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2010 DIGILAW 5541 (MAD)

Ist Petitioner v. Ist Respondent

2010-12-15

ARUNA JAGADEESAN

body2010
Judgment : 1. The Petitioner has filed this Criminal Original Petition seeking anticipatory bail in the event of his arrest in connection with the proceedings in F.No.S.Misc.154/2010 SIIB on the file of the Respondent herein. 2. The Petitioner submits that he is the Managing Director of the Company called M/s.Jai Bhawani Steel Enterprises Limited situated at New No.91, Old No.44, II Floor, Armenion Street, Chennai 600001 and the said Company is engaged in the business activities with another Company by name M/s.SDS Steel Private Limited, which has got its manufacturing unit at New No.2/221 (Old No.4/181), GNT Road, Panchetty 601204. M/s.Jai Bhawani Steel Enterprises Limited procures scrap of different types, like HMS, LMS, MS Turning and Borings, used Tin and Can Bundles, Shredded Scrap, etc. The materials so procured are sent to the manufacturing Unit at Panchetty of M/s.SDS Steel Private Limited for conversion of the same into MS Billets. 3. According to the Petitioner, M/s.Jai Bhawani Steel Enterprises Limited stored its materials to to the tune of 29667.639 MTS at the bonded warehouse. The Company already submitted advance license to the Assistant Commissioner of Customs, Bond Department, Chennai for the clearance of the said materials along with a letter dated 18.1.2010. M/s.DDS Steel Rolling Mills Pvt. Limited also filed ex-bond bills of entry to the tune of 375.3880 MTS. There was some delay in the clearance, for which the Company had been corresponding with the Assistant Commissioner of Customs (Bond Department) Chennai. 4. It is the case of the Petitioner that the Respondent, suspecting that there had been diversion of scrap billets, plate, etc., has initiated proceedings and sent a notice under Section 108 of the Customs Act, 1962 to the Petitioner calling upon him to appear before the Respondent on 18.11.2010 at 11.00 a.m. There has been no violation of any of the provisions of the Customs Act, 1962 and M/s.Jai Bhawani Steel Enterprises Limited has got a valid license to carry on it activities. In the said circumstances, the Petitioner, apprehending arrest in connection with the offences under Sections 132 and 135 of the Customs Act, 1962 and the proceedings in F.No.S.Misc.154/2010 SIIB on the file of the Respondent, has filed this Criminal Original Petition seeking anticipatory bail. 5. In the said circumstances, the Petitioner, apprehending arrest in connection with the offences under Sections 132 and 135 of the Customs Act, 1962 and the proceedings in F.No.S.Misc.154/2010 SIIB on the file of the Respondent, has filed this Criminal Original Petition seeking anticipatory bail. 5. In the counter affidavit, the Respondent has stated that M/s.Jai Bhawani Steel Enterprises Limited and M/s.SDS Steel Private Limited, in which the Plaintiff is a Managing Director were having customs notified private bonded warehouses at 2/220, GNT Road, Panjetty Village, licensed in terms of Section 58(1) of the Customs Act, 1962. They had illegally removed imported materials such as billets, plates, heavy and light melting scrap of various types from their bonded warehouses without payment of customs duty. They had several time expired bonds from the year 2007-2008, for which demand notices were issued and action was initiated under Section 72 to detain and sell such portion of their goods, if any, to make good the shortfall in duty. But, there was no cargo available in the bonded warehouses. 6. The Respondent further stated in the counter that it was ascertained that the importers were attempting to illegally clear the non existent goods on paper and regularise the records by assessing the ex-bond bills of entry against advance licenses, for which they had already filed ex-bond bills of entry in many cases and they had approached the assessing group for duty free clearance under the licence. The Bond Department refused to clear under advance licence scheme and the importer has gone on appeal before the Commissioner (Appeals) against the decision of the Department, thereby creating an illusion that the goods are still available in the bonded warehouses. Whereas they had stealthily removed the goods from the bonded warehouses. As the bond period had expired and the importer had failed to pay the duty and interest and clear the goods as per the records, the Bond Department had already issued demand notices under Section 72(1) of the Customs Act, 1962 for non clearance of the goods as per the Bond Department procedure. Action was also initiated under Section 72(2) of the Customs Act, 1962 against the said Companies, in which the Petitioner is a Managing Director to detain and sell such sufficient portion of their goods, if any, in the warehouse to make the good shortfall in payment of duty. Action was also initiated under Section 72(2) of the Customs Act, 1962 against the said Companies, in which the Petitioner is a Managing Director to detain and sell such sufficient portion of their goods, if any, in the warehouse to make the good shortfall in payment of duty. However, as the petitioner requested for clearance of the goods under advance license and had filed an appeal, their request had been rejected. 7. The Respondent further stated that there should be totally 45291.469 MTs of various types of materials such as steel billets, secondary plates, shredded scrap, heavy melting scrap, light melting scrap, turning and boring scrap, etc. valued at Rs.76,47,33,854/- available in the two bonded warehouses. After making the preliminary estimates of quantity supposed to be available, on 2.11.2010 the Respondent along with his team went to the customs bonded warehouses of the said Companies in which the Petitioner is the Managing Director and prepared observation and quantification mahazars based on visual inspection. The approximate quantity available for M/s.Jai Bhawani Steel Enterprises Limited was found to be as follows:- i. Only about 50 container loads (about 1021 metric tonnes) of light melting scrap consisting of crushed car bodies scrap in pressed bundles valued at Rs.1.22 crores were available, as against 6356 MT valued at Rs.7.61 crores declared. Thus in the light melting scrap category about 5335 metric tonne ( about 261 containers) of Value Rs.6.39 crores is missing. ii. Only about 200 container loads (about 5216 metric tonne) of Mild Steel Turnings and Borings valued at Rs.6.50 crores were available, as against 6937.283 metric tonne valued at Rs.8.65 crores declared. Thus in the Turning and Borings category, about 1721 metric tonne (about 66 containers) of value of Rs.2.14 crores is missing. iii. There were no billets, shredded steel scrap, heavy melting scrap, bushelling scrap, mild steel plates, cast iron scrap, re rollable scrap or tinplate scrap as stated in the customs bond records. Thus about 16374.35 metric tonnes (about 553 containers + 3500 metric tonne bulk) of scrap of heavy melting scrap, re rollable scrap, secondary defective mild steel plates, cast iron scrap, steel billets, and shredded steel scrap categories, valued at about Rs.28.90 crores appears to be illegally removed. iv. Thus about 16374.35 metric tonnes (about 553 containers + 3500 metric tonne bulk) of scrap of heavy melting scrap, re rollable scrap, secondary defective mild steel plates, cast iron scrap, steel billets, and shredded steel scrap categories, valued at about Rs.28.90 crores appears to be illegally removed. iv. Thus the total value of illegal removed goods in M/s.Jai Bhawani Steel Enterprises Limited bonded warehouses appears to be to the tune of 23430.35 metric tonne (approx.880 container loads+ 3500 metric tonne bulk) of all types of scrap/plates/billets totally valued at Rs.37.44 crores. The total duty evaded on the missing goods is Rs.7,34,53,650/- approx. The details of material as per the records, the actual estimated, the missing and apparently illegally removed quantities are given below:- S.No Description Total Declared Qty (MT) Available Qty (MT) Missing Qty (MT) Missing Containers Value of missing goods Duty evaded Ms turning and borings 6937.283 5216 1721 (partly missing) 66 21457051 4100960 2 Light melting scrap 6356.000 1021 5335 (partly missing) 261 63912330 12445001 3 Billets 4003.880 Nil Fully missing 20+bulk 81322000 16144697 4 Secondary/ defective plates 929.418 Nil Fully missing 38 15560762 5073276 5 Heavy melting scrap 4375.959 Nil Fully missing 236 59260758 11315129 6 Shredded scrap 2258.355 Nil Fully missing 85 32059937 6234605 7 Utcb (tin plate cans) 85.780 Nil Fully missing 2 1000725 194608 8 G111 shredded scrap 2114.794 Nil Fully missing 82 62304227 7991569 9 Bushings 219.060 Nil Fully missing 10 2772713 355647 10 Tin plate cans 282.330 Nil Fully missing 13 3623693 464800 11 Re rollable scrap 1812.640 Nil Fully missing 68 30182164 7781158 12 Cast iron scrap 73.655 Nil Fully missing 4 928238 180512 13 Secondary strips Nil Fully missing 3695782 1171688 Total Missing Contents 23430.35 880 378080380 73453650 8. The Respondent further stated that the approximate quantity available for M/s.SDS Steel Private Limited was found to be as follows:- i. Though the entire quantity of turnings and borings appeared to be available, only about 75 containers loads (about 1715 metric tonnes) of light melting scrap consisting of crushed car bodies scrap in pressed bundles valued at Rs.2.88 crores were available, as against 4300.169 metric tonne valued at Rs.7.21 crores declared. Thus, in the light melting scrap category, about 2584.68 metric tonne (about 113 containers) of value Rs.4.33 crores is missing. ii. Thus, in the light melting scrap category, about 2584.68 metric tonne (about 113 containers) of value Rs.4.33 crores is missing. ii. Only about 20 container loads (about 520.78 metric tonnes) of Tin can bundles (UTCB) valued at Rs.79.87 lakhs were available, as against 703.06 metric tonne valued at Rs.1.08 crores declared. Thus in the tin can bundles category, about 182.28 metric tonne (about 7 containers) of value Rs.27.95 crores is missing. iii. There were no shredded steel scrap, heavy melting scrap, Galvanized iron bundles, bushelling scrap, or iron scrap as stated in the customs/bond records. Thus about 9509.076 metric tonnes (about 408 containers) of shredded steel scrap, heavy melting scrap, galvanized iron bundles, bushelling scrap and iron scrap categories, valued at about Rs.20.94 crores appears to be removed. iv. Thus the total value of illegally removed goods in the customs bonded warehouse of M/s.SDS Steel Private Limited appears to be to the tune 12276 metric tonne (approx. 528 containers loads) of different types of scrap totally valued at Rs.25.55 crores and the total duty evaded on the missing goods is Rs.3.84 crores approximately. The details of material as per the records, the actual estimated, the missing and apparently illegally removed quantities are given below:- S.No Description Total Declared Qty (MT) Available Qty (MT) Missing Qty (MT) Missing Containers Value of missing goods Duty evaded Light melting scrap 4300.169 1715.49 2584.68 113 43346116 8175455 2 Used tin can bundles (UTCB) 703.060 520.78 182.28 7 2795542.04 543640.75 3 Turnings and borings 1111.610 1111.61 Nil (fully available) 44 16990823 Nil 4 Shredded scrap 5249.988 Nil Fully missing 200 121058876 15339238 5 Heavy melting scrap 4138.858 Nil Fully missing 202 86009796 13908963 6 Galv.Iron bundles 47.740 Nil Fully missing 2 1230990 239387 7 Iron scrap 32.660 Nil Fully missing 2 574831 111786 8 Bushelling scrap 39.830 Nil Fully missing 2 525583 67415 Total Missing Contents 12276.04 528 255541734 38385885 9. Totally about 35706.386 metric tonnes (about 1421 container loads and 3500 bulk vessel goods) valued at about Rs.63.36 crores appears to be missing in the bonded warehouses of both M/s.Jai Bhawani Steel Enterprises Limited and M/s.SDS Steel Private Limited. Out of this, about 25883 metric tonnes (Rs.50 crores) pertains to varieties of goods that were not at all present. Totally about 35706.386 metric tonnes (about 1421 container loads and 3500 bulk vessel goods) valued at about Rs.63.36 crores appears to be missing in the bonded warehouses of both M/s.Jai Bhawani Steel Enterprises Limited and M/s.SDS Steel Private Limited. Out of this, about 25883 metric tonnes (Rs.50 crores) pertains to varieties of goods that were not at all present. The duty evasion would be in excess of Rs.11.18 crores for all the missing goods and towards interest, in excess of Rs.2.8 crores would also be payable on the illegally removed goods till date. 10. The Respondent further stated in the counter that both M/s.Jai Bhawani Steel Enterprises Limited and M/s.SDS Steel Private Limited were issued with private bonded warehouse license Nos.P-795 dated 11.11.2003 and P-909 dated 6.2.2008 respectively under Section 58(1) of the Customs Act, 1962. As per the conditions stipulated in the licenses granted to the Petitioner, the license holders are responsible for the safe custody of the bonded goods and for the due observance of the law and they have to maintain proper stock books and stock cards to enable ready checking of the quantity among other conditions which have not been fulfilled by them. Accordingly, the Petitioner has violated the provisions of the double entry bonds furnished by them as they have illegally removed the goods. 11. This court heard the rival submissions of the learned counsel on either side and also perused the materials placed before this court. 12. Section 62(2) of the Customs Act, 1962 reads as follows:- "No person shall enter a warehouse or remove any goods therefrom without the permission of the proper officer." 13. The Petitioner, who is the Managing Director of the two Companies, namely, M/s.Jai Bhawani Steel Enterprises Limited and M/s.SDS Steel Private Limited, is alleged to have removed the goods without the permission of the proper officer. As per Section 68 of the Customs Act, 1962, bonded goods shall be cleared from the warehouses only on filing a bill of entry for home consumption on payment of duty, penalty, rent, interest and other charges in respect of such goods and an order for such clearance has to be made by the proper officer. As per Section 68 of the Customs Act, 1962, bonded goods shall be cleared from the warehouses only on filing a bill of entry for home consumption on payment of duty, penalty, rent, interest and other charges in respect of such goods and an order for such clearance has to be made by the proper officer. The allegation against Petitioner in this case is that the said two Companies, in which the Petitioner is the Managing Director, have not filed ex-bond bills of entry within the stipulated time and they have not paid any of the duties, interest, etc. and no order for clearance of the goods has been obtained. Therefore, according to the Respondent, there is a violation of Section 68 of the Customs Act, 1962. 14. As per the Section 71 of the Customs Act, 1962, no warehoused goods shall be taken out of a warehouse except on clearance for home consumption or re-export or for removal to another customs warehouse or otherwise as provided under the Act. But, in this case, there is a specific allegation against the Petitioner that both M/s.Jai Bhawani Steel Enterprises Limited and M/s.SDS Steel Private Limited have illegally removed the warehoused goods about 35706 metric tonnes of goods (about 1421 container loads and 3500 metric tonnes of bulk goods) valued at Rs.63.36 crores, thereby evading Rs.11.18 crores of duty and interest thereof, in gross violation of Section 71 and therefore, they render themselves liable for payment of duty, penalty, interest and other charges in respect of such goods. 15. Mr.G.L.Rawal, the learned senior counsel for the Petitioner would strenuously contend that the bills of entry submitted by the Petitioners companies were neither assessed nor rejected. The learned senior counsel for the Petitioner would contend that there was no valid reasons as to why the Customs Officials have not passed orders in respect of the remaining goods, in spite of the fact that the ex-bond bills of entry were filed by the Petitioner for clearance of the goods. He would submit that since the Officer had failed to discharge his duties, the Petitioner should not be held liable to pay duty. In support of his contention, the learned senior counsel relied on the decisions reported in 1991-51-ELT-185-SC [Priyanka Overseas Pvt. Limited] and 1997-95-ELT-3-SC [Kuil Fireworks Industries Vs. Collector of Central Excise]. 16. He would submit that since the Officer had failed to discharge his duties, the Petitioner should not be held liable to pay duty. In support of his contention, the learned senior counsel relied on the decisions reported in 1991-51-ELT-185-SC [Priyanka Overseas Pvt. Limited] and 1997-95-ELT-3-SC [Kuil Fireworks Industries Vs. Collector of Central Excise]. 16. The learned senior counsel for the Petitioner would further submit that the Petitioner is ready to cooperate with the Investigating Agency and would submit relevant records and documents as required by them. 17. On the other hand, Mr.R.Dhanapal Raj, the learned Special Public Prosecutor for the Respondent would submit that both M/s.Jai Bhawani Steel Enterprises Limited and M/s.SDS Steel Private Limited have illegally removed the goods from the customs bonded warehouses and therefore, the said goods are liable for confiscation under Section 111(j) of the Customs Act, 1962 and the importer would be liable for penalty under Section 112(a) of the Customs Act, 1962. It is further submitted that the Respondent made attempts to meet the Petitioner by visiting to his Office premises at No.91, (Old No.44) 2nd Floor, Armenian Street, Chennai-1 and 6H, Century Plaza, 560/562, Anna Salai, Teynampet, Chennai and both the premises were found vacated and that neither the Petitioner nor his family members were available at the residence of the Petitioner. It is also submitted that the Petitioner had ceased all operations at their factory and bonded premises at No.2/220, GNT Road, Panjetty Village, Ponneri Taluk. The summons dated 11.11.2010 and 22.11.2010 issued on two occasions were not responded by the Petitioner pleading illness and from 29.11.2010, the Petitioner is absconding. 18. The learned Special Public Prosecutor would submit that a prima facie case is shown and when the offence is of serious nature, the question of granting or not granting anticipatory bail has to be decided keeping in view the nature of serious of the offence, the character of the evidence and the larger interest of the public and relied on the decisions reported in AIR-1990-SC-625 [State of Maharashtra Vs. Anand Chaintaan Digheand, 1990-3-OCR-462 [State Vs. Surendranath Mohanty] and 2008-231-ELT-397-SC [Union of India Vs. Padam Narain Aggarwal. 19. Anand Chaintaan Digheand, 1990-3-OCR-462 [State Vs. Surendranath Mohanty] and 2008-231-ELT-397-SC [Union of India Vs. Padam Narain Aggarwal. 19. The learned Special Public Prosecutor drew the attention of this court to the statements recorded by the Respondent from one R.Rajagopal, who was the General Manager in the Petitioner Company and one Siva Shankar, who was the Manager (Accounts and Administration), pointing out that the materials available in the bonded warehouses are only waste unsaleable materials which are mixed up with rubber and tyres and other waste materials and that the good materials had already been disposed of. 20. I have given my anxious and careful consideration to the rival submissions made by the learned counsel on either side. On the face of it, though the submissions made by the learned senior counsel for the Petitioner found to be impressive, but I am afraid that the said submissions cannot be appreciated at this stage. A high revenue stakes are involved in this case and the offence is of a serious nature, where there is a prima facie material to show evasion of customs duty to the tune of Rs.11.18 crores. Further, though the Petitioner has been given an opportunity to appear before the Investigating Agency, but he has failed to avail such opportunity. He had not responded to the summons issued earlier by the Enforcement Officer. The apprehension raised by the Respondent that the Petitioner may hamper the progress of the investigation cannot be ignored. The claim made by the Respondent that custodial interrogation of the Petitioner is necessary requires consideration as the investigation seems to be at early stage. 21. In view of the reasons stated above, I am not inclined to grant the relief of anticipatory bail to the Petitioner at this stage and accordingly, this Criminal Original Petition stands dismissed.