1. Akai Impex Ltd, Mumbai was granted in 1993 three advance licences for import of stainless steel plates. The Duty Exemption Entitlement Certificate issued to it with the licences provided that the goods which were liable for eligible for exemption from customs duty on importation under notification 204/92 it utilised in the manufacture of the resultant engineering product specified in the DEEC book or otherwise disposed of in accordance with the terms of the notification.
This appellant imported in terms of these licences total quantity of 285.846 tons of plates from October 1993 to October 1994 and cleared them without payment of duty in terms of the exemption.
2. The Customs department received some information that these goods had not been utilised in the manufacture of the product which was to be exported but had actually been sold without any permission from the licensing authority to three parties Poddar Tubes & Pipes Ltd, Ganesh Benzo Plast Ltd, and Bharat Steel and that such sale has taken place before the export obligation had been discharged in full. The departmental officers searched the premises of the importer and other persons and recorded statements. Krishna Lal Dhingra, Vice President of the importing company said in his statement that the goods were supplied to these three firms for them to manufacture flanges which were to be exported. He gave details of the quantities supplied to each and stated that security deposit almost equal to the market price was taken in cheques from these persons but there was no written contract between the importer and these three. The company had exported 229.692 tons of stainless steel flanges, but these were manufactured indigenously. Madan Lal Bhallaji Jain, partner of Bharat Steel, in his statement before the Customs offices, says hat the firm had purchased 168 tons stainless steel plates of Rs. 161.72 lakhs. He gave details of the delivery. Jain said that the firm had sold the material that it bought it from Akai Impex Ltd giving details of the sale, parties to whom these goods were sold and indicating recoveries made for the sale required to be made. Ramesh Jain, the other partner of Bharat Steel confirmed whatever has been stated by this partner. Ravikant Sharma, Accounts Officer of Ganesh Benzo Plast Ltd, in his statement, admitted purchase of 21.511 tons of stainless steel plates from Akai Impex Ltd. He also gave details of delivery. He confirmed that the company was not engaged in any processing of stainless steel sheets. It had purchased steel from Akai Impex Ltd for fabrication of storage tank in its unit in Jawahar Port Trust. He denied that the amount that was given to Akai Impex Ltd on account of security deposit but stated that it was payment for outright purchase of the steel. The details of the purchase and the payment written in the ledgers. Ramakant Pilani, Managing Director of this company, in his statement, confirmed this and account of the sale, that the goods had purchased outright from Akai Impex Ltd. K.C. Poddar, Managing Director of Poddar Tubes & Pipes Ltd, in his statement, confirmed purchase of 98 tons of stainless steel sheets from Akai Impex Ltd describing how they took delivery. He said that out of this quantity, 43.570 tons of stainless steel sheets had been sold by it and the balance was kept long in a warehouse. He gave details of receipt of payment for the goods sold by them and the payments made to Akai Impex Ltd for purchase. The officers seized 24 tons of these goods that were lying in the warehouse.
3. On the basis of these and other statements, the notice was issued proposing denial of the exemption contained in notification 204/92, confiscation of entire quantity of the goods seized under Clause (o) of Section 111 of the Act, proposing confiscation of 52.741 tons of stainless steel plates which was seized under Clause (o) of Section 111 of the Act, and proposing penalities on the importer, K.L. Dhingra, its Vice President, Bharat Steel, S.N. Baheti, V.K. Taparia, its directors and Ganesh Benzoplast Ltd, and Poddar Tubes and Pipes Ltd. Various persons concerned furnished the replies and were heard by the Commissioner. The Commissioner thereupon passed orders impugned in these appeals. He found that the imported material had been sold in contravention of the provisions of law and made liable to confiscation under Clause (o) of Section 111 of the Act. He denied the benefit of the exemption contained in notification 204/92 and demanded duty in terms of the declaration or undertaking given by the importer at the time of clearance and under Section 28 of the Act. Confiscation 52.741 tons of goods which had been seized from the premises of Globe Warehouse of its owner Poddar Tubes & Pipes Ltd with an option to redeem on payment of find, and imposed penalty of Rs. 1 crore on Akai Impex Ltd, Rs. 10 lakhs on K.L. Dhingra. These two appeals are by the Importer and its Vice President. (There are other appeals also heard on this day.) 4. The contentions of the common counsel for Akai Impex and Dhingra are as follows: The case of the department is based entirely upon statements recorded from various persons. These statements have not been recorded under Section 108 of the Customs Act, 1962, but under Section 14 of the Central Excises and Salt Act, 1944. These statements are inadmissible and cannot be relied upon in proceedings under the Customs Act. The show cause notice does not indicate under what provisions of law, the demand is made. It is issued on 9.5.1995 with regard to goods assessed between October 1993 and October 1994. It is therefore beyond the period of limitation contained in Section 28 of the Act. The Commissioner has ordered redemption of 52.741 tons of stainless steel plates which was seized by the department by Poddar Tubes & Pipes Ltd, the customs authorities are not entitled in law to claim the ownership of the commodity. The Board in its circular has ruled that the licensing authority is the authority competent to monitor export obligation under the DEEC scheme and hence it is not open to the department to demand duty on the ground that export obligations had not been complied with. It is contended on behalf of Dhingra that the Commissioner says in effect that he is penalising for telling lies. He has in fact been penalised for not issuing invoice demanded by Poddar Pipes & Tubes Ltd to divert the material which were misappropriated.
5. The departmental representative contends that the statements of the parties which have been recorded, even if under Section 14 of the Central Excises and Salt Act, 1944 constitute evidence, in that they contain the admission of a person. He emphasises that these statements have not been retracted at any stage. All the buyers of the goods have been uniformly accepted the purchase of the goods. He relies upon the judgment of the Supreme Court in CC v. Naresh J. Sukhwani 1996 (83) ELT 258 to say that the admission by the buyers of the goods is sufficient for ordering confiscation and imposition of penalty on Akai Impex Ltd and its Vice President. He emphasises that in his order the Commissioner had clearly states that the fact of Dhingra has been telling lie only to disprove his claim that the goods had sold and it is for this reason that sale for which penalty has been imposed on Dhingra.
6. It does appear from the copies of the statements furnished by the appellants that the statements of the persons which are relied upon in the show cause notice and by the Commissioner in his order were recorded by the Superintendent of Central Excise, Belapur under Section 14 of the Central Excises and Salt Act, 1944. We however do not find it possible to say that, merely because the statements had been recorded under Section 14 of the Central Excises and Salt Act, 1944, they are not admissible as evidence. A statement recorded under Section 108 of the Customs Act, 1962 has relevancy to the proceedings under that Act because it is recorded in the course of an enquiry which the officer recording the statement such an enquiry is deemed to be a judicial proceedings within the meaning of Sections 193, and 228 of the Indian Penal Code, 1860. The solemnity and sanctity attached to the statements made during the judicial proceedings therefore attaches to the statements made under Section 108 of the Act. Sub- section (3) of Section 108 also makes it mandatory upon the persons summons under the Act to state the truth upon any subject respecting which he is examined or makes statement. These provisions will, we agree, not be available in respect of the statements which are relied upon. They were made under Section 14 of the Central Excises and Salt Act, 1944 with regard to a proceeding which was not an enquiry which was being made for any of the purposes of that Act. However, this does not render the statements having no probative value whatsoever. Such statements would have the same probative value as statements made by these persons before anyone other than an officer of Customs. In other words, they contain what each of the persons said voluntarily without there being any element of coercion, either of the law (since provisions of Section 108 of the Customs Act, 1962 would not apply to these proceeds) or outside it. There is nothing in the general procedures governing evidence which renders inadmissible such statement by persons. It would be safe to say it stands upon the same footing that the said statements by these persons in correspond to others. It is difficult to escape the conclusion that each of the persons would have reason to believe that they were not bound to state the truth relating to import or disposal of the goods to the Superintendent of Central Excise, who recorded the statement. None of the statements refers to any evasion of central excise duty, or contravention of the central excise law. If, despite this, that they have made various statements, these statements have to be accepted as having been voluntarily made by them. The fact that none of them retracted from the admissions made in these statements also confirm their voluntary nature. These statements can therefore be relied upon by the customs authorities, even though they were not recorded under Section 108 of the Customs Act, 1962.
7. It is also to be noted that in addition to these statements, the books of accounts of the buyers confirm what has been said by the representative in their statement that the goods were in fact bought by each and not as any job worker. Nor was it claimed on behalf of the appellant that any of these persons is shown to be in possession of import licence or to be the supporting manufacturer i.e. the person to whom the importer passed on the raw materials for fabrication in to finished goods. If this were the case, the law required these persons to indicate the supporting manufacturer in the licence application. It is not claimed that this was done. The Commissioner also notes, in our view rightly, no persons would take the security deposit equal to the price of the goods, to supporting manufacturer. It is to be noted that there is no written contract between the appellant and the persons who bought the goods. The contention that the goods were not sold therefore cannot be accepted. It was also claimed before us by the appellant that any part of the goods were utilised in the manufacture of any of the export product. Whatever was exported indigenously was made out of indigenous steel; that is what Dhingra has said in his statement.
8. The show cause notice cites the provisions of notification 204/92 that the importer, at the time of clearance of the imported material "makes a declaration before the Assistant Collector of Customs binding himself of pay on demand an amount equal to the duty leviable but for the exemption, on the imported materials in respect of which the condition specified in this notification has not been complied with, "and demand the duty in terms of this undertaking. It does not refer to or rely upon the provisions of Section 28 of the Customs Act. The provisions of section therefore would not be applicable to this notice.
We are not required to consider the contention that it is barred by limitation.
9. The appeal was filed before the Tribunal on 26.8.1996. An application was filed on 25.2.2002 seeking to incorporate additional grounds in the grounds of appeal. This grounds seek to contend that the demand is barred by limitation under Section 28 of the Act, and that no declaration or undertaking was executed before the customs authority at the time of clearance of respective consignments and only bond which was executed was with the licensing authority. There are no grounds in the appeal raising either the question of limitation or a ground that no undertaking was executed in terms of the notification. The Commissioner does not record that these grounds were raised before him.
We have considered the ground relating to limitation which was raised before us orally since it related to a question of law. The other ground however relates to a question of fact, whether a bond was executed or not. The counsel for the appellant was specifically asked to explain as to why this ground could not be raised earlier. He has no answer.
10. The notification, as we have seen, requires that the importer undertakes at the time of clearance of the goods to pay duty that such goods are not shown to have been utilised in accordance with its conditions. It is therefore reasonable to expect that, in the usual course such an undertaking would have been asked for by the assessing officer and furnished by the importer. The importation and clearance took place in between 1993-1994 nearly nine years ago, and this point is now being raised in February 2002. It is not unreasonable to conclude the department that the records would not be available. In these circumstances, we asked the counsel for the appellants to furnish evidence in support of the contention in the grounds of appeal that no bond or undertaking has been furnished. He has expressed his inability to do so. Having regard to the provisions of the notification requiring the bond and the fact that it would, normally, have been implemented by taking a bond, the long delay in raising this ground and the total absence of explanation for this delay, we can only consider acceptance of this ground if it is established the person making it i.e. the importer. There is no attempt to do so. We are therefore not able to accept it and hold that the demand for duty has been validly raised.
11. The counsel for the appellants has cited the provisions of circulars No 131/91-Cus dated 20.12.1995 and 24/96 dated 19.4.1996 in support of his contention that these circulars hold that the licensing authority is the monitoring authority for export and under the relevant DEEC Scheme and the customs notification. The orders of the Settlement Commission are also produced in support. These orders of the Settlement Commission are not binding on this Tribunal. We are not required to consider the contents of these circulars and to demand duty in case where an exemption notification of the kind that we are concerned with breached or the orders of the Settlement Commissioner 12. The matter is settled by the judgment of the Supreme Court in Shashank Sea Foods Pvt. Ltd. v. CCE 1996 (88) ELT 626 holding that the Customs authorities have power to order confiscation of the goods under Section 111(o) of the Act.
13. We do not see the relevance of the applicability of the contention raised by the counsel relating to the provisions of Sale of Goods Act, 1930. He cited the provisions of Sections 4, 18 and 19 of this Act. The fact that there was no written document of sale between the parties cannot lead to the conclusion that there has been no sale of the goods.
Section 4 of the said Act deals with the contract of sale or an agreement of sale. Section 18 provides that where there is a contract for sale, deals with contract of any ascertained goods and Section 19 explains that property of specific or ascertained goods in transfer to the buyer to such time as the parties to the contract intended to be transferred, make it clear that for ascertaining intention of the parties records shall be have to the terms of the contract, conduct of the party, circumstances of the sale. We do not see how these provisions have any relevance on the issue at hands. It is clear that, in law, contact of sale of goods need not necessarily be in writing and an oral contract of sale is made out and enforceable.
14. It follows from this discussion that the Commissioner's conclusion that the goods were sold by the appellant and the goods having been disposed of in terms of the notification in which they were exempted and hence liable to confiscation under Clause (o) of Section 111 of the Act have to be confirmed. Hence the demand for duty, liability to confiscation of the goods which were seized with an option to their owner to redeem them on payment of duty and the liability to penalty to the importer have to be confirmed.
15. We do not find that the Commissioner has penalised Dhingra, Vice President of Akai Ltd only for telling lie. He refers to his lying only to show that evidence totally rebuts his claim that the goods have not been sold but only had been given for fabrication. Nor is it correct to say as is contended that the Commissioner has imposed a penalty merely for not issuing invoice for the goods. The Commissioner refers to this fact to reveal his motives. When the Commissioner says "Krishna Lal Dhingra knowingly and in contemptuous disregard of law arranged for the sale of imported duty free goods knowingly well that they have not fulfilled export obligation and their export proceeds have not been realised, the sale of the material would constitute a breach of the condition of Notification". No material has been advanced to show that this conclusion is not correct. Having regard to the duty involved and other facts of the case, we do not think that the penalty of Rs. 1 crore on the company or penalty of Rs. 10 lakhs on Dhingra are incommensurate with the gravity of the offence.
16. The seven appeals filed by the Commissioner are identically worded.
All they seek to is recover interest on the duty that has been evaded by Akai Impex. The basis for this claim is the judgment of the Supreme Court in Agricultural & Processed Food Products v. Oswal Agro Furane Ltd. 1996 (85) ELT 3. In this judgment, the Supreme Court had ordered Oswal Agro Furane to pay interest at 18% on the excise duty that it was liable to pay and had not paid. In coming to the conclusion, the Court was guided by the fact that company had sought and obtained from the Punjab & Haryana High Court orders which resulted in its not becoming liable to pay duty which under no circumstances, could have been a matter of dispute". it was solely on this ground that the Supreme Court made its order on payment of interest that the company had taken. We do not find it possible to say that the Supreme Court in that judgment lay down any ratio generally applicable. Its order has obviously been passed in the exercise of the power conferred on it by Article 142 of the Constitution. This Tribunal is a creature of the statute and in exercise of its functions cannot go beyond the limits of the statute.
It is not contended before us that there was at the relevant time any provision in the Customs Act, 1962 for levy of interest. that being the case, we do not have powers to order payment of interest by the importer.