SANTOSH CHAWLA Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) THE present appeals have been filed by the exporter, M/s. Chawla Trading Company, and its manager, Shri Santosh Chawla, arising out of Order -in -Appeal Nos. 286 and 287 (Adjn. -Exp.)/2013 GNCH)/EXP -65 and 66, dated March 25, 2013 passed by the Commissioner of Customs (Appeals), Mumbai II, wherein an order of confiscation of goods admitted to be exported was upheld. However, redemption fine was reduced from Rs. 50 lakhs to Rs. 5 lakhs and penalty imposed of Rs. 50 lakhs on M/s. Chawla Trading Company under sections 114(i) and 114AA of the Customs Act, 1962 was reduced to Rs. 5 lakhs and penalty imposed of Rs. 10 lakhs on Shri Santosh Chawla, manager of the Trading firm was reduced to Rs. 2 lakhs and bank guarantee of Rs. 21,25,000 and Rs. 7,30,000 executed was directed to be enforced and appropriated for payment of fine and penalty. Whereas the appellant, Mukesh D. Thakkar, has filed an appeal against Order -in -Appeal No. 695 (Adjn -Exp)/2013 (JNCH)/EXP -179, dated July 30, 2013 passed by the Commissioner of Customs (Appeals), Mumbai II, who is a CHA of the aforementioned appellants and penalty imposed upon him by the Commissioner vide the order -in -original dated March 31, 2012 of Rs. 20 lakhs under section 114(1) was reduced to Rs. 4 lakhs. Being aggrieved, the appellants have preferred the appeal before this Tribunal. The facts in brief are that the appellant, M/s. Chawla Trading Company, proprietor Shri Daulatram Chawla is engaged in trading of rice and exporting of the same and the appellant, Shri Santosh Chawla, is manager of the appellant export house and the appellant, Shri Mukesh D. Thakkar, is a CHA engaged by the said exporters. The facts and charges as per the show -cause notice are that the appellant had filed four shipping bills dated July 30, 2009, August 4, 2009, August 1, 2009 and August 6, 2009 for export of basmati rice duly permitted by the Agricultural and Processed Food Products Export Development Authority (APEDA), the licensing authority under the foreign trade policy. Suspecting the rice to be non -basmati, the officers of customs, Mumbai withdrew the samples from the goods lying for export under the four shipping bills, which were drawn on August 1, 2009. As per the instruction available in the shipping bill, sample drawn in respect of shipping bill No. 785/073 and the same were sent for testing to the authorised laboratory of Agmark as authorised by Circular No. 33/2008, dated August 30, 2008 issued by the DGFT. Within a few days, the DRI, Mumbai also on some information that the appellant -exporter is illegally exporting non -basmati rice by misdeclaring the same as basmati rice inspected the consignment lying in dock and also withdrew sample on August 11, 2009 and August 12, 2009. The DRI authority inspected the goods lying at NSICT Port, Nhava Sheva under the shipping bill No. 7557073 and the goods lying at Navkar Warehousing Corporation, Nhava Sheva under other three shipping bills Nos. 7571506, 7563198 and 7575681 and the goods were put on hold by issuing directions dated August 7,2009. Thereafter, a team of the DRI examined in presence of Panchas and Shri Mukesh D. Thakkar, the proprietor of CHA firm on August 11, 2009 and recorded the following findings. The goods covered by the shipping bill No. 7563198 was found packed in the sacks and these sacks had a paper affixed on it with the details - -"Navkar Corporation Ltd., S/B - -7563198, quantity 2,128, Shipper - -Chawla Trading, CHA - -M.K. Shipping Cargo - -Basmati Rice". In addition to the above, it was also found printed on the sack "Khusbu - -Old Basmati Rice - -Net weight 35 kg.". After examination, three different sacks were selected at random for drawing the samples and three samples in duplicate were drawn and sealed for further necessary action. Similar finding was recorded in the case of other two shipping bills, namely, 7575681 and 7571506 by another team of the Revenue officials, who inspected the goods in shipping bill No. 7557073, which was examined in the presence of Panchas and Shri Mukesh Thakkar, CHA. All the goods were loaded in three different containers was found to contain stacked sacks having print as "Indian Pusa 1121 Basmati Rice - -Net weight 35 kgs.". Thereafter, total of six samples in duplicate (two samples from each container in duplicate) were drawn. During the investigation, regarding purchase invoices issued by traders based in Delhi, officers of the DRI, Delhi were requested to conduct the necessary investigation at the Delhi. The premises of supplier M/s. V.K. Food Traders was searched and statement of exporter Mr. Daulatram Chawla, proprietor of M/s. Chawla Trading Company was recorded on August 11, 2009, wherein it was stated that rice has been procured from Delhi and Haryana. It was further stated that he has been in regular business of export of basmati rice to dubai, where he had around ten buyers and he had not exported non -basmati rice after the prohibition was imposed by the Government. The statement of Shri Daulatram was recorded on August 19, 2009 at the DRI office in Mumbai. It was deposed by him that he had also been purchasing non -basmati rice and exporting the same by misdeclaring as basmati rice. Further he is holding IEC No. 0306004736 in the name M/s. Chawla Trading Company and that he was the proprietor of the said firm and his nephew Shri Santosh Chawla was associated in running his business. Further, he has exported 40 containers of non -basmati rice to Dubai from ICD, Nagpur, JNPT, Nhava Sheva, etc., by misdeclaring non -basmati rice as basmati rice. It was further stated by him that in the month of March, 2009, 11 containers contained non -basmati rice mis -declared as basmati rice were examined by the SUB, Nhava Sheva and case of illegal export was booked by them. It is also pleaded that out of 11 containers inspected in March, 2009, let export order (LEO) for three assessments were permitted and remaining eight containers were provisionally released back to town but the said containers were stored in the warehouse of M/s. Rishi Ice and Cold Storage (P) Ltd., Turbhe and the same rice was admitted to be exported in shipping bill No. 7557073.

(2.) IN the statement of Shri Santosh Chawla recorded on August 19, 2009, it has been stated that they used to export non -basmati rice as basmati rice. Order for procurement of non -basmati rice was given telephonically through agents Asim for basmati rice. Further, non -basmati rice used to be purchased from Shri Rajendra Goyal and bills were raised for basmati rice with a higher rate and similarly non -basmati rich was procured from other supplier. It is further mentioned in the show -cause notice that Shri Santosh Chawla was brought under warrant to the DRI office on August 27, 2009 and his further statement was recorded under section 108 of the Act, wherein he has confirmed the earlier statement. Prior to the examination on August 27, 2009, Shri Santosh Chawla on August 20, 2009 gave the statement of retraction before the additional chief metropolitan magistrate. Copy of the statement is available in the appeal filed and the statement reads as under :

(3.) THAT the appellant, M/s. Santosh Chawla, retracted his statement by a detailed submission and retraction dated October 14, 2009 filed before the ADG, DRI, Mumbai wherein he has said that he retracts all the statements given before the intelligence officer on August 19, 2009 and August 20, 2009 as the same had been taken under coercion and pressure. It is further stated that 11 containers of rice weighing 275 M.T.s were inspected but there were only 3 containers at the port ready for export to Dubai and these 3 containers ready for export weighing only 75 M.T.s were detained by the DRI, The rice weighing 200 M.T. has been lying at the Navkar CFS, Panvel, Mumbai. it was further stated that they exported only genuine basmati rice and have not been engaged in clandestine activity or mis -declaration. It was also stated that Revenue investigating officer have sent 18 samples for laboratory test to confirm whether the rice under export is basmati or non -basmati rice. Out of 18, 15 test reports from the laboratory confirm the average length of grain of rice as 7 mm., but the said laboratory unaware of the required length of grain of 7 mm. mentioned in the report that the required length is 8 mm. and has termed his rice under export as non -basmati, which is wrong. Further, as the length of the rice reportedly found 7 mm. as per the test report of the laboratory, it is proved beyond doubt that the average length of the grains of rice is more than 7 mm., i.e., basmati rice only as required by notification of the Government.