Commissioner of Customs Vs Joginder Kumar (CESTAT Delhi)
Held that the goods have been confiscated and no redemption was allowed, the duty liability cannot pass on to anyone but to the Government of India in whom the property vests.
Facts-
Total eighteen BOE were filed by M/s K R Express Pvt Ltd. who is a licensed customs broker in the name of M/s Samay International. All the documents such as bills of lading, invoices, and Import General Manifest were in the name of M/s Samay International. The goods were cleared after assessment by the assessing officers.
According to the intelligence, the modus operandi was to submit bogus import proforma invoices in order to remit advance payments against supposedly future imports. No imports were thereafter actually made and the remittances so made by the syndicates were adjusted against the payments due for under-valued imports made by other importers.
Investigations were initiated and statement of Shri Mukesh Arora, the alleged king pin and various other persons was recorded who, in his statement under section 108 of the Customs Act.
Conclusions drawn from the above investigation by DRI were that M/s Samay International was not the importer of the goods at all. The goods were imported in the name of M/s Samay International by Shri Pradeep Kumar, K R Express and Shri Joginder Kumar and Shri Surinder Kumar by undervaluing the goods with an intent to evade the payment of duty.
Conclusion-
Held that in this case, since the goods have been confiscated and no redemption was allowed, the duty liability cannot pass on to anyone but to the Government of India in whom the property vests. For this reason, no differential duty can be chargeable on the goods confiscated without allowing any redemption.
It is true that if there is a reason to doubt the transaction values, they can be rejected and then valuation has to be done sequentially as per the Valuation Rules. In this case rule 9 of the Valuation Rules has been adopted ignoring the previous rules and without discussing the as to why the previous rules are not applicable. Further, the statements of Shri Pradeep Kumar, based on which the value was re-determined, is not relevant as the procedure under Section 138 B was not followed.
FULL TEXT OF THE CESTAT DELHI ORDER
1. We have heard Shri Sansar Chand, learned consultant assisted by Shri Mohinder Singh, learned consultant representing Shri Joginder Kumar, Shri Surinder Kumar, M/s KR Express and Shri Pradeep Kumar and learned authorised representative Shri Rakesh Kumar representing the Revenue and perused the records.
2. All these appeals arise out of the same impugned order and hence are being disposed of together.
3. Customs Appeal No. 51192 of 2019 is filed by the Revenue assailing the non-imposition of penalty under section 112 on Shri Joginder Kumar. Customs Appeal No. 51193 of 2019 is filed by the Revenue assailing the non-imposition of penalty under Section 112 on Shri Surinder Kumar. Customs Appeal No. 52152 of 2019 is filed by M/s K R Express Pvt Ltd. assailing the entire impugned order. Customs Appeal No. 51309 of 2019 is filed by Shri Joginder Kumar assailing the imposition of penalty upon him. Customs Appeal No. 51310 of 2019 is filed by Shri Surinder Kumar assailing the imposition of penalty upon him. Customs Appeal No. 52153 of 2019 is filed by Shri Pradeep Kumar assailing the imposition of penalty upon him and also assailing the order of recovery of differential duty along with interest from him.
4. The facts of the case are that the eighteen (18) bills of entry were filed by M/s K R Express Pvt Ltd.1 who is a licensed customs broker in the name of M/s Samay International, New Delhi whose IEC is 0511069324. All the documents such as bills of lading, invoices, Import General Manifest2 were in the name of M/s Samay International. The goods were cleared after assessment by the assessing officers.
5. The Delhi unit of Directorate Revenue of Intelligence3 received intelligence that some syndicates were operating to make remittances to Hong Kong based entities for under-invoiced imports by various importers, using banking channels in the name of front/bogus firms including M/s Samay According to the intelligence, the modus operandi was to submit bogus import proforma invoices in order to remit advance payments against supposedly future imports. No imports were thereafter actually made and the remittances so made by the syndicates were adjusted against the payments due for under-valued imports made by other importers. Usually, when goods are imported, payment is made through letters of credit. In some cases advance payments are made to the overseas exporters. In such cases, the importer approaches a bank and submits proforma invoices and other documents and necessary foreign exchange is released by the bank and remittance is made in advance which must be adjusted against any future remittance towards the full and final payment for the imports which will be known once the import is completed. In this case, intelligence of DRI indicated that no imports were being made at all after remittances and no bills of entry were also filed. The money so remitted abroad was being adjusted against the undervalued imports by other importers. Investigations were initiated and statement of Shri Mukesh Arora, the alleged king pin was recorded who, in his statement under section 108 of the Customs Act, confirmed that they would use bogus firms to transfer money abroad and one such firm is M/s Samay International which has a bank account in ICICI Bank, Karol Bagh branch. He further confirmed that the M/s Samay International was created by him along with his partner Shri Bobby in the name of one Shri Anil Kumar and importer exporter code4 was obtained. He is paying Rs. 20,000/- to 25,000/- per month to Shri Anil Kumar for using his name. Shri Preet Mohinder Singh Talwar @Bobby also made a statement of 16.01.2013 confirming this modus operandi.
6. Shri Anil Kumar, proprietor of M/s Samay International gave a statement before the Officers confirming that he was in the business of purchasing mobile phones in cash and selling them in remote areas and that Shri Mohinder Singh and @ Bobby had approached him to create a firm in his name for import of mobile phones and offered to pay Rs. 15,000 to Rs. 20,000/- per month for agreeing to the proposal. He had provided his bank card using which they created a firm in the name of M/s Raj International and thereafter they opened a new firm in the name of M/s Samay International. They would get blank papers signed by him but he was not aware of their purpose. He neither signed the cheque book of his firm nor had visited the ICICI bank where these firms had their accounts.
7. Officers searched the office of M/s Samay International and K R Express and resumed documents and hard disks along with cash of Rs. 10,60,000/- under a panchanama dated 05.1.2013. The hard disks were examined under a panchanama on 29.03.2014 and they had several formats of invoices and packing lists related to imports created in word and Excel formats with missing details. The officers of DRI inferred that these were meant to create bogus documents. The statement of accounts and the remittances showed that Rs. 102 crores were remitted abroad using the account of M/s Samay International. These remittances in the name of M/s Samay International are not in question in the present proceedings. Under dispute in these proceedings are the imports actually made in the name of M/s Samay International. Shri Anil Kumar, Proprietor of M/s Samay International sent a letter dated 31.03.2013 to DRI stating that his IEC was misused by K R Express for importing goods and that he had not authorised K R Express to import goods on his behalf and that he had not imported any goods nor has paid any customs duty. He further stated that he has filed a police complaint on 17.01.2013 against K R Express and prayed that strict action may be taken against them.
8. Statement of Shri Joginder Kumar, Director of K R Express was recorded on 05.01.2013, who confirmed that he and Shri Surinder Kumar were the directors of K R Express and that they had cleared the goods through customs for various firms including M/s Samay International. Shri Surinder Kumar, in his statement dated 05.01.2013 also confirmed these facts. However, he also confirmed that in respect of the disputed 18 bills of entry they had not received the KYC documents from M/s Samay International from its proprietor Shri Anil Kumar, but had received them through one Shri Pradeep Kumar of Sonepat Haryana, who came with documents of M/s Samay International for import clearance and accordingly they filed bills of entry. He further stated that he never met Shri Anil Kumar, the proprietor of M/s Samay International and that Shri Pradeep Kumar would pay them cash and they would deposit it towards customs duty in the name of M/s Samay International and obtain delivery of the goods and hand them over to Shri Pradeep Kumar at the exit gate of Air Cargo Complex.
9. Shri Pradeep Kumar, in his statement dated 17.05.2013 under the Customs Act, confirmed the aforesaid modus operandi. He further stated that since he does not have any bank account in the name of M/s Samay International, he would pay cash to Shri Joginder Kumar and Shri Surinder Kumar who would deposit the customs duty. He further said that one, Shri Manoj Kumar Aggarwal of China, provided him invoices of lower value so that less customs duty has to be paid and that he himself would keep only kachha record of the imported goods and sell them in cash and destroy the import documents thereafter. He had given Shri Joginder Kumar Rs. 10.60 lakhs in cash for the incoming import. He confessed that it was his mistake to import goods in the name of another person and that too undervaluing them and that he was ready to pay the differential duty short paid on the import of goods in the name of M/s Samay International. In a subsequent statement, Shri Pradeep Kumar stated that K R Express and Shri Joginder Kumar were also equal earners in the imports made in the name of M/s Samay International.
10. Conclusions drawn from the above investigation by DRI were that M/s Samay International was not the importer of the goods at all. The goods were imported in the name of M/s Samay International by Shri Pradeep Kumar, K R Express and Shri Joginder Kumar and Shri Surinder Kumar by undervaluing the goods with an intent to evade the payment of duty. The extent of under valuation was assessed by the investigating agency.
11. Of the 18 bills of entry 7 are listed in Annexure A to the show cause notice. In respect of three bills of entry, viz, 6118312 dated 28.02.2012, 6288714 dated 19.03.2012 and 6089748 dated 24.02.2012 the statement of Shri Pradeep Kumar that these goods were under-valued to the extent of three to four times was relied upon and accordingly values were enhanced by 3.5 times. In respect of the remaining four bills of entry, the values were correspondently assessed at double declared valued based on the statements of Shri Pradeep Kumar.
12. In respect of 11 bills of entry mentioned in the Annexure B to the show cause notice, the transaction values were rejected and they were re-determined on the basis of “lower contemporaneous prices” declared by similar goods in terms of Rule 5 of the Customs Valuation (Determination of Value of imported Goods) Rules, 20075. Thus, the differential duty table was worked out as follows:
