F.S. Gill, President

1. Originally preferred as a revision application before the Central Government, on transfer to the Tribunal, we are treating it as an appeal. In this appeal, Order No. 494-A to 495, dated 29-2-1980 passed by the Central Board of Excise and Customs, New Delhi (hereinafter referred to as Board) has been challenged.

2. Briefly stated the facts of the case are that the importers presented three Bills of Entry at Cochin Port for the clearance of three consignments of skimmed milk powder imported from Canada. The price for the goods shown in the relevant invoices was US $ 356.00 per MT C.I.F. Bombay. Copy of the letter of credit No. CPLC/21/78 issued by M/s Bharat Overseas Bank Ltd., New Delhi also showed the same rate. Records show that the LC was originally opened for a total figure of US $ 35437.00 for the shipment of about 100 MT of skimmed milk powder in 25 Kgs. packing, the terms being C.I.F. Calcutta. This was later amended by increasing the quantity and value of the goods to 130} MT and US $ 46474.00 respectively. The mode of packing was changed to 50 Ibs. and the terms to C.I.F. Bombay. The suppliers of the goods were M/s. A.M. Aronson, Holland (hereinafter to be referred to as Holland Party) and the shippers were M/s. Ronald A. Chishohine, Canada. As the declared price appeared to be very low, the lower authorities started investigations at Cochin as well as at Bombay. In the course of these investigations, it transpired that one Shri A.H. Gandhi of Bombay, who had long standing business connections with the Holland Party had actually acted as the indenting agent for the consignment in question. The preliminary investigations also indicated that the actual price paid for the goods was $ 530 per MT c.i.f. as against the declared price of US $ 356 per MT. The residential and office premises of Shri Gandhi at Bombay and also the premises of the appellants and their partners at Delhi and Bombay were searched. Certain incriminating documents were recovered from the premises of Shri Gandhi. In the course of investigations, statements of Shri Gandhi and his employee Shri Mahadevan and S/Shri K.L. Suri and R.K. Suri of the appellant firm were recovered. On completion of investigations, the Cochin CH issued a SCN to the appellants and to Shri A.H. Gandhi. The allegation against the appellants was that they had under-invoiced the goods thereby attracting confiscation of the same under Section 111(d) read with Section 111(m) of the Customs Act, 1962 (hereinafter to be referred to as Act). The appellants were also called upon as to why penalty should not be imposed on them under Section 112 of the Act.

3. So far as Shri Gandhi is concerned, the show cause notice alleged his involvement in the unauthorised importation and he was called upon to explain as to why penalty under Section 112 of the Act should not be imposed on him, being a person concerned in the said illegal deal. Both parties appeared before the Collector of Customs and Central Excise, Cochin, who after due process of law, adjudicated the case. The learned Collector held as under:-

(a) the goods imported by the appellants were liable to confiscation under the provisions of Section 111(d) read with Section 111(m) of the Act, but gave the appellants an option to redeem the same on a fine of Rs. 8,00,000/-. In addition, a penalty of Rs. 2 lakhs was also imposed on them ;

(b) the learned Collector held that the goods should be assessed to duty at the rate of US $ 530 per MT as against the declared value of US $ 356 per MT; and

(c) Shri A.H. Gandhi was held as a person concerned in the unauthorised importation and subjected to a penalty of Rs. 1 lakh under Section 112 of the Act.

4. Aggrieved with the above order of the Collector, both parties preferred appeals before the Board. The Board disposed of the appeals of Shri A.H. Gandhi and the appellants vide composite order dated 29-2-1980. After careful appraisal of the evidence adduced by both sides, the Boa