A two-member Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in Mumbai has begun hearing afresh an appeal filed by Delhi-based Knowledge Infrastructure Systems Pvt Ltd that is accused of over-invoicing Indonesian coal imports by the Directorate of Revenue Intelligence (DRI). This is despite the plea of PRV Ramanan, special counsel of the DRI, on January 3, 2018, seeking an adjournment in the case for three weeks on medical grounds.
The case pertains to allegations of the DRI that a wholly owned subsidiary of Knowledge Infrastructure in Singapore first bought the coal from a Switzerland-based firm and then the same consignment was sold to two intermediary firms, which then “dispatched the coal to the Indian firm”. In these transactions, the price of coal sold by the two intermediary firms was “substantially higher” than the price at which the Singapore subsidiary had bought it from the Switzerland firm. The adjudicating authority has upheld the findings of the DRI and imposed a penalty of Rs 17.5 crore and Rs 1.25 crore on Knowledge Infrastructure and its promoter respectively for mis-declaration of coal quality and its imports. Knowledge Infrastructure has appealed against the order in the CESTAT and denied all the allegations of the DRI.
The decision of the tribunal in the Knowledge Infrastructure case assumes significance as it will be a precedent for over two dozen prominent coal importers which are being probed for alleged overvaluation of Indonesian coal imports, collectively pegged at Rs 29,000 crore. Now, the DRI special counsel has said that the tribunal bench did not follow “natural justice” while hearing the case despite seeking an advance adjournment from the bench. “I had asked for an adjournment for three weeks on January 3, as my wife had to undergo a major surgery but it was not granted and the case was heard part today in my absence. The bench has not followed natural justice. I don’t know why did they not entertain my plea,” said Ramanan. The Bombay High Court had on January 23, 2017 ordered the tribunal to expedite the hearing in the case and pass an order in time bound manner. But Ramanan claims that the high court order is not the reason for not granting an adjournment.
“The final hearing in the case by a bench comprising D N Panda and C J Mathew finished in September 2017 itself and an order was expected within three months. But the order was not passed. Subsequently, one of the members, Panda, retired in December 2017. Now the case is being heard afresh by Mathew and a touring member Anil Choudhary. If they waited for three months after the final hearing and still did not pass the order, then the high court directive cannot be the reason for not granting an adjournment to us this time,” said Ramanan.
E-mails to former revenue secretary and the current finance secretary, Hasmukh Adhia and Satish Chandra, president of CESTAT did not elicit any response. Mukul Rohtagi, former attorney general of India, who is representing Knowledge Infrastructure in the tribunal said the company has already lost a lot of time and money in contesting the case, due to delays. He said the hearing was completed in September 2017 but the order was not passed. Since a member hearing the case retired, the company on December 26 moved the tribunal requesting a fresh hearing on January 8.
“We had informed the other party that the hearing is on January 8 as I was available for the hearing. I had cancelled all my SC matters for this hearing. But on January 3, the special counsel for DRI moved an adjournment notice. So we showed the high court order to the bench, which had asked the tribunal to finish the case in six months and requested the bench to hear our arguments, since I was available. We asked them to fix a time for hearing the revenue case next week. And the tribunal agreed to that. What’s the big deal,” said Rohtagi. The tribunal is scheduled to hear the arguments of the revenue department on January 17.