RAMA NAGAPPA SHETTY V. COMMISSIONER OF CUSTOMS

TAXAP/834/2018

AI Insights

The case revolves around penalties imposed on Rama Nagappa Shetty, the Non-Executive Chairman of M/s. Sheshanka Sea Foods (P) Ltd., for customs violations under the DEEC scheme. The company imported HDPE granules claiming duty exemption for manufacturing and exporting, which were instead diverted to the local market. The Customs authorities and later the CESTAT found Shetty and other directors liable for these violations, leading to penalties. Shetty's appeal contested the factual and legal basis of these findings, arguing his limited role and knowledge in the company's operations. The High Court, after reviewing the facts and legal arguments, upheld the penalties, agreeing with the lower authorities' findings.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 742613 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 12-03-2020
• Assessment Year: misc
• Other Referred Cases: HIM Logistics Pvt. Ltd v. Principal Commissioner of Customs, Swadeshi Polytex Ltd. v. Collector of Central Excise, Meerut, Basudev Gard v. Commissioner of Customs, Lakshman Exports Limited v. Collector of Central Excise, Mulchand M. Zaveri v. Union of India, Commissioner of Central Excise v. Kurele pan Products Pvt. Ltd, Sushil Kumar Kanodia v. Commissioner of Customs, Chennai, Prasanta Sarkar v. Commissioner of Customs (Prev.) Mumbai, Jagannath Premnath v. Commissioner of Customs, Mumbai, Superintendent of Customs v. Bhanabhai Khalapabhai Patel and another, Pradeep Kumar v. Commissioner of Customs, Mohteshan Mohd. Ismail v. Spl. Director, Enforcement Directorate and another, Haricharan Kurmi; Jogia Hajam v. State of Bihar, Surinder Kumar Khanna v. Intelligence Officer Directorate of Revenue Intelligence, K.I. Pavunny v. Assistant Collector, (HQ), Central Excise Collectorate, Cochin, Amad Noormamad Bakali v. State of Gujarat and others, Rajesh Bajaj v. State NCT of Delhi and Ors., T.S. Balram v. M/s. Volkart Brothers, G. Subramanian v. Government of India, Honda Siel Power Products Ltd. v. Commissioner of Income Tax, Delhi
• Laws Referred To: Customs Act, 1962
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: MITESH AMIN; MAITHILI MEHTA
• Assessee Lawyers: RAGHAVENDRA HANJER; BHASH MANKAD
• Keywords: Customs Penalty; DEEC Scheme; Personal penalty; Rectification Application; HDPE granules import
• Section: 112(a); 111(d); 28(1); 111(o); 28(AB)

Judgement Text

"C/TAXAP/834/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 834 of 2018 ========================================================== RAMA NAGAPPA SHETTY Versus COMMISSIONER OF CUSTOMS ========================================================== Appearance: MR RAGHAVENDRA HANJER WITH MR.BHASH H MANKAD for the Appellant(s) No. 1 MR MITESH R AMIN(2876) SENIOR STANDING COUNSEL with MS MAITHILI MEHTA STANDING COUNSEL for the Opponent(s) No. 1 ========================================================== CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 12/03/2020 ORAL ORDER (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1. This Court (Coram : Hon'ble Mr. Justice Akil Kureshi and Hon'ble Mr. Justice B.N.Karia) passed the following order on 4th October, 2018 : “1. The appellant has been visited with personal penalty by the Customs authorities, which has been confirmed by the CESTAT by the impugned judgment. Learned counsel for the appellant submitted that the appellant was a Non­ Executive Chairman of the Company and was not involved in the day­to­day functioning of the Company. However, the CESTAT erroneously observed in the impugned judgment that the appellant was the authorized signatory, looking after all the operations of the Company and its Bank Accounts and was also approving the policy matters of the Company. 2. Notice for final disposal, returnable on 01.11.2018.” Page 1 of 37 C/TAXAP/834/2018 ORDER 2. In view of the aforesaid order, this appeal was heard finally. This appeal is filed by the original noticee of the show cause notice challenging the judgment and order dated 31st October, 2016 passed by the Customs, Excise & Service Tax Appellate Tribunal, Ahmedabad (“CESTAT” for short) raising the following substantial questions of law: “[a] Whether in the facts and circumstances of the case, the Hon'ble Appellate CESTAT was correct in upholding the penalty imposed on appreciation of the incorrect facts that the Appellate was a Promoter­cum­whole time evidences on record before the Appellate CESTAT proved that the Appellant was a non­executive Chairman of the Company even though the facts and evidences on record before the Appellate CESTAT proved that the Appellate was a non­ executive Chairman of the Company and used to rarely visit the Company and used to participate very rarely in the Board's meetings? [b] Whether in the facts and circumstances of the case, the Hon'ble Appellate CESTAT is correct in upholding the penalty imposed on the Appellant under Section 112(a) of the customs Act, 1962 especially when the Appellant was the non­executive Chairman of the Company and used to visit rarely to the Company as well as to the Board's meetings? [c] Whether in the facts and circumstances of the case, the Hon'ble Appellate CESTAT was right in rejecting the ROM application on the ground that consideration of facts and evidences on record would result in review of the order? [d] Whether in the facts and circumstances of the case, the Hon'ble CESTAT was right in rejecting the ROM application without considering the various case laws cited by the Appellant during the course of arguments which already holds that non­consideration of certain facts and grounds can be considered in ROM application? Page 2 of 37 C/TAXAP/834/2018 ORDER [e] Any other question of law which this Hon'ble Court may deem fit in the the facts and circumstances of the case?” 3. Brief facts of the case arising in this appeal are as under : 3.1) The appellant was a Non­Executive Chairman of one M/s. Sheshanka Sea Foods (P) Ltd.(here­in­after referred to as “the company”). According to the appellant, he used to visit the company and used to preside over the Board meetings very rarely and one Shri V.V. Kamath, Executive Director of the company was the overall in­charge of all the affairs of the company along with whole time Director Shri Srinivasa R. Naik. 3.2) The company imported 666.750 mt of HDPE granules under the separate bills of entry filed in the month of March 1990 under the DEEC scheme at Kandla port claiming the benefit of exemption notification without payment of duty on the ground to be utilised for manufacturing and exporting such goods. According to the appellant, he had no knowledge of the order being placed for supply of the goods as the same was never brought before the Board meeting at all or to his knowledge by any of the directors. 3.3) Custom Investigation wing however, found that in breach of conditions of DEEC scheme, the goods were diverted to the local market and in fact the goods never reached the factory of The company situated at Karnataka. The show cause notice dated 31st July 1998 was issued alleging that the appellant along with other directors of the Page 3 of 37 C/TAXAP/834/2018 ORDER company had jointly diverted the goods in the local market which were meant for re­export. The competent authority therefore, prima­facie, found the following breaches of the notification: “Therefore, from the above facts and narration it appears that M/s SSFPL has violated the following conditions of Notfn. No.140/87 dtd.27.3.97 (parawise) : (i) Para (1)(d) by not bringing the goods imported directly into the factory. (ii) Para (1)(e) by not exporting the products produced out of the imported material. (iii) Para (1)(f) by not using the imported goods for the specific purpose for which the same was imported i.e. for manufacturing packing materials. (iv) Para (1)(g) by disposing off the imported goods which was not allowed under this notification.” 3.4) On the basis of above breached stated in the show cause notice, the company and its directors including the present appellant were called upon to show cause as to why:­ “(1) the imported goods i.e. HDPE granules / Moulding powder weighing 666.75 Mts and valued at Rs.71,86,128/should not be confiscated under section 111(d) & 111(o) of Customs Act, 1962. (2) customs duty amounting to Rs.89,61,999.00 (BCD Rs.20,01,750.35; Addl. Rs.32,33,757.75 and CVD Rs.37,28,490.90) payable on the goods imported should not be demanded under the proviso to section 28(1) of the Customs Act, 1962 and interest payable @ 20% per annum under section 28 AB of Customs Act, 1962. Page 4 of 37 C/TAXAP/834/2018 ORDER (3) penalty under section 112(a) and (b) and 114(iii) of Customs Act, 1962 should not be imposed on them. S/Shri R.N.Shetty and V.V.Kamnath are also hereby called upon to show cause as to why penalty under section 112(a) (iii) of Customs Act, 1962 should not be imposed upon them for suppression of facts, wilful wrong statement and fabricating the statutory documents.” 3.5) The adjudicating authority passed the Order in Original dated 28th November, 2000 after completion of the hearing of the show cause proceedings. The appellant therefore being aggrieved preferred appeal before the CESTAT, Bangalore and the CESTAT set aside the said order and remand the matter back to the adjudicating authority to examine the matter afresh so as to grant one more opportunity of hearing to the appellant with a liberty to raise all issues during re­adjudication proceedings. 3.6) After remand, the adjudicating authority have given an opportunity of hearing to the appellant, passed a fresh Order in Original on 27th August, 2007 in which it was held that the company was liable for alleged breaches on account of which the goods would be liable for confiscation under sections 111(d) and 111(o) of the Customs Act, 1962 ( for short ‘the Customs Act’) and penalty of Rs. 50 lakhs was imposed on the company under section 111(a) of the Customs Act in addition to confirming the duty demand. The adjudicating authority also imposed personal penalty of Rs. 20 lakhs up on the appellant under section 112(a) of the Customs Act and also imposed penalty of Rs. 10 lakhs on the Executive Director Vijay Venkatrao Kamat and rest of the directors were absolved of their liabilities. Being Page 5 of 37 C/TAXAP/834/2018 ORDER aggrieved and dissatisfied, the appellant challenged the said order of the adjudicating authority before the CESTAT. 3.7) The CESTAT by common order dated 31st October, 2016 in Appeal No. C/421/2007 filed by the appellant and in Appeal No. C/57/2008 filed by Vijay Venkatrao Kamat dismissed both the appeals by holding that no interference was required to be made with the orders of penalty imposed on the appellant. The CESTAT also did not find any reason to reduce the penalty imposed by the adjudicating authority considering the facts and circumstances of the case and the amount of duty evasion of Rs.89,61,999/­ along with equivalent penalty imposed on The company which is under liquidation. 3.8) The appellant thereafter, moved Rectification Application No. 10355/2017 in Customs Appeal No. 421 of 2007 on the ground that there was an apparent error in the order dated 31st October, 2016 pointing out that though the appellant had raised various issues in the appeal, however, all the facts and evidence were not properly analysed by the CESTAT and certain facts were being wrongly reported in the order. It was also stated that the order was a non speaking order and therefore, be recalled and appeal be heard again. However, the CESTAT after hearing the parties, came to the conclusion after taking note of the facts and circumstances of the case, evidences produced on record against the appellant and complicity in the offence committed, it had decided the case on merits and therefore, the plea of the appellant to reconsider all the facts and evidence was not entertained Page 6 of 37 C/TAXAP/834/2018 ORDER as it would result in review of the order. Accordingly, the rectification application filed by the appellant was rejected. The appellant thereafter, preferred this appeal with the application to condone the delay caused due to filing of rectification application. The coordinate bench of this Court by order dated 20th September, 2019 has condoned the delay of 369 days considering the averments made in the further affidavit explaining the delay. 4. Learned advocate Mr. Raghavendra Hanjer with learned advocate Mr. Bhash H. Mankad for the appellant submitted that in the statement dated 20th June, 1997 it was categorically deposed that the appellant was only Non­ Executive Chairman having no authority to conduct any business/take decision in the Board meeting and that he was not aware of the records maintained by the company and that at no point of time proposal to import granules was brought before the Board meeting or to his personal knowledge by other directors. It was also pointed out form the said statement of the appellant that Shri V.V. Kamat and Shri Srinivasa Naik were in charge of the affairs of the company and they did not handover the record of the company and criminal complaint also has been lodged against them before the jurisdictional Court. It was therefore, submitted that in view of such statement of the appellant as well as the statements of other persons recorded by the Customs authority under section 108 of the Customs Act, the appellant could not have been saddled with the penalty of Rs. 20 Lakhs being the chairman of the company. Page 7 of 37 C/TAXAP/834/2018 ORDER 5. Learned advocate for the appellant further submitted that the appellant filed a detailed replies on 10th October, 1998 and on 20th October, 1999 pointing out various facts with regard to the alleged offence to demonstrate that the appellant had no knowledge about the transaction of import but the same were not considered by the adjudicating authority of by the CESTAT. 6. Learned advocate for the appellant also pointed out that the request of the appellant for cross examination was rejected by the Commissioner in the second round of hearing. It was pointed out that the appellant being a Non­ Executive Chairman, no penalty ought to have been imposed on him in absence of any specific allegation and evidence against the appellant. It was submitted that since the witnesses were not allowed to be cross examined, the statements involving the appellant had to be ignored and could not have been relied upon by the adjudicating authority. Learned advocate for the appellant further submitted that the CESTAT has passed the impugned order on incorrect appreciation of the facts which were neither part of the appeal nor urged by the respondent department and the impugned order is passed without appreciating the facts and evidence to the effect that the appellant was a Non­ Executive Chairman and was never part of the transaction and ground on which penalty imposed is upheld by the CESTAT that the appellant was a promoter cum whole time chairman of the company is contrary to the facts and evidence on record. It was further pointed out that late Shri Ramakanth Naik who was father of Shri Srinivasa Naik was the founder and the Managing Page 8 of 37 C/TAXAP/834/2018 ORDER Director of the company. Learned advocate for the appellant further submitted that in the synopsis of written submissions submitted by the appellant before the CESTAT, the appellant had contended that not only the statements of Shri V.V. Kamath, Shri Srinivasa Naik and Shri Y.D. Gavadi were recorded but statements of other persons of the company i.e. Shri Sumati U. Naik, Shri Sitaram Hegde, Shri V. Ranganath, Shri Kamal Mehta and Shri R.N. Naik were also recorded and none of them have implicated the appellant for the alleged offence. It was pointed out that the CESTAT did not consider such submissions as there is no finding or discussion about such vital facts in the impugned order. It was therefore, submitted that the impugned order is a non speaking order. Learned advocate for the appellant also pointed out that in the statement date 14th June, 1991 of Shri Srinivasa R.Naik who was the whole time director of the company, he clearly stated that Shri Vijay Kamath was overall in­charge of the factory and there was no mention of the appellant having any knowledge of the alleged import of the goods and its alleged diversion without bringing the same to the factory. Learned advocate for the appellant pointed out that there are contradictory statements of Shri Srinivasa R. Naik inasmuch as in statement dated 14th July, 1997, it was stated by him that import matter was looked after by Shri V.V. Kamath under direct supervision of the appellant and therefore, the statement given after six years from the first statement could not have been relied upon by the authority as such statement was given only with an intention to take revenge against the appellant for filing a criminal case. Page 9 of 37 C/TAXAP/834/2018 ORDER 7. It was submitted that the CESTAT failed to consider that no tangible and corroborative evidence was collected by the investigating authority to reject the request of the appellant for cross examination of the witnesses. 8. Learned advocate for the appellant submitted that in the facts and circumstances of the case, no penalty could have been imposed under section 112(a) of the Customs Act as the ingredients required to invoke the said provisions are not present inasmuch as the CESTAT confirmed the penalty only on the ground that the appellant was a promoter and whole time director of the company which is not true and correct. It was submitted that the CESTAT was duty bound to correct the mistake in its order where an issue has been argued and/or statement made the on issue which was not recorded and/or considered in the order. It was further submitted that import was without approval of the appellant and he was not involved in evasion of the duty. 9. Learned advocate for the appellant in support of his submissions relied upon the follwing decisions : i) HIM Logistics Pvt. Ltd v. Principal Commissioner of Customs reported in 2016(336) ELT 15 (Del). ii) Swadeshi Polytex Ltd. v. Collector of Central Excise, Meerut reported in 2000 (122) ELT 641 (SC). iii) Basudev Gard v. Commissioner of Customs reported Page 10 of 37 C/TAXAP/834/2018 ORDER in 2013 (294) ELT 353 (Del). iv) Lakshman Exports Limited v. Collector of Central Excise reported in 2002(143) ELT 21 (SC). v) Mulchand M. Zaveri v. Union of India reported in 2017 (52) STR 92 (Guj). vi) Commissioner of Central Excise v. Kurele pan Products Pvt. Ltd reported in 2017 (52) STR 218 (All). vii) Sushil Kumar Kanodia v. Commissioner of Customs, Chennai reported in 2007 (218) ELT 453 (Tri­ Chennai). viii) Prasanta Sarkar v. Commissioner of Customs (Prev.) Mumbai reported in 2007 (209) ELT 220 (Tri­ Mumbai). ix) Jagannath Premnath v. Commissioner of Customs, Mumbai reported in 2006 (198) ELT 104 (Tri­Delhi). x) Superintendent of Customs v. Bhanabhai Khalapabhai Patel and another reported in AIR 1992 SC 1583. xi) Pradeep Kumar v. Commissioner of Customs­ LAWS(CE) 1999 12 119. xii) Mohteshan Mohd. Ismail v. Spl. Director, Enforcement Directorate and another reported in (2007) Page 11 of 37 C/TAXAP/834/2018 ORDER 8 SCC 254. xiii) Haricharan Kurmi; Jogia Hajam v. State of Bihar ­LAWS(SC) 1964 2 6. xiv) Surinder Kumar Khanna v. Intelligence Officer Directorate of Revenue Intelligence SLP (Criminal) No.9816/2017. 10. On the other hand, learned Senior Standing Counsel Mr. Mitesh Amin assisted by learned Standing Counsel Ms. Maithili Mehta submitted that the adjudicating authority as well as the CESTAT after considering the materials on record have arrived at findings of fact that the appellant was a whole time chairman of the company and was authorised signatory looking after all the operations of the company and its bank accounts and the policy matters were approved by him. Mr. Amin would submit that the import of HDPE granules involved transaction of import of huge amount without payment of duty resulting into breach of exemption notification and DEEC scheme. 11.Mr. Amin referred to the statement of Shri Vijay Venkatrao Kamath that he was acting entirely under the instructions of the appellant. Mr. Amin relied upon the order passed by the coordinate Bench of this Court in Tax Appeal No. 653/2017 in case of Shri Vijay Venkatrao Kamat whereby the appeal filed by Shri Kamat for imposition of penalty of Rs. 10 lakhs by the adjudicating authority was dismissed. It was pointed out that in the said order, this Court has referred to the statement dated 3rd July, 1997 of Shri Page 12 of 37 C/TAXAP/834/2018 ORDER Kamat wherein he had admitted that application for advance license for import of goods was submitted to the licensing authority with the knowledge of the appellant and he reported directly to the appellant being the chairman of the company. Learned advocate Mr. Amin also relied upon the decision of this Court (Coram : Hon'ble Mr. Justice Rajesh Shukla) in case of Amad Noormamad Bakali v. (The) State of Gujarat and others reported in 2011 (12) GLH 31 to submit that the statement under section 108 of the Customs Act recorded by the Customs Officer is admissible in evidence as it would be hit by the provisions of sections 30 and 34 of the Evidence Act. It was therefore, submitted that statements of Mr. Kamat and Mr. Srinivasa Naik recorded under section 108 of the Customs Act by the Customs authority cannot be treated as the statements of the co accused persons but the such statements are admissible in the evidence and therefore, the penalty levied on the basis of such statements cannot be interfered with. 12. Having heard the learned advocates for the respective parties and having gone through the material on record, it would be fruitful to refer to the findings arrived at by the adjudicating authority which were later on confirmed by the CESTAT by the impugned order. The adjudicating authority has arrived at the following findings : “9. Discussion & Findings : 9.1. I have carefully studied the facts of the case as well as the submission advanced on behalf of the noticees. 9.2. In this case, the main noticee M/s. SSFPL imported Page 13 of 37 C/TAXAP/834/2018 ORDER 666.750 HDPE granules/moulding power having CIF value of Rs.71,86,128/­ at Kandla and cleared the same by filing three bills of entry Nos. F­1048/8.3.1990, F­ 1067/9.3.1990 and F­1102/12.3.1990 and by availing exemption under Notification No.140/87­Cus dated 27.3.1987 on the strength of Licence No. 0001145 dated 21.2.1990. After the clearance was permitted, it was found that SSFPL contravened the conditions of Notification No.140/87­Cus dated 27.3.1987 and accordingly, SSFPL, Shri R.N.Shetty and Shri V.V. Kamat were issued show cause notice No.S/10­377/97­SIIB dated 31.7.1998 which was adjudicated by the then Commissioner of Customs, Kandla vide Order­in­Original No.KDL/COMMR/77/2000 dated 30.10.2000. Vide this order, he confirmed the demand for duty & interest and imposed penalty, as narrated in para 1.4 and 2 above. Hon. CESTAT vide its final order No.F/1068 to 1069/2001 dated 13.06.2001 has remanded the matter back to this authority for re­ adjudication after observing the principles of natural justice and after providing opportunity of personal hearing to the noticees with a specific direction that the noticees should cooperate with the Department for speedy disposal of the matter. However, as discussed in para 8 above, none of the noticees appeared for personal hearing despite having been afforded the opportunity on three different occasions and accordingly, the issue is being considered on merits. 9.3. It is observed from the record that SSFPL who had taken duty free clearance of 666.750 MT HDPE granules/moulding powder totally valued at Rs.71,86,128/­ by availing the benefit of Notification No.140/87­Cus dated 27.3.1987, as amended, was required to satisfy the various conditions of the said notification including condition (d) which required them to take the said goods directly to the factory of manufacture and to enter the said goods into the records required to be maintained in accordance with the provisions of Central Excise and Salt Act, 1944, Condition (e) ibid which required them to export the products produced out of the imported goods, condition (f) ibid which required them to use the imported goods for the specific purpose for which the same was imported i.e. for manufacturing packing material and condition (g) ibid which categorically stated Page 14 of 37 C/TAXAP/834/2018 ORDER that the imported goods or any porting thereof shall not be sold or loaned or otherwise transferred to any other person or utilized or permitted to be utilized or disposed of for any other purpose, read with conditions appended to Licence No. 0001145 dated 21.2.1990. However, evidences that were collected in the course of investigation carried out in this regard which witnessed search of the premises of SSFPL on 14.6.1991 and those of M/s. Job­workers namely Karwar Plastics and M/s. Krishna Plastics Industries as well as recording of the statements of various persons named above under section 108 of Customs Act, 1962 clearly revealed that SSFPL had not complied with the above conditions of the aforesaid Notification. It is further observed that there is nothing on record to demonstrate the factory of manufacture, its proper accountal, its utilization in the manufacture of export products and due export of such finished goods out of India and consequently, SSFPL cannot escape from its liability to pay duty totaling Rs.89,61,999.00 on 666.750 MT HDPE granules/moulding powder having CIF value of Rs.71,86,128/­ cleared by them under bill of entry Nos. F­ 1048 dated 8.3.1990 (for 78.750 MT), No. 1067 dated 9.3.1990 (for 165.000 MT) and No.1102 dated 12.3.1990 (for 423.000 MT) as demanded in the show cause notice. As a corollary to the contravention of the conditions of the aforesaid exemption notification read with conditions of advance licence, I hold that SSFPL have rendered the goods liable for confiscation under section 111 (d) and section 111 (o) of Customs Act, 1962 and have rendered themselves liable for penalty under the provisions of Customs Act, 1962. 9.4. Coming to the aspect of penal action proposed against Shri R.N.Shetty and Shri V.V.Kamat, it is observed from the statement­dated 3.7.1997 of Shri V.V.Kamat, who was Executive Directing of SSFPL that during 1990, Shri R.N.Shetty was the Chairman of SSFPL and his approval was taken on all the issues concerning SSFPL before implementation. It is further observed that it was at the instance of none other than Shri R.N.Shetty that a decision was taken to divert the import of goods from Mumbai to Kandla and Shri R.N.SHetty being the Chairman of SSFPL cannot plead ignorance of the fact that the Company appointed M/s. Gujarat State Exports Page 15 of 37 C/TAXAP/834/2018 ORDER Corporation as letter of authority holder to import the said goods which were post­import never brought to the factory of SSFPL or their job workers namely M/s. Karwar Plastics and Shree Krishna Plastic Industries for use in the manner specified in exemption Notification No.140/87­Cus. It is further observed from the statement­dated 14.7.1997 of Shri Srinivas Naik, whole­time Director of SSFPL that import of goods under consideration was looked after by Shri V.V.Kamat, Executive Director under direct supervision of Shri R.N.Shetty, Chairman. Shri Vinayak D. Gavadi, (Administration) in his statement­dated 15.7.1997 has also stated that the day to day affairs of the Company was looked after by Shri V.V.Kamat with the knowledge of Shri R.N.Shetty. These deposition by different responsible persons associated with the Company clearly established the fact that Shri R.N.Shetty was involved in day to day affairs of the Company and was aware of import of goods under consideration and diversion thereof in contravention of the conditions governing its duty free import. As regards Shri V.V.Kamat, it is observed from his own statement­ dated 3.7.1997 that the application for advance licence for import of HDPE granules was submitted to the licensing authority under its signatures and he also looked after day to day affairs of the Company and reported directly to Shri R.N.Shetty, Chairman, which is also reiterated by him in his defence reply filed before this authority. The above set of evidences are to be considered sufficient for holding that both these persons are responsible for rendering the goods liable for confiscation under section 111(d) and 111(o) of Customs Act, 1962 and ipso facto, both these persons are liable for penal action under the provisions of section 112(a) of Customs Act, 1962. In the backdrop of these facts, the various pleas raised by Shri R.N.Shetty with reference to minutes of the meeting of Board of Directors, filing of criminal complaint against Shri V.V.Kamat, etc. does not appear to have any bearing on the liability of confiscation of goods which resulted out of his various acts of omission and commission as narrated hereinabove. For these reasons, the various decisions cited by him are also found to be inaplicable to the facts and circumstances of the case. These facts having been brought on record out of evidence gathered from a cross­section of responsible persons associated with the Company can be considered sufficient for rejecting the request made by Shri R.N.Shetty Page 16 of 37 C/TAXAP/834/2018 ORDER for cross­examination of various persons. Moreover, the request made by Shri R.N.Shetty for supplying him with a copy of defence reply filed by Shri V.V.Kamat was duly considered in keeping with the principles of natural justice and after supplying him with a copy of the said reply, the said notice was given sufficient opportunity to represent his case. Moreover, Hoh. CESTAT in case of Shivom Ply­N­ wood reported in 2004 (177) ELT 1150 (T­Mum) has held that cross­examination cannot be claimed as a matter of right in Departmental proceedings and each case has to be examined on its own merits. I also draw support from the decision of Government of India in case of G. Subramanian, 2002 (142) ELT 224 (G.O.I.) and that of Hon. CESTAT in case of Fortune Impex, 2001 (138) ELT 556 for not entertaining the request for cross­examination. In result, I hold both these noticees as liable for penal action under section 112(a) of Customs Act, 1962. 10. Finally, taking note of the fact that the main noticee i.e. SSFPL has been ordered to be wound up by Hon. High Court of Karnataka and the Office Liquidator has also requested this office to forward a copy of this proceedings to his office, a copy of this order is being endorsed to the Office of Official Liquidator, Hon. High Court of Karnataka, Bangalore. 11. In view of the above discussion and findings, I pass the following order: Order (i) I hold that goods i.e. 666.750 MT HDPE granules having total CIF value of Rs.71,86,128/­ imported by SSFPL under bills of entry Nos.F­1048 dated 8.3.1990 (for 78.750 MT), No. 1067 dated 9.3.1990 (for 165.000 MT) and No. 1102 dated 12.3.1990 (for 423.000 MT) are liable for confiscation under section 111 (d) and section 111(0) of Customs Act, 1962. However, actual confiscation of the said goods is not ordered considering that the same have already been cleared at the material time. (ii) I impose penalty of Rs.50,00,000/­ (Rupees Fifty lakh only) against SSFPL under section 112(a) of Customs Act, 1962. Page 17 of 37 C/TAXAP/834/2018 ORDER (iii)I confirm the demand for duty of Rs.89,61,999/­ (Rupees Eighty Nine Lakh Sixty One Thousand Nine Hundred Ninety Nine only) under section 28 of Customs Act, 1962 along with interest as applicable, in terms of section 28 AB ibid, against SSFPL. (iv) I impose penalty of Rs.89,61,999/­ (Rupees Eighty Nine Lakh Sixty One Thousand Nine Hundred Ninety Nine only) against SSFPL under section 114 A of Customs Act, 1962. (v) I impose penalty of Rs.20,00,000/­(Rupees Twenty Lakh only) against Shri R.N.Shetty under section 112(a) of Customs Act, 1962. (vi) I impose penalty of Rs.10,00,000/­ (Rupees Ten Lakh only) against Shri V.V.Kamat under section 112(a) of Customs Act, 1962. Show Cause Notice No.S/10­377/97­SIB dated 31.7.1998 issued by Custom House, Kandla is disposed of in above terms.” 13. The CESTAT after considering the materials on the record as well as written statements and synopsis filed by the appellant held as under : “5. On careful consideration of the arguments, submissions of both sides including written submissions, case laws, and examination of records, it is observed that Shri R N Shetty was the whole time Chairman of the Company and Shri Vijay Venkatarao Kamat was Executive Director of the Company. It is not disputed that Shri Vijay Venkatarao Kamat made the application for the import license and signed all the documents. He was looking after day to day operations of the Company. From the evidences brought on records, it is clear that he was aware of the diversion of the imported goods to the local market. The plea of Shri Vijay Venkatarao Kamat is that he is only the Executive Director and an employee of the Company and that diversion of the goods were done by Shri R.N.Shetty, Page 18 of 37 C/TAXAP/834/2018 ORDER Chairman. Even if the same is accepted for arguments sake, it does not absolve him from his contraventions of the provisions resulting in defrauding the Public Exchequre. 6. As regards Shri R N Shetty, it is observed that Shri R N Shetty was the Promotor­cum­whole time Chairman of the Company. He was the Authorised Signatory, looking after all operations of the Company and Bank Accounts, and all policy matters were approved by him. The import of HDPE granules involving transfer of huge amount was with his approval. Thus on the facts of the case it is apparent that Shri R N Shetty is that he was not involved and it was Shri Vijay Venkatarao Kamat and others who did the same. In addition to the documentary evidences, the statements of Shri Vijay Venkatarao Kamat, Executive Director, Shri Srinivas Naik, Whole­time Director and Shri Vinayak D. Gavadi, Manager (Administration), clearly establish the role of Shri R N Shetty in defrauding the Public Exchequer and evasion of the duty. 7. As regards admissibility of statements, it is observed that the statements were recorded under Section 108 of the Customs Act, 1962. As per sub­Section 4 of Section 108,­ “Every such inquiry as aforesaid shall be deemed to be a judicial proceedings within the meaning of Section 193 of Section 228 of the Indian Penal Code (45 of 1860).” These statements have not been retracted. They are admissible evidences under the Evidence Act, even in the Court Proceedings. It is also observed that the statements of various persons are of corroborative nature except that Shri R N Shetty blames Shri Vijay Venkatarao Kamat and Shri Vijay Venkatarao Kamat blames Shri R N Shetty for the entire scheme of defrauding the Public Exchequer and diversion of the imported goods. The statements of others especially Shri Srinivas Naik, Whole­time Director, and Shri Vinayak D. Gavdi, Manager (Administration) clearly establishes that both Shri R N Shetty and Shri Vijay Venkatarao Kamat are responsible for the said evasion of duty. 8. As regards the contentions regarding cross­ examination of witnesses, it is observed that in the first round, the adjudicating authority had granted their request for the cross­examination but they did not appear for the Page 19 of 37 C/TAXAP/834/2018 ORDER cross­examination of witnesses. It is also observed from the impugned order that the appellants had not cooperated in the adjudication proceedings in spite of directions of this CESTAT in the remand order. It is also observed that supporting evidences, facts of the case, and records clearly establish the contraventions and evasion of duty and the role of both the accuseds. 9. As regards the plea of limitation, it is observed that the goods were imported and cleared under License No. 0001145 dated 21.02.1990 availing the benefit of exemption under Notification No.140/87­Cus. Dated 27.3.1987, which prescribes certain conditions, according to which they were to use the imported goods for manufacture of specified goods which were to be exported. These conditions are in the nature of continuing obligation which would be satiated only on fulfilment of the conditions and the Bond and license are discharged. It is settled law that when the goods are imported under certain conditions are under Bond, limitation does not apply till the conditions are fulfilled and the Bond is discharged. 10. In view of the above, we do not find any reason to interfere with the impugned order wherein the penalties have been imposed on the appellants. We also do not find any reason to reduce the penalty imposed by the adjudicating authorities considering the facts and circumstances of the case, and the amount of duty evasion of Rs.89,61,999/­ along with equivalent penalty of Rs.89,61,999/­ alongwith equivalent penalty of Rs.89,61,999/­ imposed on the Company which is under liquidation, thereby impoverishing Public Exchequer. 11. As a result, the impugned Order­in­Original is upheld. Both the appeals are dismissed.” 14. While dismissing the appeal filed by Mr. Kamat arising out of common order passed by the CESTAT, this Court in Tax Appeal No. 653/2017 has held as under : “9. We have perused the documents on record with the assistance of the counsel for the petitioner. We find that Page 20 of 37 C/TAXAP/834/2018 ORDER during the course of the adjudicating proceedings, the department had brought on record voluminous material linking the appellant with the diversion of goods in the local market. The adjudicating authority has referred to the statements of Shri Srinivas Naik whole­time director of the company as well as Shri Vinayak Gavadi, Manager (Administration). In their statements, they had highlighted that the appellant was in­charge of the day to day affairs of the company which was being carried out with the knowledge of Shri R.N.Shetty. The adjudicating authority had also referred to the statement of the appellant himself recorded on 03.07.1997 in which, he had admitted that the application for advance licenses for import of the goods was submitted to the licensing authority under his signature and that he looked after the day to day affairs of the company and he reported directly to Shri R.N.Shetty, the Chairman. In fact, this stand was reiterated by him in his defense statement filed in response to the show cause notice. On the basis of such materials, the adjudicating authority came to the conclusion that the appellant along with Shri R.N.Shetty were the persons responsible for rendering the goods liable for confiscation. 10. It appears quite undisputable that the appellant had signed the necessary documents for import of goods, the goods upon import though were required to be utilized for manufacture of export product at the factory of the company, never reached the factory premises but were diverted in the local market and that the appellant was in­ charge of the day to day functioning of the company. Such being the facts, the involvement and knowledge of the appellant in diversion of the goods in local market is writ large on the face of the record. These findings were confirmed by the CESTAT in the impugned judgment. Such being the findings of facts, we have no reason to interfere. No perversity is pointed out in such factual conclusions. 11. Clause­(a) of section 112 of the Customs Act, provides for penalty against the person who in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act. In such a case, the penalty that could be imposed would be an amount not exceeding the value of goods or Page 21 of 37 C/TAXAP/834/2018 ORDER Rs.5000/whichever is greater. Even if therefore, invoking this provision would require mens rea on the part of the noticee, the same was duly established on record. 12. No question of law arises. Tax Appeal is dismissed.” 15.Learned advocate for the appellant tried to distinguish his case on the ground that the appellant was a Non­Executive Director having no knowledge about the import transactions made by the company. Learned advocate relied upon the various documents in support of his submissions including the statement dated 14th June, 1991 of Shri Srinivasa Naik which was said to be contrary to his further statement recorded on 14th July, 1997. He also referred to the statements of Mr. Y.D. Gavadi and Shri Sumati U. Naik dated 15th July, 1997 wherein it was stated by them that appellant rarely used to visit the company. But on perusal of the impugned orders passed by the adjudicating authority, there is concurrent findings of fact relying upon the statements of Shri V.V. Kamat as well as Shri Srinivasa Naik recorded under section 108 of the Act, wherein, it was stated that the day to day affairs of the company was carried out with the knowledge of the appellant and the same were reported directly to the appellant. Thus the appellant was in knowledge of the day to day affairs of the company and involvement and knowledge of appellant in diversion of the goods in the local market is apparent on the face of the record. 16. This Court in case of Amad Noormamad Bakali (supra) has held that the statement recorded under section 108 of the Act is admissible in evidence as under : Page 22 of 37 C/TAXAP/834/2018 ORDER “32. The submissions, which have been made by the learned Counsels for the applicants in these group of revisions have mainly emphasised on the aspect of admissibility of the statements recorded under Section 108 of the Customs Act and the probative value thereof. Another limb of the submission is that even if such statement under Section 108 of the Customs Act is made admissible, it would confine to the accused, who has made such statement, but it cannot be considered as any kind of statement or confession or incriminating evidence for the other co­accused, which has been considered by both the Courts below and, therefore, it has been submitted that the present Revision Application requires to be considered as the convictions have been recorded solely on such statements. The submissions, which have been made at length referring to this aspect and also discussion in the judgments given by both the Courts below though sound appealing requires closure scrutiny, it does not seem to be well­founded. The first aspect about the admissibility of the statements recorded under Section 108 of the Customs Act is well settled in light of the judicial pronouncement made by the Apex Court that such statement made before the Officer is admissible in evidence as it cannot be said that the statement before the Police, which is also relied upon time and again that when during the inquiry, such statement is made before the authorized officer under the statute, such statements would be admissible in evidence and it would not be hit by the provisions of Section 34 or 30 of the Evidence Act. 33. A useful reference can be made to the observations made by the Honble Apex Court in a judgment reported in (1997) 3 SCC 721 in case of K.I. Pavunny v. Assistant Collector, (HQ), Central Excise Collectorate, Cochin decided by the bench of three Judges on very this point with regard to the statements recorded under Section 108 of the Customs Act. The Hon''''ble Apex Court has discussed on this very point and observed that a question considered by three Judges bench in the instant case on a reference from the two Judges bench was whether the confessional statement of the appellant made to Customs Officers under Section 108 of the Customs Act, 1962 though retracted at a later stage, is admissible in evidence and could form basis for conviction and whether retracted Page 23 of 37 C/TAXAP/834/2018 ORDER confessional statement requires corroboration on material particularly from independent evidence? While considering the object of recording statements under Section 108 of the Customs Act, it has been observed as under : “the object of the Act empowering Customs Officers to record the evidence under Section 108 is to collect information of the contravention of the provisions of the Act or concealment of the contraband or avoidance of the duty of excise so as to enable them to collect the evidence of the proof of contravention of the­ provisions of the Act so as to take proceedings for further action of confiscation of the contraband or imposition of the penalty under the Act etc.” 34. It is also required to be mentioned that it has been further observed as under : “it is not every threat, inducement or promise even emanating from the person in authority that is hit by Section­24 of the Evidence Act. In order to attract the bar, it has to be such an inducement, threat or promise, which should lead the accused to suppose that \"by making it he would gain any advantage or avoid any evil of temporal nature in reference to the proceedings against him.” 35. Further, it has also been observed as under: “The collection of evidence under Section 108 and other relevant provisions relating to search and seizure are only for the purpose of taking further steps for confiscation of contraband and imposition of penalty. The self same evidence is admissible in. evidence on the complaint laid by the Customs Officer for prosecution under Section 135 or other relevant statutes.” 36. Therefore, in light of this clear discussion with regard to the admissibility of the statements recorded under Section 108 of the Customs Act and also contention raised with regard to the coercion or threat have also been considered and have not been accepted. It is required to be mentioned as observed that it is the duty of the accused prima­facie to establish by evidence that such statement was recorded under such compulsion or coercion or threat then burden would shift on the prosecution to discharge Page 24 of 37 C/TAXAP/834/2018 ORDER that it was recorded voluntarily. In the facts of the present case, it could be seen that the accused had moved earlier Criminal Misc. Application Nos.1340, 1347 & 1348 of 1985 and as per the order dated 19.09.1985 passed therein, it has been clearly recorded that the appellant had undertaken to accept summons under Section 108 of the Customs Act and had agreed to remain present for recording such statement. Therefore, such applications were made under Section 438 of the Criminal Procedure Code, wherein the orders have been passed recording some statements on behalf of the accused and, thereafter, when such statements are recorded, the submission with regard to coercion or threat cannot be readily accepted. Further, as rightly submitted by the learned Counsel, Ms.Yagnik, no evidence has been brought on record on this aspect to primarily establish that it was not made voluntarily. Even the statements under Section 313 of the Criminal Procedure Code does not refer to this aspect, in Which, it was open for the accused persons to say or state before the Court. Therefore, such contention which has been raised at belated stage by way of defence cannot be readily accepted. 37. In the aforesaid judgment of the Honble Apex Court reported in (1997) 3 SCC 721, similar contention raised by the learned Counsel relying upon the judgment of the Apex Court reported in AIR 1970 SC 940 also have been considered. While considering this aspect, it is required to be considered that in a judgment reported in (2002) 1 SCC 155 while considering admissibility of the confessional statement recorded under Section 108 of the Customs Act vis­a­vis other procedure, the Hon'ble Apex Court has quoted earlier judgment of the Apex Court reported in AIR 1968 SC 832 in case of Abdulla v. State of Maharashtra and made following observations : “These statements are not confessions recorded by a Magistrate under Section 164 of the Code of Criminal Procedure but are statements made in answer to a notice under Section 171A of the Sea Customs Act. As they are not made subject to the safeguards under which confessions are recorded by Magistrates they must be specially scrutinised to finding out if they were made under threat or promise from someone in authority. If after such Page 25 of 37 C/TAXAP/834/2018 ORDER scrutiny they are considered to be voluntary, they may be received against the maker and in the same way as confessions are received, also against a co­accused jointly tried with him.” 38. It has also been discussed that since such statement given before the Competent Officer under the statute like Customs Act, is not a statement of the accused, a person, who gives such statement, does not give the character of the accused. In a judgment of the Hon'ble Apex Court reported in AIR 1970 SC 940, this aspect has been considered and same contention has been squarely answered in a judgment of the Hon'ble Apex Court in case of Rajesh Bajaj v.State NCT of Delhi and Ors. reported in (1999) 3 SCC 259, wherein it has been observed as under:­ “We hold that a statement recorded by Customs Officers under Section 108 of the Customs Act is admissible in evidence. The Court has to test whether the inculpating portions were made voluntarily or whether it is vitiated on account of any of the premises envisaged under Section 24 of the Evidence Act.” 39. Therefore, as such statements recorded before the authority under the special statute like Customs Act are not a statements of the accused and, therefore, the submissions made by the learned Counsel that the statements of the co­accused would not be admissible also is misconceived. 40. Further, as discussed hereinabove referring to the judgment of the Hon'ble Apex Court reported in (1997) 3 SCC 721 wherein the purpose and object is also reflected and the purpose as indicated is that while making such inquiry for the purpose of collecting evidence and in furtherance thereof when the seizure has been made of the contrabands goods, the entire evidence would be a relevant for considering the guilt of the accused persons. Therefore in the facts of the case, on the basis of such statements of the accused recorded revealing the details with regard to the transaction which have taken place leading to further recovery of the contraband articles and or money, for Page 26 of 37 C/TAXAP/834/2018 ORDER which, panchnamas are made. Therefore, observations have been made by the Apex Court in a judgment reported in (1997) 3 SCC 721 that such statements will lead to further evidence is required to be considered if on the basis of such revelation made in the statements leading to further evidence like recovery or discovery of the contraband articles, for which, panchnama have made would also be a relevant evidence. Again it is corroborated by the testimony of the Customs Officers as stated hereinabove. This aspect has to be considered in light of the provisions of Section 6 of the Evidence Act read with Section 10 and 11 of the Evidence Act. 41. Provisions of Section 6 of the Evidence Act refers to the relevancy of the facts forming part of some transaction, which reads as under : “6. Relevancy of facts forming part of same transaction.­ Facts which, though not in issue, are so connected with a fact in issue as to form part of the same transaction, are relevant, whether they occurred at the same time and place or at different times and places.” 42. This aspect has to be considered in light of the evidence regarding the recovery of the contraband articles and the money from the co­accused on the basis of the revelation made in the statements recorded under Section 108 of the Criminal Procedure Code of the Customs Act by other co­accused. 43. Further Section 10 of the Evidence Act clearly suggests that it is not merely a statement made by one co­ accused, which would have bearing but if on the basis of such statements, further evidence is collected suggesting the involvement in the offence, it will have to be considered. 44. Therefore, the submissions made by the learned Counsel with regard to the conviction having based Only on the confessional statements under Section 108 of the Customs Act only and that there is no corroborative evidence and the fact that such statements could be only corroborative piece of evidence are misconceived. 45. Another facet of arguments that the statements made Page 27 of 37 C/TAXAP/834/2018 ORDER by the co­accused cannot be made admissible in evidence to establish the guilt of other co­accused even though the statement under Section 108 of the Customs Act is made admissible is also misconceived. As discussed above, the statement recorded under Section 108 of the Customs Act is not a statement under Section 164 of the Criminal Procedure Code as it is not a statement of the accused and still on the basis of such statement or admission made, further evidence is collected, which would be evidence for all the accused and if such independent evidence is there, it cannot be said that other co­accused are implicated merely on the basis of the statements of other co accused recorded under Section 108 of the Customs Act. In fact, it is on the basis of such revelation, further evidence has been collected like in the present case on the basis of the­ statement of the co­accused when search has been made and the contraband articles (watches and money) have been recovered from the other co­accused would in fact be a evidence against them. Further, there is no explanation with regard to this aspect in further statements under Section 313 of the Criminal Procedure Code. Therefore, cumulative effect of the entire evidence has to be considered and particularly when there is no explanation coming forth from the accused or the concerned accused with regard to the incriminating evidence against him. Therefore, it cannot be said that the impugned judgment and order recording conviction, which has been confirmed, is perverse or resulted into miscarriage of justice. It is also well settled that the provisions of Section 313 of the Criminal Procedure Code is specific for the purpose of pointing out circumstances with regard to the relevant evidence or incriminating evidence against him, which can be considered and opportunity is offered to give explanation or rebuttal even by preponderance of the probability. 46. Therefore, having regard to the aforesaid discussions, it cannot be said that the impugned judgment and order recording conviction, which has been confirmed by the lower Appellate Court is perverse or it is based only on the statements recorded under Section 108 of the Customs Act or even it is based on the statements of the co­accused recorded under Section 108 of the Customs Act as sought to be canvassed. Moreover, it is well settled that the scope Page 28 of 37 C/TAXAP/834/2018 ORDER of exercise of discretion is very limited as observed in a catena of judicial pronouncement including that judgment of the hon'ble Apex Court reported in (2008) 11 SCC 76 in case of Raj Kumar v. State of Himachal Pradesh, wherein referring to earlier judgment reported in (1999) 2 SCC 452 in case of State of Kerala v. Puttumana Math Jathavedan Namboodiri it has been observed as under : “the revisional jurisdiction is one of supervisory jurisdiction exercised by the High Court for correcting miscarriage of justice. But the said revisional power cannot be equated with the power of an appellate Court nor can it be treated even as a second appellate jurisdiction. Ordinarily, therefore, it would not be appropriate for the High Court to re­appreciate the evidence and come to its own conclusion on the same unless any glaring feature is brought to the notice of the High Court which would otherwise tantamount to gross miscarriage of justice.” 17.The Supreme Court in case of K.I. Pavunny v. Assistant Collector (HQ) Central Excise Collectorate, Cochin reported in 1997 Law Suit (SC) 174, has held as under: “[17] It would thus be clear that the object of the Act empowering Customs Officers to record the evidence under Section 108 is to collect information of the contravention of the provisions of the Act or concealment of the contraband or avoidance of the duty of excise so as to enable them to collect the evidence of the proof of contravention of the provisions of the Act so as to take proceedings for further action of confiscation of the contraband or imposition of the penalty under the Act etc. By virtue of authority of law, the officer exercising the powers under the Act is an authority within the meaning of Section 24 of Evidence Act. [1] Though the authority/officer on suspecting a person of having committed the crime under the Act can record his statement, such a person per force is not a person accused under the Act. Page 29 of 37 C/TAXAP/834/2018 ORDER [2] he becomes accused of the offence under the Act only when a complain is laid by the competent customs officer in the court of competent jurisdiction or magistrate to take cognizance of the offence and summons are issued. thereafter, he becomes a person accused of the offence. [3] A statement recorded or given by the person suspected of having committed an offence during the inquiry under Section 108 of the Act or during confiscation proceedings is not a person accused of the offence within the meaning of Section 24 of the Evidence Act. [4] Though the Customs Officer is an authority within the meaning of Section 24 of the Evidence Act, by reason of statutory compulsion of recording the statement or the accused giving voluntary statement pursuant to his appearing either after issuance of summons or after the appellant's surrender, such statement cannot be characterised to have been obtained by threat, inducement or promise. [5] The collection of evidence under Section 108 and other relevant provisions relating to search and seizure are only for the purpose of taking further steps for confiscation of contraband and imposition of penalty. [6] The self­same evidence is admissible in evidence on the complaint laid by the Customs Officer for prosecution under Section 135 or other relevant statutes. [18] It is true, as pointed out by Shri Thakur, that Public Witness 2 admitted in cross­examination that they treated the appellant as an accused and decided to prosecute the appellant. but the above evidence requires to be tested in the light of the above legal position. The assumption of Public Witness 2 that the appellant was an accused as on 6/12/1980, is erroneous, since as on that date on formal complaint had been laid against the appellant. Therefore, it cannot be considered that on 6/12/1980, the Page 30 of 37 C/TAXAP/834/2018 ORDER appellant was an accused of the offence under Section 24 of the Evidence Act. [19] Next question for consideration is: whether such statement can form the sole basis for conviction? It is seen that, admittedly, the appellant made his statement in his own hand­writing giving wealth of details running into five typed pages. Some of the details which found place in the statement were specially within his knowledge, viz., concealment of the 200 biscuits in his earlier rented house till he constructed the present house and shifted his residence and thereafter he brought to his house and concealed the same in his compound; and other details elaboration of which is not material. The question then is whether it was influenced by threat of implicating his wife in the crime which is the sole basis for the claim that it was obtained by threat by Public Witness 2 and Public Witness 5. In that behalf, the High Court has held that it could not be considered to be induced by threat that his wife will be implicated in the crime and accordingly disbelieved his plea. It is seen that admittedly after the appellant gave his statement, he was produced before the magistrate though no complaint was filed and was released on bail. He did not complain to the magistrate that Ex. P­4 statement was given under inducement, threat or duress. It was raised only subsequently making accusations against Public Witness 5, the Inspector of Customs. Therefore, obviously it was only an afterthought. The High Court, therefore, rightly has not given any weight age to the same. It is true that the Magistrate has given various reasons for disbelieving the evidence of Public Witness 3, the panch witness who had also, at one point of time, indulged in smuggling. It is unlikely that Public Witness 3 would bring 200 gold biscuits of foreign marking and conceal them in the compound of the appellant without appellant's knowledge for safe custody. It is not his case that he had facilitated PW­3 in concealing them in his compound. The place of concealment of the contraband is also significant at this juncture. It is Page 31 of 37 C/TAXAP/834/2018 ORDER just near and visible from the window of his bed­ room through which he or family members could always watch anyone frequenting the place where the contraband was concealed. This fact becomes more relevant when we consider that after concealment of the contraband in the compound one would ensure that others having access to the compound may not indulge in digging and carrying away the same. As soon as the appellant and/or the members of his family had sight of such visitor or movement by others, they would immediately catch hold of such person or would charge them. Obviously, therefore, it would be the appellant who had concealed 200 gold biscuits of foreign marking in his compound at a place always visible from his bedroom window. Therefore, the High Court was right in its conclusion, though for different reasons, that Ex.P­4 is a voluntary statement and was not influenced by threat duress or inducement etc. Therefore, it is a voluntary statement given by the appellant and is a true one.” 18.In view of the above dictum of law with regard to the statement recorded under section 108 of the Act coupled with concurrent findings of fact arrived at by the adjudicating authority and the CESTAT, we are not inclined to interfere as no perversity is pointed out in such factual findings arrived at by the both the authorities. For the foregoing reasons and considering section 112(a) of the Customs Act which provides that penalty against person who in relation to any goods does or omits to do any act which act or omission would render such goods liable to confiscation under section 111 or abets the doing or omission of such an act, penalty can be imposed not exceeding the value of the goods or five thousand rupees whichever is greater. Therefore, invoking such provision would require mens rea on part of the appellant which is duly established on record. Page 32 of 37 C/TAXAP/834/2018 ORDER 19. In that view of the matter, reliance placed on the various decisions by the learned advocate for the appellant are not required to be discussed at length as the proposed questions of law cannot be said to be substantial questions of law in view of factual findings arrived at by the adjudicating authority and confirmed by the CESTAT. 20.We also hold that the CESTAT was justified in rejecting the rectification application as any interference in the impugned order passed by the CESTAT would have resulted in review of its own order which is not permissible under the provisions of the Customs Act, in view of the judgment of Supreme Court in case of CCE, Belapur vs. RDC Concrete (India) P. Ltd. reported in 2011 (270) ELT 625 (SC), wherein the Apex Court has held as under: “16. Upon perusal of both the orders viz. earlier order dated 4th November, 2008 and order dated 23rd November, 2009 passed in pursuance of the rectification application, we are of the view that the CESTAT exceeded its powers given to it under the provisions of Section 35C(2) of the Act. This Court has already laid down law in the case of T.S. Balram v. M/s.Volkart Brothers, 82 ITR 50 to the effect that a \"mistake apparent from the record\"cannot be something which can be established by a long drawn process of reasoning on points on which there may conceivably be two opinions. It has been also held that a decision on a debatable point of law cannot be a mistake apparent from the record. If one looks at the subsequent order passed by the CESTAT in pursuance of the rectification application, it is very clear that the CESTAT re­appreciated the evidence Page 33 of 37 C/TAXAP/834/2018 ORDER and came to a different conclusion than the earlier one. At an earlier point of time, the CESTAT came to a conclusion that the company to which the respondent­assessee sold its goods was an inter­connected company. In the circumstances, according to the CESTAT, the decision of the department to appoint a Cost Accountant to ascertain value of the goods manufactured by the assessee was considered to be just and proper. However, after considering the submissions made in pursuance of the rectification application, the CESTAT came to a different conclusion to the effect that the assessee company and the buyer of the goods were not inter­connected companies. Different conclusions were arrived at by the CESTAT because it reappreciated the evidence in relation to common directors among the companies and inter se holding of shares by the companies. Re­appreciation of evidence on a debatable point cannot be said to be rectification of mistake apparent on record. 17. Similarly, in pursuance of the rectifying application, the CESTAT came to the conclusion that an officer of the department, who was working as Assistant Director (Cost) and who was also a Member of an Institute of Cost and Works Accountants was not competent as a Cost Accountant to ascertain value of the goods. It is strange as to why the CESTAT came to the conclusion that it was necessary that the person appointed as a Cost Accountant should be in practice. We do not see any reason as to how the CESTAT came to the conclusion that the Cost Accountant, whose services were availed by the department should not have been engaged because he was an employee of the department and he was not in practice. The aforestated facts clearly show that the CESTAT took a different view in pursuance of the rectification application. The submissions which were made before the CESTAT by the Page 34 of 37 C/TAXAP/834/2018 ORDER respondent­assessee while arguing the rectification application were also advanced before the CESTAT when the appeal was heard at an earlier stage. The arguments not accepted at an earlier point of time were accepted by the CESTAT after hearing the rectification application. It is strange as to how a particular decision taken by the CESTAT after considering all the relevant facts and submissions made on behalf of the parties was changed by the CESTAT. There was no mistake apparent on record when the CESTAT did not accept a submission of the respondent­assessee to the effect that the officer appointed to value the goods manufactured by assessee should not have been engaged as a cost accountant. 18. We are not impressed by the judgments cited by the learned counsel for the respondent. So far as the judgment delivered in the matter of Saci Allied Products Ltd. v. Commissioner of C. Ex., Meerut, 2005(183) E.L.T 225 (S.C.) is concerned, it pertains to sale of goods by an assessee to an independent and unrelated dealers and its effect on valuation. The said judgment pertains to a transaction with a related person in the State of U.P., at lower price and as such deals with the facts of that particular case. In our opinion, the said judgment would not help the respondent so far as the matter pertaining to rectification is concerned. 19. So far as the judgment delivered in Commissioner of Central Excise, Mumbai v. Bharat Bijlee Limited, (supra) is concerned, this Court held therein that when the Tribunal had totally failed to take into consideration something which was on record, the Tribunal had committed a mistake apparent on the face of the record. In the instant case, the evidence which was on record was duly appreciated by the Tribunal at the first instance but the Tribunal made Page 35 of 37 C/TAXAP/834/2018 ORDER an effort to re­appreciate the evidence and re­appreciation can never be considered as rectification of a mistake. We are, therefore, of the view that the aforementioned judgment would not help the respondent­assessee. 20. So far as judgment delivered in the case of Honda Siel Power Products Ltd. v. Commissioner of Income Tax, Delhi, 2008(221) E.L.T 11 (S.C.), is concerned, there also the Tribunal had not considered certain material which was very much on record and thereby it committed a mistake which was subsequently rectified by considering and appreciating the evidence which had not been considered earlier. As stated hereinabove, in the instant case, the position is absolutely different. 21. This Court has decided in several cases that a mistake apparent on record must be an obvious and patent mistake and the mistake should not be such which can be established by a long drawn process of reasoning. In the case of T.S. Balram v. M/s. Volkart Brothers (supra), this Court has already decided that power to rectify a mistake should be exercised when the mistake is a patent one and should be quite obvious. As stated hereinabove, the mistake cannot be such which can be ascertained by a long drawn process of reasoning. Similarly, this Court has decided in ITO v. Ashok Textiles, 41 ITR 732 that while rectifying a mistake, an erroneous view of law or a debatable point cannot be decided. Moreover, in­ correct application of law can also not be corrected. 22. For the afore stated reasons, we are of the view that the CESTAT exceeded its powers and it tried to re­appreciate the evidence and it reconsidered its legal view taken earlier in pursuance of a rectification application. In our opinion, the CESTAT could not have done so while exercising its powers under Section 35C(2) of the Act, and, therefore, the Page 36 of 37 C/TAXAP/834/2018 ORDER impugned order passed in pursuance of the rectification application is bad in law and, therefore, the said order is hereby quashed and set aside. The appeal is allowed with no order as to costs.” 21. In view of above, no substantial question of law arises from the impugned order passed by the CESTAT. Tax Appeal is therefore, accordingly dismissed with no order as to costs. (J. B. PARDIWALA, J) (BHARGAV D. KARIA, J) RAGHUNATH R NAIR Page 37 of 37 "