C.N.B. Nair, Member (T)
1. All these appeals are directed against a common order of adjudication, Order No. AKR/CC/TKD/31 & 32/03 dt. 30-6-2003 of the Commissioner of Customs, ICD, Tuglakhabad, New Delhi. Accordingly they were taken up for consideration and heard together and are disposed of under this order.
2. The case relates to illegal import of tin, nickel and zinc through ICD, Tuglakabad, New Delhi by the first appellant M/s. Suren International Limited, Vasant Kunj, New Delhi by concealing those metals in consignments declared as of aluminium scrap. There is also import of excess quantities of aluminium scrap and import of copper scrap in the place of aluminium scrap. In regard to part of the goods under adjudication (17 container load) M/s. Suren International Limited had filed Bills of Entries and therefore, there is no dispute that the import was by that appellant. Part of the goods (23 container load) had been consigned to M/s. Suren International Limited and had reached ICD, Tuglakabad, though they were seized by Customs authorities before any Bill of Entries were filed. The remaining goods were seized from two trucks loaded with those goods and from the godown at Ganga Nursery in Vasant Kunj, New Delhi. The impugned order has reached a finding that they had also been illegally imported. The second appellant M/s. Gaurav Exim Pvt. Ltd. claims those goods and contends that they had been purchased from two Delhi parties. The remaining appeals are against imposition of penalties on the appellant individuals.
3. We may first recall the material facts briefly, even through details have to be left to a perusal of the Adjudication order. M/s. Suren International Limited, Vasant Kunj, New dehli had been importing aluminium scrap through ICD, Tuglakabad, New Delhi. In July 2001, it filed six Bills of Entries for the clearance of 17 containers, while 23 more containers had arrived in its name. Even as those Bills were pending assessment, on the basis of specific information received on or around 31-7-01 that M/s. Suren International Limited are importing prime quality metal concealed in aluminium scrap consignments, investigations were undertaken by the customs authorities. The information was proved correct by the mere examination of the containers from 8-8-2001, inasmuch as large quantities of prime quality tin (40 MTs) and nickel (42 MTs) ingots were found in the containers which were declared to contain aluminium scrap. In addition, there was also undeclared large excess qualities of copper and aluminium scrap. The result of the examination of 40 containers which had arrived are listed fully in the two charts at pages 148-149 and 151-152 of the adjudication order.
4. Customs authorities also carried out search operations and other investigations in many places including the house at Vasant Kunj of Mrs. Renu Mahant (Director of M/s. Suren International Limited) and her husband Shri Harish Kumar and godown of M/s. Suren International Limited in the Sunder-van area of Vasant Kunj. Upon learning that certain goods have been removed from the godown a few hours before its search on 7-8-2001, the officers combed the neighboring forest area and located two trucks loaded with metals in slab form. The drivers informed that they had loaded the goods from the godown of M/s. Suren International Limited. Thereupon, the trucks were taken over and verification showed that over 21 MTs of zinc slabs of Chinese origin were loaded on the trucks. These goods and the trucks were also seized. Subsequent search of the godown of Shri Gajendra Singh at Ganga Nursery in Vasant Kunj based on information, led to the seizure of about 132 MT's of tin ingots and over 36 MTs of nickel on 10-8-2001 and the godown persons informed that the goods were brought from "DIG Ki Kothi" by his body guard. Investigating officers also seized business records and files of M/s. Suren International Limited, M/s. Gaurav Exim Pvt. Ltd. and other business entities from the farm house of Dr. Hans Nagar at Vasant Kunj. The authorities also recovered banking and other papers and also questioned many persons. Investigations were also carried out at Mumbai since a claim was made that the goods seized from the two trucks and Ganga Nursery had been purchased by M/s. Gaurav Exim Pvt. Ltd., from the Delhi parties who had bought those goods from Mumbai parties. Mrs. Renu Mahant and her husband Shri Harish Kumar mostly did not cooperate with the investigation; but ultimately, pursuant to Court orders, they appeared before the authorities and rendered their statements. While Mrs. Renu Mahant admitted that she was the Director of M/s. Suren International Limited even though she disowned responsibility for the excess import, Shri Harish Kumar maintained that he was an IPS Officer and had no involvement with the business of M/s. Suren International Limited, distancing and disowning responsibility for the smuggled goods is the position taken by them. Explanation was also offered that the goods had been wrongly supplied. Supplier also filed a Writ Petition in the Bombay High Court which was dismissed. M/s. Suren International Limited also filed application before the Settlement Commission seeking a settlement of the disputes without going into adjudication proceedings.
5. Evidence involves considerable records, statements of many parties and inquiry reports of investigating agencies like Central Forensic Science Laboratory (CFSL), CBI, Directorate of Revenue Intelligence, Banks and other authorities. What emerged in the investigation was that though the imports were carried out in the name of M/s. Suren International Limited, the business was controlled by Shri Harish Kumar and his wife Mrs. Renu Mahant and other officers of M/s. Suren International Limited were only attending to routine functions. It was also seen that Shri Harish Kumar's body guard from the Haryana Police Shri Vikram Singh (11th Appellant) was attending to the physical clearance of the goods from the Customs.
6. Show cause notice was issued on 2-8-2002 proposing to confiscate the seized goods and imposing penalty on the parties and persons mentioned in the notice. After considering the replies filed by the parties to the notice and affording them opportunity of hearing. Commissioner confiscated goods worth over Rs. 9 crores imported by M/s. Suren International Limited and the goods worth about Rs. 5.5 crores seized from the two trucks and at Ganga Nursery godown near Sundervan Godown. We reproduce operative portion of the order so as to indicate particulars of the goods under confiscation and amounts of penalties imposed:
208. For the reasons aforesaid, I order confiscation of the metals and scraps contained in 40 containers, seized at ICD totally valued Rs. 9.23 crores under section (f), (i), (I), and (m) of Section 111, read with Section 119 of the Customs Act, 1962. I allow redemption thereof on payment of a fine of Rs. 4 crores (Rupees four crores only). On redemption, duty will be paid at the appropriate rate on the aforesaid goods.
209. I also order confiscation of the metals totally valued Rs. 5.5 crores (including the value of trucks) seized from Ganga Nursery Godown and near Sundervan godown under Sub-section (d), (e) (f) and (j) of Section 111 of the Customs Act, 1962. I allow redemption of the above said goods on payment of a fine of Rs. 2.50 crores (Rupees Two crores fifty lakh only) for the meals and Rs. 5 lakhs (Rupees Five Lakhs only) each for the two trucks.
210. I impose penalty on the following noticees, indicating the amount of penalty against each, with reference to the sub-sections of Section 112 of the Customs Act, 1962, as applicable.
1. M/s. Suren International Ltd. Rs. 2,00,00,000/- (Rs. Two crores only) under Section 112(a) of the Customs Act, 1962.
2. Shri Harish Kumar - Rs. 25,00,000/- (Rupees twenty-five lakh only) under Section 112 (a) and (b) of the Customs Act.
3. Smt. Renu Mahant - Rs. 50,000/- (Rupees Fifty thousand only) under Section 112(b) of the Customs Act.
4. Shri Balwan Sharma - Rs. 1,00,000/- (Rupees One lakh only) under Section 112(b) of the Customs Act.
5. Shri Vikaram singh - Rs. 50,000/- (Rupees Fifty thousand only ) under Section 112(b) of the Customs Act.
6. Shri V.K. Khanna - Rs. 25,000 (Rupees Twenty five thousand only) under Section 112(b) of the Customs Act.
7. Shri J.R. Sharma - Rs. 25,000 (Rupees Twenty five thousand only) under Section 112(b) of the Customs Act.
8. Dr. Hans Nagar - Rs. 25,000 (Rupees Twenty five thousand only) under Section 112(b) of the Customs Act.
9. M/s. Gaurav Exim Pvt. Ltd. - Rs. 50,000/- (Rupees. Fifty thousand only) under Section 112(b) of the Customs Act.
10. Shri Ashok Kumar Sirpaul - Rs. 1,00,000/- (Rupees One lakh only) under Section 112(b) of the Customs Act.
11. Shri Rajesh Gadia - Rs. 50,000/- (Rupees Fifty thousand only ) under Section 112(b) of the Customs Act.
12. Shri Hemant Khera - Rs. 10,000/- (Rupees ten thousand only) under Section 112 (b) of the Customs Act.
7. The above orders follow the finding that the entire seized goods had been illegally imported and that "Shri Harish Kumar was the master mind in the entire business belonging to M/s. Suren International Limited and other related Group Companies covered in the show cause notice and that other notices/ persons had participated in and were involved in the illegal imports. The present appeals challenge those findings and orders.
8. In respect of the goods seized from the two trucks and Ganga Nursery godown the claim all through was that they belonged to M/s. Gaurav Exim Pvt. Ltd. and that they had been purchased from M/s. Ashok & Co. and M/s. Amrit Industries, both of Delhi, though, significantly, no such claim was put forth at the time of seizure, and the goods were not stated to be so by the Trucks drivers, transport operators or godown keeper. This claim is being canvassed in the present appeals also. The investigation, however, found that M/s. Gaurav Exim Pvt. Ltd., also belonged to the M/s. Suren International Limited family, and one of its Directors was Ms. Sonali Mahant, daughter of Mrs. Renu Mahant & Sh. Harish Kumar and that the whole claim of purchase of the materials were false and put up. The investigation had found that the purported selling Delhi firms were defunct, they did not exist at the addresses and their sales tax registration had been surrendered or revoked years before the purported sale sot M/s. Gaurav Exim, that the purported Bombay suppliers of the two selling firms had only provided invoices without supplying goods, banking records had shown that the amounts purported to have been paid for the said supplies were all withdrawn as cash and returned through hawala and suppliers had admitted that the transactions were all false, and that upon receipt of payments by cheque, the cheques were encashed and money returned and there was no supply of goods. There was also no transport of goods. It is in the light of such evidence that the Commissioner concluded that all the seized goods were illegally imported and belonged to the family businesses controlled by Shri Harish Kumar. The detailed finding of the Commissioner on this issue is to be found in paras 173(ii) to 183 of the impugned order.
9. The contention before us is that the surrendering revocation of sales tax registration by M/s. Gaurav Exim's suppliers is no ground to reject their sales to M/s. Gaurav Exim, inasmuch as, even transactions in violation of Sales Tax Laws remain valid. We find no merit in this submission. The evidence on record clearly brings out that these goods were not procured in India as claimed by M/s. Gaurav Exim. The recovery and seizure of the goods was pursuant to information about storage of these goods by M/s. Suren International Limited, the drivers of the trucks and the persons at Ganga Nursery had all stated that the goods were received from M/s. Suren International Limited, these goods are also similar goods as sought to be smuggled in the containers imported by M/s. Suren. International Limited, each aspect of M/s. Gaurav Exim's claimed transaction with the two alleged suppliers of Delhi and their purchase from Bombay remains exposed as false. In these facts and circumstances, the Commissioner's finding that these goods were also illegally imported is fully justified.
10. During the investigation and adjudication proceedings the appellant M/s. Suren International Limited and their suppliers had also put up a defence that discrepancy in the goods is the result of wrong supply, and that the goods were not intended for M/s. Suren International Limited. Reliance was also placed on some purported fax and other correspondence between the parties. The Commissioner rejected this explanation after detailed discussion as is to be seen in paras 170 and 171 of the impugned order. It is his finding that the method of concealment of misdeclared goods i.e. scrap being packed in the front of the container and valuable goods being kept hidden behind the scrap under declaration of weights, and other factors point only to deliberate concealment of the goods with intention to smuggle. He has also stated as to why the correspondence placed is not acceptable. During the hearing before us, specific reliance was placed on the purported dated 1-08-01 from the supplier M/s. SMC Industry Singapore; cancellation of order under letter dated 6-8-01 etc. We are of the opinion that the evidence on record fully supports the Commissioner's finding regarding concealment and not the explanation that the goods were wrongly sent.
The examination of the consignments fully establishes that huge quantities of undeclared prime metal were being concealed in the consignments declared as scrap. We are accordingly, of the opinion that order of confiscation and imposition of penalty passed against M/s. Suren International Limited., and M/s. Gau-rav Exim are fully justified. We also do not find any justification to interfere with the quantum of redemption fines and penalties imposed as they can not be considered disproportionate or excessive, given the value of the offending goods, pre-meditated nature of the offence, and the amount of duty sought to be evaded.
11. Having disposed of the appeal of the importer, we now turn to the appeal filed by persons on whom penalties were imposed. The highest amount of penalty of Rs. 25 lakhs has been imposed on Shri Harish Kumar. As already noted, Shri Harish Kumar has disowned any involvement in the business activities of M/s. Suren International Limited. His position is that any assistance he may have rendered is incidental and is in the nature of normal help to a spouse. The Commissioner has rejected this submissions after detailed examination of the evidence on record. The discussion is to be found in para 190 to 195 of the order. The evidence is both documentary and oral. The business files records of M/s. Suren International Limited were seized from the farm house of Dr. Hans Nagar. The evidence is that there were shifted their at the instance of Shri Harish Kumar from his house. Seized files contain several instructions on yellow paper slips or at other places like "Please check and fax back", "We have to keep it below 2.5", I have confirmed TT for US 5000 from Canada for your account in Tat-lee Bank"," talk to them how it works to reduce our demurrages JRS". These and other hand written notes were sent during investigation to Central Forensic Science Laboratory. The CFSL has confirmed that the hand writing in those slips and other places in the seized papers is the same as the writing admitted to be of Shri Harish Kumar. Apart from such instructions of Shri Harish Kumar in the files of M/s. Suren International Limited is the fact that parties writing to the M/s. Suren International Limited were marking those communications as "Kind attention to Mr. Harish Mahant" etc. It is of particular significance that in relation to one of the consignments under seizure, the invoice mentions "in case of need, please contact Sh. Harish Sharma contract No. 6899840". There is no dispute raised that Shri Harish Kumar is the person referred to. We are not reproducing or dealing with each of these entries. Suffice it to note, the impugned order had dealt with the evidence in detail at paras 31 and 32 and other paras. The entries in the seized papers and files do point only in one direction, that Shri Harish Kumar was actively running the business and he was perceived by the suppliers and others as the person behind the business of M/s. Suren International Limited. Evidence of witnesses is also to be same effect. His disowning and distancing cannot find acceptance in the face of such overwhelming evidence. They are just part of standard tactics of evasion, alibis and excuses. The Commissioner was fully justified in reaching the conclusion that Shri Harish Kumar was the main person behind the imports of M/s. Suren International Limited and other family businesses of Shri Harish Kumar and in imposing penalty on him. In the light of the large value of the goods smuggled, the Customs duties involved on them and the personal involvement of Shri Harish Kumar, we are of the opinion that the amount of penalty imposed on him is also not excessive, needing any intervention. The penalty imposed on Mrs. Renu Mahant is Rs. 50,000/-. She was a Director of M/s. Suren International Limited and it is the evidence that she was attending to the business of the company. The penalty imposed on her also does't call for any intervention. The Commissioner has indicated the reasons for imposing penalty on the other persons also. We are of the opinion that no interference is called for in cases other than those of Dr. Hans Nagar and Mr. Hemant Khera.
12. The association of Dr. Nagar in this case is that the business files of M/s. Suren International Limited were sought to be concealed in his farm house. The evidence on record shows that by making use of his acquaintence with Dr. Nagar (he had treated Shri Harish Kumar's son) Shri Harish Kumar got the record moved to Dr. Nagar's premises. Dr. Nagar has been insisting that these records be taken back from his premises. He had also visited Sh. Harish Kumar house to ask for the removal of the papers. But having found a place to conceal them, they were not being taken back by Shri Harish Kumar or his people. In these circumstances no finding of assisting in an offence or its cover up can legitimately be raised against Dr. Nagar. With regard to Shri Hemant Khera the finding is that he is an employee of M/s. Suren International Limited and was keeping accounts of M/s. Suren International Limited. Even though the order mentions that he was aware of all the manipulation, it also notices that "he was not at the command of the situation". Thus, the finding itself is that he has not voluntarily taken part of assisted in any offence. In these circumstances, we are of the opinion that imposition of penalty on Dr. Nagar and Sh. Hemant Khera was not warranted in the facts of the case.
13. In the result, appeal of Dr. Hans Nagar (Appeal No. C/394/03-NB-C) and Appeal of Shri Hemant Khera (No. C/396/03-NB-C) are allowed and the appeals filed by others are rejected.