Shri Parmod Kumar Gupta and Shri Vs. Commissioner of Customs, New - Court Judgment

Excerpt:
1. these two appeals have been filed by the appellants being aggrieved by imposition of penalty and disallowance of draw back claim by the commissioner of customs. new delhi.2. shri l.p.asthana, learned advocate, submitted that shri p.k. gupta is the proprietor of m/s. world fashion, exporting ready-made garments for more than 10 years; that 3 shipping bills were filed on his behalf on 30.12.99 for export of ready-made garments; that on examination 6,874 pieces were found short out of declared quantity of 23, 494 pieces of garments; that in addition 3,996 pieces of garments were found in excess; that in his statement dated 7.1.2000, shri r.k.gupta deposed that the shortage fond in the consignment was due to goods being rejected while checking quality aspects and that the goods in excess were those left over from the previous export orders; that the appellant no. 2 shri arun kumar dang, production manager, in his statement dated 10.1.2000, has deposed that the shipment was to be despatched by 30.12.99 and as all the goods were not found upto the specification, the goods available were packed in order to clear the consignment by due date; that owing to the shortage of time shipping documents remained to be amended. the learned advocate, further, submitted that the shortage of the garments declared and excess of undeclared garments in the consignment is not being disputed by him; that, however, the penalty imposed on both the appellants is very harsh and the drawback in respect of the quantity which were found in excess should have been allowed as the goods had been exported under the shipping bill; that mistake had happened under the shipping bill; that it was a case of benefit mistake by the production manager who was not aware of the export procedure and who was handling the export for the first time; that the export goods were placed with a view to minimise the shortages and different kind of goods were placed only because the goods of the same type as covered by the shortages were not immediately available for export; that this clearly indicates that there was no deliberate intention or mens in packing excess goods. he finally submitted that the amount of draw back involved in respect of garments found short is only rs.3.5 lakhs and the draw back which would have been available to them in respect of garments found in excess is rs.1,61,173/-; that,therefore, imposition of penalty of rs.10 lakhs is on very high side and very harsh; that similarly the imposition of penalty of 1 lakh on shri a.k.dang, appellant no.2,is very harsh; that as the entire amount has been remitted by the foreign buyer the draw back is allowable to them.3. countering the arguments, shri m.m.dubey, learned d.r.submitted that in respect of garment pieces which were not declared and found in excess no shipping bill for draw back claim was filed by the appellants and as such no draw back can be given in respect of those garments; that the goods were changed knowingly as admittedly the quota was going to expire and the appellants were interested in exporting the consignment to their foreign buyer within the quota period; that further apparel export promotion council has found them guilty and appellants were barred for a month form taking quota; that because of this reason the commissioner gave his finding that the order passed by aepc "not only confirms their mens but also renders the element of actus reus operati, and therefore, renders noticees liable for penalty." 4. we have considered the submission of both the sides. it is not in dispute that on examination of the goods it was found that certain goods which were declared by the appellants were short in the consignment and there were some other goods which were not declared in the export documents. in view of this admitted position the appellants are certainly liable for penalty under section 114 of the customs act as the learned advocate had fairly conceded that the goods were liable for confiscation under the provisions of section 113 (i) of the customs act. however, taking into consideration the circumstances in which the goods were found short/excess and the amount of draw back involved in the pieces of garments found short we are of the view that the penalty imposed on both the appellants under the impugned order is very harsh.it is settled law that the penalty should be commensurate with the degree offence committed by a person. in our opinion the interest of justice will meet if the penalty of rs.10 lakhs imposed on shri p.k.gupta is reduced to rs.1 lakh only and the penalty of rs.1 lakh imposed on shri a.k. dang is reduced to rs.15,000/-. we order accordingly. it is also not in dispute that the department has allowed the export of 3,996 pieces of garments which found in excess in the consignment. the department has also not rebutted the fact of remittance of foreign exchange to the appellants by their customers. on a quarry from the bench both, both learned advocate and the d.r. replied that these 3,996 pieces of garments were allowed export under the shipping bills submitted by the appellants with claim of draw back. in view of this position there is no substance in the submissions of the learned d.r.that there was no draw back shipping bill filed by the appellants.accordingly the appellants are eligible to the draw back claim admissible on these 3996 pieces of garments.5. the impugned order is modified to the extent mentioned above and the appeals are also allowed to this extent and the remaining part of the order is upheld.

Judgment:
1. These two appeals have been filed by the appellants being aggrieved by imposition of penalty and disallowance of draw back claim by the Commissioner of Customs. New Delhi.

2. Shri L.P.Asthana, learned Advocate, submitted that Shri P.k. Gupta is the Proprietor of M/s. World Fashion, exporting ready-made garments for more than 10 years; that 3 shipping bills were filed on his behalf on 30.12.99 for export of ready-made garments; that on examination 6,874 pieces were found short out of declared quantity of 23, 494 pieces of garments; that in addition 3,996 pieces of garments were found in excess; that in his statement dated 7.1.2000, Shri R.K.Gupta deposed that the shortage fond in the consignment was due to goods being rejected while checking quality aspects and that the goods in excess were those left over from the previous export orders; that the Appellant No. 2 Shri Arun Kumar Dang, Production Manager, in his statement dated 10.1.2000, has deposed that the shipment was to be despatched by 30.12.99 and as all the goods were not found upto the specification, the goods available were packed in order to clear the consignment by due date; that owing to the shortage of time shipping documents remained to be amended. The learned Advocate, further, submitted that the shortage of the garments declared and excess of undeclared garments in the consignment is not being disputed by him; that, however, the penalty imposed on both the appellants is very harsh and the drawback in respect of the quantity which were found in excess should have been allowed as the goods had been exported under the shipping bill; that mistake had happened under the shipping bill; that it was a case of benefit mistake by the Production Manager who was not aware of the export procedure and who was handling the export for the first time; that the export goods were placed with a view to minimise the shortages and different kind of goods were placed only because the goods of the same type as covered by the shortages were not immediately available for export; that this clearly indicates that there was no deliberate intention or mens in packing excess goods. He finally submitted that the amount of draw back involved in respect of garments found short is only Rs.3.5 lakhs and the draw back which would have been available to them in respect of garments found in excess is Rs.1,61,173/-; that,therefore, imposition of penalty of Rs.10 lakhs is on very high side and very harsh; that similarly the imposition of penalty of 1 lakh on Shri A.K.Dang, Appellant No.2,is very harsh; that as the entire amount has been remitted by the foreign buyer the draw back is allowable to them.

3. Countering the arguments, Shri M.M.Dubey, learned D.R.submitted that in respect of garment pieces which were not declared and found in excess no shipping bill for draw back claim was filed by the appellants and as such no draw back can be given in respect of those garments; that the goods were changed knowingly as admittedly the quota was going to expire and the appellants were interested in exporting the consignment to their foreign buyer within the quota period; that further APPAREL Export Promotion Council has found them guilty and appellants were barred for a month form taking quota; that because of this reason the Commissioner gave his finding that the Order passed by AEPC "Not only confirms their mens but also renders the element of actus reus operati, and therefore, renders noticees liable for penalty." 4. We have considered the submission of both the sides. It is not in dispute that on examination of the goods it was found that certain goods which were declared by the Appellants were short in the consignment and there were some other goods which were not declared in the export documents. In view of this admitted position the appellants are certainly liable for penalty under Section 114 of the Customs Act as the learned Advocate had fairly conceded that the goods were liable for confiscation under the provisions of Section 113 (i) of the Customs Act. However, taking into consideration the circumstances in which the goods were found short/excess and the amount of draw back involved in the pieces of garments found short we are of the view that the penalty imposed on both the appellants under the impugned order is very harsh.

It is settled law that the penalty should be commensurate with the degree offence committed by a person. In our opinion the interest of justice will meet if the penalty of Rs.10 lakhs imposed on Shri P.K.Gupta is reduced to Rs.1 lakh only and the penalty of Rs.1 lakh imposed on Shri A.K. Dang is reduced to Rs.15,000/-. We order accordingly. It is also not in dispute that the department has allowed the export of 3,996 pieces of garments which found in excess in the consignment. The department has also not rebutted the fact of remittance of foreign exchange to the appellants by their customers. On a quarry from the Bench both, both learned Advocate and the D.R. replied that these 3,996 pieces of garments were allowed export under the shipping bills submitted by the appellants with claim of draw back. In view of this position there is no substance in the submissions of the learned D.R.that there was no draw back shipping bill filed by the appellants.

Accordingly the appellants are eligible to the draw back claim admissible on these 3996 pieces of garments.

5. The impugned Order is modified to the extent mentioned above and the appeals are also allowed to this extent and the remaining part of the Order is upheld.