Custom, Excise & Service Tax Tribunal
Exim Aides vs Commissioner Of Customs - Chennai Ii ... on 27 March, 2026
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT No. III
Customs Appeal No. 211 of 2002
(Arising out of Order-in-Original No. 20/2002 dated 08.02.2002 passed by Commissioner of Customs,
No. 60, Custom House, Rajaji Salai, Chennai - 600 001)
Mr. Exim Aides ...Appellant
No. 6, Exim House,
7th Cross, Vasantha Nagar,
Bangalore - 560 052.
Versus
Commissioner of Customs ...Respondent
Chennai II Commissionerate, No. 60, Custom House, Rajaji Salai, Chennai - 600 001.
And Customs Appeal No. 212 of 2002 (Arising out of Order-in-Original No. 12/2002 dated 27.01.2002 passed by Commissioner of Customs, No. 60, Custom House, Rajaji Salai, Chennai - 600 001) Mr. Exim Silks (India) Pvt. Ltd. ...Appellant No. 6, Exim House, 7th Cross, Vasantha Nagar, Bangalore - 560 052.
Versus Commissioner of Customs ...Respondent Chennai II Commissionerate, No. 60, Custom House, Rajaji Salai, Chennai - 600 001.
APPEARANCE:
For the Appellants : Mr. N. Viswanathan, Advocate For the Respondent : Mr. Anoop Singh, Authorised Representative CORAM:
HON'BLE MR. P. DINESHA, MEMBER (JUDICIAL) HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) FINAL ORDER Nos. 40432-40433 / 2026 DATE OF HEARING : 09.12.2025 DATE OF DECISION : 27.03.2026 2 Per Mr. VASA SESHAGIRI RAO These two appeals, Appeal No. C/212/2002 filed by M/s. Exim Silks (India) Pvt. Ltd. and Appeal No. C/211/2002 filed by M/s. Exim Aides, arise out of Order-in- Original No. 12/2002 dated 27.01.2002 and Order-in-Original No. 20/2002 dated 13.02.2002 respectively passed by the Commissioner of Customs, Chennai. Though basing on separate Show Cause Notices and different Bills of Entry, both matters arise from a common SIIB investigation into alleged misuse of the DEEC Scheme in 1996 which involves overlapping evidence and statutory provisions. The appeals were dismissed on 23.05.2003 for non-compliance with pre- deposit under Section 129E of the Customs Act, 1962. The Hon'ble High Court of Madras, by common order dated 13.08.2024 in W.P. Nos. 22687 and 22688 of 2003, set aside the dismissal and restored the appeals subject to deposit of Rs.15 lakhs in each case. Upon compliance, the appeals are being heard together on merits for disposal by this common order.
1.2 In Appeal No. C/212/2002 (Exim Silks India Pvt.
Ltd.), the subject import concerns Bill of Entry No. 23450 dated 14.05.1996 filed by M/s. Sreesilk Imports "A/c Exim Silks (India) Pvt. Ltd." for clearance of 8133.73 kg (135 3 bales) declared as Dupion Silk under Notification No. 80/95- Cus.
1.3 In Appeal No. C/211/2002 (Exim Aides), the subject import concerns Bill of Entry No. 41041 dated 19.08.1996 filed by M/s. Sreenidhi Impex "A/c Exim Aides"
for clearance of 8028.69 kg (135 bales) declared as Dupion Silk under the same notification. The department alleged that a portion of the consignments consisted of Mulberry Raw Silk and that non-transferable advance licences were misused. Statements under Section 108 were recorded from the partners of Sreesilk Imports and Sreenidhi Impex, Shri R. Sadagopan (connected with both appellants), bank officials and licence brokers. It is undisputed that both the appellants executed end-use bonds and furnished bank guarantees for clearance under Notification No. 80/95-Cus. The Adjudicating Authority has confirmed differential duty under the proviso to Section 28(1), ordered confiscation under Sections 111(d), (m) and (o), imposed redemption fine under Section 125 and penalties under Sections 112 resulting in the present appeals.
2. The Ld. Advocate Mr. N. Viswanathan appeared on behalf of the Appellant and advanced detailed submissions in support of the Appeals and the Ld. Authorized 4 Representative Mr. Anoop Singh appeared for the Revenue and defended the findings in the Impugned Order.
3. The Learned Advocate appearing for the Appellant made the following submissions which are that: -
i. the impugned Orders-in-Original suffer from a fundamental legal error in treating the appellants as "importers" within the meaning of Section 2(26) of the Customs Act, 1962.
ii. It was argued that in both cases the Bills of Entry were filed by M/s. Sreesilk Imports and M/s. Sreenidhi Impex respectively, who subscribed to the statutory declarations under Section 46 and physically cleared the goods for home consumption.
iii. The appellants neither filed the Bills of Entry nor took delivery of the goods.
iv. The Section 108 statements of Shri R. Suresh clearly admit that Sreesilk Imports were the actual importers and were responsible for the clearance and alleged misdeclaration.
v. The appellants' role was confined to furnishing advance licences, end-use bonds and bank guarantees, and such furnishing by itself does not render them liable to duty under Section 28.5
vi. It was further contended that misdeclaration, if any, was attributable solely to the filing firms, and even the adjudicating authority recorded that the appellants may not have been aware of the alleged inclusion of Mulberry Raw Silk in the garb of dupion silk. vii. Denial of benefit of Notification No. 80/95-Cus was also challenged on the ground that fulfilment of export obligation is within the domain of the DGFT and there is no finding regarding cancellation of licence. viii. Confiscation and imposition of redemption fine was assailed as unsustainable when goods were not available and when appellants status as importers itself is not established. Finally it was submitted that penalty cannot be sustained in the absence of mens rea. 4.1 The Ld. Authorized Representative supported the findings in the impugned orders and submitted that the appellants cannot escape liability merely because the Bills of Entry were filed by associated firms. It was argued that the consignments were cleared "on account of" the appellants and against advance licences held by them. The end-use bonds and bank guarantees were executed by the appellants, and the clearances under Notification No. 80/95-Cus were granted on the strength of such undertakings. Therefore, the 6 appellants held themselves out as importers within the meaning of Section 2(26) of the Customs Act, 1962. 4.2 It was further submitted that the Section 108 statements reveal that the high sea sales arrangements and licence utilisation were not bona fide commercial transactions but were structured to facilitate misuse of non-transferable licences. The irregularities in bank guarantees and the admitted receipt of premium amounts for permitting use of licences indicate active and fraudulent involvement.
5. We have heard the Rival submissions of both the sides. We have also perused the appeal records, OIO's, Orders of the Tribunal and MADRAS High Court in Appellant's case and written submissions placed on record.
6. Upon such consideration, the following issues arise for our determination as to: -
i. Whether the appellants are importers under Section 2(26) and so are liable to duty under Section 28? ii. Whether misdeclaration under Section 111(m) is established against them?
iii. Whether confiscation and redemption fine are valid in their hands? and, 7 iv. Whether penalty is sustainable, and if so, to what extent?
Issue No.1 - Appellants' status as importers under Section 2(26) of Customs Act 1962 7.1 We note that Section 2(26) of the Customs Act defines "importer" as any owner or person holding himself out to be the importer at any time between importation and clearance for home consumption. We observe that under the statutory framework of Sections 46 and 47, the person who files the Bill of Entry, subscribes to the declaration as to the truth of its contents, and seeks out-of-charge clearance is legally treated as importer for the purposes of assessment and recovery of duty.
7.2 We find that in the case of Exim Silks (India) Pvt. Ltd., the Order-in-Original itself records: -
"M/s. Sreesilk Imports, Bangalore, filed Bill of Entry No.23450 dated 14.05.96 on account of M/s. Exim Silks India P Ltd., Bangalore and cleared 8133.73 kgs (135 bales) of goods declared as 'Dupion Silk' under DEEC Scheme..."
7.3 We further observe that the adjudication order categorically records:
"Though the account party was shown as M/s. Exim Silks India P Ltd., Bangalore, the declaration as to the truth of contents of the Bill of Entry were subscribed to by M/s. Sreesilk Imports, Bangalore."
7.4 We also note that the Order records:
8
"The investigations revealed that M/s. Sreesilk Imports negotiated with the suppliers M/s. National Origin Ltd., Hong Kong for the shipment of subject goods."
7.5 We find that the Section 108 statement of Shri R. Suresh, Partner of Sreesilk Imports, in Para 8 is reproduced in the Order to the effect that: -
"M/s. Sreesilk Imports were the actual importers responsible for duty evasion. He agreed to pay the differential duty at the earliest"
7.6 We observe that the statement of Shri R. Sadagopan of Exim Silks is recorded in Para 9 as: -
"Apart from giving the Advance Licences and signing the high sea sale contract, they were not a party to the imports covered by Bill of Entry No.23450... They had not taken delivery of the goods after clearance."
7.7 We find that similarly, in the case of Exim Aides, the Order-in-Original records that the relevant Bill of Entry was filed by M/s. Sreenidhi Impex "A/c Exim Aides," and that the declaration under Section 46 was subscribed by Sreenidhi Impex. We observe that the investigation notes that Sreenidhi Impex handled negotiation, clearance and delivery of the goods. The Section 108 statements indicate that Sreenidhi Impex arranged clearance under the licences furnished by Exim Aides.
7.8 We therefore note that in the both appeals, the act of filing Bills of Entry, subscribing to declarations and 9 seeking clearance under Section 47 were performed by Sreesilk Imports and Sreenidhi Impex respectively. 7.9 The Respondent, however, contended that the consignments were cleared "on account of" the appellants and against advance licences held by them, and therefore they held themselves out as importers. We observe that mere mention "A/c" and furnishing of licences does not substitute the act of filing and subscribing to the declaration of the Bill of Entry filed for clearance of imported goods. 7.10 Upon careful consideration, we find that neither Exim Silks nor Exim Aides filed the Bills of Entry or subscribed to statutory declarations. They cannot therefore be treated as "importers" within the meaning of Section 2(26). Consequently, the duty demand under Section 28 cannot be sustained against either of the appellants. 7.11 However, we also observe that both Orders-in- Original record that the appellants furnished end-use bonds and bank guarantees for clearance. In respect of Exim Silks, the Order records: -
"The bank guarantees and the end-use bonds were also submitted by M/s. Exim Silks India P Ltd., Bangalore for the purpose of clearance from Customs."
In respect of Exim Aides, it is recorded: 10
"M/s. Exim Aides furnished end-use bonds and bank guarantees for clearance under Notification 80/95 and instructed the CHA to submit the same."
We therefore find that while not importers, both appellants facilitated clearance by furnishing licences and securities. We further note that the licences furnished by both appellants were non-transferable QBAL (Quantity Based Advance Licence) licences issued under the DEEC Scheme, and the clearances were effected by filing forms using such non- transferable licences. The utilisation of non-transferable QBAL licences by third parties, even if shown as on "A/c" the licence holder, forms the substratum of the department's allegation of misuse.
Issue No.2 - Misdeclaration under Section 111(m) 8.1 We observe that misdeclaration under Section 111(m) presupposes that the person concerned made or was responsible for a false declaration regarding description or value.
8.2 We find that in the case of Exim Silks, the Order reproduces the admission of Shri R. Suresh that Mulberry Raw Silk was included in the consignment. However, the same Order records: -
"No doubt, M/s. Exim Silks India P Ltd., Bangalore may not be aware that 45 bales of Mulberry Raw Silk was also included..."11
8.3 We note that there is no statement from Shri Sadagopan admitting knowledge of misdescription. On the contrary, his statement records lack of knowledge and non- receipt of goods.
8.4 We observe that in the case of Exim Aides, the Section 108 statements indicate that Sreenidhi Impex handled the description and clearance process. There is no categorical admission by Exim Aides of awareness of misdescription. The evidence establishes furnishing of licences but not participation in description or valuation. 8.5 The respondent controverted this contention, arguing that misdeclaration occurred and the appellants facilitated clearance. We observe that facilitation of use of licence is distinct from making a false declaration. 8.6 We therefore find that misdeclaration, if any, is attributable to the entities that filed and subscribed to the declaration in the Bills of Entry. There is no evidence establishing that either Exim Silks or Exim Aides instructed or knowingly participated in misdescription. 12 8.7 Accordingly, we hold that misdeclaration under Section 111(m) is not established against either of the appellants.
Issue No.3 - Confiscation and Redemption Fine 9.1 We note that the goods in question are admittedly not available for confiscation. The learned Authorised Representative relied upon the judgment of the Hon'ble Supreme Court in Weston Components Ltd. v. Commissioner of Customs, 2000 (115) ELT 278 (SC), to contend that redemption fine may be imposed even where the goods are not physically available, provided the goods are otherwise liable to confiscation. We observe that the principle laid down therein applies only when confiscability of the goods is legally sustainable on merits. 9.2 In the present case, we have already held that 'importer' status and misdeclaration are not established against either Exim Silks (India) Pvt. Ltd. or Exim Aides. In the absence of sustainable confiscation under Sections 111(d), (m) or (o) in their hands, the very foundation for imposition of redemption fine fails. Consequently, we hold that the redemption fine imposed under Section 125 of the Customs Act is unsustainable and is liable to be set aside. 13 Issue No.4 - Penalty 10.1 We observe that Section 112(a) of the Customs Act provides for imposition of penalty on any person who, by any act or omission, renders goods liable to confiscation under Section 111. The Orders-in-Original record that non- transferable QBAL advance licences were permitted in a designed and conspirational manner to be utilised for clearance by third parties, and that bank guarantees furnished for clearance were issued without complying with prescribed procedural requirements and were misused. The Orders further observe that by such illegal transfer and utilisation of non-transferable licences, the goods were rendered liable to confiscation under Section 111(o) for breach of the conditions of Notification No. 80/95-Cus. The search proceedings conducted at the premises of both appellants resulted in recovery of DEEC passbooks, bond documents and copies of bank guarantees furnished to Customs. Statements of officials of Bank of Madura clarified that certain guarantees were irregular and not supported by proper margin money or banking documentation. We therefore find that both Exim Silks and Exim Aides, have furnished non-transferable QBAL licences, executed end-use bonds and submitted bank guarantees which enabled clearance of goods under a conditional exemption scheme. 14 10.2 At the same time, we find that misdeclaration is not established against either of the appellants in import of Mulberry Silk in the garb of declared dupion silk. However, deliberate negligence and premeditated facilitation of the improper clearance are evident from the material on record. For their contributory and fraudulent conduct in transfer of nontransferable licenses and execution of bonds and Bank guarantees which were found to be not regular as being manipulated, the Adjudicating Authority could have imposed penalty equivalent to the duty sought to be evaded. But he was considerable in imposition of a penalty of Rs.10,00,000/- each under Section 112 of the Customs Act, 1962 which is sustained. So, ordered accordingly.
11. Insofar as Appeal No. C/212/2002 filed by M/s. Exim Silks (India) Pvt. Ltd. and Appeal No. C/211/2002 filed by M/s. Exim Aides are concerned, we hold that neither of the appellant can be treated as an importer within the meaning of Section 2(26) of the Customs Act, 1962 and, consequently, the duty demands confirmed against them under Section 28 are set aside. The denial of Notification No. 80/95-Cus in their hands is unsustainable and the confiscation and redemption fine imposed are also set aside. However, we find that both the appellants facilitated clearance of the consignments by furnishing non-transferable 15 QBAL advance licences, executing end-use bonds and producing bank guarantees, some of which were found to be irregular, thereby enabling misuse of the DEEC scheme. For such facilitative conduct, penalty under Section 112(a) is warranted. Accordingly, while setting aside the duty demand, interest, confiscation and redemption fine in both appeals, we sustain the penalty imposed of Rs.10,00,000/- each on the appellants under Section 112(a) of the Customs Act, 1962.
12. Thus, the appeals are partly allowed as above.
(Order pronounced in open court on 27.03.2026) Sd/- Sd/-
(VASA SESHAGIRI RAO) (P. DINESHA) MEMBER (TECHNICAL) MEMBER (JUDICIAL) MK