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IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, Amit Mahajan, JJ.
M/s Seville Products Limited – Appellant
Versus
Commissioner of Customs Exports, Icd-tughlakabad, New Delhi – Respondent
CUSAA 88 of 2022 and CM Appl. 34721 of 2022 and CUSAA 89 of 2022 and CM Appl. 34723 of 2022
Decided On : 18-05-2023
Penalty - Customs Act - Section 112(a), Section 114A, Section 114AA - The court discussed the imposition of penalties under Section 112(a) of the Customs Act, 1962 and upheld the findings that the appellant had participated in a conspiracy with importers to evade customs duty. The court also addressed the jurisdiction of the officers of DRI to issue show cause notices to the appellant and the liability of the appellant despite other co-noticees settling their liability before the Settlement Commission.
Fact of the Case:
The appellant, an entity located in Dubai, was engaged in supplying confectionary items to importers in India. The appellant was found complicit in a conspiracy with importers to evade customs duty by under-invoicing and mis-declaring goods.
Finding of the Court:
The court upheld the findings that the appellant had participated in the conspiracy to evade customs duty and imposed penalties under Section 112(a) of the Customs Act.
Issues: The issues included the jurisdiction of the officers of DRI to issue show cause notices to the appellant, the liability of the appellant despite other co-noticees settling their liability before the Settlement Commission, and the extra-territorial operation of the Customs Act.
Ratio Decidendi: The court held that the levy of penalty under Section 112(a) of the Customs Act on the appellant was within the purview of the Customs Act as the alleged offences were committed within the territory of India. The court also ruled that the settlement of liability by other co-noticees before the Settlement Commission did not absolve the appellant of its liability under the Customs Act.
Final Decision: The court dismissed the appeals, finding no substantial question of law.
JUDGMENT
Vibhu Bakhru, J. (Oral)
1. The appellant has filed the present appeals impugning a common order dated 07.12.2021 (hereafter `the impugned order') passed by the Customs, Excise and Service Tax Appellate Tribunal (hereafter `the Tribunal'), whereby the appeals preferred by the appellant (Customs Appeal No.C/51953/2019-SM and Customs Appeal No.C/52105/2019- SM) were rejected.
2. The appellant had preferred the appeal, being Customs Appeal No.C/51953/2019-SM, against an order-in-appeal dated 02.05.2019 passed by the Commissioner of Customs (Appeals), whereby the appellant's appeal against an order-in-original dated 29.04.2016 was rejected. The appellant had preferred the appeal, being Customs Appeal No.C/52105/2019-SM, against an order-in-appeal dated 08.05.2019 passed by the Commissioner of Customs (Appeals) rejecting the appellant's appeal against an order-in-original dated 06.05.2016.
3. The appellant is essentially aggrieved by the levy of penalty under Section 112(a) of the Customs Act, 1962 (hereafter `the Customs Act'). In terms of the orders-in-original dated 29.04.2016 and 06.05.2016, the Adjudicating Authority had imposed penalties of Rs.13,00,000/- (Rupees Thirteen Lacs) and Rs.23,00,000/- (Rupees Twenty- three Lacs Only) under Section 112(a) of the Customs Act, respectively.
4. The aforesaid orders-in-original dated 29.04.2016 and 06.05.2016 were rendered pursuant to the show cause notices dated 11.08.2014 and 16.06.2014 issued by the Additional Director, DRI, respectively.
5. The nature of allegations made in the two show cause notices mentioned above are similar and the contentions advanced on behalf of the appellant are also similar in material aspects. The grounds on which the impugned order is assailed are common and therefore the present appeals have been heard together.
The context
6. The appellant is an entity located in Dubai and is engaged in the business of supplying confectionary items such as wafers, cookies, toffees etc. The appellant has been exporting the said goods to various importers in India.
7. It is stated that the officers of Directorate of Revenue Intelligence (hereafter `DRI') had gathered intelligence that certain importers importing confectionary items from the appellant and M/s Kelsen Group AS, Denmark (hereafter `the Kelsen Group') were evading customs duty by under-invoicing the goods and mis-declaring the transaction value and the retail sales price. The modus operandi for such evasion was that the exporters were issued two invoices: one for a value lower than the actual consideration, which would be used for clearance of the goods; and the second invoice for the full amount of consideration. The Bills of Entries would be filed on the basis of the lower value invoice. The invoice for the entire consideration would not be disclosed. The consideration reflected in lower value invoices, on the basis of which goods were imported, were remitted through normal banking channels and reflected in the books of accounts of the exporters. However, the invoices issued for the balance portion was collected by agents of the appellant and the Kelsen Group, in India.
Order-in-original dated 06.05.2016
8. The officers of DRI had found that M/s S.R. International (hereafter `SRI') had imported the consignment of assorted confectionary from suppliers located overseas including the appellant, by under-invoicing and mis-declaring the goods. The premises of SRI and one Sh. Prakash Menon, who was the representative of the appellant located in India, was searched. In addition, the premises of one Sh. Srikant Panda, who was an Indian representative of the Kelsen Group, was also searched. During the course of investigation invoices raised by the appellant were recovered from the premises of its representative, Sh. Prakash Menon. It is stated that the invoices raised by the Kelsen Group were recovered from its representative, Sh. Srikant Panda. The concerned officers found that the values shown in the
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