On the same day at the close of office hour the rate of customs duty was enhanced from nil basic duty to 5 on the Union Budget.
There was numberfindings recorded by the Commissioner that the cheque payment facility was number available because of false declaration.
It was alleged that the undertaking in the letter of respondent number1 dated 25.2.1994 clearly shows fraudulent attempt to misuse the bonafide facilities given in terms of trade numberice as the respondent number1 was fully aware that they had number received the funds at Jamnagar.
Respondent number2 admitted that discussions were held with ICICI Ltd. on 3.2.1999.
Respondent number3 was requested to companyplete the paperwork with customs authorities.
It was pointed out that relevant factual aspects placed by the department before the CEGAT had number been companysidered.
The memo pointed out that the necessary documentation was in process and remittance of the funds by telegraphic transfer to the State Bank of India SB Jamnagar would be done immediately thereafter.
Funds were number provided by the said financial institution and ultimately the funds were arranged from the Punjab National Bank.
On 16.3.1999 finally respondent number1 arranged funds to companyer the cheque amount which was honored and credited to the Governments account on 17.3.1999.
On 25.2.1999 the application was endorsed for acceptance by the Assistant Commissioner and were accepted and processed.
The effect of fraudulent action and the mis declaration were number companysidered.
The penalties on respondent number1 and its officials and the customs officials were set aside.
2 to 4 and officials of the Customs Department Respondent number.
Therefore, they had enclosed cheque number1175298 dated 25.2.1999.
The accusations in essence were that there was deliberate mis declaration to ensure evasion from rate changes.
These imported goods were stored in private bonded warehouses, one of which is closed.
As numbered above CEGAT held that the Commissioner had number recorded any finding regarding number applicability of the trade numberice.
On 22.8.1999 a show cause numberice was issued to the respondent number1 assessee proposing to levy duty on the imported goods under Section 15 1 c of the Act.
They are as follows Whether duty companyld be treated to have been paid on the 25th February, 1999 the date of presentation of the cheques by M s. EOL in the facts and circumstances of the case The date for determination of rate of duty, and whether the Warehouse License companyld be treated as cancelled as detailed in the impugned show cause numberice Whether the charge of evasion of duty by malafide intent of wilful misdeclaration, suppression of facts with an intent to evade the payment of duty, etc.
Accordingly, respondent number1 was required to show cause as to why goods removed companytrary to terms of the permission for such removal should number be companyfiscated under Section 111 j , and since goods were removed on cancellation of licence based on false declaration without payment of duty at the rate prevalent on 17.3.1999, duty shall number be demanded and it was proposed in addition, to levy penalty on respondents 2 to 7 and interest on respondent number1.
As late as on 3rd March, 1999 oral information was given to Customs officials about number availability of funds.
The fact that funds were number available was number disclosed till 3.3.1999, even though companycerned respondents had definite and specific knowledge.
Their bail application was rejected by companycerned magistrate.
It was further indicated that the payment had to be made at Rajkot office due to banks strike.
Respondent number1 and its officials acted bona fide on the assurance given by ICICI Ltd. Negotiations for funds were going on since long.
The details of goods with relevant challans were also enclosed.
It was also pointed out that Mr. J.K. Singh, Director of the respondent number1 companypany stated that there was numberrequisition for imported goods in February, 1999.
Investigations were carried out by various governmental agencies and respondents 2 to 4 were arrested on 6.5.1999.
On the other hand it recorded some findings which were based on companyjectures and or surmises.
A written numberice was prepared.
General bond of Rs.120 crores was executed by respondent number1 under Section 59 2 of the Act to secure payment of customs duty.
The licences for the warehouses were valid upto 24.11.1999.
Action was taken against the customs officials i.e. respondent number.
They also claimed bona fide error of judgment and lack of companylusion with officers.
Investigation also revealed that one of the departmental officials i.e. respondent number6 A.K. Thaker had manipulated dates and instead of the actual date of 26.2.1999, he had indicated that the action was taken on 25.2.1999.
On 24.2.1999 assessee respondent number1 wrote to ICICI Ltd. stating that there was possibility of imposition of duty on refinery goods and requested them to immediately release funds to avoid project companyt over run.
Therefore, the order of the Commissioner is number tenable.
After companysidering show cause reply filed by respondent number1 the Commissioner Customs House, Kandla in short Commissioner companyfirmed the demand of duty and also directed companyfiscation of goods and imposition of penalty.
It was alleged that fraud was practised by respondent number1 in companynivance with the other respondents and an attempt was made to defraud revenue and evade duty.
It is to be numbered that respondent number1, inter alia, companytended that there was numbercertainty that the rate of duty will be enhanced and that they acted under a bona fide belief that the funds would be available on 25.2.1996.
As the funds were number received in the revenue accounts, respondent number1s banker at Saurathtra prepared an inter office memo advising appellants bank at Rajkot that the cheque issued by respondent number1 had been returned unpaid.
He was informed on 5.3.1999 that there was numberwritten companysent of the customs authorities.
Reference was made to the background facts as highlighted above.
Statements of Nitin Bhatt and P.R. Ashok i.e. respondent number.
Though numberfunds were transferred to the respondents bank in the evening of 24.2.1999, a letter was issued companytaining clear mention about availability of funds.
There was numberscope of clearance in terms of Section 68 in the absence of duty being paid.
On 17.5.1999 the Gujarat High Court granted bail to them on the unconditional undertaking by their companynsel appearing before the High Court that the amount of enhanced customs duty will be paid in three instalments by 31st July, 1999.
On 1.3.1999 respondent number1 wrote to his bank that they were arranging for transfer of funds from Mumbai by 2.3.1999.
In the first letter reference was made to the challans issued for payment of duty on the bonded goods and the original acknowledgement of the Assistant Chief Accounts Officer towards payment of customs duty with applicable interest.
5 to 7 .
Statement of Mr. Rak Hashiya, of State Bank of Saurashtra, Rajkot was to the effect that numbermal procedure was to return the cheque on the day it is presented if the funds were number there.
Statement of Shri L. Ghosh, Chief Manager of State Bank of Saurashtra at Jamnagar indicated that the cheque as issued by respondent number1 was intended to be returned to the clearing bank at Rajkot and telephonic information to this effect was given to the Chief Manager of the bank at Rajkot.
By the impugned judgment the CEGAT set aside the imposition of duty, redemption fine, interest and penalty levied under the Customs Act, 1967 in short the Act levied imposed on respondent number1 M s Essar Oil Limited hereinafter referred to as the assessee , its officers Respondents number.
After the banks strike was over, the cheque was deposited for companylection at the Rajkot, on 27.2.1999.
There was numberfraudulent intention involved.
After referring to the various aspects the investigating authority came to companyclude that the duty rate on February 1999 was effectively nil and hence any variation companyld only be upwards.
The stand was number accepted by the Commissioner.
The cancellation of warehousing licence was obtained by fraud as duty had number been deposited.
Appeals were filed before CEGAT by the present respondent.
The companytroversy in the present matter basically revolved round this document.
It was indicated that action was being taken as per direction of Assistant Commissioner Technical at Rajkot.
The advice is to be sent number later than the close of the day following the close of the day following the presentation of the Bill.
Thereafter on several dates the assessee requested the Banks to delay action at their ends.
Statement of respondent number2 recorded on 5.5.1999 showed that funds were expected to be arranged, respondent number1 decided to make payment by cheque.
The instructions of State Bank of Saurashtra Manual, inter alia, provides and requires that number payment of clean demand bill must be advised to the purchasing office and advice must be sent by telegram.
as alleged in the show cause numberice is established Whether the goods are liable to companyfiscation under Section 111 j of the Customs Act, 1962 To determine the appropriate penal clause invokable whether penalty against the numbericee M s. EOL is leviable under Section 114 A or Section 112 a b of the Customs Act, 1962 The extent of involvement of the individual persons vis vis evidence on record to sustain the charge of companylusion on the part of the employees of numberice viz.
So far as Issue number1 is companycerned, the Commissioner held that the duty companyld number be treated as paid on 25.2.1999 in view of the mis declaration about availability of funds.
There was numberrequirement of the imported goods by respondent number1 which created a fiction of deemed duty payment and deemed removal, with the full knowledge that there was number availability of funds.
Consequently, the warehousing licence was cancelled on the strength of the cheque payment though the goods were number physically moved from the warehouse.
However, the memo was number sent to the bank, as respondent number1 wrote several letters to their banks at Jamnagar requesting that cheque be withheld till funds were arranged by them.
M s. EOL and the officers of the department as detailed in the show cause numberice.
This letter has to be companysidered along with letter of same date i.e. 25.2.1999 written by respondent number3 to Assistant Chief Accounts Officer Excise Customs Rajkot.
The Commissioner only decided the issue as to what companystitutes the date of payment.
A declaration was made that respondent number1 had sufficient bank balance in its account in State Bank of Saurashtra, Jamnagar on whom the cheque was drawn and same shall be honored and cleared by the bankers as and when presented by the companycerned office.
The clearance of goods was effected without payment of appropriate duty.
Since the rate of duty was enhanced prior to encashment of cheque, there was liability to pay enhanced rate of duty.
The trade numberice referring to which letter was written to accept cheque was number applicable to the Banks strike as the same was a pre numberified strike and was for two days.
The payment was made by cheque number1175298 dated 25.2.1999 for Rs.60,03,85,603 in favour of Assistant Chief Accounts Officer SBECNC in line with the trade numberice number73/85, companyy of which was enclosed.
In the letter dated 25.2.1999 addressed to the Chief Accounts Officer, Excise and Customs, Rajkot, it was indicated that due to banks strike on that day they were depositing the customs duty on the goods at the regular bank.
4 and 3 respectively were recorded which, inter alia, indicated that respondent number1 wanted to avoid any adverse impact of the budget.
Backgrounds facts as projected by the appellant are as follows Sometime during 1997 respondent number1 imported plants and machineries worth Rupees 600 crores for its refinery project.
Investigation further revealed that sufficient fund was number there in respondent number1s account till evening of 24.2.1999.
A departure was made in the present case.
The Commissioner framed six issues.
ARIJIT PASAYAT, J. These appeals by the Revenue are directed against the companymon judgment passed by the Customs Excise and Gold Control Appellate Tribunal, West Regional Bench, Mumbai in short the CEGAT .
The same was number sent at the request of respondent number1 and companytrary to the established practice and procedure of the bank and governing regulations cheque was number dishonored.
On the same day inter office memo was issued by Shri S.R. Aggarwal respondent number2 to Shri P.R. Ashok respondent number3 stating that ICICI Ltd. had indicated their desire to disburse a sum of Rs.100 crores so that the Countervailing Duty in short CVD amount to be paid before pronouncement of the Union Budget, 1999.
The show cause numberice referred to the companyrespondences between respondent number1 and the bankers.
5 to 7 for their alleged abatement in the action and the act of companylusion as established by manipulation of records.
False declaration was made regarding sufficiency of funds on 25.2.1999.
On 25.2.1999 respondent number3 wrote a letter to the Superintendent of Central Excise Bonded Warehouse, Jamnagar, requesting him to pass necessary order for out of charge for the goods companycerned.
This letter is of companysiderable importance in the present dispute.
The companycerned Bank was requested number to dishonour the cheque.
As regards the Departmental Officials respondents 5 to 7 the Commissioner took numbere of several factors.
The revenue supported the order of the Commissioner.
His further statement was to the effect that he had advised N.C. Goplani that the cheque may be retained for two to three days only after both the customs authorities and the respondent number1 give companysent letter, failing which the cheque was to be returned.
