Full Judgment
2. M/s. Overseas Development Corporation (hereinafter ODC) based in USA are suppliers of Steel Materials. Shri Anil Mody is their indenting agent in India. Shri Dungarmal Doshi, Proprietor of M/s. Dungarmal Prithviraj & Co. (hereinafter DPC) had imported several consignments from ODC. Some of the consignments were cleared by them in their own name. Some of the consignments were sold by them to M/s. Alfa Transcore Industries, M/s. Transtamp Laminators (I) Pvt Ltd. and M/s. Suparshva Industries. Shri A.G. Deshmukh is the Director of Transtamp Laminators (I) Pvt. Ltd. 3. A number of consignments had been imported and cleared by DPC and/or the 3 corporations named above who had bought the material on High Seas Sale basis. The goods after due examination and assessment had been cleared on payment of duty. The earliest clearances were vide Bills of Entry dated June/July, 1994. The last consignments were cleared vide Bills of Entry filed in February, 1996.
4. An information was received by the Directorate of Revenue Intelligence (DRI) that DPC were under invoicing the goods. The modus operandi was that value in the suppliers' invoices would be understated. Another set of invoices bearing the same number but with the suffix 'A' would be issued for the difference between the correct price and the invoice price. This additional payment would be done by DPC through undisclosed banking channels. As part of information the DRI received sets of invoices of the two types (with and without suffix 'A').
5. The premises of DPC were searched on 11-3-1999. On 13-5-1999 the premises of Anil Mody, the indentor was searched. During the course of search, a number of fax messages were being received and were taken from the fax machine by the DRI officers. One faxes was from ODC to Mody Brothers referring to two invoices where apparently the values were understated. Other faxes indicated payment of US$38,000 to ODC by DPC. One set of duplicate invoices was also received on the fax bearing Nos. 53815 and 53815A both dated 6-9-1995. While recording his statement Anil Mody was asked questions about these documents. He was shown the duplicate sets of invoices. He made the following statement: "After seeing these invoices it is clear that suppliers have issued two invoices and there appears to be a dispute for payment difference in value between the two parties." - (statement dated 13-5-1999) 6. In his statement dated 18-5-99 again these 'A suffix' invoices were shown to him. His observations read as follows : "The dispute appears to be regarding the payment of the amount shown in the second set of invoices with suffix 'A'. This amount is the amount not yet paid by M/s. Dungarmal Prithviraj & Co. However part of the amount of USD38000 have been paid by M/s. Dungarmal Prithviraj & Co. to M/s. ODC through Israeli Discount Bank, USA. This part amount paid pertains to invoice Nos. 93288, dt. 30-5-1994 and 93292, dated 13-5-1994. In these invoices the rate per M.T is USD975 per M.T and 825 per M.T. These represent the correct price and I have been given commission on these price as per the fax of ODC." 7. Apart from these two admissions Mody's statement is exculpatory. He continued to maintain that he was an indenting agent and introducing the suppliers and buyers. He was not concerned with or involved in the later transactions.
8. In his statement dated 3-3-2000 he made the categorical statement that the invoices were not typed by the ODC. He maintained that these documents were received on fax during the search operations while the offices in the VSA were closed in the night.
9. A number of statements of Dungarmal Doshi were recorded. He flatly refused having made any additional payment (statement dated 11-3-99).
He was shown the duplicate invoices as well as the faxes received in Mody's office during the search. However no direct questions were asked of him and not confession was made by him. In his statement dated 9-12-99 Doshi called 'A' suffix invoices as forged invoices and disclaimed any knowledge thereof. He denied that he had evaded any payment of duty. In his statement recorded on 8-3-2000 he denied having seen any of the fax messages under seizure. He disclaimed that the signature on the fax documents as his own. Once again he was shown the duplicate invoices. He claimed that the 'A' suffix invoices were never received by him and although the name of the banker was the same in both the invoices, no remittance was made by him for the additional amounts.
10. M/s. Suparshva Industries had filed 3 Bills of Entry after having bought the goods from DPC on high seas sale basis. The statement of Kirit Bagaria partner of the buyer was recorded. He admitted that the price paid by him was less than the prevailing prices. But there was nothing in his statement to show that whether he had any knowledge of under-invoicing nor is there anything to show whether any additional payments were made by the buyer to DPC.11. Statement of Mahendra Parekh of Alfa Transcore Industries was recorded which was equally bland. No corroboration of undervaluation comes out of his statement.
12. The 3rd buyers were M/s. Transtamp Laminators (I) Pvt. Ltd. The statement of Shri A.G. Deshmukh, Director, was recorded. Apart from stating that the rate at which he bought the goods was comparatively less there is no admission to under valuation or any admission of having paid any additional amount over the contract price.
13. Show Cause Notices were issued to DPC/ Anil Mody, the 3 high seas buyers and the Director of only one of the buyers.
14. In his 9 adjudication orders the Commissioner confirmed the differential duty of and imposed penalties as follows :- 15. These persons have filed appeals against these orders and also the present applications.
16. We have heard Shri V.S. Nankani, Advocate for DPC/ Supershva Indus., Alfa Transcore Inds., Transtamp Laminators & Shri A.G.Deshmukh. Shri Anil Mody was represented by Shri Anil Balani, Advocate.
18. During the search of Anil Mody's office a document dated 20-5-1994 was in the fax machine apparently received just before or during the search. It was a Book Credit Advice issued by Israel Discount Bank of New York crediting ODC with a sum of US$37,982.90. The debit party name is shown by an account number in a Bank in Geneva. On the body of the fax copy of the said advice the following is written by hand : These two invoices dated 13-5-1994 and 30-5-1994 respectively were issued by ODC for value of US$485 and US$ 585 PMT for goods imported by DCP and sold on high seas basis to Alfa Transcore Industries.
19. In the Show Cause Notice dated 24-6-1999 the allegation was made that on perusal of the faxes it appeared that the values in the said 2 invoices were understated to the extent of US$38,000 was paid to ODC through an undisclosed Bank account by DPC. The contents of the statements extracted above by us have been cited and differential duty demand was made. The duty confirmation was made by the Commissioner in his Order No. 48/2002, dated 22-2-2002. Before him all concerned persons denied their involvement. DPC called the said duplicate invoices as fake. The Commissioner extracted certain portions from their statements for establishing the under-invoicing and confirmed the demands.
20. Shri Nankani claimed that that faxes had no evidentiary value.
These invoices and other documents were several years old. It was apparent that they were faxed to Mody's office by the DRI themselves.
The Advise issued by the Bank does not refer to Mody or Doshiat all. It is not established who the author of the handwritten notation showing Dungarmal's name and the invoice numbers is. These documents have not been authenticated either by Bank or by ODC. Therefore, these documents are not at all reliable. He claimed that as an indenting agent Mody was entitled to commission. It is his claim that the entire evidence is fabricated and that is what was consistant contested by Shri Mody all along.
21. The duplicate invoices form the basis of 5 adjudication orders viz.
45/2002,47/2002,49/2002,50/2002 and 51/2002. The basis of the allegation was that the suppliers had sent two sets of invoices, the first showing declared value and the second showing differential value.
Mody had disclaimed any knowledge of this. Dungarmal Doshi had in all his statements disclaimed any knowledge thereof. It appears that these were received as part of information the source thereof is not disclosed. Shri Nankani argued that in the absence origin thereof there was no value of evidence attached to these invoices.
22. The 3rd group is of cases covered by adjudication orders No.14/2002, 40/7.002, 44/2002 and 49/2002; continuing the same assumption that where declared value was 'X' the correct value must be 'Y'. No specific information is disclosed or evidence is shown to establish the undervaluation. In these cases the imports were made by DPC and demands were confirmed against high seas buyers M/s. Supershav Inds.
23. On behalf of Shri Anil Mody Shri Anil Balani Advocate reiterated the submissions made by Shri Nankani. It was his case that Mody was an indenting agent whose job was merely to bring together the buyers and the supplier. He was not involved in the subsequent transactions between the other two. He referred to the statement of Mody that the faxes purportedly emanated from ODC were fake since ODC never used such typewriter. It was claimed that when the panchanama was going on it was 11.00 a.m. and when the faxes came it was late night in USA. It was claimed that the show cause notice itself admits that the invoices with suffix 'A' were not seized from any source. It was claimed that there was some dispute between the two parties as a result of Mody's intervention some amount was paid by the importers but that he had no connection with the transaction between said parties after he had introduced them.
24. We have carefully considered the submissions and have seen all documents.
25. The main plank of allegation is the adoption of duplicate invoicing method. Apparently these 'A' suffix invoices were received as part information and their authenticity has not been established by the DRI authorities. Mody in all his statements consistently denied any knowledge of these invoices. In his statement dated 11-33-99 he roundly denied having made any additional payments. Where the dispute arose and he received credit Doshi admitted the contents of the fax but denied all other fax documents and information arising therefrom.
26. Prima facie therefore it appeared that Doshi has made a prima facie case in his support. We mark that at some places when 'A' suffix invoices were show to Mody he had claimed that they were indicative of additional payments. On this aspect, Shri Nankani's additional submission was that as per the original statements it was no indicative of any extra payments having been made by DPC.27. We have narrated above the statements of the buyers. In the statements recorded by the DRI there was no admission. From what is disclosed in the show cause notice they were not asked about any additional payments. Before going into the evidentiary value of duplicate invoices, it is to be seen whether there were any additional payments sent by DPC to ODC. If DPC were to send extra payments to their suppliers it was logical that they would have recovered the same from their buyers. This very vital piece of evidence is not collected by the DRI.28. We thus have the evidence in the form of duplicate invoices given by the informers who are not indicated and the source of which is questioned. We have also seen that these documents were faxed over 4 years after they were made. The handwritten entries which connect them to the Appellant namely Doshi are not authenticated and their authorship is not known. The initial importer and the indenting agent have flatly refused any knowledge of under-invoicing and the high seas buyers have not confessed to having made any additional payments.
29. Thus although there is a gray mist of suspicion on the dealings of DPC, prima facie the evidence disclosed in the Show Cause Notice and that adopted the Commissioner is not strong enough to make a prima facie case against them.
30. As regards the 3 buyers of the goods on high seas sale basis, the notices does not disclose any corroboration on their part. Even otherwise where the person who had cleared the goods is not the one who had imported the goods; the extended period under Section 28(1) against the buyer cannot be invoked for this. It has to be proved that the importer himself had suppressed any information or had made a misdeclaration with intent to evade duty. Prima facie therefore they have made a strong case for waiver.
31. On the basis of the above discussions we grant waiver of pre- deposit of duty confirmed against M/s. DPC and against the high seas buyers. We also grant waiver of pre-deposit of penalty to Doshi, Anil Mody, A.G. Deshmukh and the three high seas buyers.