Mr. Rajiv Praful Kamdar vs Commissioner Of Customs (Export), ...

IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. IV

APPEAL NO. C/89011/14-Mum

(Arising out of Order-in-Original No. 71/2014/CAC/CC(ADJ)SJ dated 17.06.2014 passed by the Commissioner of Customs (ADJ), Mumbai-I.)

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? =====================================================

Mr. Rajiv Praful Kamdar

: Appellant Versus

Commissioner of Customs (Export), Nhavasheva : Respondent

Appearance Shri Stelin Mathew, Advocate : For Appellant Shri S. J. Sahu, Asst. Commr. (A.R.) : For Respondent

CORAM: HONBLE SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL)

Date of Hearing : 22.06.2015 Date of Decision: 22.06.2015

ORDER NO. .......................................................

Per: Anil Choudhary:

The present appeal has been filed by Mr. Rajiv Praful Kamdar, the appellant herein being aggrieved by Order-in-Original No. 71/2014/CAC/CC(ADJ)SJ dated 17.06.2014 passed by the Commissioner of Customs (ADJ), Mumbai-I, imposing penalty of Rs. 5000/- under Section 112(b) of the Customs Act.

2. The brief facts are that M/s Frost International Ltd. was granted an Advance Licence dated 22.10.2002 from Jt. Director, DGFT, Kanpur for import of 1050 MTs Garlic for CIF value of Rs. 1,67,21,000/. Pursuant to the said licence, M/s Frost International Ltd. intimation imported Garlic from China through JNPT and Chennai Port. The present appellant was known to the Director's of M/s Frost International Ltd. namely Mr. Uday J Desai and Mr. Sunil Verma. At the request of Mr. Desai, the appellant introduced one CHA namely, M/s. D.R. Sonata & Sons for assisting in clearance of garlic imported by M/s. Frost. The appellant also acted as coordinator i.e. forwarded the documents received from importer at Kanpur to the CHA at Mumbai, as the importer was not having any office at Mumbai. All the clearing charges, duty etc. was paid by the importers directly to the clearing agent. Further only part of the total consignment under import i.e. 140 MTs out of 1050 MTs was cleared by the said CHA through JNPT. Further, at the specific directions of Mr. Desai and Mr. Verma, the appellant arranged for storage of the imported garlic in the godown of M/s. Mehta Ice and Cold Storage, Navi Mumbai, and further as per the directions he further sent the delivery orders in respect of the imported garlic to the Cold Storage for giving delivery to the persons nominated by Mr. Desai and Mr. Verma.

3. The Revenue initiated enquiry against M/s. Frost International Ltd. for alleged misuse of advance licence and scheme by deviating garlic imported duty-free in the local market for profit. Further to fulfil the export obligation, they attempted to export clay powder by mis-declaring the same as garlic powder. Intelligence also indicated that the imports and exports through JNPT is being managed by one Nirmal Agarwal. Further facts are that out of balance of 910 MT, 390 MT garlic having assessable value of Rs. 52,09,228/ was imported through Chennai Port, through CHA M/s. Guru Shipping and Clearing services, Chennai. The total duty exemption availed in respect of clearance of 390 MT garlic was Rs. 46,12,369/- and the remaining 520 MT of garlic having assessable value of Rs. 75,71,175/- was imported from JNPT by availing duty exemption of Rs. 72,17,224/-. The Bill of Entry for clearance of 406 MT (two consignments) of garlic was filed by M/s Kalpana Shipping Agencies  CHA, and the remaining one consignment of 104MT garlic was filed by the M/s. D.R. Sonata & Sons CHA. A show-cause notice dated 28.01.2005 was issued on importers and among others on the appellant, wherein the appellant was alleged to having abetted in the illegal of diversion of 104 MT of garlic imported duty-free in the local market for it legal profit by M/s. FIL by introducing the CHA, in directing and instructing him from time to time, directing him to hand over the duty-free imported goods to M/s. Mehta ICC and Cold Storage, Navi Mumbai and also directing the said storage owner to deliver the stored goods to local persons. By such act of omission, and commission by the appellant, it was alleged that he has rendered himself liable for penalty under Section 112(b) of the Customs Act 1962.

4. Vide Order-in-Original dated 17.6.2014, it have been observed that the main company and persons concerned that is M/s. Frost International Ltd. and its directors have settled the dispute by filing application before the settlement commission. This appellant had also moved before the settlement commission but as he had challenged the allegations in the show-cause notice, this case was not found fit for settlement and referred back to the adjudicating authority.

Further with respect to the 104 MT of garlic in question that was imported but matching export not made after processing and that the goods exported were undoubtedly clay powder and not garlic powder. In the application of settlement by Frost International Ltd. before the settlement commission, it was held that this appellant is also involved in aiding and abetting in diversion of the imported garlic in the local market which was supposed to be re-exported after processing. Accordingly, a penalty of Rs. 5000/- was imposed on the appellant under Section 112(b) of the Act.

5. Being aggrieved the appellant is before this Tribunal on the ground among others that the impugned orders passed without giving any valid findings on the submissions made by the appellant, pending the impugned order is bad in law and liable to set aside. Further as the dispute have settled before the settlement commission by the main persons and while the company and its directors in such circumstances the status of this appellant being a co-noticee should also have settled. It is further contended that the learned Commissioner has misled on the ruling of the Apex Court in the case of S. P. Cheng Naidu 1994 (1) SCC 1. It is further contended that the Commissioner has failed to appreciate that in the case before the Apex Court it has been held that it is settled provision of law that the judgement of decree of obtained by practising fraud is a nullity and non-est in the eyes of law. Such facts not obtaining in the appellant's case, the ruling Relied upon is misplaced. The only finding against the appellant is that they have handed over the papers to the CHA on behalf of the importers and also give instructions to send the consignment to the order storage and from the order storage to the buyers in the local market. All along the appellant have acted only as the facilitator and helping the actual importer as because he does not have an office at Mumbai. Save and except this, there is no allegation nor received any consideration or the profits, in the whole cycle of events. The appellant have not even paid any remuneration to either the CHA, nor have handled on executed any documents of title. It is further stated that the condition precedent for imposing penalty under Section 112(b) of the Act is that any person, who acquires position of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under Section 111 shall be liable for penalty. It is further urged that no case of the made by the revenue that the appellant have been acting malafidely, knowing fully well that the goods are imported duty-free and under bond for the re-export after processing. Accordingly he prays for setting aside the penalty imposed upon the appellant.

6. The learned A.R. relies on the impugned order. He further points out that that there is mistake in mentioning the Section when imposing penalty. The more appropriate Section 112(a) which provides that any person who in relation to any goods, does or omits to do any Act, which Act or omission would render such goods liable to confiscation under Section 111 or abets the doing or omission of such an Act, is also liable to penalty. Here the appellant have admittedly assisted the importers and its directors in coordinating with the CHA and also the warehouse keeper in order to storage. In this view of the matter, the penalty imposed is fit to be confirmed.

7. Having considered the rival contentions, I find that the role of the appellant is not restricted to introduction of the parties. The appellant have actively assisted M/s. FIL and its directors in diversion of the goods in the local market which were supposed were processed and the exported. In view of absence of any finding as to consideration received by the appellant for assisting the main accused and also in absence of any finding as to any role in export of the clay powder in the guise of garlic powder, I deem it just and proper to reduce the penalty to Rs. 2000/.

8. Thus, the appeal is allowed in part, the amount of penalty is reduced to Rs. 2000/.

(Pronounced in open Court)

(Anil Choudhary)

Member (Judicial)

Sp 6