Cosmos Trading Company vs Commissioner of Customs

K.A. Puj, J.—The appellant has filed this Tax Appeal u/s 130A of the Customs Act, 1962 proposing to formulate the following substantial questions of law for determination and consideration of this Court.

(1) Whether the Tribunal was justified in levying such a huge amount of redemption fine and penalty in absence of the Commissioner not arriving at any findings regarding the value of the exported products ?

(2) Whether the tribunal was justified in penallizing the appellant by relying upon the belated statement dated 2-1-2003 Anand Kapadia the Director of Bhairavi Exim which was without any basis and a clear afterthought as well as it was inconsistent with the statement dated 25-6-2002 of Hemant Shah the other Director of M/s. Bhairavi Exim wherein he had admitted that the consignment sent to the appellant contained returned and rejected goods and some of the goods were procured from local market?

Heard Mr. P.R. Nanavati with Ms. D. K. Contractor, learned advocate appearing for the appellant and perused the order passed by the authorities below.

The brief facts giving rise to the present Appeal are that the appellant, being engaged in the trading activity, received two consignments from M/s. Bhairavi Exim Pvt. Ltd., under AR-3A No. 6 and AR-3A No. 7 both dated 16-6-2002 containing 1,20,000 pieces of scarves to be exported to Dubai. The appellant prepared and submitted AR-4 No. 1003 dated 18-6-2002 for 60,000 pieces received under AR-3A No. 7 dated 16-6-2002 for the goods meant for export to Dubai. This was present for export examination and some discrepancies were noticed by the officers and, therefore, the remarks on the body of the AR-34 of M/s. Bhairavi Exim Pvt. Ltd., was made that approximately 6000 pieces out of the goods are found prima facie to be defective pertaining to AR-3A No. 7 dated 16-6-2002 and the goods were detained for further investigation. The goods pertaining to AR-3A No. 6 dated 16-6-2002 were also examined by the Officers. Thereafter, investigation was started and statements of Hemant Jayantilal Shah and Shri Anand Kapadia-Directors of M/s. Bhairavi Exim Pvt. Ltd., were recorded. The statement of Nilesh Bansal was recorded. Based on the evidences which were collected during the course of investigation the adjudicating authority has passed an Order-in-Original on 31-5-2004 communicating to the appellant on 18-6-2004 with regard to confiscation of 1,20,000 pieces of scarves and giving option to redeem the confiscated goods on payment of redemption fine of Rs. 14 lacs in lieu of confiscation under provisions of Section 125 of the Act and also imposed penalty of Rs. 5 lacs on the appellant u/s 114 of the Act and also imposed penalty of Rs. 2 lacs on the partner of the appellant firm.

Being aggrieved by the said order the appellant preferred Appeal before the CESTAT and the CESTAT vide its order dated 2-12-2009 reduced the redemption fine of Rs. 14 lacs to Rs. 5 lacs and penalty from Rs. 5 lacs to Rs. 4 lacs. The separate penalty levied on the partner of M/s. Cosmos was deleted. Being aggrieved by the said order of the Tribunal the present Tax Appeal is preferred.

Mr. Nanavati has submitted that the adjudicating authority has passed an order without giving an affidavit of cross-examination of the Investigating Officer and the Director of M/s. Bhairavi Exim Pvt. Ltd., which is the supplier of goods and, therefore, the order was in violation of the principles of natural justice. She has further submitted that both the Directors of M/s. Bhairavi Exim have given two contradictory statements. He has further submitted that huge amount of redemption fine and penalty was imposed despite the fact that the Commissioner has not determined the value of the defective, goods. He has, therefore, submitted that the questions of law which are proposed by the appellant require to be considered by this Court and the Appeal be admitted.

We have considered the submissions made by Mr. Nanavati for the appellant and we have also perused the order passed by the adjudicating authority as well as CESTAT. The adjudicating authority in its order at length has discussed the issue and arrived at the conclusion after proper appreciation of facts and evidence on record. It is the finding of the adjudicating authority that M/s. Bhairavi Exim Pvt. Ltd. and the appellant have joined hands and prepared the documents in relation to goods. The sub-standard quality of goods was meant for export only. The Tribunal has also recorded in its findings that though the Commissioner had not arrived at any finding of the value of the goods and has adopted value disclosed by the appellant, it further observed that scarves were torn, damaged and made out of old stock and based on that the redemption fine of Rs. 14 lacs was reduced to Rs. 5 lacs only. The Tribunal has also considered the fact regarding misdeclaration on the part of the appellant and value of scarves was inflated with intent to earn fraudulently NFE and as such goods are liable for confiscation. Despite this, the tribunal has reduced penalty from Rs. 5 lacs to Rs. 4 lacs.

In the above background of the matter, we are of the view that the tribunal has considered the evidence on record and given its findings of fact. No substantial question of law arises out of the order of the Tribunal.

Hence, the Appeal deserves to be dismissed and it is accordingly dismissed.

In view of dismissal of Appeal, the Civil Application no longer survives and it is accordingly rejected.