1. These six appeals arise out of two orders passed by two Commissioners of Customs. Appeal Nos. C/343, 344 and 345/95-Bom are against the order, dated 21-7-1995 passed by Commissioner of Customs, J.N. Port, Sheva. Appeal Nos. 179, 283 and 284/95-Bom are against the orders of the Commissioner of Customs (II), Mumbai. Both sets of appeals relate to identical circumstances involving same firm and persons and were argued by learned counsel Shri M.M. Patel. These six appeals are, therefore, being disposed of vide this common order.
2. M/s. Sima Exports filed shipping bill No. 102982, dated 4-11-1994 describing the goods as stainless steel cutlery weighing 39000 kgs.
made of AISI-304 grade stainless steel. The two containers in which the export goods were packed bore Central Excise examination seats.
Examination on 25-11-1994 showed that the total weight was 17760 kgs.
and that the goods were made of steel inferior in quality than was declared. In his statement Mukesh Mehta, partner of M/s. Sima Exports confessed the deliberate misdeclaration both in quantity and quality.
He also revealed that the Central Excise officers were shown a sample of superior goods. He also admitted to falsification of the invoices by overtyping and by use of correctional fluids. The confessions were repeated in subsequent statements. Statements were also recorded of Jayantilal Mehta, the third appellant who is the uncle of Mukesh Mehta and the husband of the second partner of M/s. Sima Exports, namely Smt.
Rasilaben Mehta. Jayantilal Mehta corroborated the statement of Mukesh Mehta fully and stated that he was aware of the misdeclaration as also in the falsification of the samples. Issue of show cause notice was waived, the charges were understood, the persons were heard and the impugned order was passed by the Commissioner. In terms of this order the offending goods were confiscated but allowed redemption on payment of fine of Rs. 5,00,000/- and penalty of Rs. 10,00,000/- was imposed on M/s. Sima Exports and of Rs. 1,00,000/- each on Mukesh Mehta and Jayantilal Mehta.
3. Subsequent to the detection of the misdeclared consignment M/s. Sima Exports filed three shipping bills on 31-1-1995 and on 2-2-1995 at Nhava Sheva for identical cutlery. The weight was shown to be 25526 kgs. The quality of the steel used for manufacture of the cutlery was declared as AISI-304. Physical examination revealed that there was a shortage of 1067 kgs. in the consignment and that out of the total material only 30% was of the declared grade of steel. As in the earlier case the samples were certified by the Deputy Chief Chemist as not conforming to the declared grade. The misdeclaration of weight and the grade was accepted by Mukesh Mehta in his statements and were duly corroborated by Jayantilal Mehta in his statements. Show cause notice was waived by letter, dated 28-3-1995. After hearing the concerned persons the Commissioner passed the impugned order. He ordered confiscation of the goods but permitted redemption on payment of fine of Rs. 5,00,000/-. He imposed penalty of Rs. 8,00,000/- on M/s. Sima Exports and of Rs. 1,00,000/- each on Mukesh Mehta and Jayantilal Mehta.
5. Shri M.M. Patel, learned counsel submitted that vide their letter, dated 17-1-1995 acknowledged to be received by Customs at Mumbai the three appellants had retracted the confessional statements. On a specific query which was made whether the claim for retraction was made or reiterated before the two adjudicating Commissioners, Shri Patel replied in the affirmative. I, however, find that in the submissions of the counsel before the Commissioner of Customs, Mumbai no reference to the retraction is made nor is the order of the Commissioner, Nhava Sheva, refers to any such claim made. It would appear that the claim of retraction was not stressed before the Commissioner, Mumbai. It appears that the claim was not made before the Commissioner, Nhava Sheva at all. I find that the retraction was made substantially after the date on which the inculpatory statements were made. I have seen these letters in retraction made to Mumbai Customs where even the fact of shortage was retracted. I find that the shortage stands established on the basis of panchnama. No attempt was made to challenge the contents of the panchnama. The fact that the grade of steel was different from that which was shown in the export documents also stands proved by the test report given by the Deputy Chief Chemist. I observe that this test report was not at all challenged in the proceedings before the Commissioner of Customs, Mumbai. I, therefore, hold that the retraction does not have any merit and the original statements stand proved on corroborative evidence. The same stands proved of the retraction made by Jayantilal Mehta also.
6. Similar retractions have been made by these two persons in the case of the misdeclared shipments subsequently attempted to be exported from Nhava Sheva, also. On perusal thereof I hold that my observations made in regard to the attempted retractions made before the officers in the case of shipments made at Mumbai would clearly apply to these statements also.
7. What is surprising is that when the first attempt was brought to notice on 25-11-1994 and while the investigations were under way, these very persons sought to adopt the same modus operandi within two months in an adjacent Customs House. It is correct that as pointed out by Shri Patel, the discrepancy in the weight was marginal and that at all times it was claimed by Mukesh Mehta that about 30% of the total shipment was of goods conforming to the specification of steel. Even with these in favour of the exporters, what stands, out is their willingness to continue the improper and illegal practice even when they were found out.
8. During his argument Shri Patel laid stress on the need for leniency.
It is his case that the exporters have suffered financially. It is also his case that the two appellants, namely Mukesh Mehta and Jayantilal Mehta are facing prosecution in the Chief Metropolitan Magistrate Court which is now about six years old and may continue for a number of years. He states that the punishment awarded to the present appellants in both the adjudication proceedings and also that likely to be awarded in the trial proceedings would result in very harsh of total punishment when compared to their offence.
9. I have carefully considered his submissions. As far as consignments sought to be exported from Mumbai Port, I find no provision or possibility of showing any leniency in view of the very substantial difference in the weight of the consignments and also the fact that the misdeclaration as to the quality related to the entire consignment. As regards the follow up consignment, I observe that the shortage in weight is about 4% as against that of 40% in the first consignment. I also find that at all times Mukesh Mehta had claimed that about 30% of the material was of AISI-304 grade as against nil percentage of such goods in the first consignment. Although in both cases the chief chemist certified the goods free of non AISI-304 type, in the second case of exports at Nhava Sheva it is not known whether the samples were representative samples. It is significant that this claim was made by Mukesh Mehta repeatedly in subsequent statements also. In that situation the benefit attempted to be received by the firm was much less than what was projected by the Commissioner on which basis he had arrived at the quantum of penalty. On this ground there is some merit in the plea of reduction of penalty on the firm M/s. Sima Exports in Appeal No. C/345/95-Bom.
10. Shri Patel here submits that subsequently these goods were exported and remittance was received.
11. In both cases the fine prescribed ranges from 10% to 15% which is reasonable. The plea of very high demurrage does not make for a reduction in this quantum.
12. I do not find any reason to accede to the plea of reduction in the penalties imposed upon Mukesh Mehta and Jayantilal Mehta inasmuch as their guilty mind is very clearly shown on the record. While I find no reason to reduce the quantum of penalty from Rs. 10,00,000/- imposed by the Commissioner in his order, dated 17-4-1995, on the basis of my observations above I deem it proper to reduce the penalty imposed upon M/s. Sima Exports in the order, dated 21-7-1995 of the Commissioner, Nhava Sheva, from Rs. 8,00,000/- to Rs. 5,00,000/-. Subject to this modification the appeals are dismissed.