Customs, Excise and Gold Tribunal - Mumbai
Zenith Ltd. And Ors. vs Commissioner Of Customs (Preventive) on 13 September, 2005
ORDER
Jyoti Balasundaram, Vice President
1. The above appeals arising out of two orders-in-original involve common issues and are hence heard together and disposed off by this common order.
2. Appeal No. C/572, 583,584, 589, 687 & 688/02 arise out of the Commissioner's order dt. 18.3.2002. Appeal No. C/572, 684, 685 & 691/-2002 arise out of Commissioner's order dt. 22.3.2002.
3. Vide order dt. 18.3.2002 the Commissioner of Customs has confirmed a duty demand of Rs. 37,02,753/- on two consignments of silver bars of imported by M/s. Adani Exports (hereinafter referred to as importer) under Section 28 along with appropriate interest in terms of Section 28AB, by denying the benefit of exemption in terms of Notification No. 117/94-Cus, dt. 27.4.1997, held that the goods were liable to confiscation under Section 111(d) and (o) but since the goods were not available, has not ordered confiscation thereof and inter alia imposed penalties equal to duty amount under Section 114A on the importer and penalties of Rs. 5 lakhs each under Section 112(a) on the other appellants.
4. Vide order dt. 22.3.2002 the adjudicating authority has confirmed a demand of Rs. 71,80,208/- under Section 28A together with interest under Section 28AB on M/s. Zenith Ltd. (hereinafter referred to as the importer) on gold bars imported by them, denying the benefit of exemption in terms of Notification No. 117/94 and inter alia imposed penalty of amount equal to duty under Section 114A on the importer and penalties of Rs. 10 lakhs each under Section 112(a) on the other appellants.
5. The case of the department is that the SILs purchased form M/s. Arihant Bullion Gem & Jewellery and purchase for clearance of the goods was forged and therefore not valid for the consignment in question.
6. Appeal No. C/572.583. 584. 589. 687. 688/02 The brief facts as unfolding from the Commissioner's order dt. 18.3.2002 are that office premises of one M/s. Gazeb & M/s. Mahavir Corporation, Mumbai were searched by officers of DRI on 2.12.1997 during which, a file containing original exchange control copy of SIL No. 3535539 dt. 6.8.1997 in the name of Track Industries, Kanpur was recovered. On inquiry from the Jt. DGFT., Kanpur it was revealed that no such SIL had been issued by them and that the signature and security seal had been forged. Shri Ramesh Tarachand Shah @ Bafna stated on 19.9.1998 that he had purchased from SIL from one Shri Sushil Kumar Lohia who, in turn admitted that he had given the said copy of SIL to Shri Lohia and also tendered the customs purpose copy of the said SIL and other related documents. Shri Lohia further stated that the said SIL was given to him by one Shri Manoj Kumar at a premium of 2.5% whereas prevailing market premium was 10%. On search of residential premises of Dinesh C. Buchasia (named by Shri Lohia), certain documents were recovered and his statement was recorded in which he deposed that he had purchased 7 forged SIL from one Shri Rajesh Chopra, at a low premium and that out of these, he had sold 4 licences to Shri Sushil Lohia and three licences to his brother Shri Laxmichand Buchasia. Shri Laxmichand Buchasia admitted knowledge of the forged nature of the licenses, which he had purchased and stated that he had further sold them to M/s. Arihant Bullion Gem & Jewellery through one Shri Suresh Kumar Jain. However at a later stage he said that he had sold only two SILs of M/s. Arihant Bullion Gem & Jewellery. The proprietor of M/s. Arihant Bullion Gem & Jewellery, Shri Ganpat Raj V Mehta, admitted that he had purchased the said two SILs from Shri Laxmichand Buchasia and submitted documents relating to sale & purchase of these licences and import of gold by M/s. Arihant Bullion Gem & Jewellery. One Shri R.K. Das, DGM of the importer admitted that his firm had purchased three SILs from M/s. Arihant Bullion Gem & Jewellery and used them to clear two import consignments of silver bars vide Bills of Entry Nos. 6205 dt. 12.8.97, which consignments were sold by them to M/s. Arihant Bullion Gem & Jewellery. Shri Suresh Jain admitted that he had purchased of two SILs for M/s. Arihant Bullion Gem & Jewellery from Shri Laxmichand Buchasia ana mat these SILs were sold by M/s. Arihant Bullion Gem & Jewellery to M/s. Adani Exports Ltd. & Zenith Ltd.
7. In the based upon the above facts, show cause notice dt. 23.3.1999/20.4.1999 was issued to the importer M/s. Adani Exports Ltd. proposing recovery of duty on the ground that the Notification No. 117/94 dt. 27.4.97 which exempted gold and silver imported into India from payment of tariff rate of Customs duty and which provided a concessional rate of duty subject to the condition that the goods were covered by a Special Import Licence was not available to the importers, as the SILs were forged. The notice also proposed confiscation of the goods under Section 111(d) and (o). Penalty was also proposed on the importer as well as the others involved in the offence of being concerned with forged licences. The notice was adjudicated by the Commissioner who ordered confiscation, confirmed the demand raised under the proviso to Section 28(1) and imposed penalty of amounts set out in the opening paragraph of this order.
8. Appeal Nos. C/S76. 684. 685 & 691/-02 In these appeals the evidence relied upon by the department is the same as in the earlier case except for the fact that in place of the statement of R.K. Das, DGM of M/s. Adani Exports Ltd., it is the statement of Dr. Rajendra Thusu, Chief Executive of M/s. Zenith Ltd. which has been relief upon along with statement of others such as Bafna, Shri Sushil Kumar Lohia, Dinesh Buchasia etc. and the goods imported by M/s. Zenith Ltd. are gold bars, while the goods imported by Adani Exports Ltd. were silver bars.
9. We have heard both sides.
10. We find that the appeals can be disposed of on the point of limitation, without going into the merits of the matter. The importers are transferees of licences. Duty has been demanded from them under the proviso to Section 28(1) of the Act, on the basis of acts of omission or commission on the part of third parties with whom the transferees have no privity of contract. The finding of the Commissioner against both importers is that they had purchased SILs from M/s. Arihant Bullion Gem & Jewellery make any payments and imported the silver/gold utilizing the said bogus SIL and sold imported silver/gold to M/s. Arihant Bullion Gem & Jewellery on commission basis, arranged for payment of customs duty from EEFC Account and that instead of themselves importing silver/gold M/s. Arihant Bullion Gem & Jewellery chose to transfer the SIL to the importers and this round about way of dealing with SIL must have alerted the importers who chose remain silent and knowingly dealt with forged SIL. To our minds this is not sufficient to attribute knowledge to the importers of the forged nature of the SIL, particularly in view of their explanation that they had imported the goods and thereafter sold them to M/s. Arihant Bullion Gem & Jewellery, as they (importers) had an Exchange Earning Foreign Currency Account) and the Notification provided for payment of duty in convertible foreign currency out of such account of the importer. In both cases the show causa notice proceeds on the basis that Shri Lakhmichand Buchasia was the agent of the importers. However there is not evidence to support or substantiate this allegation. Statements of all the persons concerned including Shri Lakhmichand Buchasia and his brother Dinesh Buchasia do not disclose that they are agents of the importers. Transaction between Buchasia and M/s. Arihant Bullion Gem & Jewellery, on one hand and between M/s. Arihant and the importers on the other, are on principal to principal basis. The Commissioner has not rebutted the stand of the importers that Buchasia is not their agent. In these circumstances there is not wilful mis-statement or suppression of facts with an intention to evade payment of duty on the part of the importers so as to attract the proviso to Section 23(1) against them. We, therefore agree with the importers that the demands are barred by limitation. In the light of Tribunal's decision in the case of H. Kumar Gems 2001 (137) ELT 61. The submission of the Ld. SDR that since forged licences are void ab-initio and therefore the buyer cannot have a better title than he himself has been answered against the Revenue by the Larger Bench decision in the case of Hico Enterprises Order No. M.1152/WZB/05C-I dt. 20.9.05. The further argument that the provisions of the Limitation Act, 1963 would apply in such cases and the limitation period is to be computed from the date of discovery of the forgery is not tenable, in the light of the specific statutory provisions for limitation in the Customs Act. The decision of the Tribunal in the case of ICI India Ltd. v. Commissioner of Customs, Calcutta relied upon by Ld. DR is distinguishable for the reason that the notice in that case was issued within the normal period of limitation under Section 28, and not under the proviso thereto. For the same reason, the affirmation of this judgment of the Hon'ble Calcutta High Court in arid by the Apex Court are not applicable in the present case. Moreover, we note that the Tribunal has held that the provisions of Section 114A were not applicable qua the transferee and since the provisions of Section 114A and the proviso to Section 28(1) are pari materia, the proviso to Section 28(1) is not applicable against the importers.
11. In view of our holding that the demands of barred by limitation, the penalties imposed under Section 114A on the importers are required to be set aside. The penalties imposed under Section 112(a) on the other appellants are also set aside in view of the above findings. In the result, we set aside the impugned orders and allow the appeals.
(Dictated in Court)