Whether prayer for reduction of penalty and redemption fine to high court proper when no dispute raised before Tribunal on merits?

PJ-Case law-2012/13-1567

Case:-PRAKASH RAMDEO JAISWAL VERSUS DEPUTY COMMISSIONER OF CUSTOMS

Citation:-2013(291) E.L.T. 11 (ALL)

Brief Facts:-The facts in brief are that export of non-basmati rice was prohibited by the notification dated 1st April, 2008, by the Department of Commerce, Ministry of Commerce and Industries, Government of India. The petitioners were found to be involved in an attempt to export non-basmati rice, mis-declaring the same as basmati rice. A show cause notice was given to which reply was submitted on which common adjudication order dated 23-3-2012 was passed by the Adjudicating Authority adjudicating show cause notice dated 18-11-2009 and 3-9-2010, which resulted in the consequences of redemption fines and penalties consequence against the appellants under the Customs Act, 1962. In the show cause notice dated 18-11-2009, 77 containers seized in ICD, Loni, and in the show cause notice dated 3-9-2010, 15 containers which left ICD, Loni to Mumbai for export containing non-basmati rice mis-declared as basmati rice was involved. The Customs Department sent the samples of rice to be tasted. The samples were sent to SGS laboratories and thereafter the samples were also sent to Basmati Export Development Foundation, which reported on 17th September, 2009, that the samples do not meet the specifications of Basmati Rice as per DGFT Notification No. 55 (RE-2008)/2004-2009, dated 5th November, 2008. All these samples tested negative to the Basmati rice. In the statement recorded under Section 108 of the Customs Act the petitioners without any demur, admitted that these samples are of non-basmati rice. They agreed with the test reports and did not make any protest nor any objections were filed to send the samples to some other laboratories. In the order in-original the Adjudicating Officer found that the petitioners took up defence that they engaged Shri Diwakar Mishra and Shri Vikram Bisht from ICD Loni, Ghaziabad for supplying and exporting non-basmati rice as basmati rice. The appellants played fraud, and admitted that they were exporting non-basmati rice as basmati rice, which was prohibited in law. The CESTAT after considering the market price of the goods, which was much lower, and to the extent of 1/3 of the price on which goods were sought to be exported, has imposed penalties on a much lower rate. These penalties under Section 104(i) having levied to the extent of almost 10% of the declared price. The penalty has not been imposed under Section 114(a). Under Section 177 penalties have been imposed out of the four cases, only on Shri Prakash Ramdeo Jaiswal.

Appellant’s Contention:-Shri Ajay Bhanot submits that the Customs Authorities completely lacked jurisdiction in recording findings that the goods sought to be exported were mis-declared to be Basmati rice. He has relied upon PTC Industries Ltd. v. Union of India & Ors., Writ Petition No. 1343 of 2009 decided on 18-12-2009 [2010 (252) E.L.T. 426 (All)] in which this Court held that under the scheme of the Customs Act, 1962 and the Foreign Trade (Development and Regulation) Act, 1992 whenever a dispute arises as to the classification of the goods, other than its description, quantity and FOB value, the customs authorities have to refer the dispute for adjudication to DGFT under Section 13 of the Act. It is only if the DGFT as the licensing and also adjudicating authority decides against the licensee, that the customs authorities will get jurisdiction to confiscate and levy penalty on such goods. Shri Ajay Bhanot has also laid great emphasis on the test reports, which according to him were not obtained from the accredited and recognised laboratories. He submits that the appellants were not given an opportunity to object to these reports and to cross-examine the persons, who had examined the samples. The appellants were also not given opportunity to send the samples to some other laboratories. He has also relied upon State of U.P. v. Jai Lal & Ors., (1999) 7 SCC 280 in support of his submissions. Shri Ajay Bhanot relies upon para 71 of the affidavit in support of the appeals and ground no. 19 in submitting that the arguments with regard to lack of jurisdiction, denial of opportunity to send the samples to some other laboratory as well as cross‑examination.

Respondent’s Contention:-Amit Mahajan on the other hand appearing for the department submits that there was no dispute about the mis-description of the goods. The confessional statements under Section 108 were recorded without any pressure, coercion or duress. There was no retraction of the confession. There was no request made either at the time of recording statement or in the proceedings of declaration to send the samples for retesting. The appellants admitted that they were exporting non-basmati rice and blamed their agents for stuffing the non-basmati rice in the containers without their consent or knowledge.

Reasoning of Judgment:-After hearing both the sides and considering the documents, we find that that will not make any difference, as the redemption fine and penalties were not levied only on confession. The customs authorities relied on test reports, which were not denied nor any objections were filed. They did not find any good ground to interfere in these appeals. All the appeals are consequently dismissed. We find that there is clear and unambiguous admission to the mis-description of the goods. It was not case of classification or any dispute with regard to description, which was required to be sent for the final reference to DGFT, or to some other laboratories. The contents of paragraph 1 that the petitioner 1[was present), when the arguments were heard, cannot be pressed upon at this stage, when the appellants have not protested, before the Tribunal by either making an application to review the order. In the present case we do not find that any point, which was pressed and argued but was not discussed by the Tribunal. The Tribunal proceeded on the basis that there was no dispute to the nature and quality of goods, which was not non-basmati rice. If the petitioner had any grievance with regard to non- consideration of matter on merits, the point should have been taken in the Tribunal itself. Having failed to do so, the appellant cannot be allowed to canvass the point in the High Court in an appeal under Section 130 of the Act. So far as redemption fine and penalties are concerned, we find that the Tribunal has been too lenient with the appellants. In case of Jai Bamleshwari Rice Sortex as against declared value, market value has been taken. The redemption fine has been imposed at 10% of the penalty under Section 114(5) on the ground that the goods were not exported and that containers did not go out of India. The Tribunal also considered the magnitude of the fraud and involvement of appellants as well as role played by them. So far as redemption fine on Hari Shellac Industries is concerned, the Tribunal has given the same direction by treating the declared market value as against the declared value and thereafter reducing penalty, which is 10% of the penalty included in the order in-original. Accordingly, the appeal is dismissed.

Decision:-Appeal dismissed.

Comment:-The analogy drawn from this case is that reduction in quantum of penalty and redemption fine cannot be sought only by disputing the confession as the Tribunal had imposed the penalty and fine after considering all the evidences including confession. Moreover, the issue could not be appealed to the High Court when the issue was not raised on merits before the Tribunal.

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PJ-Case law-2012/13-1567

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