A show cause notice issued by the Director of Revenue Intelligence bearing the signature of Additional Director General on 16-5-01, gives the detailed account of the investigation carried out by them. Para 11 of the show cause notice particularly deals with the allegations of misdeclaration of quantity/desc-ription/value and concealment of goods in a bill of entry-wise chart. The information contains all the particulars as declared by the appellants in the bill of entry and also the particulars as actually found of the goods as per annexure, namely, bill of entry numbers, invoice numbers and pro-invoice numbers, container numbers and supplier’s name.
6. Apart from the incriminating documents recovered from the possession of Shri Rakesh Chandna from which the inference was made by the investigating authorities that the same showed mala fide intention of misdeclaration of goods/quantity/value and concealment of goods so as to avoid payment of Customs Duty, the contents of several fax messages sent from Rakesh Chandna to his supplier have also formed the backbone of this investigation. Para 13 of the show cause notice is replete with information relating to advice given to the supplier so as to hoodwink the fisc.
7. Para 14 of the show cause notice also indicates the Italian connection of the appellants and the fact that 100% value loading in case of certain imports of many order sheets for plywood was accepted by the appellant-company without any objection. It was, therefore, alleged that apart from 8 bills of entries as detailed in para 11 of the show cause notice, all the other 28 bills of entries were also misdeclared in terms of description/quantity/value. After referring to various provisions under the Customs law, a show cause notice charged the appellant-company. Shri Rakesh Chandna and Shri Sanjeev Murgai for the duty evasion amounting to Rs. 3,95,58,229/-. The Notices also demanded this amount besides contemplating confiscation of goods and penalty.
8. In the impugned order, the learned Commissioner of Customs, after taking into account the submissions of the appellants and observing that the personal hearing could not be conducted as the noticee failed to appear (para 26 of the order refers). Relying upon the incriminating documents, he had arrived at a decision that the value declared by the overseas supplier in their export invoice/documents were far higher than what were declared by the appellants before the Indian Customs for the purpose of assessment of duty. It is observed that such an evidence was recovered from the possession of the appellant Shri Rakesh Chandna in the Calcutta Air port and were shown to Shri Sanjeev Murgai, Manager of the appellant-firm/company who had confirmed the truth of the contents.
9. Relying upon the fax messages sent by the appellant Shri Rakesh Chandna to his overseas supplier as well as those messages received by the appellant Shri Rakesh Chandna, the ld. Commissioner traced the evidence and found that payments were made over and above, through letter of credit and that the amount had been paid to the overseas supplier through illegal channel. As the receipt of such amounts through the persons sent by the appellant Shri Rakesh Chandna were confirmed in writing by the overseas suppliers in such fax messages, it was also observed that the contents of fax messages revealed that appellant Shri Rakesh Chandna was dictating the contents of proforma invoice and packing list to his overseas supplier. It was also noted that the written reply submitted by the appellant was basically a para-wise denial of the charges levelled against him and that no documentary evidence was produced in support of their claim.
10. The impugned order contains bills of entry-wise details relating to description, dimension, quantity and value of the consignment comparing them with the evidences in a detailed manner. Against certain bills of entries, the learned Commissioner has been able to co-relate the bill of entry with the said correspondence, fax message and the like. In certain other cases, he has found that the allegation made in the show cause notice was not based on any fact but a mere presumption against the notices. He had therefore, partially dropped the proceedings in certain bills of entries as detailed in the order. In respect of certain consignments imported from Italy on which investigation was conducted through overseas inquiries in respect of supplies made from three suppliers, the learned Commissioner came across under-valuation. He also found evidence against the appellants that they had misdeclared the value substantially to evade the payment of duty. Thus out of the total sum of duty Rs. 3,95,58,229/-, demanded under the show cause notice, the learned Commissioner confirmed the amount of Rs. 1,45,85,446/- being the differential duty as detailed in para 38 of the impugned order. He also imposed the like amount towards penalty under Section 114A of Customs Act besides imposing penalty of Rs. 10 lakhs and Rs. 5 lakhs on Shri Rakesh Chandna and Shri Sanjeev Murgai.
11. The learned Counsel for the appellant, on being asked whether the money seized from the appellant at Calcutta Airport belonged to the appellant, stated that dollars and Indian rupees and also the documents reported to be seized did not belong to the appellant and they were not claiming the seized currency in this case.
The learned Counsel further contended that :-
(a) There was violation of principles of natural justice by the authorities below as the application for adjournment filed by the appellants was not dealt with by the learned Commissioner when hurriedly passing the impugned order;
(b) DRI had no jurisdiction to issue show cause notices under Section 28 of the Customs Act;
(c) None of the documents relied upon by the department, stood authenticated as per the procedure laid down under Section 3(ii) of Diplomatic and Consular Officers (Oaths and Fees) Act, 1948;
(d) The department had relied upon the documents obtained from the foreign countries without affording any opportunity for cross-examination to the appellants;
(e) The fax messages received are not admissible evidence because they were not signed; and
(f) The fax messages are not relevant to the allegation that they were engaged in evasion of duty, because these messages had not specified any consignment and that no co-relation was possible.
12. The contention of the appellant was that the documents obtained from the foreign countries were not authenticated as per the procedure laid down under Section 3(ii) of Diplomatic and Consular Officers (Oaths and Fees) Act, 1948. A judgment of the Hon’ble Rajasthan High Court in Vimal Chand v. Income Tax Officer, Central Circle I and others delivered on 15-5-81 reported in 134 ITR 119 was relied upon. It was also argued that Section 3(1) confers powers on Indian Diplomatic and Consulars in foreign countries to do notarial act which any notary public may do within a State. It was also contended that the fax messages are not administrative evidence since they do not bear any signature. Yet another contention was that the statement retracted cannot be relied upon by the authorities. It was further contended that whichever part of the statements was in favour of the appellant the same were not considered by the authorities.
13. The learned Counsel for the appellant relied upon a number of judgments to drive home the point that the show cause notice was issued wrongly by an officer who is not a “proper officer” as defined under Section 26 of the Act; that the Revenue had not brought any concrete material to prove that the documents relied upon by them were genuine; that there was no proof that the appellants had remitted more money than as was declared in the bill of entry; that the unauthenticated documents obtained by the DRI from the supplier cannot be relied upon; that the evidence adduced by the Revenue in support of the charge of under-valuation on the basis of document seized/obtained by the DRI were incomplete and unauthenticated. The following citations were mentioned in their support :
(1) Konia Trading Co. v. CC, Jaipur -
(2) Durga Prasad HR Gomes, Superintendent (Prev.) CCE, Nagpur - (S.C.)
(3) Truwoods P. Ltd. v. CC, Bhubaneshwar - (Tri. - Del.)
(4) Wipro Ltd. v. CC - (Tri. - Bang.)
(5) Overseas International v. CC -
(6) Mirah Exports Pvt. Ltd. v. CC - (S.C.)
14. The learned authorized representative of the department reiterated the ratio of the decision of the learned Commissioner. He emphasized on the fact of recovery of foreign and Indian currency as also the documents from the appellant Director Rakesh Chandna after following the proper procedure of drawing panchnama, in the presence of independent witnesses. According to him, the confessional statement recorded on the spot from the said appellant Director of the Company when caught in the act, cannot be over-looked especially when such a statement was made compatible by the statement of the Manager of the Company, Shri Sanjeev Murgai. He emphasized on the compatibility of documents recovered from Shri Rakesh Chandna with the concerned bills of entry. For instance, the fax message addressed by the appellant-company to the supplier in Thailand asking them to show a reduction in the price from US $ 230 per piece to US $ 195 per piece is dated 19-11-99. In this message the importer had also asked to ensure that the retrospective date namely 30-9-99 was shown, besides indicating that such a letter was required for Customs clearance.
15. The learned DR co-related this message with the undated reply to this letter which, according to him, goes to prove that the appellants were engaged in deliberate undervaluation. It was contended that by tallying of the rate, the details of customers, the details of exporters and the date of facts (being prior to the date of bill of entry filed by the appellants) the charges against the appellants stood proved. Similarly, he also referred to yet another fax message dated 22-11-1999 from the appellant Director to supplier which also sought for reducing the price suggesting the bulk discount “for customs clearance purpose”.
16. The main thrust of the Revenue’s contention was that 13 invoices recovered from the Italian suppliers cannot be brushed against because each of them not only bore signature of the supplier but also tallied with the stamp of the dispatch airlines indicating S.No. and also the date of dispatch. It was also contended that the invoices are not “stray documents” because they have been received by the officials of the High Commission of India under the forwarding letter from the Italian authorities duly signed from their side, bearing S.No. of the correspondence and the date on the covering letters. The source of this invoice is referred to as Italian Customs by the High Commission of India, Trade Department Indian House, London, in their letter dated 22-10-01 addressed to DRI. He therefore, contended that the authenticity of this document cannot be questioned now especially since when various events narrated and the various other documents remained co-related to them. According to him, several information in these invoices (except those relating to pricing) squarely tallied with the bills of entries filed by the appellants.
17. It was also submitted that the appellants were not co-operating with the authorities in answering summons since as many as 11 summons were issued to them.
18. In this context, he relied upon the following decisions to state that the Customs officials are not police officers and that the confession though retracted is an admissible evidence, binding the appellants. He also submitted that there was no need to call panch witnesses for examination and cross-examination by the petitioner. It was also contended that the principles of natural justice did not require that the persons from whom inquiries have been made by the authorities should be produced for cross-examination by the appellants. It was also contended that adoption of the export declaration of value by the suppliers before the foreign customs along with related invoices was quite in order to arrive at the assessable value of the imported goods under Section 14 of the Customs Act, 1962. It was also contended that statutory documents filed before Customs authorities in foreign countries and the foreign authorities who made such documents available to the Indian Customs on request cannot be ignored. According to him, the values reported by the foreign customs authorities constituted the correct transaction value of the goods under import and the goods were required to be assessed on these values due to over-whelming evidence. The Revenue relied upon the following statements to drive home the above contention :-
(1) Surjeet Singh Chabbra v. UOI -
(2) Lilachand R. Solanki v. Customs of Customs - (Tri. - Mum.)
(3) Jagdish Shanker Trivedi v. CC, Kanpur - (Tri. - Del.)
(4) Manohar Rajaram Chhabria and Orson Electronics v. Collector - (S.C.)
(5) CC, Jaipur v. Indian Watch Parts Mfg. - (Tri.)
19. We have heard both sides at great length and perused the record. At the outset, we find that the entire events in this matter unfolded with the seizure of foreign currency and documents at Calcutta Airport from the appellant Director. We find that the investigating authorities have meticulously worked out the follow up action in such a way that the investigation culminates into unearthing the suppression of value and description of the goods resorted to by the appellants which would have caused serious impact on the public exchequer.
Reasoning :
20. The prolonged contention before us that their adjournment application was not dealt with by the Commissioner has been found flimsy in view of the observations made by the learned Commissioner in para 26 of the impugned order :
“26. Personal hearing in this case was fixed on 3-3-04. The noticees requested for adjournment and the hearing was refixed on 20-4-04. None appeared on the said date and it was again fixed for 13-5-04. A letter was received from the noticee intimating that their counsel is not well and 8 weeks adjournment may be given to them. The request was considered and personal hearing was fixed on 10-8-04. None appeared on said date also. The noticee vide letter dated 6-8-04 intimated that adjournment may be given to them till October. However, looking to the circumstances that ample opportunity have been granted to the noticee to represent their case, I proceed with the adjudication of the case on the basis of the written submissions made by the notices and the records available before me.”
21. Further, we also find that the appellants have been given enough opportunities to defend themselves fully by way of furnishing a very detailed reply to the show cause notice once on 15-6-01, to be follow up again by supplementary reply on 25-6-01, answering the allegations. From a perusal of the order of the Commissioner, it is evident that each and every aspect of these replies had been fully considered by him while arriving at the decision and after weighing every piece of evidence. It is in record that the appellants have got a considerable relief in terms of quantum of demands raised against them in the show cause notice.
22. The next issue which was agitated before us relates to jurisdiction of the DRI officers. It was raised by the appellants whether DRI was competent to issue show cause notice under Section 28 of the Act. We find that the issue here raised stands very much settled by way of Notification No. 19/90-Cus. dated 26-4-99 under which the Government of India has exercised its powers appointing the DRI officers as “Customs officials”. As long as the Government of India has no objection of DRI officials using the powers of Customs officers, there should be no grievance on this account for the appellants.
23. Before us there was a contention that the documents recorded by the Revenue had not been authenticated as per the procedure laid down under Section 3(2) of Diplomatic and Consular Officers (Oaths and Fees) Act, 1948. We have examined the provisions under this Act as appearing in the judgment of Vimal Chand (supra). It is obvious that Section 3 of this Act confers powers on Indian Diplomatic and Consular officers in foreign countries to administer any oath and do notarial act. As regards the objective of the said Act, it aims at providing “the administration of oath by diplomatic and consular officers and to prescribe the fees leviable in respect of certain officials of their duties”. In our view, the said Act is just a mechanism available so that notarial act, as available through notary public in India, could also be available abroad. The availability of such mechanism cannot be made into a mandate under the Customs law. If co- relatable documents were obtained independently from foreign countries from reliable sources (such as Customs) under their covering letter duly authenticated and signed by the said authorities, we do not find anything wrong in relying upon them. Further, the provisions under the Act of 1948 especially Section 3(2) does not require every document to be attested. From the perusal of the record and the statements made during the investigation, it appears to us that the fax messages cannot be brushed aside lightly mainly since their exchange was never contested by the appellants. The argument that the fax messages cannot be relied upon as they do not bear any signature does not, in our opinion, hold water.
24. A perusal of the address of fax message received from the Supplier (Metro Talk Wood Company Ltd.) would indicate that except the one dated August 13, 1998, others do not bear signature of the sender. When the sender is satisfied about the message in the context of other fax messages, we do not find any reason to segregate those messages on their face value, since their genuineness cannot be questioned.
25. It was also contended by the appellant’s side that neither of the two “inconsistent statements” could be relied upon and that any statement retracted cannot be relied upon. In this context, it is now clear that Customs officers are not police officers and hence confession though retracted will be binding on the appellants. The case of Surjeet Singh Chhabra v. UOI (supra) would support this view.
26. We do not find any genuine reason for not admitting the statement on the spot made by the appellant Director in which he had confessed the facts which were further corroborated by the appellant’s Senior manager subsequently. The inflow of more evidence clearly indicated that the appellants were very much engaged in activities with clear intention to evade customs.
27. We do not find any force in the argument that the appellants could have been allowed cross-examination of the foreign suppliers etc. who had been the source of the documents based on which the entire case has been made out. Relying upon Para 12 of the Hon’ble Supreme Court decision in Kanungo v. Collector of Customs Calcutta and others reported in (S.C.) which had squarely rejected such a contention stating that the principles of natural justice do not require that in any matters like this, the persons who have given the opinion should be examined in the presence of the appellants or should be allowed to cross-examination by them on such submissions made before the Customs authorities.
28. We do not therefore, find any inadequacy in the decision of the Commissioner in discarding the transaction value as declared by the appellants under Section 14 of the Customs Act. In our opinion, enough material exists especially those which are procured from the suppliers themselves and with co-relatable invoices. From the various citations referred to by the appellants, we do not find any of them could be of any use to them in saving from this embarrassment. On the contrary, the citations referred to by the Revenue upholding that there was no need for arranging the cross-examination of the persons who supplied the relevant documents to the investigating officers very much go in favour of the Revenue.
29. The contention of the learned Counsel for the appellants that in some documents, particulars of letters of credit were not shown etc. appears to us anemic. The contention that the documents received from abroad did not tally with the contents of their Bills of Entry particularly in respect of the description of goods and values also appears to us superfluous inasmuch as it is on this very basis that the Revenue has made out a case of undervaluation and mis-description against them. We are also not able to subscribe to the view that payments are not even remotely corroborated. In our opinion, various statements and actual events have snowballed against the appellant as “preponderance of probability” heavily weighs against them. In our view, in a case like this, searching for one-to-one co-relation would amount to searching a needle from inside a haystack.
30. The appellants have also placed reliance on a decision of this Tribunal in Truwood Pvt. Ltd. (supra). In this case, this Tribunal had an occasion to examine the case of enhancement of value sought on the basis of photocopies of export declarations obtained from Italian/US Customs. The facts discussed in paras 8 and 9 of this decision in our view are not comparable to the facts and evidence of the subject case. Here, the very documents seized from the Director have led to opening of Pandora’s box. We also note that particularly in the subject case, most of the documents involved are the fax copies which can never reach in its original form. Original documents would remain with the sender himself, if not dispatched separately by post. It is an established practice both in bureaucracy and in business that those who receive fax message would act on its contents without waiting for its originals. We, therefore, do not find that Truwood Private Ltd. (supra) could be of any help to the appellants.
31. We are also not impressed with the argument that the show cause notice should have been signed by the Customs Officer and not by the DRI officers. The very fact that the Government itself has empowered the DRI officers to work as Customs officer would not make difference either administratively or legally. We therefore, do not find anything wrong in the show cause notice being issued by Additional Director General, in our opinion is empowered to do so. The jurisdiction of the adjudicating authority viz., the Commissioner of Customs has never been questioned before us. The plea that officers working under the Customs Department should not be considered as subordinate to Additional Director General as he has no day-today control over them, does not appear to be strong mainly because the Additional Director General in DRI has been formally delegated with the powers of Customs officers and is also designated as Customs Commissioner, ear-marked with jurisdiction running all over India. Issuing show cause notice, the reply of which has to be addressed to the Commissioner of Customs, has in no way prejudiced the appellants as it was just a workable arrangement for the Revenue without which overlapping jurisdictions of the Commissionerates in the length and breadth of India could have caused serious working problems for the tax administrators. We therefore do not find anything wrong in the system being followed/implemented in which the show cause notice stands issued by the Additional Director General in DRI (who is being designated as Commissioner of Customs). In our view it is the workable arrangement for an efficient functioning and that there is nothing wrong in it.
32. In our view contention that invoices and a copies of fax message did not bear particulars of letter of credit or container numbers makes no difference since comparative study undertaken goes to prove that there was under-valuation in respect of invoices obtained from Italy. Except for the price, other contents were tallying and hence we find that these invoices duly signed and authenticated with a seal of dispatching airlines, would indicate that the goods under the very same invoice stood dispatched to the appellants.
33. In view of the foregoing, we do not find any warrant to interfere with the impugned order on any of the grounds raised on behalf of the appellants. The appeals are therefore, dismissed.
(Dictated in the open Court on 26th and 27-6-2007)