M/S Akanksha Packs vs Commissioner Of Central Excise, ...

(Arising out of Order-in-Original No. 52/Customs/Commr./2014 dated 6.8.2014 passed by the Commissioner of Central Excise, Customs & Service Tax, Aurangabad).

For approval and signature:

Honble Shri Anil Choudhary, Member (Judicial)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy : Seen of the order?

4. Whether order is to be circulated to the Departmental : Yes authorities? ======================================================

M/s Akanksha Packs Appellant

Vs.

Commissioner of Central Excise, Aurangabad Respondent

Appearance: Shri Prashant Patankar, Consultant for Appellant

Shri Chatru Singh, AC (AR) for Respondent

CORAM: SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL)

Date of Hearing: 10.06.2015

Date of Decision: 10.06.2015

ORDER NO.

Per: Shri Anil Choudhary

The appellant, a manufacturer-exporter, is in appeal against order of penalty under Section 114(i) of the Customs Act whereby penalty of Rs.30 lakhs has been imposed.

2. Para 31.1 of the impugned order.

2.1 The investigation further revealed that the corrugated boxes were replaced with Red Sanders and some corrugated boxes were used in front to hide the red sanders behind these corrugated boxes. Thus, the adjudicating authority found that in the guise of export of corrugated boxes, red sanders were attempted to be smuggled out of India, which are prohibited goods. The appellant-manufacturer/exporter had appeared in the proceedings and contended that they had brought the goods from the ICD Waluj and the same were pursuant to inspection, the stock received of the Customs supervision. Thereafter further transportation from ICD to gateway Port is the responsibility of the custodian/the shipping line and/or their agents and the same is found so secured as the appellant as exporter is not concerned with either in booking of container nor concerned to transport the goods from ICD to gateway port. The appellant exporter had only recommended the name of the transporter which the buyer had recommended being the relative of the buyer. The learned Commissioner relying on the ruling of this Tribunal in the case of P. Bhaskar Naidu  2013 (298) ELT 248 held that the appellant exporter liable for aiding and abetting for the attempted export of prohibited goods and accordingly imposed a penalty of Rs.30 lakhs under Section 114(i) of the Customs Act.

2.2 Being aggrieved the appellant is in appeal before this Tribunal.

3. The learned Counsel for the appellant states that under the scheme of handing over the goods to ICD by the exporter, the role of the exporter ends once the goods are inspected, stuffed and the container is sealed at the ICD. The exporter cannot play any role in transportation of the sealed container from ICD to the gateway port. The learned Counsel further relies on the Circular No. 57/98-Cus dated 4.8.1998, wherein the CBE&C have been prescribed guidelines for movement of cargo by containers/trucks from the Hinterland to Ports/Air Cargo Complexes. The relevant paragraph of the Circular are reproduced for ready reference: -

3. For accountability, in case the goods are moving from the factory of manufacture, it will be the responsibility of the factory owner or exporter and in case the goods are moving from ICD / CFS, it would be the responsibility of the custodian of the ICD / CFS. The custodian shall accept responsibility for shortages in the goods during transit and will be required to pay the amount equal to drawback / duty amount and other benefits availed by the exporters. They may be asked to execute separate bond for the transport of the goods from ICD to Ports / Airports and vice versa.

4. In case of movement of goods from ICD / CFS, the exporters are required to bring their goods meant for export to ICD / CFS and to file six copies of Shipping Bill along with all necessary documents like GR Form, AR Form, certificates issued by Export Promotion Councils, documents regarding quotas wherever applicable, etc. The Shipping Bills will be assessed as usual, the goods examined, samples drawn, if required, inspection carried out by other agencies under any one of Allied Acts. After the assessment of Shipping Bills, original and duplicate Shipping Bills along with two more copies (transference copies) and original GR from will be retained at the ICD. The original GR form will be forwarded to respective branch of Reserve bank of India.

5. The examination order would be given on duplicate and both transference copies of Shipping Bill. The report would also be recorded on all these copies, duplicate copy of S/B would be retained in ICD and transference copies would be forwarded to the Airport \ Port. FOB value of goods would be debited from the continuity bond executed by the custodians. After the examination is over, all the packages would be handed over by the Customs Authorities to the custodians of goods along with two transference copies of Shipping Bill, certified copy of invoice, packing list and other documents in sealed cover. The goods are to be transported by container or truck, the entire cargo body of which can be sealed with tamper proof bottle seals, all the packages would be stuffed can be sealed with tamper proof bottle seals, all the packages would be stuffed in the container/trucks under supervision of customs and representatives of the custodians. After the stuffing, the containers/trucks would be sealed with tamper proof bottle seals. The examination order and endorsements that the trucks are sealed would be made on both copies of Shipping Bill and AR4 from, it would be signed by customs as well as custodian's representatives. The seal number would be endorsed on all documents.

6. The custodians would be required to move the goods by road or rail upto Gateway Ports / Airports.

3.1 The learned Counsel further urges that scheme of transport from ICD to Gateway Port is evident that in short, it is a custodian who is responsible. It is further urged that though the exporter recommended the name of the transporter being irrelevant to the buyer in the foreign country, but the custodian was not bounded by recommendation and accordingly, the custodian is solely responsible as there is appointing authority to the transporter. The ruling relied by the learned Commissioner in the said case P. Shekhar Naidu (supra), he urges that the findings are distinguishable. In the case of P. Bhaskar Naidu (supra), the facts were that he had obtained order for supply of Granite Cobble Stone to M/s. Naldex Sdn. Bhd., Malaysia through one Mr. Krishnan. Accordingly he arranged for the exports. However, it is strange to note that Shri Bhaskar Naidu does not know the address of the person who acted as middleman for overseas buyer. Mr. Bhaskar Naidu could not even furnish the address of Shri Krishnan to the Department. It is reasonable to expect that any prudent businessman let alone the exporter would check the veracity of buyer to ensure that he receives payment for the supplies made.

According to one Shri P. Saravanan, who owned the trailers informed Shri Bhaskar Naidu that he was the brother of the overseas buyer. However, whereas he failed to give the correct address of Shri P. Saravanan too and instead provided some fictitious non-existing address and phone numbers to the Department, as and when Shri Bhaskar Naidu needed to contact Shri Saravanan he was able to reach Shri Saravanan. For instance, on 3-8-2005, Shri Bhaskar Naidu contacted Shri P. Saravanan to enquire whether the container, which left his premises, had reached Chennai Harbour. Again on 5-8-2005 Shri Saravanan contacted Shri Bhaskar Naidu asking to expedite the clearance. The fax message dated 8-7-2005 of Shri Selvam received at 7.20 PM seized at M/s. Archana Exports, Kuppam reads I am out of the country for a few more days. This gives a clear message that Shri Selvam and Shri Bhaskar Naidu had ongoing regular business deals. The exchange of e-mail messages between Shri Selvam and Shri Bhaskar Naidu clearly indicates their earlier transaction and business dealings even before the present consignment.

This clearly establishes that Shri Bhaskar Naidu, CEO of M/s. Archana Exports and the overseas buyer knew each other very well. Both carefully hatched a fraud creating a web of intermediaries to smuggle prohibited Red Sanders under the garb of Granite Cobble Stones. He himself being the main conspirator tried to mislead the Department by way of engaging a number of intermediaries and by furnishing the wrong and fictitious telephone numbers and addresses, so that investigations are lost in the trail. In such facts the exporter was held liable for aiding and abetting. Further, in the case of P. Bhaskar Naidu, the payment for goods was received in cash, wherein in the case of present appellant the payment is received through Banking Channel. Further in the Bhaskar Naidus case, the goods were factory stuffed and it moved from the factory to the Port, whereas in the appellants case the goods have been taken to ICD premises for inspection.

3.2 The learned Counsel further urges that the present appellant is first time exporter, who has received advance payment for the consignment of export and in the facts and circumstances the allegation of aiding and abetting does not stand.

(Dictated and pronounced in Court)

(Anil Choudhary) Member (Judicial)

Sinha

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