Custom, Excise & Service Tax Tribunal
) Shri Mahendra Shah vs Commissioner Of Customs (Import), ... on 10 July, 2009
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
Appeal No. C/474, 502, 537/08
(Arising out Order-in-Original No. 27/2008-CAC/CC(I)/SP/Gr.VB dated 18.2.08 passed by the Commissioner of Customs(Imp), Mumbai)
For approval and signature:
Honble Mr. P.G. Chacko, Member (Judicial)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3.
Whether Their Lordships wish to see the fair copy of the Order?
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
Yes
1) Shri Mahendra Shah
2) M/s Chanchal Cargo (I) P. Ltd.
3) M/s Cannaught Plaza Restaurant P. Ltd.
Appellants
Vs.
Commissioner of Customs (Import), Mumbai
Respondent
Appearance:
Ms. Kiran Doiphode, Advocate for appellant no. 1 & 2 Shri P.K. Ram, Advocate for appellant no.3 Shri Jaman Singh, JDR for the respondent CORAM:
Honble Mr. P.G. Chacko, Member (Judicial) Date of hearing : 10.7.2009 Date of decision : 10.7.2009 O R D E R No:..
These appeals are against the following order of the Commissioner of Customs (Import), Mumbai:-
ORDER (1) I hold that the goods imported by B/E No. 3825 dt. 10.9.1997 were imported without Special Import Licence in contravention with the provisions of the Customs Act, 1962 read with the provisions of the Exim Policy.
(2) I order confiscation of goods imported by B/E no. 3825 dt. 10.9.1997 valued at Rs.69,78090/- which were cleared against forged Special Import Licence bearing No. P/W/0025312 dt. 27.12.96 under Section 111(d) and 111(o) of Customs Act, 1962. I, however, redeem the same on payment of redemption fine of Rs.10,00,000/- (Rupees ten Lakhs only) by M/s Cannaught Plaza Restaurant Ltd. under Section 125 of Customs Act, 1962.
(3) I impose a penalty of Rs.3,00,000/- (Rupees three lakhs only) on M/s Cannaught Plaza Restaurant Ltd. under Section 112(a) of the Customs Act, 1962. I do not impose any penalty on Shri Jagdish Agarwal of M/s Cannaught Plaza Restaurant Ltd. as investigation has not brought out any direct evidence of his abetment in the commission/omission of offence.
(4) I impose a penalty of Rs.1,00,000/- (Rupees One Lakh only) on M/s Chanchal Cargo Agents (CHA 11/773) under Section 112(a) of Customs Act, 1962. I do not impose any penalty on its proprietor Shri Surendra Trivedi, as I have imposed penalty on the proprietary firm.
(5) I impose a penalty of Rs.1,00,000/- (Rupees One Lakh only) on Shri Mahendra Shah (SIL Agent) under Section 112(a) of the Customs Act, 1962.
2. M/s Cannaught Plaza Restaurant P. Ltd., one of the appellants, had imported Industrial Kitchen Machine, Beverage Dispensers and allied equipments with accessories and filed a bill of entry on 10.9.97 for the clearance of the goods, which were restricted for import and hence required special import licence. They produced what appeared to be a special import licence issued by the Foreign Trade Development Officer (FTDO), Ministry of Commerce, Government of India. This document bearing Serial No. 0025312 authorised its holder to import the above goods upto a value of Rs.81,04,411/- CIF within a period of 12 months. It stood in the name of one M/s Cepham Labs Ltd., New Delhi. M/s Cannaught Plaza Restaurant P. Ltd. sought to use the above licence for clearance of the imported goods to the extent of Rs.64,91,485/- in CIF Value. This clearance was permitted under the aforesaid bill of entry and accordingly, on 21.10.1997, the importer paid duty of over Rs.22.9 lakhs and cleared the goods. In the next year, the Directorate of Revenue Intelligence (DRI) sensed foul play in relation to the above import. In May 2000, the importer was asked to produce certain documents and, accordingly, they produced copies of bill of entry, bill of lading, debit note relating to payment for licence etc. The DRI, after several years, recorded statements under Section 108 of the Customs Act from the importers CHA and from the broker from whom the importer procured the licence through CHA. The DRI obtained a letter from the office of the Directorate-General of Foreign Trade, wherein it was informed that licence no. 0025312 had not been issued to M/s Cepham Labs Ltd. On the basis of this information from the DGFT, the DRI took the view that the clearance of the aforesaid goods had been obtained by the importer under a forged licence. Further investigations in the case were undertaken by the SIIB (Imports) of the department. After completion of such investigations, a show-cause notice was issued to the importer, CHA, broker and others on 5.4.2007. In this notice, the goods were proposed to be confiscated and the noticees were proposed to be penalised. These proposals were contested. In adjudication of the dispute, the ld. Commissioner passed the aforesaid order.
3. Heard both sides. It is submitted by the ld. counsel for the importer that the Commissioners order is liable to be set aside on the sole ground of delay of proceedings. It is submitted that the show-cause notice was issued after more than 9 years from the date of the bill of entry and from the date of commencement of the investigations. In this connection, ld. counsel has relied on the Tribunals judgement in Hari Concast P. Ltd. vs. CCE 2007 (213) ELT 404 (Tri-Del). The ld. counsel has also referred to the High Courts judgment in Parekh Shipping Corporation vs. CCE 1995 (80) ELT 781 (Bom). Referring to the facts of the case, the counsel submits that the goods, having not been cleared under bond/undertaking, were not liable to confiscation. In this connection, reliance has been placed on the Honble High Courts judgment in CCE vs. Raja Impex P. Ltd. 2008 (229) ELT 185 (P&H) and the Tribunals larger bench decision in Shiv Kripa Ispat P. Ltd. vs. CCE 2009 (235) ELT 623. Reiterating the importers challenge against penalty, the ld. counsel submits that the penalty imposed on them by the Commissioner is liable to be set aside on the sole ground that there is no evidence on record to show that the importer was aware of the forged character of the licence at the time of importation. The importer is a bonafide purchaser of the licence and had no reason to believe that the document was forged. He had no mens rea. Therefore the penalty on the importer cannot be sustained.
4. The ld. counsel for Shri Mahendra Vallabhai Shah, proprietor of M/s Unity Impex (broker) and M/s Chanchal Cargo (CHA) refers to the various statements recorded by the department under Section 108 of the Customs Act and submits that there is nothing incriminating in these statements. It is submitted that Shri Mahendra Shah was not the first purchaser of the licence. He purchased it from M/s. Agarwal Sales Corporation, New Delhi, who purchased it from M/s. Maruti International, New Delhi, who procured it from M/s Cepham Labs Ltd, New Delhi. Shri Mahendra Shah (M/s Unity Impex) had procured the licence for valid consideration from M/s. Agarwal Sales Corporation and he believed that the document was genuine. When he sold the document to the importers CHA for a valid consideration, he had no reason to think otherwise. Neither the statement of the CHA nor the statement of Mahendra Shah himself contained any confession to knowledge of the forged character of the licence. In the circumstances, according to the ld. counsel, the penalties on the broker and the CHA are only liable to be vacated.
5. The ld. DR has heavily relied on the Tribunals judgment in DIC India Ltd. Cs. CC Kolkata 2008 (226) ELT 545 (Tri-Kolkata) and the Honble High Courts judgement in Golden Tools International vs. Jt. DGFT, Ludhiana 2006 (199) ELT 213 (P&H), in support of his argument that the beneficiaries of the forged licence are liable to be penalised under Section 112 of the Customs Act in whatever circumstances. It is argued that the fraud underlying the document vitiated the clearance of the goods in question and thereby rendered everyone associated therewith liable to penalty under Section 112(a) of the Act. The ld. DR has also pointed out that, where a person presents a Special Import Licence before the Customs authorities for clearance of goods which are otherwise restricted/prohibited, the burden is on him to ensure that the licence is genuine. It is submitted that the importer or their CHA did not take adequate safeguards in this regard. It is also argued that, for imposing a penalty under Section 112(a) of the Act, there is no requirement of mens rea. In her rejoinder, the ld. Counsel for the broker and the CHA points out that the charge against them is abetment but there is no evidence in support thereof. The CHA was only following the instructions of the importer. The broker had done nothing except sale of a licence to the importer through CHA for valid consideration. Neither of them was aware of the forged nature of the document.
6. I have given careful consideration to the submissions. It is not in dispute that what was produced by the importer as special import licence no. 0025312 was a forged document. Such a licence had not been issued by the DGFT to M/s Cepham Labs Ltd, a fact confirmed through a letter issued by the Joint DGFT. M/s Cannaught Plaza Restaurant P. Ltd. were producing a forged licence for customs clearance of the goods imported by them and therefore the goods were liable to confiscation under Section 111(d) of the Customs Act. However, as the goods were not cleared under any bond or undertaking, no redemption fine could be imposed in lieu of confiscation as held by the Honble High Court in Raja Impex (supra) as also by the Tribunals larger bench in Shiv Kripa Ispat case (supra). However, for penalty to be imposed on the importer under Section 112 of the Act, it is not necessary that the goods are actually to be confiscated. The goods, obviously, could not be confiscated as they were not physically available. However, a liability to confiscation remained with the goods wherever they were. This liability arose out of the conduct of the importer. Consequently, the importer rendered themselves liable to penalty under Section 112(a) of the Act. The penalty imposed on the importer is as high as Rs.3 lakhs. I do not think that this amount of penalty is reasonable in the circumstances of the case.
7. In the appeals filed by the CHA and the broker, the challenge is against the penalties imposed on them under Section 112(a). As rightly pointed out by their counsel, the CHA was only following the instructions of the importer. As per such instructions, the CHA procured the licence from Shri Mahendra Shah(M/s Unity Impex), a fact admitted by the importer in their reply to the show-cause notice. It further appears from the reply that an amount of over Rs.13 lakhs was paid by the importer to the CHA by demand draft, out of which an amount of Rs. 8.1 lakhs was paid by the latter to Shri Mahendra Shah as consideration for the licence. This would mean that the CHA charged over Rs.2 lakhs from the importer towards commission and other charges. These facts pleaded in the importers reply to the show-cause notice were not disproved by the adjudicating authority and the same disclosed the genuineness of the transactions. I must hasten to say that this genuineness of transactions would not take within its scope any genuineness of licence. It appears from the conduct of the parties that they were entering into genuine transactions without the awareness of the forged character of the document. There is no evidence on record to indicate that the broker or the CHA had any inkling of the forged character of the licence at the material time. They were apparently dealing with a licence, treating the same to be genuine. When the document was produced by the importer, the proper officer of Customs accepted the same and, in token thereof, stamped the document with Customs seal. Even the signature of the Foreign Trade Development Officer (FTDO) was verified, a fact endorsed on the document itself. The proper officer, who verified the FTDOs signature found the same to be genuine, further noted thus: BULLETIN NOT RECEIVED. In this context, it has been submitted by the ld. DR in answer to a query from the bench that there was a practice of the Customs department receiving periodical bulletins from the licensing authority. These bulletins contained the particulars of the licences issued by the said authority. These bulletins enabled the Customs authorities to verify the genuineness of any licence produced by any importer. Where any such bulletin was not received, the burden was on the department to take alternative safeguards against imports in breach of restrictions/prohibitions. It appears, no such safeguards were taken in the present case. This, however, would not detract from the penal liability otherwise fastened to the importer by virtue of the operation of Section 111(d) of the Customs Act. Where, the charge is abetment, the department has a burden to show that the person who allegedly abetted the offence committed by the importer did something or omitted to do something with intent to enable the importer to escape penal liability arising out of the import in breach of prohibition/restriction. In the instant case, I do not find any such evidence. Consequently, the penalties on the CHA and the broker cannot be sustained.
8. In the result, it is ordered as under:-
(a) The redemption fine is set aside.
(b) The penalty on the importer is sustained in the facts and circumstances of this case to the extent of Rs.1.5 lakhs.
(c) The penalties on the broker and the CHA are vacated.
(d) The appeals are disposed of in the above terms.
(Dictated in Court) (P.G. Chacko) Member (Judicial) //SR 11