Sh. Gagandeep Singh, Sh. Satender Singh ... vs C.C., New Delhi (Icd Tkd.)

Date of Pronouncement: 28/08/2015

C/53392/2014-CU(SM)

and

Appeal No. C/51877/2014-CU(SM)

C/51878/2014-CU(SM)

(Arising out of OIA No. DEI-CUSTM-000-APP-808-13-14 dated 17.12.2013, DEI-CUSTM-000-APP-809-13-14 dated 17.12.2013 and OIA No. DEI-CUSTM-000-APP-43-13-14 dated 17-02-2014 passed by Commissioner of Customs (Appeals), New Customs House, Near IGI Airport, New Delhi)

1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it would be released under Rule 27 of the 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 Department Authorities?

M/s Bosch Chassis Esystems India Ltd.

Sh. Gagandeep Singh, Sh. Satender Singh Dahiya Appellant

Vs.

C.C., New Delhi (ICD Tkd.) Respondent

Appearance:

Present for the Appellant: Shri Rachit Jain, Advocate

Present for the Respondent: Shri R.K. Gupta, DR

Coram: Honble Ms. Sulekha Beevi C.S., Member (Judicial)

Final Order No.52701-52703/2015

Per: Sulekha Beevi C.S.

The allegation against appellants is that they mis-declared the quantity of goods imported. The appeals though arising out of separate orders are connected, as they arise upon the same facts/incident. Appeal No. E/53392/2014-CU(SM) is filed by the importer and the other two appeals are filed by the authorized respresentatives of the CHA, M/s Schanker India (P) Ltd. Therefore they were heard together and are disposed by this common order.

Brief facts are as under:

2. M/s Bosch Chassis Esystems India Ltd., the appellant in C/53392/2014-CU(SM) imported Hydraulic Oil Brake Hose. They filed Bill of Entry (B/E) dated 17.11.2011 and commercial invoice dated 27.9.2011 through their CHA, M/s Schanker (I) Pvt. Ltd. declaring import of 40,000 meters of Hydraulic Oil Brake Hose. On examination of the consignments by officers of SIIB, it was found that the quantity of the goods imported was 90000 mts., and not 40,000 mts. as declared in B/E. It is the case of appellant that for the said consignment, the shipper had actually raised two invoices bearing Nos. 2011927 and 2011920 for the quantity of 40,000 mts. & 50,000 mts. respectively. That when the invoices were scanned & mailed to the appellants, by the shipper, instead of these two separate invoices, the shipper had scanned invoice No.20110927 (for 40,000 mts.) twice. Thus instead of receiving two separate invoices, they had received two copies of the same invoice. This invoice was forwarded to the clearing agent who filed the B/E through the EDI System. On coming to know that there was excess import of 50,000 mts. they sought clarification from the supplier.

The supplier acknowledged the mistake that the second invoice for 50,000 mts. was missed out while scanning and that the invoice for 40,000 mts was scanned twice. The supplier also issued a certificate acknowledging the mistake. Thereafter, on request of the appellant the goods were released provisionally on execution of bond. The differential duty of Rs.8,78,874/- was also paid. A show cause notice was issued to appellants which was finalized by passing the order dated 30.4.2013 which ordered confiscation of the goods and imposed redemption fine of Rs.15,00,000/-. The duty and differential duty paid was ordered to be appropriated. A penalty equal to the differential duty (Rs.8,78,874/-) was imposed on M/s Bosch Chassis India Ltd. under Section 114A. Besides this penalty of Rs.2,00,000 was imposed under Section 114 (AA). A separate penalty of Rs.1,00,000 was imposed on Shri Vijay Kumar Mullankara, authorized representative of M/s Bosch Chassis India Ltd.. A penalty of Rs.1,00,000/- was imposed on Shri Gagandeep Singh authorized representative of CHA, M/s Schanker (I) Ltd. under Section 112 (a) and also further penalty of Rs.1,00,000 under Section 114 (AA).

Similarly penalty of Rs.1,00,000 was imposed on Sh. Satendar Singh, authorized representative of CHA, M/s Schankar (I) Ltd under Section 112 (a) and a further penalty of Rs.1,00,000 under Section 114 (AA) for assisting and handling clearance in respect of the B/E. The appellants filed appeal before the First appellate authority. The Commissioner (Appeals) vide impugned order dated 17.2.2014 upheld the order passed against M/s Bosch Chassis Esystem India Ltd., but dropped the separate penalty imposed on Vijay Kumar Mullankara. The Commissioner (Appeals) vide order dated 17.12.2013 modified the penalty imposed upon Shri Gagandeep Singh & Shri Satender Singh under Section 112 (a) and the penalty was reduced from Rs.1,00,000 to Rs.15,000. The penalty imposed on them under Section 114 (AA) was dropped. The above orders dated 17.2.2014 and 17.12.2013 are under challenge in these appeals.

3. The learned Counsel appearing for the appellants urged that the whole issue arose only due to an inadvertent error in dispatching the same invoice twice. That the mistake was not intentional. That the mistake happened only due to the shippers mistake, who scanned the same invoice twice instead of scanning the separate invoices of different quantity. He drew our attention to the contents of Bill of lading in which the quantity of goods is seen to have been correctly stated. He also relied upon the letter issued by the shipper acknowledging the mistake and mentioning the quantity that was shipped. Fortifying his arguments he relied upon the judgment of the Tribunal in Escorts Ltd Vs. Commissioner of Customs Delhi 2000 (122) ELT 576 (Tri. Delhi). It was further submitted that imposition of penalty under Section 114 (AA) was totally unwarranted. The penalty imposed under this section 114(AA) upon Sh. Satender Singh and Sh. Gagandeep Singh has been dropped by the first appellate authority. However, the penalties imposed upon M/s Bosch Chassis Ltd. both under 114 A and 114AA of the Customs Act were upheld by the impugned order. The learned Counsel argued that penalty under Section 114A cannot be imposed as there was no malafide intention or willful mis-representation and that quantity was declared incorrectly only due to mistake. Further, that penalty imposed on M/s Bosch Chassis Ltd. under Section 114AA is wholly unwarranted. That penalty under this provision can be levied only in those situations where export benefits are claimed without exporting the goods and by presenting forged documents. The learned Counsel adverted to the discussion of the Twenty Seventh Report of Standing Committee of Finance to elucidate the intention of inserting this section (114AA). It is seen stated there in, that new section 114AA has been proposed, consequent to the detection of several cases of fraudulent exports which were shown only on paper and no goods crossed the Indian border. According to the counsel the mis-declaration in the instant case, happened only due to inadvertent error.

4. Refuting the contentions of the appellant, the learned DR, strenuously argued that there is mis-declaration of quantity of goods by the appellants. The Bill of lading shows total number of packages as 18 pallets and gross weight as 9,360 and serial number of two invoices is also mentioned. But in the B/E only one invoice was shown and duty was deposited only for this invoice. That there is deliberate attempt on the part of importer to evade duty and the CHA has connived for such act. He supported the impugned order and argued that the Commissioner (Appeals) has given sufficient remission of penalty besides dropping the penalty under Section 114 (AA) imposed on the representatives of CHA. That there is no infirmity in the impugned orders.

5. Heard both sides. The issue revolves around the question whether the case of the appellants that declaration in the B/E of a lesser quantity than the actual quantity imported, has happened only due to an inadvertent error, is believable or not.

6. The case of the appellants is that they placed purchase order on 19.11.2011 for supply of 1,00,0000 mtr of Hydraulic Oil Brake Hose for which two separate commercial invoices were generated by the supplier. It was for the first time that for one purchase order, two different invoices were generated by the foreign supplier. The supplier by mistake, instead of scanning the two separate invoices, scanned the same invoice twice. The second invoice of 50,000 mts was thus missed out. As only one invoice was usually generated by the supplier against the purchase order, the appellants send the same to the CHA for filing B/E. When the difference in quantity came to their knowledge, they sought clarification from the supplier who then scanned the second invoice acknowledging the mistake. It is submitted that the difference in quantity occurred only due to an inadvertent mistake of the supplier. The learned counsel laying thrust upon the Bill of Lading vehemently argued that if the appellants had any intention of evading duty by mis-declaration they would not have submitted the Bill of Lading which showed the serial numbers of two invoices and also mentioned the entire weight as 9,360 Kgs.

This argument advanced by the learned counsel for appellants is not without force. The goods were imported in two containers. The quantity found in container No. ESPU 2010630 carried 8 pallets (40,000 mts) and the quantity in Container No. DRYU 2350741 was 10 pallets (50,000 mts.). If the appellants had intention of evading duty by mis-declaring the quantity they would have avoided sending the goods in two separate containers and by two separate invoices. Further, the Bill of Lading shows the correct volume of goods imported. Further, they have stated that it was the first time the supplier had shipped goods in two separate invoices on one purchase order placed by appellants. The department has not conducted any investigation to disprove these facts stated by the appellants. The appellants have put forward a consistent case from the very beginning immediately on detection of difference in quantity of goods. The immediateness of the defence raised, supported by the Bill of Lading where the quantity was correctly stated, along with the letter of supplier acknowledging the mistake of scanning the same invoice twice makes the case put forward by the appellants as a probable one.

From the facts and circumstances, it can be inferred that mis-declaration in the B/E was due to an inadvertent mistake which occurred because the shipper provided only one invoice instead of the two invoices raised for the order placed.

7. The impugned orders have proceeded on a footing that M/s Bosch Chassis Ltd. willfully mis-declared the quantity and the CHA connived in this act. In Escorts Ltd. Vs. Commissioner of Customs, Delhi (supra), the facts are that, the description of goods was wrongly given by foreign supplier in the import invoice and the same was copied by CHA who filed the B/E without referring to the purchase order. The Tribunal held that it was not a case of wilful mis-statement as the goods were correctly described in the purchase order. The penalty imposed under Section 114A of Customs Act, 1962 was therein set aside on finding that it was a mistake. In the case in hand, the quantity of the goods was wrongly stated. Mis-declaration involves an element of mens rea or intention to evade payment of duty by the party. Mis-declaration can occur due to human error also. In the instance case, the appellants have been able to explain the mis-declaration which reveals the nature of a wrong declaration, which was not deliberate. On coming to know the mistake they were able to explain the mistake. If the shipper made a mistake, the importer/CHA cannot be penalized for it. In the light of the above decision and the facts presented by this case, I hold that there was no wilful mis-statement on the part of M/s Bosch Chassis Ltd. The representatives of the CHA have merely relied on the invoice handed over by M/s Bosch Chassis Ltd./ Importer. The Commissioner (Appeals) have imposed penalty upon the representatives of CHA observing that they omitted to compare the invoices with purchase order and B/L. As there is no deliberate act or omission established, the imposition of penalty is unjustified. For these reasons penalty under Section 114A cannot be imposed. As rightly pointed out by the learned counsel, the fact of this case does not warrant the application of Section 114AA. The penalty of Rs.2,00,000/- imposed on M/s Bosch Chassis System India Ltd. under 114AA is therefore set aside as unsustainable. However, I uphold the order of confiscation of the goods as the quantity declared was different in the B/E and reduce the redemption fine from Rs.15,00,000/- to Rs.5,00,000/- .

8. From the foregoing the impugned order in appeal No. C/53392/2014 filed by M/s Bosch Chassis Esystems Ltd. is modified to the extent of reducing the redemption fine from Rs.15 lakhs to Rs.5 lakhs and also setting aside the penalty imposed under section 114 A and section 114AA of the customs Act, 1962. The appeal No. C/51877/2014 and C/51878/2014 filed by Sh. Satender Singh and Sh. Gagandeep Singh is allowed setting aside the penalty imposed under Section 114A.

9. The appeals No. C/51877/2014 and C/51878/2014 are allowed. The appeal No.C/53392/2014 is partly allowed.

(Pronounced on 28/08/2015)

(Sulekha Beevi C.S.)

Member (Judicial)

K. Gupta

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