M/S. N.K. Kutty Pushpangadhan and Vs. Commissioner of Customs Cochin - Court Judgment

Excerpt:
1. misc application has been taken up for early hearing and granted, these two appeals have been taken up for decision by this order, as they are against the very same order in appeal. the matter was heard after waiver of pre-deposit, since the issue revolves in a narrow area.2. the brief facts of the case are - one shri nediyambath kunjhayappa kutty pushpangadhan alias nk pushpangadhan, (hereinafter called as n.k.kutty), and indian national who was working as driver in dubai returned after a stay of 18 years there on 25 june 1998 for permanent settlement in india. he imported a toyota land cruiser car, 1995 model car to be cleared icd, bangalore on bill of entry dated 15.10.98. when he presented the rc book, insurance certificate and other documents and earnings for purchase, before the vehicle could be cleared, the preventive customs officers of hq, bangalore detained the vehicle and recorded statements. it was alleged in the show cause notice issued, that the import of the said car for availing tr concession to shri n.k.kutty was not eligible, as shri n.k.kutty had admitted that he was working as a driver for shri chandra siroya, a wholesale jewellary shop owner in dubai, on monthly salary, and he was informed by his employer that a car would be sent in his name to be cleared through customs and then to be handed over to one shri shailesh siroya, the brother of the employer, the appellant in the second appeal. it was also alleged that shri nk kutty signed various documents for getting the car cleared from the customs. shri shailesh siroya in his statement admitted that he was managing director of a pharmaceutical firm and his father was based at sharjah who had a jwellary shop where shri n.k.kutty was working as a driver and that a car was sent in the name of shri n.k. kutty who had been used for getting the vehicle cleared from icd, bangalore. shri sundar, an employee of pharmaceutical company of shri shailesh siroya has admitted that he had accompanied and assisted for the clearance of the vehicle. enquiries made at dubai revealed that the said car was cleared by sharjah customs on 02-8-98 and the importer had manipulated the registration books to show that the same was in possession and in use for one year, for availing the benefit of public notice no 3(pn)/1997-2002 dated 31.03.97 of department of commerce. accordingly, declarations were made to the customs. therefore, regarding the use and possession were considered to be misdeclaration and the passenger had arrived in india, before the vehicle had arrived in dubai. show cause notice also relied upon the valuation opinion. the ld. additional commissioner, after considering the material came to the conclusion that since no payment was made out of the earnings in foreign exchange of the importer, viz. shri n.k. kutty, therefore, value will have to be determined as per customs valuation rule and taking the catelogue price and after allowing the trade discount, determined the value of rs 5,93,144.03 and after considering the additional fittings determine the assessable value for the purpose of duty to be rs 6,18,144.03 and rejected the value of rs 2,08,463 declared, he ordered confiscation of the car under section 111 (d) of the customs act read with section 3 (2) and 3 (3) of the foreign trade regulation and development act 1992 and there was wilfull attempt to evade customs duty, it was also held value was misdeclared and concessions misused along with penalty under section 112 (a) on shri n.k. kutty, shri shailesh siroya and shri sundar. the ld. commissioner (appeals) set aside the penalty on shri sundar after given a findings that the role played by him, of having accompanied to shri n.k. kutty for customs clearance on the direction of shri shailesh siroya, his employer was not to make him liable for penalty and no motive could be made attributed him as regards the absolute confiscation of the vehicle. he had that the conditions precedent upon import of the "second hand imported car have been sustantially fulfilled" and therefore did not upheld the absolute confiscation but ordered redemption fine of rs 5 lakhs and confirmed the penalty of rs one lakh each imposed to shri shailesh siroya and shri n.k. kutty.3. after considering the earlier hearing application, we have heard shri v.m. doiphode, advocate for the appellant and smt radha arun, sdr for revenue and considered their submissions and find - (a) when the collector (appeals) has come to his findings that the conditions precedent for import has been substantially complied with, there was no reason for him to have imposed redumption fine of rs 5 lakhs, nor has be arrived at or worked out the margin of profit and given reasons as to why this fine of rs 5 lakhs was justified. we therefore, cannot up hold the amount of rs 5 lakhs fine imposed.(b) the ld. advocate submitted that the statement of shri n.k. kutty were not correct, as the same were retracted by a letter dated 11.3.99 to additional commissioner to customs, bangalore and there i no documentary evidence to corroborate the statement and has relied on subsequent decisions. we find that the appellants have not denied the fact of the clearance of the vehicle from uae, customs at sharjah on 23.7.98. they are claiming this to be a re-entry, but have not produced any evidence of earlier export of vehicle for the alleged re-entry on that date. hence, the findings of the lower authority about the car having not been in sharjah to be in possession/use cannot be assailed, this is a condition for licence force import is then not satisfied.confiscation under section 111(d) is therefore upheld.(c) however, relying on the earlier decision of the cases of cegat bench at chennai in final order no 1093 & 1094/2000 and the facts and circumstances of this case that no valuation certificate or mop has been arrived or relied upon; out findings in the present case are that redemption fine should be suitably reduced, as we agree with the submission of the ld. advocate that no purpose will be served for remanding for determination of fine and penalty. we, therefore, reduce the redumption fine to 3 lakhs in terms of the earlier orders and practice in such cases.(d) as regards penalty, we do not agree with the ld. advocate that there should be no penalty in this case. the penalty of rs one lakh on shri n.k. kutty is confirmed as he has willingly connived with his employer to import the car, which is liable for confiscate on, mens-rea under section 12 (a) of customs act, under which he is liable for a penalty is not essential ingredient. as regards penalty to shri shailesh siroya who has only given assistence of his employee for the clearance of the car on the instructions of his father at dubai, the penalty of rs one lakh appears to be harsh. no material has been brought on record to show his pre-concert and knowledge that the car was liable for confiscation. he has followed the instructions of his father in associating himself with the dealing of the car. since he has liability of penalty, if any, under section 112(b) only, the words 'knowingly concerned' used therein would stipulated the existence of pre-concert knowledge and mens-rea before liability for penalty is established. the penalty on shri shailesh siroya is, therefore, set aside for want of a finding on this critical aspect of section 112(b) of the customs act, 1962 by the adjudicator.

Judgment:
1. Misc application has been taken up for early hearing and granted, these two appeals have been taken up for decision by this order, as they are against the very same order in appeal. The matter was heard after waiver of pre-deposit, since the issue revolves in a narrow area.

2. The brief facts of the case are - one Shri Nediyambath Kunjhayappa Kutty Pushpangadhan alias NK Pushpangadhan, (hereinafter called as N.K.Kutty), and Indian national who was working as driver in Dubai returned after a stay of 18 years there on 25 June 1998 for permanent settlement in India. He imported a Toyota Land Cruiser Car, 1995 model car to be cleared ICD, Bangalore on Bill of Entry dated 15.10.98. When he presented the RC book, Insurance Certificate and other documents and earnings for purchase, before the vehicle could be cleared, the Preventive Customs Officers of HQ, Bangalore detained the vehicle and recorded statements. It was alleged in the Show Cause Notice issued, that the import of the said Car for availing TR concession to Shri N.K.Kutty was not eligible, as Shri N.K.Kutty had admitted that he was working as a driver for Shri Chandra Siroya, a wholesale jewellary shop owner in Dubai, on monthly salary, and he was informed by his employer that a Car would be sent in his name to be cleared through Customs and then to be handed over to one Shri Shailesh Siroya, the brother of the employer, the appellant in the second appeal. It was also alleged that Shri NK Kutty signed various documents for getting the car cleared from the Customs. Shri Shailesh Siroya in his statement admitted that he was Managing Director of a Pharmaceutical firm and his father was based at Sharjah who had a Jwellary shop where Shri N.K.Kutty was working as a driver and that a car was sent in the name of Shri N.K. Kutty who had been used for getting the vehicle cleared from ICD, Bangalore. Shri Sundar, an employee of Pharmaceutical Company of Shri Shailesh Siroya has admitted that he had accompanied and assisted for the clearance of the vehicle. Enquiries made at Dubai revealed that the said car was cleared by Sharjah Customs on 02-8-98 and the importer had manipulated the registration books to show that the same was in possession and in use for one year, for availing the benefit of Public Notice No 3(PN)/1997-2002 dated 31.03.97 of Department of Commerce. Accordingly, declarations were made to the Customs. Therefore, regarding the use and possession were considered to be misdeclaration and the passenger had arrived in India, before the vehicle had arrived in Dubai. Show Cause Notice also relied upon the valuation opinion. The Ld. Additional Commissioner, after considering the material came to the conclusion that since no payment was made out of the earnings in Foreign Exchange of the importer, viz. Shri N.K. Kutty, therefore, value will have to be determined as per Customs valuation rule and taking the catelogue price and after allowing the trade discount, determined the value of Rs 5,93,144.03 and after considering the additional fittings determine the assessable value for the purpose of duty to be Rs 6,18,144.03 and rejected the value of Rs 2,08,463 declared, he ordered confiscation of the car under Section 111 (d) of the Customs Act read with Section 3 (2) and 3 (3) of the Foreign Trade Regulation and Development Act 1992 and there was wilfull attempt to evade Customs duty, it was also held value was misdeclared and concessions misused along with penalty under Section 112 (a) on Shri N.K. Kutty, Shri Shailesh Siroya and Shri Sundar. The Ld. Commissioner (Appeals) set aside the penalty on Shri Sundar after given a findings that the role played by him, of having accompanied to Shri N.K. Kutty for Customs clearance on the direction of Shri Shailesh Siroya, his employer was not to make him liable for penalty and no motive could be made attributed him as regards the absolute confiscation of the vehicle. He had that the conditions precedent upon import of the "second hand imported car have been sustantially fulfilled" and therefore did not upheld the absolute confiscation but ordered redemption fine of Rs 5 lakhs and confirmed the penalty of Rs one lakh each imposed to Shri Shailesh Siroya and Shri N.K. Kutty.

3. After considering the earlier hearing application, we have heard Shri V.M. Doiphode, Advocate for the appellant and Smt Radha Arun, SDR for Revenue and considered their submissions and find - (a) When the Collector (Appeals) has come to his findings that the conditions precedent for import has been substantially complied with, there was no reason for him to have imposed redumption fine of Rs 5 lakhs, nor has be arrived at or worked out the margin of profit and given reasons as to why this fine of Rs 5 lakhs was justified. We therefore, cannot up hold the amount of Rs 5 lakhs fine imposed.

(b) The Ld. Advocate submitted that the Statement of Shri N.K. Kutty were not correct, as the same were retracted by a letter dated 11.3.99 to Additional Commissioner to Customs, Bangalore and there i no documentary evidence to corroborate the statement and has relied on subsequent decisions. We find that the appellants have not denied the fact of the clearance of the vehicle from UAE, Customs at Sharjah on 23.7.98. They are claiming this to be a re-entry, but have not produced any evidence of earlier export of vehicle for the alleged re-entry on that date. Hence, the findings of the lower authority about the car having not been in Sharjah to be in possession/use cannot be assailed, this is a condition for licence force import is then not satisfied.

Confiscation under section 111(d) is therefore upheld.(c) However, relying on the earlier decision of the cases of CEGAT Bench at Chennai in final order No 1093 & 1094/2000 and the facts and circumstances of this case that no valuation certificate or MOP has been arrived or relied upon; out findings in the present case are that redemption fine should be suitably reduced, as we agree with the submission of the Ld. Advocate that no purpose will be served for remanding for determination of fine and penalty. We, therefore, reduce the redumption fine to 3 lakhs in terms of the earlier orders and practice in such cases.

(d) As regards penalty, we do not agree with the Ld. Advocate that there should be no penalty in this case. The penalty of Rs One lakh on Shri N.K. Kutty is confirmed as he has willingly connived with his employer to import the car, which is liable for confiscate on, mens-rea under section 12 (a) of Customs Act, under which he is liable for a penalty is not essential ingredient. As regards penalty to Shri Shailesh Siroya who has only given assistence of his employee for the clearance of the car on the instructions of his father at Dubai, the penalty of Rs One lakh appears to be harsh. No material has been brought on record to show his pre-concert and knowledge that the car was liable for confiscation. He has followed the instructions of his father in associating himself with the dealing of the car. Since he has liability of penalty, if any, under section 112(b) only, the words 'knowingly concerned' used therein would stipulated the existence of pre-concert knowledge and mens-rea before liability for penalty is established. The penalty on Shri Shailesh Siroya is, therefore, set aside for want of a finding on this critical aspect of section 112(b) of the Customs Act, 1962 by the Adjudicator.