M/S Shri Ganesh Industrial Corporation vs Cc (Prev.) Amritsar

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 26 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

Customs Appeal No. 7 of 2010

(Arising out of order-in-appeal No. 17/Cus/2009 dated 22.12.2009 passed by the Commissioner of Customs (Prev.) Amritsar).

M/s Shri Ganesh Industrial Corporation Appellant

Vs.

CC (Prev.) Amritsar Respondent

Appearance:

Adj. letter from the appellant-assessee

Smt. Suchitra Sharma, Commissioner (AR) for the Revenue

Coram:

Honble Mr. Justice G. Raghuram, President

Honble Mr. R. K. Singh, Member (Technical)

Final Order No. 53097 / 2015

Per: R. K. Singh:

Appeal has been filed against order-in-original dated 22.12.2009 in terms of which 239.970 MT of rice valued at Rs. 73,36,098/- was confiscated under Section 113 of the Customs Act, 1962 and an option was given to redeem the same for home consumption on payment of redemption fine of Rs. 30,00,000/-. Penalty of Rs. 15,00,000/- was also imposed.

2. The facts of the case, in brief, are as under:

The appellant filed shipping bill dated 26.09.2009 for the impugned goods. On examination of the goods 933 bags of rice weighing 17682 kgs. were found to be appearing to be of length 7mm and the remaining 11732 bags weighing 222288 kgs. appeared to contain rice of length less than 7 mm/ non-basmati rice. Export of non-basmati rice was prohibited during the relevant time as per Notification No.38(RE-2007) 2004-2009 dated 15.10.2007 as amended by Notification No. 55(Re-2008)/2004-2009 dated 05.11.2008 issued by Ministry of Commerce & Industry, New Delhi. The goods were tested and as per test report received from the Deputy Agricultural Marketing Adviser, Chandigarh the impugned rice did not conform to the specifications of basmati rice as per parameters. Consequently, the primary adjudicating authority passed the impugned order holding the appellant guilty of mis-declaration of the goods.

3. The appellant has contended that:

(i) It purchased the impugned goods from various shopkeepers/ brokers on credit basis and they supplied them in the name of basmati rice of length not less than 7 mm and there is no evidence to show that the appellant was in the knowledge of the fact that the suppliers did not supply basmati rice;

(ii) The sample reports are also contradictory vis-a-vis rice contained in 933 bags;

(iii) The quantum of redemption fine and penalty is excessive. It cited the judgment of Supreme Court in the case of Jain Exports Pvt. Ltd. vs. Union of India  1990 (47) ELT 213 (SC) in which it has been held that the determination of quantum of redemption fine should be done taking into account the circumstances and bonafide conduct of the party. It also cited few judgments to the effect that imposition of fine requires leniency if there is no malafide intention on the part of the appellant and that no penalty is imposable in the absence of mens-rea.

4. We have considered the contentions of the appellant. We find that the appellant is not really challenging the report of the Deputy Agricultural Marketing Adviser, Ministry of Agriculture, Department of Agriculture and co-operation, Directorate of Marketing and Inspection, Chandigarh which has clearly held after testing the impugned goods that the length and L/B ratio has not been conformed as per Notification No. 55(RE-2008)/2004 dated 05.11.2008 of the Deptt. of Commerce and the samples are not conformed as basmati rice. The contention of the appellant that during the physical examination 933 bags were found to contain rice of length 7mm and therefore the report of the Deputy Agricultural Marketing Adviser is at variance is not tenable because the show cause notice merely stated that on physical examination, the rice in 933 bags appeared to be of 7 mm length. Further length of 7mm does not automatically makes rice basmati rice. What was allowed to be exported was basmati rice of length 7 mm or above. Thus, the report of the Deputy Agricultural Marketing Adviser is not in any way in disharmony with the physical examination which merely stated that the rice contained in 933 bags appeared to be of length 7mm.

Thus, the impugned goods were attempted to be exported in violation of the prohibition and therefore were rendered liable to confiscation under Section 113 of the Customs Act, 1962. Accordingly, the confiscation ordered by the primary adjudicating authority is clearly sustainable. Regarding the contention that the appellant was cheated by the suppliers of rice, it is pertinent to take note of the fact that it was not a question of some small quantity having been purchased from a local vendor. Further, when only basmati rice was allowed to be exported, it was the appellants obligation to ensure that goods attempted to be exported were basmati rice. The quantity attempted to be exported was 239.970 MT and it is not believable by any yardstick that such huge quantity was purchased by the appellant and it did not realise that the goods were not basmati rice. A person dealing in such huge quantity of a commodity cannot claim that it could not make out that the rice was not basmati rice as the distinction between basmati rice and non basmati rice is not so insignificant as not to be noticed/ felt by persons dealing with the commodity at such large scale.

Also, there is no evidence that the appellant proceeded against any of the suppliers who, it claimed, cheated it at such a large scale. Therefore, the assertion of innocence does not cut any ice and appellant is clearly guilty for attempting to illegally export the impugned goods. Having regard to the nature of offence, the gravity thereof and the quantity of the impugned goods involved, we are of the view that the case deserves no leniency. The fine imposed in this case works out to about 40% of the value of the goods and penalty works out to about 20% which in the given facts and circumstances cannot be said to be unwarranted, arbitrary, excessive or unreasonable from any yardstick even in the wake of various judicial pronouncements cited by the appellant.

5. In the light of the aforesaid analyses, we reject the appeal and sustain the impugned order.

(Justice G. Raghuram)

President

(R. K. Singh)

Member (Technical)

Pant