Penalty would be applicable for Illegal Undervaluation of Imported Goods: CESTAT

John Miranda Vs  Commissioner of Customs (CESTAT Kolkata)

Conclusion: In present facts of the case, demand of Custom duty was dropped as Bill of Entries were in the name of some different entities but the penalties were confirmed as the Appellant were actively involved in import of the goods and undervalued the same.

Facts: In present facts of the case, an Intelligence was gathered by DRI, Ahmedabad, indicated that the importer, were indulging in evasion of Customs duty by resorting to gross undervaluation in the import of electronic goods viz, Car audio items viz. Car Speaker, CD Players, Amplifiers etc. imported by them through Kolkata Port. The intelligence indicated that the importer was manipulating the actual value of the imported consignments in collusion with the supplier firm and was declaring lower value before Indian Customs for assessment of duty thereby paying lesser amount of Customs duty. The intelligence also indicated that the imports were being made by the Appellant in the name of their own firms as well as by using the IEC of other firms.

The appellant submitted that the period involved in both the cases is March, 2007 to March, 2008 and the show-cause notice has been issued on 1^st March, 2012 & 27^th March, 2012 respectively. He also submits that the demand of duty from the appellants is un-sustainable ex-facie being contrary to Section 28 of the Act. As per the provisions of the Act, duty not paid or short paid or not levied or short levied erroneously refunded can be demanded and recovered only from the importer within the meaning of Section 2 (26) of the Act. There is no dispute, as none can be, that all the relevant documents including bills of lading, bills of entry, packing list etc. were in the name of some another entity as importer. The assessment of the said goods and clearance thereof, upon payment of assessed duties of Customs was also made in the name of the said importer. There is no provision in the Act for providing for any deemed importer of goods for demanding or recovering of duty of Customs allegedly evaded from any other person except the importer on record. Therefore, duty cannot be demanded from the appellant.

The Revenue, referred to the various statements of the appellants during the course of investigation and submitted that it was the case of under-valuation and it was been admitted by the appellants that they have paid the money to the overseas suppliers having their office in India. Therefore, the penalties on the appellants are rightly imposed.

The Hon’ble Tribunal after taking submissions of both sides into consideration observed that the duty cannot be demanded from the appellants as it is the fact on record that the appellants, as they were not the real importers. In fact, the Bills of Entry has been filed in the name of another entities and the respective Bills of Entry were assessed and the goods were cleared to those importers. Therefore, the demand of duty from the appellant was not sustainable.

With regard to the imposition of penalty, it was observed the Appellant were using IEC Code of various IEC holders for import of car electronic goods by under-valued the same and the differential amount has also been paid to the overseas suppliers through their office in India by illicit means.

Therefore, the Appellants were actively involved in import of the impugned goods and undervalued the same. Therefore, penalties imposed on the Appellants were confirmed.

FULL TEXT OF THE CESTAT KOLKATA ORDER

1. The Customs Appeal Nos.C/75240/2014 & C/75241/2014 are arising out of Order-in-Original No.Kol/Cus/Port/26/2013 dated 19.11.2013 and remaining three Customs Appeal Nos.C/75242/2014, C/75243/2014 & C/75244/2014 are arising out of Order-in-Original No.Kol/Cus/Port/29/2013 dated 21.11.2013. As all the appeals are arising out from a common investigation, therefore, all are being disposed off by a common order.

Customs Appeal No.75242 of 2014

Customs Appeal No.75243 of 2014

Customs Appeal No.75244 of 2014

2. The facts of the case are that an Intelligence gathered by DRI, Ahmedabad, indicated that M/s. Creative Enterprise, Chamber No. 209, Reshab Shree House, Ranjit Nagar Commercial Complex, West Patel Nagar, New Delhi – 110008, having an IEC No: 0506076814 (hereinafter referred to as the importer for the sake of Brevity), were indulging in evasion of Customs duty by resorting to gross undervaluation in the import of electronic goods viz, Car audio items viz. Car Speaker, CD Players, Amplifiers etc. imported by them through Kolkata Port. The intelligence indicated that the importer was manipulating the actual value of the imported consignments in collusion with the supplier firm and was declaring lower value before Indian Customs for assessment of duty thereby paying lesser amount of Customs duty. The intelligence also indicated that the imports were being made by Shri jhon Miranda and Shri Rakesh magoo in the name of their own firms as well as by using the IEC of other firms.

2.1 Searches were conducted on 26.07.2008 at the office premises of Shri John Miranda situated at 3^rd Floor, Madhuban Building, S.B.Singh Road, GPO, Mumbai, the residential premises of Shri Rakesh Magoo, situated at J-221, LIC Colony, Paschim Vihar New Delhi as well as the office premises of Shri Rakesh magoo situated at GH-9/638, Paschim Vihar, New Delhi. In the course of the searches, documents, hard disk and computer relevant to the investigation were seized under panchnama in the presence of independent witnesses.

2.2 Statement of Shri Rakesh Magoo, Proprietor of M/s. A.S Enterprises New Delhi, was recorded under Section 108 of the Customs Act 1962 on 26.07.2008 wherein he stated inter alia that, he was engaged in the business of trading of Electronics for the preceeding 15 years and had started his firm- M/s A.S Enterprises which was initially engaged in trading and importing of electronic components for past 5 years; that, since, last 2 years, he had been importing Car Audio Speakers in the name of M/s A.S Enterprises and the said firm was engaged in trading & import of Car Audio Speakers only; that, he agreed with proceedings of Panchnama drawn by officers of DRI, New Delhi on 26.07.2008 under which documents relating to imports & trading done by the said firm and a Computer Hard Disk was recovered during search conducted at M/s A.S Enterprises; that ,they had also imported Car speakers through others firms i.e. M/s Balaji Enterprises and M/s J.N.S Enterprises, Delhi; that, Shri John Miranda of Bombay was his business friend / partner and Shri John Miranda was known to him for the preceeding 15 years; that, they interchanged their imported goods as per requirement of their buyers and the accounts of those transactions were settled by them by payment in cash; that, he had imported Car Audio Speakers through his firm or through other firms from overseas suppliers M/s Cosmo, Hong Kong and M/s Farle, Singapore; that, all communications and negotiations were done and orders placed through Mr. Vijay Kumar in case of import from M/s Cosmo, Hong Kong and all communications & negotiations were done and orders placed through Ms. Belinda in case of import from M/s Farle, Singapore; that, all the imports made by him at Kolkata Port were handled by CHA M/s R.S Arunachalam and all the imports made by him at Mumbai Port were handled by CHA, M/s. Sai Dutta Clearing; that, all the goods imported by him were undervalued and they made the payment of differential amount to the representative of the overseas supplier in India; that, they were informed telephonically about the visits of the overseas supplier to India and the payments of differential amount were made to them. He agreed to deposit the amount of differential duty voluntarily on the goods imported and undervalued by them.

2.3 Statement of Shri John Miranda, Proprietor of M/s. Jojojem International was recorded under Section 108 of the Customs Act, 1962 on 26.07.2008 wherein he stated inter alia that, he had imported goods in the name of M/s. M.R. International, New Delhi, however, there was no firm known as Venus Enterprises in so far as his business was concerned and he did not know any M/s. Venus Enterprises; that, he was the sole proprietor of M/s. Venus International, having office at 305, 3^rd floor, Madhuban Building, 23, Cochin Street, 323, S.B. Singh Road, Mumbai-400 001; that, he did not having any IEC number and therefore was not connected with import and export at all; that, he was the sole proprietor of M/s Jojojem International (IEC No: 0304015059) having office at 5B, Gr. Floor and 9B, 2^nd floor, Vithal Niwas, Jacob Circle, Mumbai- 11 and they were importing various electronic goods like Speakers, Amplifiers, Twitters etc; that, he placed the order on the foreign supplier and thereafter contacted Custom House Agent M/s. Sai Dutta Clearing Agency Pvt. Ltd. for clearance of the goods and the said goods were transported to Delhi through transporter M/s Godhara Road Lines or by Rajdhani Courier; that, it was true and correct that one Shri Rakesh Magoo was his business partner in the import and trading of car audio items; that, Shri Rakesh Magoo used to make payments towards clearing charges and transporting charges; that, they had been using various other import Export Codes (IECs) of various other fictitious firms to hide their identity as actual importer / beneficiary; that, they were using the Import Export codes of various firms including the following firms for effecting the import and trading of car audio items.

2.4 That, it was factually correct that the actual IEC holders reflected in the bills of entry in all the cases had nothing to do with the imported goods; that, the details as to how the payment was made to IEC holders for retiring the import documents from the bank and which were the banks, could be explained only by his partner Shri Rakesh Magoo; that, all the details of the amount paid to the respective IEC holders, can best be elaborately explained only by his partner Shri Rakesh Magoo; that, the overseas suppliers – the overseas persons with whom he interacted and placed the order were – Shri Vijay Kumar, owner of M/s. Rasco International and M/s. Cosmo Trading Co. Hong Kong, Shri Pawa of M/s. A.K. Pawa Brothers, Singapore and Shri Sunil of M/s Zajel Al Khaleej General Trading Co, Dubai; that, Shri Dham of M/s. Sai Dutta Clearing Agency Pvt. Ltd. was clearing their goods in Mumbai and Shri Dipak Dutta was clearing their goods in Kolkata; that, the imported goods were directly supplied to the retail shops in Delhi and he would furnish the details of all these retailers from his partner Shri Rakesh Magoo; that, there was substantial difference in the import price and the sales price of the car audio items; that, the declared price was ranging between 30 to 40% of the actual transaction value and the undervaluation was to the extent of 50 to 60%; that, his rough estimate of their differential duty liability was approximately Rs. 50 lakhs on account of undervalued import in the name of various other fictitious firms used for facilitating import of electronic goods; that, further there was differential duty liability of approx Rs. 10 lakhs on account of his firm M/s Jojojem International (IEC No. 0304015059) as well as on account of other fictitious firms used for facilitating import of electronic goods.

2.5 Regarding the payment of differential amount to the overseas supplier, he stated that it was apparent from the names of the persons of the supplier companies, that they all were Indians and they had their persons operating in Mumbai and Delhi and they were sending their representatives to collect the differential amount. He stated that he did not have any contact number or contact persons’ details as they were confirming the receipt of differential amount over phone.

2.6 On being asked, he stated that it was not correct that all 21 firms were used by them for imports; that, to the best of his memory they had used only 6 firms, besides his own proprietary firm, which were mentioned as under:

He undertook to furnish all the details substantiating their duty liability as well as the entire duty liability of Rs. 60 lakhs during his next visit on 28.07.2008.

2.7 A further statement of Shri John Miranda, Proprietor of M/s. Jojojem International was recorded under Section 108 of the Customs Act, 1962 on 28.07.2008 wherein he inter alia stated that, there were two live consignments of electronic goods imported by him i.e. one consignment of car audio system, speakers sub-woofers, etc. imported by him which was pending clearance in Kolkata port but he did not remember the declared value/actual value of the same; that, the approximate declared value of the said consignment would be US$ 43,000/- and the actual value of the same should be approx US$ 90,000/-; that, he had paid the differential value of the said consignment amounting to Rs. 20,00,000/- in cash form to Shri Sunil (Tel.No.097142283717) of the said firm M/s Zajel Al Khaleej General Trading Co, Dubai in India. He undertook to furnish photocopies of the document to the DRI on his next visit. He stated further that, the second consignment of car audio systems, speakers, sub-woofers, etc. was pending clearance in Mumbai port which had arrived in Mumbai port on 28.07.2008 and he voluntarily submitted photocopies of the relevant Bill of lading No. NCLIEANSA8070023 dtd. 15.07.2008 issued by Inter-Container Cargo Line for port of shipment Jebel Ali, Dubai, U.A.E. and port of discharge Nhava-Sheva, Invoice and paking list No. ZAKJSRIO295/08; dtd. 07.07.2008 issued by M/s. Zajel, Al Khaleej General Trading Co. (LLC),P.O. Box. 25542, Dubai, U.A.E. for supply of branded speakers etc. for a declared value of US$ 22,003/-; that, the actual value of the said goods was US$ 55,000/- and he had paid the differential value of the said consignment amounting to Rs. 15,00,000/- in cash to Shri Sunil of M/s. Zajel Al Khaleej General Trading Co., Dubai in India.

2.8 Statement of Shri Deepak Dutta, Branch Manager of Custom House Agent M/s R.S Arunachalam, Kolkata- was recorded under Section 108 of the Customs Act, 1962 on 28.07.2008 wherein he inter alia stated that, as Branch Manager of M/s R.S. Arunachalam, he was responsible for all the day to day work of the firm; that, his firm was a Custom House Agent and was functioning from all the major ports; that, as a Custom House agent it was his firm’s responsibility to ensure complete adherence to all the Rules, regulations and guide the clients in this regard; that, he had been authorized to give statement on behalf of M/s R.S. Arunachalam and he produced the authorization letter; that, as a CHA, before accepting job from clients they verified the personal and professional details of their clients so that in case of any need by the department they may trace the clients; that, they also ensured that compliance with Rules and regulations is made; that, before starting the work with any client, he obtained authorization from him/them; that, he also got the signatures verified from the concerned bank; that, he did not normally verify the address of the business premises; that, after they get the documents from the clients they file the Customs documents like Shipping Bill or Bill of Entry as the case may be, and process the same through the concerned Custom House; that, they retain the documents even after the clearance from the Customs; that, their major clients of car speakers for whom they did the Customs clearing were Surya Trading Co, M.R. International, New Star Enterprises, KS. Enterprises, Balaji Enterprises, J.N.S. Enterprises, SSR Enterprises, A.S. Enterprises.

2.9 He was shown a letter dated 21.07.2008 of Shri Samunder Singh, post man of Shahadara Post Office, Delhi vide which the post man had confirmed that the address: 1974/3, Vishwas Nagar, Gali No. 15, Shahadara, Delhi-32, did not exist. He stated that the said nonexistent address belonged to M/s M.R. International. He admitted that they had not personally verified the address at any point of time because they knew that all these firms belonged to Shri Rakesh Magoo and Shri John Miranda and since they knew them well, they had not verified further. The signatures on the authorization letter received from the proprietor of the firm were verified from concerned Bank and a copy of PAN card was obtained. Since the address was as per IEC, they assumed that it was correct.

2.10 Shri Dutta has stated further that, as directed by Shri Rakesh Magoo, they used to send the clearance documents to Shri Rakesh Magoo directly in respect of all the 7 firms as mentioned above; that, he knew Shri Rakesh Magoo and/or Shri John Miranda who gave instructions regarding all the affairs of the above firms; that, although separate IEC had been obtained for all the above firms, in name of different persons, he did not know any proprietor/partners of the said firms; that, he knew only Shri Rakesh Magoo and Shri John Miranda who gave instructions in respect of these firms; that, the residential address of Shri Rakesh Magoo was G 638, LIC Colony, Pashchim Vihar, New Delhi, phone no. was 011-25270745 and mobile no. was 09810168779; that, the address of Shri John Miranda was: 305, Madhuvan Building, Shahid Bhagat Singh road, Fort, Mumbai-1, his phone no. was 022-22644322 and mobile no. was 09819385670; that, the above persons viz. Shri Rakesh Magoo/Shri John Miranda used to contact him on phone to give instructions regarding clearance, delivery, etc; that, as per his understanding they were partners; that, he received the documents like Bill of Lading, Invoice, Packing list, Purchase order / proforma invoice, declaration form duly signed by the said proprietor / partners mentioned in the IEC by courier; that, all the faxes and couriers sent by the above firms were delivered from Shri Rakesh Magoo, Delhi / Shri John Miranda, Mumbai; that, he received the amount towards duty, interest, demurrage etc. from Shri Rakesh Magoo, in form of cash or draft; that, besides the above said firms of Shri Rakesh Magoo / John Miranda, he had also worked for import of car audio accessories for the firms – Venus Enterprises, Fine Enterprises, Shri Sainath Export, Avon Enterprises, Dipali International, Navyug Enterprises, Royal Enterprises, S&S International.

2.11 He stated further, that, as per his knowledge, all the above eight firms belonged to Shri Subhash Langi of Delhi who imports electronics goods like car audio and accessories in the name of the above firms; that, this was also evident from the fact that the fax of import documents like Bill of Lading and/or invoice of M/s. Dipali International, M/s. Navyug Enterprises, M/s. Fine Enterprises, were sent from the fax no.011-23521120 which belonged to Shri Subhash Langi; that, moreover, the directions regarding import, clearance, transportation etc. and payments for duty, other charges were received from Shri Subhash Langi, in respect of the above 8 firms (he submitted copies of the import documents for year 2007-08 and 2008-09 in respect of car audio / accessories imported by various firms of Shri Rakesh Magoo / John Miranda). Regarding the status of Bill of entry no. 420730 dated 17.07.2008 of M/s. M.R. International, he stated that the Bill of Entry had been assessed and duty payment was pending; that, while assessing the Bills of Entry, values declared in the invoices had been enhanced by the Group Appraiser; that, the assessable value in case of M/s M.R. International, after the enhancement was Rs. 29,03,578/- against the declared invoice value of Rs. 19,14,494/- (44317 X 43.2); that, the duty payable was assessed as Rs. 9,20,533/-; that, similarly, the assessable value in case of M/s. Venus Enterprises, after the enhancement was Rs. 23,32,185/- against the declared invoice value of Rs. 21,56,611/- (49,991 X 43.2)/ that, the duty payable was assessed at Rs. 7,39,381/-; that, the above two import consignments had been detained by the DRI, KZU for further examination.

2.12 In the course of the searches carried out at the office premises of M/s A.S. Enterprises, Delhi of Shri Rakesh Magoo and the office premises of M/s Jojojem International Mumbai of Shri John Miranda a hard disk and a CPU were withdrawn for further investigation. The said CPU and hard disk were, forwarded to the Directorate of Forensic Science, Gandhinagar (DFS in short) for retrieval of the data contained therein.

2.13 The Directorate of Forensic Science, Gandhinagar vide their letter No. D/EE/2008/CF/108 dated 25/11/2008 forwarded print outs of data recovered from the hard disk withdrawn under Panchnama dated 26/07/2008 drawn at the premises of M/s A.S. Enterprises, GH-9/638, Paschim Vihar, Delhi-87.

2.14 As, Shri Rakesh Magoo did not appear before the investigating officer at Ahmedabad, he was summoned by the DRI, Delhi to appear on 17.12.2008 at DRI, Delhi when Shri Rakesh Magoo appeared. In his statement recorded on 17.12.2008 under Section 108 of the Customs Act, 1962 he stated inter alia that, he agreed fully with the contents of the Panchnamas both dated 26.07.2008 both at his residence as well as at the premises of M/s A.S. Enterprises, GH-9/638, Paschim Vihar, New Delhi-87; that, he agreed with the facts mentioned in Panchnama dated 26/07/2008 drawn at premises of M/s Venus International, 305, Madhuban Building, 323, Cochin Street, S.B. Singh Road, Mumbai­400001; that, he agreed completely with the facts stated by Shri John Miranda, Proprietor of M/s. Venus International, Mumbai and M/s. Jojojem International, Mumbai in his statements dated 26.07.2008 and 28.07.2008; that, he was doing business of importing electronic goods like Car Speakers, Amplifiers etc. in the name of the firms viz. M/s A.S. Enterprises, M/s M.R. Internationak, M/s S.S.R. Enterprises, M/s K.S Enterprises, M/s Balaji Enterprises, and M/s J.N.S. Enterprises.; that, the owners of all the firms / IEC holders stated above have never imported goods of their own; that, he paid commission to owners / IEC holders for allowing him to use said IEC to import various goods; that, in addition to above commission, he paid the IEC holders an amount equivalent to 5 to 10% of total profit earned by selling the said imported goods; that, the payment was made to the IEC holders in cash; that, the local buyers of goods imported by him were Ankush Ji – Delhi, Tejpal Ji – Delhi; that, Vineet ji – Delhi, Anil Dawar – Delhi, Rajneesh – Delhi, Abhishek – Delhi, Maninder – Delhi, Harvinder – Delhi, Manu – Delhi, Sunil – Delhi, Sonu – Delhi; that, he did not know remember the name of the firms of those persons.

2.15 Shri Magoo was shown letter No. D/EE/2008/CF/108 dated 25/11/2008 of the Directorate of Forensic Science, Gandhinagar, under which print outs of data recovered from the hard disk withdrawn under Panchnama dated 26/07/2008 drawn at the premises of his office i.e. M/s A.S Enterprises, GH-9/638 Paschim Vihar, Delhi-87, had been forwarded. He perused the same and identified that the page No. 000002 to 000011 of said printouts pertained to account of imported goods sold to Shri Tejpal, Shri Vineet apd Shri Ankush. It also contained Item No., Qty(Quantity), Rate & Amount; that, page No. 000015 to 000027 of said printouts pertained to account of imported goods sold to Shri Anil Dawar; that, it also contained Item No.,Qty(Quantity), Rate & Amount; that, the page No. 000029 to 000052 of said printouts pertained to account of imported goods sold to Shri Abhishek, Shri Rajneesh and Shri Rajesh – Expert; that, It also contained Item No., Qty(Quantity), Rate & Amount; that, page No. 000054 of said printouts was a Proforma Invoice sent by M/s Farle, Singapore in the name of Shri John Miranda showing rates of different models of different types of Speakers; that, page No. 000056 of said printouts pertained to account of imported goods sold to Shri maninder Ji. And the same also contained Item No., Qty(Quantity), Rate & Amount; that, page No. 000058 to 000078 of said printouts pertained to account of imported goods sold to Shri Harvinder Ji, Shri Manu Ji and Shri Maninder Ji and also contained Item No., Qty(Quantity), Rate & Amount; that, page No. 000082 to 000084 of said printouts pertained to account of imported goods sold to Shri Sunil and Shri Rajneesh Ji and also contained Item No., Qty(Quantity), Rate & Amount; that, page No. 000088 of said printouts pertained to M/s Venus International owned by Shri John Miranda; that, he was not aware of the contents of the said document; that, he and Shri John Miranda were business partners and the said document must have been received on behalf of Shri John Miranda by his Computer Operator; that, page No. 000090 of said printouts was a Quotation of different types of Speaker of different make and different modes; that, however, he was not aware of the contents or sender of said quotation; that, they had not imported any of the Model & make of Speakers as shown in the said Quotation; that, page No. 000094 of said printouts pertained to M/s Venus International- owned by Shri John Miranda and he was not aware of the contents of the same; that, page No. 000102 of said printouts pertained to M/s Venus International – owned by Shri John Miranda and he was not aware about the contents of the said document; that, page No. 000112 of said printouts was an Invoice issued by M/s Cosmo Trading Co. Hong Kong and pertained to the consignment imported by him in the name of M/s Balaji Enterprises; that, page No. 000114 to 000119 of said printouts pertained to account of imported goods sold to Shri Harvinder ji which also contained Item No., Qty(Quantity), Rate & Amount; that, page No. 000121 to 000129 of said printouts pertained to account of imported goods sold to Shri Rajneesh Ji which also contained Item No., Qty(Quantity), Rate & Amount; that, page No. 000131 to 000151 of said printouts pertained to account of imported goods sold to Shri Abhishek Ji which also contained Item No., Qty(Quantity), Rate & Amount; that, page No. 000153 to 000176 of said: printouts showed the details of Payments and Expenses; that, he was not able to explain the details of the same nor was he aware of the contents of the said document; that, he did not know how to operate a computer but it was possible that the said papers may have been prepared by a person named Shri Raju a part time computer operator employed by him in his office; that, page No. 000153 to 000176 of said printouts pertained to account of imported goods sold to Shri Sonu Ji and also contained Item No., Qty(Quantity), Rate & Amount; that, page No. 000187 to 000203 of said printouts pertained to account of imported goods sold to Shri Maninder Ji. It also contained Item No., Qty(Quantity), Rate & Amount; that, he had not imported any consignment of automobile parts till that date; that, the consignments which were lying at Mumbai Port in the name M/s K.S. Enterprises, Delhi and M/s S.S.R Enterprises, Delhi had not been imported by him; that, they got credit for a period of 90 to 120 days from the overseas suppliers; that, they made payment to overseas suppliers from the amount they earned by selling the imported goods.

2.16 Sri Magoo admitted that they had undervalued the price of Car Speakers at the time of import and had not declared the correct value of the imported goods; that, by undervaluing the goods, they had paid less Customs Duty so that they could sell their products at competitive price in the market, and with high profit margins; that, he was willing to pay the differential Customs duty leviable on the goods imported by him.

2.17 As Shri John Miranda did not appear before the investigating officer at Ahmedabad, he was summoned to appear on 06.01.2009 before DRI, Mumbai when Shri Miranda appeared and in his statement recorded under Section 108 of the Customs Act, 1962, he had stated inter alia that, he confirmed that the facts stated by him in his statements dtd. 26.07.2008 and 28.07.2008 were true and correct; that, he agreed with the facts stated by Shri Rakesh Magoo, Proprietor of M/s. A.S. Enterprises, New Delhi in his statement dated 26/07/2008; that, he also agreed with the facts stated by Shri Rakesh Magoo in his statement dtd. 17.12.2008 except for some facts which did not pertain to him and about which he was not aware; that, he had imported goods in the name of the firms by using the IEC numbers of these firms. The same (with the IEC numbers inside the bracket) were A.S. Enterprises (0503074144), J .N .S. Enterprises (0505013085), K.S. Enterprises (0506071944), New Star Enterprises (0505051688), Surya Trading Co (0505003902), M.R. International (0508000793); that, the above mentioned IECs were all given to him by Shri Rakesh Magoo of M/s. A.S. Enterprises, New Delhi and he did not know any of the owners of these firms and he was also not aware as to who got the IEC for these persons from DGFT, that, he placed the order on the foreign supplier and at the time of arrival of the goods in India he contacted the Custom house agent M/s. Sai Dutta Clearing Agency Pvt. Ltd. for clearance of the goods at Mumbai and M/s. R.S. Arunachalam for imports at Kolkata; that, he paid the CHA their fee/charges by cheque issued by the firm in whose name the goods were imported; that, as stated by him in his statement dated 26/07/2008 he imported Car Speaker, Car Amplifiers, Car Tweeters in the names and IECs of the above stated 06 firms; that, the imports were mainly from M/s. Rasco International, Hong Kong, M/s. Cosmo Trading Co., Hong Kong, M/s. Wing Tat, Hong Kong, M/s. Chee Lin Exports, Hong Kong of Shri Vijay Kumar, M/s. Farle Exports, Singapore of Ms. Belinda, M/s A.K. Pawa Brothers, Singapore of Shri Pawa, and M/s. Zajel Al khaleej General Trading Co., Dubai of Shri Sunil; that, these firms were all owned by persons of India Origin and he dealt directly with these persons for his imports; that, he was the sole proprietor of M/s. Venus International, having office at 305, ₃rd floor, Madhuban Building, 23, Cochin Street, 323, S.B. Singh Road, Mumbai-400 001; that, however, M/s. Venus International did not have any IEC code and was in no way connected with import and export; that, he was shown letter No. D/EE/2008/CF/108 dtd. 25.11.2008 of Directorate of Forensic Science, Gandhinagar under which printouts of data contained in the hard disk seized from the office of M/s. A.S. Enterprises, New Delhi under panchnama dtd. 26/07/2008 had been forwarded; that, he was not aware of the contents of page No. 00002 to 000011 of the documents forwarded by DFS, Gandhinagar; that, he knew Shri Tejpal, and Shri Ankush who were Delhi based purchasers of car speakers, amplifiers etc; that, however, he did not know Shi Vineet; that, he was not aware of the contents of page No. 000013 of the documents forwarded by DFS, Gandhinagar and he did not know any company by the name of M/s. Tricom International, New Delhi or M/s. India Impex, New Delhi; that, it is true that his name was mentioned in the said document and was shown as the sender of the details of M/s. Tricom International New Delhi and M/s. India Impex, however, he did not know these companies and nor was he aware as to why his name was mentioned therein; that, he was not aware of the contents of page No. 000015 to 000027 of the documents forwarded by DFS, Gandhinagar; that, he knew Shri Anil Dawar who was a Delhi based purchasers of car speakers, amplifiers etc; that, he was not aware of the contents of page No. 000029 to 000052 of the documents forwarded by DFS, Gandhinagar; that, he knew Shri Ranjnish who was a Delhi based purchasers of car speakers, amplifiers etc. However, he did not know Shri Abhishek; that, page No. 000054 of the documents forwarded by DFS, Gandhinagar was a proforma Invoice quotation containing rates of different models of speaker sent by M/s. Farle Exports, Singapore; that, he was not aware of the contents of page No. 000056 of the documents forwarded by DFS, Gandhinagar; that, he did not know Shri Maninder; that, he was not aware of the contents of page No. 000058 to 000078 of the documents forwarded by DFS, Gandhinagar; that, he knew Shri Harvinder and Shri Manu who were Delhi based purchasers of car speakers, amplifiers etc, however, he did not know Shi Maninder; that, page No. 000080 of the documents forwarded by DFS, Gandhinagar contains details pertaining to Integrated Circuits (ICs), however, he had never dealt in or imported ICs; that, he also did not know Sahib Electronics; that, it was true that he had imported car speakers, amplifiers etc in the name of M/s. Balaji Enterprises but he had not imported ICs in the name of M/s. Balaji Enterprises or any other firm; that, he was not aware of the contents of page No. 000082 to 000084 of the documents forwarded by DFS, Gandhinagar; that, he knew Shri Sunil and Shri Rajnish who were Delhi based purchasers of car speakers, amplifiers etc; that, page No. 000088 of the documents forwarded by DFS, Gandhinagar was a statement of account dtd. 28.08.2007 sent to his firm M/s. Venus International, Mumbai; that, however, he was not aware of the said document; that, there was no activity of any kind in M/s. Venus International and neither did it have any bank account; that, Shri Rakesh Magoo was aware of the existence of his firm M/s. Venus International and he must have used his firm’s name to transact locally or with overseas firms without his knowledge; that, page No. 000090 of the documents forwarded by DFS, Gandhinagar was a quotation of speakers, car radio, amplifiers of different make and model; that, except for the JBL make speakers and amplifiers mentioned in the said document the other goods had not been imported by him; that, the JBL make speakers and amplifiers were imported from the authorized agent of the company – M/s. Zajel Al Khaleej General Trading Co (LLC), P.O. Box. 25542, Dubai, U.A.E and the goods were imported in the name of M/s. K.S. Enterprises, New Delhi; that, page No. 000094, 96 and 102 of the documents forwarded by DFS, Gandhinagar are invoices issued by M/s. Rasco International Limited, Hong Kong of Shri Vijay Kumar in the name of his firm M/s. Venus International Mumbai; that, however, he was not aware of the same; that, Shri Rakesh Magoo was aware of the existence of his firm M/s. Venus International and he must have used his firm’s name to transact locally or with overseas firms without his knowledge as is evident from the fact that the said document had been recovered from the hard disk of M/s. A.S. Enterprises of Shri Rakesh Magoo; that, page No. 000112 of the documents forwarded by DFS, Gandhinagar was an invoice of Cosmo Trading Co, Hong Kong issued in respect of consignment imported by Shei Rakesh Magoo in the name of M/s. Balaji Enterprises; that, he was not aware of the contents of page No. 000114 to 000119 of the documents forwarded by DFS, Gandhinagar; that, he knew Shri Harvinder who was a Delhi based purchasers of car speakers, amplifiers etc; that, he was not aware of the contents of page No. 000121 to 000129 of the documents forwarded by DFS, Gandhinagar; that, he knew Shri Rajnish who was a Delhi based purchaser of car speakers, amplifiers etc; that, he was not aware of the contents of page No. 000131 to 000151 of the documents forwarded by DFS, Gandhinagar; that, he did not know Shri Abhishek; that, page No. 000153 to 000176 of the documents forwarded by DFS, Gandhinagar contained details of the payments and expenses; however, he was not aware of the details contained in the said documents.

2.18 Regarding the mention of ‘John’, ‘Jo’ in the said document in the expenses column, he stated that this document was recovered from the hard disk of M/s. A.S. Enterprises of Shri Rakesh Magoo; that, therefore, though it is an account statement showing payments and expenses, he was not in a position to explain the same and as it must have been prepared by Shri Rakesh Magoo, and only he would be able to explain the same. Regarding the names mentioned in the expenses column i.e. Kumar, Belinda, Pawa, SKK, he stated that kumar apparently refers to Shri Vijay Kumar of M/s Rasco International, M/s Cosmo Trading, M/s. Wing Tat and M/s. Chee Lin Exports; that, Belinda apparently refers to Ms. Belinda of M/s Farle Exports; that, Pawa apparently refers to Shri Pawa of M/s. Pawa Brothers and SKK apparently refers to Shri Sunil of M/s. Zajel Al Khaleej General Trading Co. (LLC), P.O. Box. 25542, Dubai, U.A.E; that, he was not aware of the contents of page No. 000178 to 000185 of the documents forwarded by DFS, Gandhinagar; that, he knew Shri Sonu who is a Delhi based purchasers of car speakers, amplifiers etc; that, he was not aware of the contents of page No. 000187 to 000203 of the documents forwarded by DFS, Gandhinagar; that, he did not know Shri Maninder Ji; that, he knew the above mentioned Delhi based buyers i.e. Shri Sunil, Shri Mani, Shri Sonu, Shri Anil Dawar, Shri Tejpal, Shri Ankush, Shri Harvinder and Shri Rajnish, however, he did not know the name of their firms; that, the goods imported by him were also sold in New Delhi and the sales and marketing were all looked after by Shri Rakesh Magoo and he did not have any part in the sales of the goods imported by him; that, what had been stated by him in his earlier statement dtd. 26.07.2008 was true and correct; that, there was substantial difference in the actual price of the goods imported and the price declared before the Customs at the time of import; that, the declared price was ranging between 30 to 40% of the actual transaction value and the undervaluation was to the extent of 50 to 60%; that, he had stated in his statement dated 26.07.2008 that the differential duty liability was approximately Rs. 50 lakhs on account of undervalued import in the name of various other fictitious firms not belonging to him and used for facilitating import of electronic goods; that, however, this duty amount was inclusive of the imports made by Shri Rakesh Magoo in the names of the above mentioned 06 firms; that, the differential duty of Customs in respect of the goods imported by him in the name of different firms was about Rs. 30 lakhs and he had accordingly submitted Demand Drafts drawn in favour of the Commissioner of Customs, New Custom House, Mumbai for a total amount of Rs. 30 lakhs.

2.18 He produced copies of the letters and Demand Drafts submitted by him. He stated that he would pay the balance differential duty, if any, of Customs arising out of the undervaluation at the time of import in respect of the consignments imported by him in the name of different firms and different IECs; that, he would submit details of the consignments imported by him in the name of different firms and different IECs by 09.01.2009.

2.19 From the above investigation, it was found that one M/s Surya Trading Company has imported car electronic goods from Hong Kong and Singapore. The said firm is having IEC a Partnership Firm of Shri Hardeep Singh and Late Shri Rajinder Batra. Whereas Shri Deepak Dutta on behalf of CHA in his statement, has stated that the said M/s Surya Trading Company belonged to Shri Rakesh Magoo and Shri John Miranda and the documents and instructions in respect of imports of the said Firm were given by Shri Rakesh Magoo and Shri John Miranda and as per the direction of Shri Rakesh Magoo, the clearance documents were sent by him directly to Shri Rakesh Magoo, Shri Ashwani Dham, Director of M/s Sai Dutta Clearing Agency Private Limited, Mumbai, who stated that they handled the imports for Shri John Miranda and Shri Rakesh Magoo in the name of various firms including M/s Surya Trading Company and all imported formalities were done by Shri John Miranda and Shri Rakesh Magoo.

2.20 On the basis of that, it was alleged that the payment of differential amount has been paid by them to represent the overseas suppliers in India. Therefore, on the basis of the statement, it was alleged that the imported goods were under heavily under-valued and the differential consideration was paid through illicit means. Therefore, differential duty was demanded and the various penalties were imposed on the appellants.

2.21 The matter was adjudicated. Demand of duty was confirmed jointly from M/s Surya Trading Company, Rakesh Magoo and John Miranda and penalties on all the appellants, namely, Shri Rakesh Magoo, Shri John Miranda & M/s Sai Dutta Clearing Agency Private Limited, were imposed.

2.22 Against the impugned order, Shri Rakesh Magoo, Shri John Miranda & M/s Sai Dutta Clearing Agency Private Limited, are in appeal before us.

Customs Appeal No.75240 of 2014

Customs Appeal No.75241 of 2014

3. In respect of Customs Appeal Nos.C/75240/2014 & C/75241/2014, the statement of Shri Chander Mohan Sahni, Partner of M/s. Creative Enterprises, Chamber No. 209, Reshab Shree House, Ranjit Nagar Commercial Complex, West Patel Nagar, New Delhi was recorded before the officer of DRI, Delhi Zonal Unit under Section 108 of the Customs Act, 1962 on 03.07.2009 wherein he stated inter alia that he was the Partner of three firms M/s. Creative Enterprises, Chamber No. 209, Reshab ‘Shree House, Ranjit Nagar Commercial Complex, West Patel Nagar, New Delhi-110008; M/s. Real Enterprises, 7/202, Shop No. 2, Ramesh Nagar, New Delhi, and M/s. New Star Enterprises, 129-A, First Floor, DDA Flats, Shivaji Enclave Extension, New Delhi; that, the other partner in all the above firms was Late Shri Rajinder Batra S/o Shri Ram Chander Batra; that, Shri Rajinder batra expired on 22/01/2009 due to heart attack; that, he was not aware about the exact activities of the said firms as all dealing were done by his Partner Late Rajinder Batra; that, however, he could state that the said firms were importing car electronic items such as Speakers, Amplifiers, Woofers, Music Systems etc; that, he was not aware of the activities of the said firms because the firm M/s Creative Enterprises, M/s Real Enterprises and M/s New Star Enterprises were started in the year 2007 by the late Shri Rajinder Batra; that, Shri Batra who was his close and old friend informed him that he was starting some firms and if he was interested, he would take him as a partner in the said firms; that, Shri Batra informed him that one of his business friend Shri John Miranda of Mumbai, who was engaged in importing and trading of car electronics along with Shri Rakesh Magoo in New Delhi, Wanted him to start a firm and obtain an IEC which would be used by them for importing car electronics items; that, Shri Batra informed him that they would be paid about Rs. 15000 per month per firm for allowing Shri John Miranda use the IEC obtained by them; that, he had agreed to the proposal and accordingly became a partner of the firm M/s. Creative Enterprises, M/s Real Enterprises and M/s New Star Enterprises New Delhi; that Shri Rakesh Magoo was engaged in the import and trading of car electronics along with Shri John Miranda of Mumbai; that, he did not know the address of Shri John Miranda and never met Shri John Miranda, however, he met Shri Rakesh Magoo occasionally; that, he was not aware of how or who obtained the IEC in the name of their firm as all these matters were handled by the late Shri Rajinder Batra only on the instructions of either Shri John Miranda or Shri Rakesh Magoo; that, the office premises of their firms i.e. M/s Creative Enterprises and M/s Real Enterprises were on rental basis and the monthly rent was Rs. 5000/- each and M/s New Star Enterprises was also on rental basis and the monthly rest was Rs. 2000/-; that, he was not aware who paid the rent for the said premises as all these matters were being handled by the late Shri Batra; that, he had not invested any capital in the said firm; that, he did not recollect the IEC number of their firms; that, as and when instructed by the late Shri Rajinder Batra, he also used to sign cheques, import documents, bank documents etc; that he was not aware of the details of the goods being imported in the name of their firms and using the IEC of their firms, however, he knew that car electronic goods were being imported; that, he was not aware of the rate/price of the car electronics being imported in the name of their firm; that, all these matters were handled by the late Shri Rajinder Batra on the instructions of Shri Rakesh Magoo and Shri John Miranda; that, he did not know anything about import/export procedures, Custom procedures for import export and he also did not know any overseas firm; that, the remittances to the overseas suppliers was made from the bank account of their firm i.e. M/s Creative Enterprises with Lord Kishna Bank, J-2/14, Rajouri Garden, New Delhi and that of M/s Real Enterprises with Syndicate Bank, Rajouri Garden, New Delhi and that of M/s New Enterprises with Syndicate Bank, Rajouri Garden, New Delhi; that, whenever remittance was to be made to the overseas suppliers, the funds were arranged and deposited in their account by way of cash deposits/drafts, cheque etc., however, he was not aware who arranged the funds; that he used to get about Rs. 15,000/- per month per firm for allowing Shri John Miranda and Shri Rakesh Magoo use the IEC of their firms for their imports; that, he was shown photocopies of the following bills of entry filed in the name of their firm and using the IEC of their firm M/s Creative Enterprise, the details of the bills of entry are as below:-

3.1 Shri Sahni also stated that he was in no way concerned with the goods imported under the above mentioned bills of entry and the goods were not his but belonged to Shri Rakesh Magoo and Shri John Miranda.

3.2 On the basis of the above investigation, it was alleged that M/s Creative Enterprise, Delhi with the connivance of Shri Rakesh Magoo & Shri John Miranda, have imported car electronic goods and under valuation of their assessable value and the differential amount has been paid through illicit means. Therefore, show-cause notice was issued to demand differential duty along with interest and to impose penalty on the appellants.

3.3 The matter was adjudicated. The duty was demanded jointly from M/s Creative Enterprise, Shri Rakesh Magoo and Shri John Miranda. Penalties were also imposed on the appellants.

3.4 Against the said order, Shri Rakesh Magoo and Shri John Miranda are in appeal for demand of duty and for imposition of penalty jointly.

4. The ld.Sr.Advocate for the appellants, submits that the period involved in both the cases is March, 2007 to March, 2008 and the show-cause notice has been issued on 1^st March, 2012 & 27^th March, 2012 respectively. He also submits that the demand of duty from the appellants is un-sustainable ex-facie being contrary to Section 28 of the Act. Undisputedly, in terms of the impugned order itself, the importer is Creative Enterprises and Surya Trading Company. As per the provisions of the Act, duty not paid or short paid or not levied or short levied erroneously refunded can be demanded and recovered only from the importer within the meaning of Section 2 (26) of the Act. There is no dispute, as none can be, that all the relevant documents including bills of lading, bills of entry, packing list etc. were in the name of Creative Enterprises and Surya Trading Company as importer. The assessment of the said goods and clearance thereof, upon payment of assessed duties of Customs was also made in the name of the said importer. There is no provision in the Act for providing for any deemed importer of goods for demanding or recovering of duty of Customs allegedly evaded from any other person except the importer on record. Therefore, duty cannot be demanded from Shri Rakesh Magoo and Shri John Miranda. To support his contention, he relied on the decision of Commissioner of Customs (Preventive) Vs. Mustan Taherbhai : 2022 (382) ELT 471 (SC) and Nalin Z. Mehta Vs. CC : 2014 (303) ELT 267 (T).

4.1 For imposition of penalties upon the appellants, he submitted that there is no evidence on record and none has been disclosed that the appellants in any manner were involved for consignment of the goods imported by the above said importer. On the contrary, the evidence on record including the statements, inter alia, the appellants and the representative of the CHA conclusively evidences that the appellants are not involved in the importation of the said goods by the said importer. There is no corroboration of the statement with other evidence on record. Therefore, the statement cannot be relied upon as held by the decision of the Hon’ble High Court of Madras in the case of CC Vs. Sainul Abiden Neelam : 2014 (300) ELT 342 (Mad.).

4.2 With regard to confiscation and imposition of redemption fine, he submitted that the goods were not available for confiscation by DRI, which has also been released upon final assessment by the jurisdictional Customs Authorities. Therefore, redemption fine is not imposable. To support, he relied upon the decision of the Hon’ble Bombay High Court in the case of CC (Exports) Vs. Sudarshan Cargo Pvt. Ltd. : 2010 (258) ELT 197 (Bom.).

4.3 With regard to valuation of the imported goods, he submitted that the similar charge is not sustainable being contrary to the manner of determination and the settled principles to be applied in this regard. He also submitted that the DFS print out relied upon does not comply with the provisions of Section 138C(4)(c) of the Act and therefore, cannot be admitted as evidence and no penalty can be imposed on the person, who has filed the Bill of Entry shown as limited interest in the clearance of the goods. To support, he relied on the decision of the Hon’ble Kerala High Court in the case of Proprietor, Carmel Exports & Imports Vs. Commissioner of Customs : 2012 (276) ELT 505 (Ker.).

4.4 He also submitted that no corroboration of material on record evidencing any amount has been paid in cash to the suppliers in the case pertaining to the importer. Therefore, he submitted that no penalty can be imposed. In that circumstances, penalties on the appellants are to be set aside.

5. On the other hand, the ld.A.R. for the Revenue, drew our attention to the various statements of the appellants during the course of investigation and submitted that it is the case of under-valuation and it has been admitted by the appellants that they have paid the money to the overseas suppliers having their office in India. Therefore, the penalties on the appellants are rightly imposed.

6. Heard both the parties and considered the submissions made from both the side.

7. On going through the facts on these cases and the arguments advanced before us, we hold that the duty cannot be demanded from the appellants as it is the fact on record that the appellants, namely, Shri Rakesh Magoo & Shri John Miranda are not the real importers. In fact, the Bills of Entry has been filed in the name of Surya Trading Company & Creative Enterprises and these Bills of Entry were assessed and the goods were cleared to those importers.

7.1 In that circumstances, we hold that the demand of duty from the appellants before us, is not sustainable.

8. With regard to the imposition of penalty,we find that during the course of investigation, the statement of Shri John Miranda was recorded and the same has been considered by us, which is as under :

8.1 On being asked whether it is true that the goods imported in the, New Delhi, however, there is no firm known as Venus Enterprise in so far as my business is concerned and I do not know any M/s. Venus Enterprise name of M.R. International / Venus Enterprise, both of New Delhi are meant for you, I am to state that I have imported goods in the name of M/s. M.R. International whatsoever. However, I reiterate that I am the sole proprietor of M/s. Venus International, having office 305, 3rd floor, Madhuban Building, 23, Cochin Street, 323, S.B. Singh Road, Mumbai-400 001, having office Tel.No.022-66101714, Fax No.022- 22644322. Though this firm M/s. Venus International does not have any IEC code and therefore is no way connected with import and export whatsoever. Further, I would like to clarify that I am the sole proprietor of M/s. Jojojem International (IEC No.0304015059) having office at 5B Gr. floor and 9B, 2^nd floor, Vithal Niwas, Jacob Circle, Mumbai-11 having Tel.No.23008920 and Telefax – 23016548 and we are importing various electronic goods like Speakers, Amplifiers, Twitters etc.

8.2 On being asked about my nature of job, I am to state that I used to place the order on the foreign supplier. Thereafter, I used to contact custom house agent M/s. Sai Dutt Clearing Agency Pvt. Ltd. for clearance of the goods. Thereafter I used to book the said goods through the transporter M/s. Godhara Road Lines or by Rajdhani Courier to Delhi. Shri Rakesh Magoo used to make payments towards clearing charges and transporting charges.

8.3 On being asked whether it is true that one Shri Rakesh Magoo is your business partner in the import and trading of car audio items and having your office at Mumbai and address is 305, 3^rd floor, Madhuban Building, 23, Cochin Street, 323, S.B. Singh Road, Mumbai-400 001, I am to state that it is true and correct statement that one Shri Rakesh Magoo is my business partner in the import and trading of car audio items and having your office at Mumbai and address is 305, 3^rd floor, Madhuban Building, 23, Cochin Street, 323, S.B. Singh Road, Mumbai­400 001.

8.4 On being asked about M/s. M.R. International, I am to state that I confirm that the address of M.R. International at 1974/3, Viswas Nagar, Gali No. 15, Shahdara, Delhi is fictitious. The fictitious address of M.R. International used by us for the import of car audio items at grossly undervalued price. We have been using the various other Import Export Codes (IECs) of various other fictitious firms to hide our identity as actual importer / beneficiary.

8.5 On being asked about the relation with Shri Om Dutt / Pannalal / M.R. International & Ajay Sharma / Venus Enterprises, New Delhi, I am to state that I do not have any personal or business relation whatsoever with any of Shri Om Dutt / Pannalal & Ajay Sharma / Venus Enterprises, New Delhi. However, I am using the Import Export Code No. 0508000793 under PAN No. ATWPP6517E in the name of M/s M.R. International, 1974/3, Viswas Nagar, Gali No. 15, Shahdara, Delhi-PIN­110032.

8.6 On being asked about the Name and other details of the firms which were used by us to import of car audio items at undervalued prices, I am to state that we are using the Import Export Codes of various firms including the following firms for effecting the import and trading of car audio items.

8.7 On being asked whether it is fact that the actual IEC holders reflected in the bills of entry in all these case have nothing to do with the imported goods, I am to state that it is factually correct that the actual IEC holders reflected in the bills of entry in all these case have nothing to do with the imported goods.

8.8 On being asked as to how the payment was made to IEC holders for retiring the import documents from the Bank, I am to state that all the details as to how the payment was made to IEC holders for retiring the import documents from the Bank and which are the banks can be explained only by my partner Shri Rakesh Magoo.

8.9 On being asked about the amount paid to IEC holder and mode of payment, I am to state that all the details of the amount paid to the respective IEC holders can best be elaborately explained only by my partner Shri Rakesh Magoo.

8.10 On being asked about the details of the overseas suppliers – the overseas persons with whom you used to interact for placing the order, I am to state that I used to place the order with Shri Vijay Kumar owner of M/s. Rasco International and M/s. Cosmo Trading Co. having Tel. No. +85290203944 and another office No. +8523126097, 085227118102, 08523126116 and Fax No.+8523696760, Hong Kong, Shri Mr. Pawa of M/s. A.K. Pawa Brothers, Singapore having Tel. No.06563388437, 06581237233, 006596375057, 006563364462, 006563388437, 06563361440 and 6597337320, Shri Sunil of M/s. Zajel Al Khaleej General Trading Co., Dubai having Tel. No.097142283717.

8.11 On being asked about the details of the CHA engaged by you for the clearences of car audio items at different ports. How the payment was made to CHAs, I am to state that Shri Dham of M/s. Sai Dutt Clearing Agency Pvt. Ltd. is clearing our goods in Mumbai and Shri Dipak Dutt having Tel. No. 9830022568 in Kolkata, I do not remember the name of the firm.

8.12 On being asked about the details of the godowns / warehouses where the imported goods were stored and subsequently delivered to their buyers, I am to state that the goods are directly supplied to the retail shops in Delhi and I will furnish the details of all these retailers from my partner Shri Rakesh Magoo.

8.13 On being asked about the name and other details of buyers to whom the imported car audio items were sold and the details about the transportation and receipt of payment from their buyers. The import price of the car audio items vis-à-vis sales value, I am to state that there is substantial difference in these two prices i.e. the declared price is ranging between 30% to 40% of the actual transaction value and the undervalued is to the extent of 50% to 60%.

8.14 On being asked about payment to the foreign supplier, I am to state that as is apparent from the name of the persons of the supplier companies, they all are Indians and are having their persons operating in Mumbai and Delhi and they are sending their representatives to collect the differential amount.

8.15 On being asked about the duty liability on account of under valuation, I am to state that my rough estimate of differential duty liability of approximately Rs. 50 lakhs on account of undervalued import in the name of various other fictitious firms used to facilitating import of electronic goods. Further there is differential duty liability of approx. Rs. 10 lakhs on account of my firm M/s. Jojojem International (IEC No. 0304015059) having office at 5B Gr. floor and 9B, 2^nd floor, Vithal Niwas, Jacob Circle, Mumbai-11 as well as on account of other fictitious firms used to facilitating import of electronic goods.

8.16 On being asked as to how the differential amount was being sent to the overseas supplier, I am to state that as is apparent from the name of the persons of the supplier companies, they all are Indians and are having their persons operating in Mumbai and Delhi and they are sending their representatives to collect the differential amount. However, I do not have any of the contact number or contact persons details as they are confirming the receipt of differential amount over phone.

8.17 It is not true that all the importers given in the below mentioned table are managed and controlled by you and Shri Rakesh Magoo?

8.18 I am to state that it is not correct to say that all the 21 firms mentioned above are used by us. In fact to the best of my memory we have used only 6 firms besides my own personal proprietary firms, which are mentioned as under:

9. Further, Shri Rakesh Magoo, in his statement agreed with the contents of Panchanama and he agreed with the facts mentioned in the He also agreed completely with the facts stated by Shri John Miranda that he was doing business of electronics goods in the name of the firm as stated by Shri John Miranda and the owner of the above said firm, who was shown to be importer, has never imported the goods in their own, but he has a common IEC holder for allowing him to use IEC to import various goods with the above commission. He being an IEC holder, has an occasion equivalent to 5% to 10% of total profit earned by selling the imported goods.

10. From the above discussion, it is clearly coming out that Shri Rakesh Magoo and Shri John Miranda were using IEC Code of various IEC holders for import of car electronic goods by under-valued the same and the differential amount has also been paid to the overseas suppliers through their office in India by illicit means.

11. In that circumstances, we hold that Shri Rakesh Magoo and Shri John Miranda were actively involved in import of the impugned goods and undervalued the same. Therefore, penalties imposed on the said Shri Rakesh Magoo and Shri John Miranda, are confirmed.

12. Further, in respect of penalty imposed on M/s Sai Dutta Clearing Agency Private Limited, we hold that they are also involved in the illegal imports by undervaluation of imported goods as it was in their knowledge that Shri Rakesh Magoo and Shri John Miranda, imported the goods in the name of IEC holder using IEC code for their illegal import. Accordingly, penalty imposed on M/s Sai Dutta Clearing Agency Private Limited, is also confirmed.

13. In view of the above, we hold that no duty is payable on Shri Rakesh Magoo and Shri John Miranda, but penalties imposed on Shri Rakesh Magoo and Shri John Miranda and M/s Sai Dutta Clearing Agency Private Limited , are confirmed.

14. In view of the above, the appeals are disposed off.

(Pronounced in the open court on 26.07.2023)