CESTAT Chennai held that claim of wrong supply made by the supplier merely supported by e-mails, the authenticity of which were never proved before the Adjudicating Authority, is unacceptable.
Facts- The assessee-respondent had filed two Bills-of-Entry through their CHA, for the clearance of goods imported from China which were declared as “Polyethylene Laminated in Rolls” under CTH 3921 1900.
Said Bills-of-Entry were facilitated by RMS without assessment and examination. But, however, the unclear description appears to have prompted the Revenue to open the containers which were later examined by the Dock Officers. Only “PVC Flex Fabrics” were found instead of the declared Polyethylene Laminated in Rolls, which attracted Anti-Dumping Duty under Notification No. 79/2010-Cus. dated 30.07.2010.
During adjudication, it appears that the respondent claimed ignorance by throwing the blame on the foreign supplier; that the supplier had sent the wrong consignment to them and thus requested the Commissioner to permit them to re-export the consignment in question.
The learned First Appellate Authority concludes that there was no deliberate misdeclaration, despite the fact on record that the same misdeclaration was repeated in the earlier import, on the part of the respondent and that the Department also did not come out with conclusive evidence to the contrary to the correspondence between the supplier and the respondent.
The documents sought to be relied upon are nothing but e-mails, the authenticity of which were never proved before the Adjudicating Authority and hence, the presumption in terms of Section 114 of the Indian Evidence Act has to be drawn against the importer. The above discussion, in effect, is that the initial burden has to be discharged by the importer. It is only thereafter that the onus would shift to the Revenue and not vice versa.
FULL TEXT OF THE CESTAT CHENNAI ORDER
This appeal is filed by the Revenue against Order-in- Appeal C.Cus. No. 1278/2012 dated 29.10.2012 passed by the Commissioner of Customs (Appeals), Chennai.
2. Brief facts, as could be gathered from the Order-in-Original and the impugned Order-in-Appeal, are that the assessee-respondent had filed two Bills-of-Entry Nos. 5263238 and 5263239 both dated 22.11.2011 through their CHA, for the clearance of goods imported from China which were declared as “Polyethylene Laminated in Rolls” under CTH 3921 1900. Total invoice value of USD 10530.00 (CIF) and USD 10530.00 (CIF) was also declared.
3. It appears that said Bills-of-Entry were facilitated by RMS without assessment and examination. But, however, the unclear description appears to have prompted the Revenue to open the containers which later on came to be examined by the Dock Officers. It appears that what was found was only “PVC Flex Fabrics” instead of the declared Polyethylene Laminated in Rolls, which according to them attracted Anti Dumping Duty under Notification No. 79/2010-Cus. dated 30.07.2010. It thus appears that the following doubts/suspicion emerged thereafter: –
4.1 During adjudication, it appears that the respondent through its representative claimed ignorance by throwing the blame on the foreign supplier; that the supplier had sent wrong consignment to them and thus requested the Commissioner to permit them to re-export the consignment in question. It also appears that the respondent-importer, on the same day, requested the Deputy Commissioner of Customs (Gr-2) for clearance.
4.2 The Adjudicating Authority has observed in the Order-in-Original that the respondent, claiming wrong shipment/supply, had also sought for clearance, which did not arise, and thus vide Order-in-Original No. 19327/2012 dated 30.08.2012 (i) rejected the declared description and held the same as “PVC Flex Fabrics” (ii) rejected the declared value of USD 0.65 per kg. under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and redetermined the same at USD 1.30 per kg. (iii) ordered payment of Anti Dumping Duty of Rs.11,14,122/- under Notification No. 82/2011-Cus. dated 25.08.2011 (iv) ordered payment of differential customs duties of Rs.2,80,168/- on the enhanced value (v) ordered confiscation of the goods imported vide the Bills-of-Entry in question in terms of Section 111(l) and 111(m) of the Customs Act, 1962, while also giving an option to redeem the goods on payment of redemption fine of Rs.1,15,000/-under Section 125 of the Act, thereby rejecting the request for re-export of the goods; and (vi) imposed penalty of Rs.13,94,290/- on the respondent under Section 114A ibid.
5.1 Aggrieved by the above Order-in-Original, the respondent filed an appeal before the First Appellate Authority and after hearing, the learned First Appellate Authority has allowed the appeal vide Order-in-Appeal C.Cus. No. 1278/2012 dated 29.10.2012 by accepting the contentions urged on behalf of the respondent. To summarise his findings:
5.2 The learned First Appellate Authority thus concludes that there was no deliberate misdeclaration, despite the fact on record that the same misdeclaration was repeated in the earlier import, on the part of the respondent and that the Department also did not come out with conclusive evidence to the contrary to the correspondence between the supplier and the respondent. Apparently, no concrete evidence was filed by the importer either before the Adjudicating Authority or even before us. Consequently, the unilateral action taken by the Department in the past clearance was held unsustainable.
5.3 Regarding the present appeal, the learned Commissioner (Appeals) holds that the Department should have allowed re-export, as requested, considering the wrong supply. The sum and substance of the order is that the appeal filed by the respondent-importer was allowed with the direction to the respondent to re-export the goods without any payment of fine and penalty. However, if the respondent was interested in clearing the goods for home consumption as per the request of the supplier, then the order passed by the lower authority would be upheld with modification; the action taken by the lower authority was held to be not legal and proper and the Order-in-Original was set aside, with a direction to the lower authority to issue necessary detention certificate for waiver of demurrage and container detention charges.
6. The above has thus resulted in the present appeal.
7. Heard Shri S. Balakumar, Learned Assistant Commissioner representing the appellant-Revenue and Shri Shravan Kochar, Learned Advocate appearing for the respondent.
8. After hearing both sides, we find that the issue, on the facts and in law, is: whether the order of Commissioner (Appeals) is sustainable?
9. We find that the appellant-Revenue, is aggrieved by the impugned Order-in-Appeal, on the following grounds:-
10. Per contra, Shri Shravan Kochar, Learned Advocate appearing for the respondent, supported the findings of the Commissioner (Appeals). He would also contend that the learned Commissioner (Appeals) has given a categoric finding as to there being wrong supply and that the Revenue did not file any evidence to the contrary. His other submissions made orally and, in the synopsis filed, are: –
(a) Gopal K. Sapru v. Commissioner of Customs (Airport), Chennai [2007 (213) E.L.T. 689 (Tri. – Chennai)];
(b) J. K. Enterprises v. Commissioner of Central Excise, Delhi-IV [2014 (301) E.L.T. 681 (Tri. – Del.)]
(c)Guru Ispat Ltd. v. C.C.E. [2003 (151) E.L.T. 384 (Tri. – )]
(d) Marmo Classic v. Union of India [2003 (156) E.L.T. 14 (Bom.)]
(e) Seimens Ltd. v. Collector of Customs [1999 (113) E.L.T. 776 (S.C.)]
(f) Sankar Pandi v. Union of India [2002 (141) E.L.T. 365 (Mad.) affirmed in 2018 (360) E.L.T. A214 (S.C.)]
(g) Shree Salasar Tools (HUF) v. Commissioner of Customs, Chennai [Final Order No. 40327/2022 dated 23.09.2022 – CESTAT, Chennai]
Discussion of the finding as to violation of principles of natural justice:
11.1 We find, at the outset, that the impugned Order-in-Appeal insofar as the same relates to violation of principles of natural justice, is not sustainable, for the following reasons: –
11.2 In view of the above, it is very clear that the findings as to violation of the principles of natural justice is not sustainable in law and deserves to set aside, which we hereby do.
Discussion on merits:
12.1 The Commissioner (Appeals) has concluded that it was the case of wrong supply made by the supplier for which respondent could not be held liable. This aspect requires a bit of analysis.
12.2 In the first place, ‘wrong supply’ has to be proved, obviously with supporting evidence.
12.3 When irregularity was pointed out by the Revenue to the importer, the importer immediately waived issuance of Show Cause Notice, thereby preventing the Revenue from highlighting the case against them, for which they had to answer, in writing. That situation was very decisively/conveniently avoided by the importer!
12.4 During personal hearing also, they appear to have made only formal representation, again perhaps trying to avoid the possible further probing/digging by the Adjudicating Authority, except requesting for permission to re-export. We do not see any reference to the e-mail sent by the supplier admitting wrong supply anywhere in the order of the Adjudicating Authority, though we are not suspecting the very existence of such e-mail from supplier at that stage. We do not want to guess here, that it was because they were not filed since the only ground urged was for re-export.
12.5 That makes it clear that their claim of ‘wrong supply’ could possibly be an after-thought, which gave birth to the e-mail from supplier! It is thus clear that the Department or at least the Adjudicating Authority never had any chance to address/examine this issue of ‘wrong supply’ and hence, there was nothing for the Adjudicating Authority to prove or disprove on this, at the time of adjudication.
13. When an irregularity was pointed out, instead of discharging the same, the respondent simply evaded by requesting for re-export. So, if we go by the findings of the Commissioner (Appeals), then it was for the Adjudicating Authority to even explain the irregularity, not just ‘wrong supply’. Thus, the burden which was on the respondent was never discharged and hence, there is no question of onus shifting on to the Revenue, to prove, what the learned Commissioner (Appeals) wanted or as desired by the respondent, that there was no ‘wrong supply’.
14.1 The requirements under the burden of proof are covered in Chapter VII of the Indian Evidence Act.
14.2 Under the Indian Evidence Act, 1872, Sections 101 to 103 deal with the burden of proof in general, whereas Sections 104 to 106 deal with the situation where the burden of proof is placed on a specific individual.
14.3 Order 6, Rule 2 of the Civil Procedure Code, 1908, states that the pleading shall only contain important facts that must be shown in a concise form. Evidence is a relative term that refers to a connection between two facts: the fact in dispute (factum probandum), or statement to be proven, and the evidential fact (factum probans), or material corroborating the proposition.
14.4.1 The burden of proof is defined under Section 101 of the Indian Evidence Act: –
“Anyone who wants a court to rule on a legal right or responsibility based on facts he claims must first show that such facts exist. The second Section of the statute specifies that when a person is required to show the existence of a fact, that person shall also bear the burden of proof.
As a result, a person seeking a favourable decision from the court must provide evidence in support of his case, according to this clause. The usual rule is that the party that asserts a truth bears the burden of proof, not the side that denies it.”
14.4.2 Section 102 of the Indian Evidence Act reads as under: –
“Who bears the burden of proof — In a suit or procedure, the person who would fail if no evidence was presented on either side has the burden of proof.”
14.4.3 Section 103 of the Indian Evidence Act states:
“The burden of proof as to any specific fact is with the person who asks the court to believe in its existence unless any law provides that the burden of proof rests with any particular individual.”
14.4.4 Section 104 of the Indian Evidence Act states that the burden of proof is on the person giving the evidence to prove the facts that must be shown in order for the evidence to be admissible, but in any case, we are not examining the issue on hand from the Evidence Act perspective.
15.1 Section 123 of the Customs Act requires burden of proof in certain cases and in the light of our above discussion, the ‘burden of proof’ which has not been defined under the Customs Act, therefore, has to be looked into from the point of the Indian Evidence Act. When a statutory authority entertains a doubt, a Show Cause Notice will be naturally issued based on certain observations and it is for the noticee to satisfy and to prove that the observations / allegations of the statutory authority issuing such Show Cause Notice is wrong. The burden of proof, therefore, is always there on the noticee initially, which has to be discharged in the first place.
15.2 A cumulative reading of the above provisions leads us to understand that the fact as to the ‘wrong supply’ was advanced by the importer and ence, the burden of proof is always on the importer to prove the wrong supply to the satisfaction of the authority.
15.3 The documents sought to be relied upon are nothing but e-mails, the authenticity of which were never proved before the Adjudicating Authority and hence, the presumption in terms of Section 114 of the Indian Evidence Act has to be drawn against the importer. The above discussion, in effect, is that the initial burden has to be discharged by the importer. It is only thereafter that the onus would shift to the Revenue and not vice versa.
16.1 Thus, the Commissioner (Appeals) was clearly in error to observe that the Department did not bring on record any material to contradict the contention of ‘wrong supply’ which, according to us, is not the intention or spirit of law.
16.2 Other than mere contention, we do not find any attempt being made by the importer to furnish any other piece of evidence to justify its claim as to the wrong supply.
17. In view of the above discussion, we are of the clear view that the Commissioner (Appeals) committed an error in allowing the appeal of the importer without there being any evidence in support of the importer’s claim and hence, the impugned order cannot sustain.
18. Consequently, we set aside the impugned order and allow the Revenue’s appeal.
(Order pronounced in the open court on 31.05.2023)