T.K. Jayaraman, Member (T)

1. These appeals have been filed against the Order-in-Original No. 06/2005-Cus-Adjn. (Commr.) dated 17.05.2005 passed by the Commissioner of Customs, Bangalore.

2. The appellant, M/s. Surya Light, filed Bill of Entry for clearing Energy Saving Lamps (CFL) imported by them at Bangalore. On the basis of certain intelligence, elaborate investigations were carried out and proceedings were initiated against the appellant on the ground that they are not entitled for the benefit of exemption Notification under the Indo-Sri Lanka Free Trade Agreement (ISFTA in short). It was revealed during the course of investigation that initially, the Bill of Entry was filed along with an Invoice from Hong Kong which indicated that the Country of Origin of the goods was China. But later, the original Invoice was replaced with a fake invoice which was fabricated to show that the origin of the goods was Sri Lanka. This was done, as per the allegation in the proceedings, in order to get the benefit of exemption from duty under the ISFTA and also in order to avoid the Anti Dumping Duty because if the goods are of Chinese origin, the Energy Saving Lamps are liable to discharge Anti Dumping Duty. Proceedings were initiated against various persons involved and the Adjudicating Authority passed the impugned order. In the impugned order, he held that the 76,500 pieces of Energy Saving Lamps imported by M/s. Surya Light are liable for confiscation under Section 111(d) and 111(m) of the customs Act. He imposed a Redemption Fine of Rs. 25,00,000/- on the said goods. He rejected the Certificate of Origin issued by the Sri Lankan Department of Commerce and denied the benefit of ISFTA exemption in terms of Notification No. 26/2000-Cus dated 01.03.2000 as amended by Notification No. 43/2003-Cus dated 18.03.2003 to the CFL imported by the appellants. He also held that the impugned goods are liable for levy of Anti dumping Duty in terms of Notification No. 138/2002-Cus dated 10.12.2002 as amended. Further, the Adjudicating Authority accepted the value declared by the appellant for the purpose of Customs Duty. However, for charging Additional Duty on Customs, he fixed the RSP at the rate of Rs. 200/- per piece. He confirmed the total demand of Rs. 1,18,03,735/- under the provisions of Section 28(1) of the Customs Act, 1962 read with Sub-sections (1) and (2) of the Customs Tariff Act, 1975, Notification No. 13/2002-CE(NT) dated 01.03.2002, Sections 3A and 9A of the Customs Tariff Act, read with Notification No. 138/2002-Cus dated 10.12.2002 along with interest under the provisions of Section 28AB of the Customs Act. He imposed a penalty of Rs. 20,00,000/- on Shri Umesh Kumar, Proprietor of M/s. Surya Light, under Section 112(a) of the Customs Act. He imposed a penalty of Rs. 5,00,000/- on Shri Jagadish P. Bajaj, Representative of M/s. Surya Lights, New Delhi under Section 112(a) of the Customs Act. The appellants are highly aggrieved over the impugned order. Therefore, they have come before this Tribunal for relief.

3. Shri A.K. Jayaraj, the learned Advocate, appeared on behalf of the appellants and Shri R.P. Raheja, the learned JCDR, for the Revenue.

4. We heard both sides.

The learned Advocate for the appellants invited our attention to the various documents viz. the Invoice No. CEC/037/03 dated 20.10.2003 issued by M/s. Ceyenergy Electronic Company Pvt. Ltd., Sri Lanka and the Certificate of Origin issued by the competent authority. He said that the appellant M/s. Surya Light approached the Honble Delhi High Court in the matter and the High Court ordered that investigations have to be carried out with regard to the documents produced by the appellants. The learned Advocate invited our attention to the correspondence between the Sri Lankan authorities and the Indian authorities in the matter and he said that there is ample evidence to show that the documents produced by the appellants are not fake and that they have been issued by the Sri Lankan authorities. In other words, he emphasized that the country of origin of the impugned goods is Sri Lanka in terms of the Country of Origin Certificate and he said that this is very clear from the investigation carried out by the authorities. Particularly, he invited our attention to the letter from the Department of Commerce, Ministry of Commerce and Consumer Affairs, Sri Lanka, addressed to Dr. M. Subramanyam, Joint Director, Directorate of Revenue intelligence, Government of India, confirming the verification of the documents issued by the Sri Lankan Department of Commerce. In these circumstances, he said that the denial of the exemption notification in terms of ISFTA to the impugned goods is not in order. He further said that as the goods are of Sri Lankan origin, they are not liable for Anti Dumping Duty. He requested that the impugned order is liable to be set aside in view of these investigations. He also reiterated that the appellants are not liable for any penalty.

5. The learned Departmental Representative Shri R.P. Raheja, informed the bench that the subject matter of the impugned order was already dealt with by this Tribunal in its Final Order Nos. 537 to 539/2007 dated 01.05.2007 wherein the appellants were (i) Amit Choudhary, Appraiser of Customs, Bangalore (ii) Srikanta Datta, Shipping Assistant of M/s. Chakiat Agencies and (iii) H.V. Nanjundappa, C & F In-charge, M/s. Chakiat Agencies. He said that it has been clearly established in the Final Order that the appellants had fabricated the invoice. They had actually replaced the invoice submitted originally along with the Bill of Entry by another invoice which was fabricated in order to escape from the Anti Dumping Duty and also to gain the advantage of benefit of Indo-Sri Lankan Free Trade Agreement. Therefore, he said that the impugned order requires to be confirmed by this Bench. He also said that the Commissioner has elaborately discussed the issue and given the reasons as to why the Certificate of Origin issued by the Sri Lankan authorities cannot be accepted in the present case. He also mentioned the role of the appellant in claiming the benefit and also in the fabrication of the documents produced before the Customs Authority. Hence, he requested the bench to confirm the impugned order.

6. On a very careful consideration of the issue, we find that the appellant imported Energy Saving Lamps and claimed the benefit of the Notification in terms of the Indo-Sri Lankan Free Trade Agreement. The Adjudicating Authority has elaborately dealt with the issue in its findings. It is seen that originally when the Bill of Entry was filed, it was covered by Invoice No. 12336 dated 20.10.2003 of M/s. Red Sea Trading Co. Ltd., Hong Kong, which indicated China as the Country or Origin. It is seen that later, this invoice had been replaced by another fabricated invoice of M/s. Ceyenergy Electronic Co. Pvt. Ltd., Sri Lanka. Even though the investigations have revealed that the Sri Lankan authorities indeed had given the Certificate of Origin, the learned Commissioner had given elaborate reasons for not giving the benefit of Indo-Sri Lankan Free Trade Agreement benefit. The investigations have revealed that the impugned goods had actually originated from China and in Sri Lanka, only packing and labeling was done. He had examined the issue in terms of the Origin Rules and he had come to the conclusion that the Certificate of Origin issued by the Sri Lankan authority is based on wrong information as the conditions of Rule 7(b) and 7(d) of the Origin Rules, 2000 notified vide Customs Notification No. 19/2000-Cus(NT) are not fulfilled. In view of these findings, he held that the goods are not eligible for benefit of exemption under Notification 26/2000-Cus dated 01.03.2000. It would be worthwhile to reproduce paras 108 and 109 of the impugned order, which explains clearly as to why the appellants are not entitled for the benefit of the Indo-Sri Lankan Free Trade Agreement.

108. It has been further argued by the importers Advocate that the investigating authority should made inquiry with the Sri Lankan manufacturer to ascertain whether the declarations made by it in the certificate of origin are borne out by facts and also to make inquiries with the Sri Lankan authority about the origin of the goods. In this connection, it is pertinent to note that the claim for the preferential treatment under Notification No. 26/2000-Cus dated 01.03.2000 has been made by the importer and in terms of Rule 4(b) of the Origin Rules, 2000, and it is for the importer making the claim to produce suitable evidence that the imports are eligible for the said preferential treatment. Further, the evidence produced by the importer making the claim is to be to the satisfaction of the Deputy Commissioner of Customs. In this case, the importer has produced only the country of origin certificate evidencing the origin of the goods. However, during the course of investigation, the following facts came to light viz:

a) the invoice No. 12336 dated 20.10.2003 from M/s. Red Sea Trading Company, Hong Kong which had originally been produced at the time of submission of the Bill of entry No. 20244 had indeed been shown China as the country of origin but later on, as a result of connivance between the importer and the clearing agent, the said document had been replaced with a tampered document in such a way that the country of origin had been obliterated. The officers were in fact able to recover a Xerox copy of the original invoice showing "CHINA" in the country of origin column from the conspirators.

b) Both the importer, and his representative Shri Jagdish Bajaj, in their respective statements given before the investigating officer had clearly and repeatedly admitted that the goods in question are of Chinese origin and that the only activities done by M/s. Ceyenergy Electronic Company Pvt. Ltd., Sri Lanka were to put the marks i.e. "MADE IN SRI LANKA" etc. on the CFL and repacking them in Sri Lanka.

c) Investigations also subsequently revealed that the importers representative had, sitting in Bangalore, fabricated the Sri Lankan Invoice No. CEC/037/03 and packing list and forged the signature of the authorized signatory of the Sri Lankan party making it appear as though the invoice had been sent from M/s. Ceyenergy Electronics Ltd. of Sri Lanka, and had faxed the same to the CHA office, that he had shown the fax as well as its photocopy to the Appraising Officer on 20.11.03 who had instructed him to tear off the top portion of the fax which had the phone number from where the fax was sent; that he had done accordingly and had thrown the top portion in ICD itself and that the same was later recovered by the officers of the HPU under mahazar dated 22.11.03. He had admittedly replaced these fabricated documents in place of the documents already given to Customs so as to not only fraudulently avail the concessional benefits available to Sri Lankan originating goods but also to avoid the antidumping duty leviable on the goods of Chinese origin.

Therefore when the investigation has unearthed facts corroborated with evidences and the statements of the Proprietor of the unit, his representative and the CHA, which render the impugned goods ineligible for the preferential treatment, it is for the importer (and not for the investigating authority) to substantiate his claim for the said preferential treatment. In any case, the department had caused verification of the COO issued by the Sri Lankan authorities and it was confirmed by the Director General of Commerce, Ministry of Commerce and Consumer Affairs, Department of Commerce, Sri Lanka that the Country of Origin Certificate No. CO-ISFTA/03/7155 dated 23.10.2003, was issued by the designated authority after having been satisfied about the origin requirements of the relevant rules. Notwithstanding the above, the fact remains that:

(a) the goods in question were covered by Invoice No. 12336 dated 20.10.03 of M/s. Red Sea Trading Co., Hong Kong which indicated China as the country of origin.

(b) The order had been placed with M/s. Red Sea Trading Company, Hong Kong.

(c) The payment for the goods in question is to be made to M/s. Red Sea Trading Company, Hong Kong and no payment has been or is to be made by M/s. Surya Light to M/s. Ceyenergy Electronic Co. Pvt. Ltd., Sri Lanka and

(d) The goods have only been subjected to the activities of labeling and packing in Sri Lanka which activities in terms of the aforesaid Rules are not sufficient for the goods to qualify as goods of Sri Lankan origin.

109. In a similar case detected by the Jodhpur Commissionerate, an importer filed a Bill of Entry for clearance of CFLs claiming benefit of Customs Notification No. 26/2000 dated 1.3.2000. The goods were imported from M/s. Ceyenergy Electronic Company Pvt. Ltd., Sri Lanka (who is the same exporter in this case also). The importer at Jodhpur had submitted COO issued by the Govt. of Sri Lanka as per ISFTA. On an investigation by the Jodhpur Commissionerate, a report was received from the Sri Lankan Customs to the effect that the exporter (i.e. M/s. Ceyenergy Electronics Pvt. Ltd., Sri Lanka) had procured the following components from China viz. Ballast, tube with plastic upper cover, Plastic lower cover, wire, Inner sleeve, insulation sleeve, cement, glue and adaptor. It has been further confirmed by the Sri Lankan Customs that the exporter had procured the following items domestically viz. Gift box, packing sleeve, price sticker, semi carton, master carton, cellotape 2" for semi, Cellotape 3" for master, yellow strapping, strapping clips, Poly screen ink pad, Poly screen ink reducer. Therefore, it is evident that all the components in knocked down condition are imported by M/s. Ceyenergy Electronic Company Pvt. Ltd. from China and only assembling and packing processes are being carried out in Sri Lanka by procuring the materials for packing of the goods for exports. This modus is consistent with the statements given by both Shri Umesh Kumar, Prop of M/s. Surya Lights and his representative Shri Jagdish Bajaj. In terms of General Rule 2(a) for the interpretation of the import schedule, all the imported components from China are classifiable as complete CFL under Heading 8539.31. Further the processes carried out by M/s. Ceyenergy Electronic Company P. Ltd. in Sri Lanka do not result in any change in the four digit level code and as such the condition of Rule 7(b) of the Origin Rules, 2000 is not fulfilled for the simple reason that the non-origination materials as well as the complete manufactured product, namely CFL are classifiable under the same heading. Further, as already discussed in the preceding paras, the condition of Rule 7(d) of the Origin Rules is also not fulfilled as only assembling, labeling and packing processes are being carried out in Sri Lanka. Therefore, I find that the COO certificate issued as per ISFTA was issued by the Sri Lankan authorities based on wrong information as the conditions of Rule 7(b) and 7(d) of the Origin Rules, 2000 notified vide Customs Notification No. 19/2000-Cus(NT) are not fulfilled. Taking all these facts into consideration and also the various acts of the importers representative and the staff of the CHA in attempting to misdeclare the country of origin of the impugned goods, I disregard the COO No. CO-ISFTA/03/7155 dated 23.10.2003 and hold that the goods are not eligible for the benefit of exemption under Notification No. 26/2000-Cus dated 1.3.2000.

7. In view of the above findings, we find that the appellants are not entitled for the benefit of the said Indo Sri Lankan Free Trade Agreement and further, as there is evidence to show that the goods originated actually from China, they are also liable to Anti Dumping Duty in terms of the relevant Notification.

8. The learned Commissioner has observed on the basis of various statements, which were recorded during the investigation that Shri Umesh Kumar, Proprietor of M/s. Surya Light, had masterminded the entire operation of importing the goods of Chinese origin and getting the same routed through Sri Lanka with the sole intention of evading Anti Dumping Duty of over Rs. 1 crore. He had appointed Jagdish Bajaj of Chennai for the sole purpose of securing the release of the goods from the Customs and dispatching the same to various locations of his choice. He had also admitted that on earlier occasions also he had imported CFL/Lamp fittings from China and got them cleared at various ports in India. In his statement dated 09.01.2004, Shri Umesh Kumar has stated that Shri Jagadish Bajaj had, on his instruction, informed Shri Ragavendra to move the container of CFL from China to Colombu, Sri Lanka for packing and labeling. This fact was deposed by Shri Ragavendra of M/s. Direct Logistics India (P) Ltd. in his statement dated 03.12.2003 and supported by Bill of Lading No. SHA-02090261 for movement of a container from China to Sri Lanka. Further, Shri Umesh Kumar also admitted in the same statement that the same modus operandi was adopted in the case of the instant consignment seized on 22.11.2003. He admitted to having knowledge of the entire activity undertaken by Shri Jagadish Bajaj in the case of present consignment, which involved tampering with the original invoice of M/s. Red Sea Trading Company to remove the word China from the origin column and fabricating the Sri Lankan Invoice No. CEC/037/03 in order to mislead the Department that the goods were of Sri Lankan origin. He also admitted that the reason for mis-declaring the country of origin of the goods was in order to avail the benefit of the exemption under ISFTA and also evade the Anti Dumping Duty leviable on the said goods. Therefore, the Commissioner has held that the appellant is liable to penalty under Section 112(a) of the Customs Act, 1962. The role of Shri Jagadish Bajaj, the second appellant, is discussed in para 118 of the impugned order, which is reproduced below:

118. Shri Jagdish Bajaj, authorized representative of M/s. Surya Lights has associated himself in attempting to import energy saving lamps by misdeclaring the country of origin of the goods as Sri Lanka with an intent to evade the payment of anti dumping duty of Rs. 1 crore on the goods. With this malafide intention, he has in connivance with the CHA staff tampered with the original invoice No. 12336 of M/s. Red Sea Trading Co., Hong Kong and erased the word China appearing in the origin column of the said invoice and later destroyed the original invoice and replaced the tampered documents in the B/E No. 20244; had removed the original GATT declaration (indicating China as the country of origin) after the assessment was completed and replaced it with another declaration indicating Sri Lanka as the country of origin; fabricated an invoice bearing the number CEC/037/03 of M/s. Ceyenergy Electronics Ltd., Sri Lanka and forged the signature of the authorized representative of the Sri Lankan company and presented such fabricated document to the Department forgetting the clearance of the instant goods. Shri Jagdish Bajaj has done all this to ensure that the goods did not suffer anti dumping duty to the tune of Rs. 1 crore as also to ensure that they would unduly get the benefit of exemption under ISFTA. His counsels arguments that the allegations made in the SCN against Shri Jagdish Bajaj are false is not tenable especially when there is ample documentary evidence to prove that he had received a sample of the Sri Lankan invoice from Shri Umesh Kumar by fax at his Hotel at Bangalore, taken photocopies of the said fax (which fact is corroborated by the statement given by the owner of M/s. Plus Point Systems, a Xerox shop in Gandhinagar), prepared a similar invoice at a local internet parlour and faxed the same to the CHA office showing as though it had been sent from Srilanka. Laer he had also torn of the top of the fax copy which had the phone number from where it had been faxed and had thrown it in the bushes at ICD, While Field, Bangalore, which had been recovered by the Investigating Officers as per the directions given by Shri Jagdish Bajaj in his presence. Further, the argument that the Department had falsely alleged that Shri Jagdish Bajaj had fabricated the Sri Lankan invoice which is not corroborated with any documentary proof and that the statement of Shri Jagdish Bajaj was taken by force is totally baseless. The investigating officers had recovered from the person of Shri Jagdish Bajaj a torn piece of paper which appeared to be a part of the invoice of M/s. Ceyenergy Electronics and on which attempts appeared to have been made to forge/imitate the signature contained therein. On being questioned, Shri Jagdish Bajaj had admitted that he had tried to practice the signature of the representative of M/s. Ceyenergy Electronics so that he could fabricate an invoice with the number CE/037/03 which number is appearing in the certificate of origin. Therefore, it is absurd to state that the allegations in the Show Cause Notice are not supported by any evidence. On the other hand, it is armed with such evidence which is clinching Shri Jagdish Bajaj in attempting to defraud the govt. Further, the averments made by the Counsel that the act of erasing the word China appearing in original invoice No. 12336 dated 20.10.03 of M/s. Red Sea Trading Co. was done by Shri Jagdish Bajaj on the suggestion made by the CHA and that the CHA staff Nanjundappa and Datta had in turn received such instruction from the AO Shri Amit Choudhary appears to be an attempt to shift the responsibility on to someone else and escape the clutches of law. The fact remains that Shri Jagdish Bajaj had erased the word China from the original invoice No. 12336 of M/s. Red Sea Trading, which fact is also not being denied by the Counsel. I also find it worthy of mention here that Shri Jagdish Bajaj in his various statements given under Section 108 of the Customs Act had always stood by his earlier statements and at no point of time had he retracted any statement. From the various evidence and submissions made by Shri Jagdish Bajaj, I find that his appointment as representative of M/s. Surya Light was with the explicit purpose of getting the imported consignments cleared from Customs and hence he is solely responsible for ensuring that the information given to the Department is true and based on facts. The fact that Shri Jagdish Bajaj has committed the above acts of commission, albeit with the complete knowledge and concurrence of his Proprietor Shri Umesh Kumar does not absolve him of his responsibility of declaring the truth to the Department and ensuring that the goods suffer the appropriate duties. Therefore, Shri Jagdish Bajaj is liable for penalty under Section 112(a) of the Customs Act, 1962.

9. The investigations have clearly revealed that the goods are of Chinese origin. Further, the Commissioner has clearly given a finding that in terms of the Origin Rules issued by the Government of India, the goods will not be entitled for the benefit of the exemption under the ISFTA. In view of this, the demand of duty on the impugned item is in order. The appellant is also liable for payment of Anti Dumping Duty and also the CV Duty. Hence, we confirm the demand of duty to the tune of Rs. 1,18,03,735/- (Rupees One crore, eighteen lakhs, three thousand seven hundred and thirty five only). The Commissioner has given enough justification for adopting the value of Rs. 200/- per piece for the purpose of Additional Duty of Customs under Section 3(1) of the Customs Tariff Act. He had taken the value of RSP at Rs. 200/- per piece. The Commissioner has also discussed the roles of Shri Umesh Kumar, Proprietor of M/s. Surya Light and also Jagadish P. Bajaj in the entire episode. However, taking into consideration the facts and circumstances of the case, the penalty on Shri Umesh Kumar is reduced to Rs. 10,00,000/- (Rupees ten lakhs only) and the penalty on Shri Jagadish Bajaj is reduced to Rs. 50,000/- (Rupees fifty thousand only). With these modifications, we dispose of the appeal.

(Pronounced in open Court on 6.12.2007)