Customs, Excise and Gold Tribunal - Mumbai
Shri S.K. Colombowala And Ors. vs Commissioner Of Customs (Import) on 20 March, 2007
ORDER Archana Wadhwa, Member (J)
1. All the appeals are being disposed of by a common order as they arise out of the same impugned order passed by the Commissioner of Customs, Mumbai vide which he has imposed penalties of varying amount upon the appellants in terms of the provisions of Section 112(a) and 112(b) of the Customs Act, 1962. The said penalties stand imposed upon the appellants on the allegations and findings that they aided and abetted one M/s. Amrit Laxmi Machine Works, Bombay in duty free imports against duplicate advance licences.
2. After hearing both the sides, we find that proceedings were also initiated against M/s. Amrit Laxmi Machine Works. However, the said noticee settled the dispute in Settlement Commission who vide its order No. 38/2002 dt. 5.9.02 settled the case on terms that an amount of Rs. 15,94,565/- (Rupees fifteen lakhs ninety four thousand five hundred sixty five only) deposited by the said notice be appropriated towards the admitted duty liability along with interest at the rate of 10%. Immunity was granted to the said noticee from fine, penalty and prosecution. As such, it is the appellant's case that no penalty having been imposed upon the main offender, imposition of penalties upon them in terms of the provisions of Section 112 is not called for It is settled law that co-accused cannot be vested with any higher penal consequences than main accused. By referring to various, Ld. Advocate has argued that main accused stand absolved of penal consequences, no question of imposition of penalty on the co-accused can arise.
2. After hearing the Ld. DR, we find that the Hon'ble Supreme Court in the of UOI of India v. Onkar S. Kanwar , held that settlement of dispute by main declarant under Kar Vivad Samadha Scheme to operate as full and final settlement in respect of all other person upon whom show cause notice was served in respect of the same matter. Further, in the case of V. Abdul Rehman Musaliyar v. Commissioner , it was observed that abetter cannot be penalized more than the original importer. Similarly, in the case of D.P. Kothari v. Commissioner of Central Excise, Jaipur-I 2001 (135) ELT 669 (Tri.-Del.). It was laid down that where principal noticee filed a declaration under Kar Vivad Samadhan Scheme and issue finally settled in favour of him, as a consequence, penalty imposed on co-noticee does not survive.
3. Ld. DR has submitted that all the above decisions are in respect of settlement under Kar Vivad Samadhan Scheme, whereas in the present case the dispute has been settled by the main noticee in Settlement Commission. However, we find that this difference would not effect the ratio of law declared by the above decision. The principal which weighed with the authorities in holding as above, is that the co-accused should not be penalized more than the main accused. To simply state if an accused has been acquitted for murder, co-accuse cannot be held guilty for conspiracy to murder. In any case, we find that the Tribunal's decision in the case Shitala Prasad Sharma v. Commissioner of Central Excise, Mumbai-I is a judgment where the main accused settled the dispute before Settlement Commission and the penalty on the co-accused was set aside on the ground that where the Settlement Commissioner has granted immunity to the main accuse from levy of penalty, co-accused cannot be vested with any higher penal consequences than the main accused. In view of the above, we set aside, the impugned order of imposition of penalties upon the appellants and allow all the appeals with consequential relief to them.
(Pronounced in court on....) M. Veeraiyan, Member (T)
4. I have carefully gone through the order proposed by my learned sister Mrs. Archana Wadhwa, Hon'ble Member (Judicial). As I am not in a position to pursue myself to accept the same, I proceed to record a separate order.
5. The following are the facts and findings as per Commissioner's order which are relevant:
a. M/s. Amrit Laxmi Machine Works was a holder of an advance licence issued to them in November, 1996 enabling them import of 248 pieces of bearings valued at Rs. 9,22,110/- within the overall value of Rs. 50,05,468/- allowed for duty free import and they were required to export goods valued at Rs. 3,52,96,940/-.
b. There were certain amendments to the licence and M/s. Amrit Laxmi Machine Works imported two consignments in January, 1997 and August, 1998. Licencee discharged export obligation by February, 1997. Still there was balance value on the licence for Rs. 27 lakhs and the licence was not being utilized after August, 1998 by the said firm which was valid up to 21/05/1999.
c. One broker dealing in advance licences, by name, Shri Jitendra Vakharia and Shri Ashwin Mehta of M/s. Nippon Bearings Pvt. Ltd., Mohanlal H. Vora of M/s. Shalin Bearing Corporation were mainly instrumental in making a false representation to DGFT as if the licence was misplaced; procuring Chartered Engineer's certificate to enable import of large quantity of different kind of bearings; procuring duplicate licence dated 22/11/1999 with enhanced value of Rs. 1,91,33,433/- which included 4248 bearings as against 248 pieces originally allowed; arranging financial transactions between Nippon Bearings Pvt. Ltd., and M/s. Amrit Laxmi Machine Works, and M/s. Shalin Bearings Corporation and M/s. Amrit Laxmi Machine Works; arranging imports from Dubai from the relative of Shri Manharlal H. Vora and showing high-sea-sales to M/s. Amrit Laxmi Machine Works; transferring the goods cleared in the name of M/s. Amit Laxmi Machine Works to Delhi.
d. The customs clearance work was handled by M/s. East West Freight Carriers, the CHA and Shri Saifuddin Abdul Kadir Colombowala as a Director of the CHA company.
e. In this case, though on record, the licence holder importer was M/s. Amrit Laxmi Machine Works, the entire fraudulent activities were done by Ashwin S. Mehta of Nippon Bearings Pvt. Ltd., and Manharlal H. Vora of Shalin Bearings Corporation with the help of others.
f. M/s. Amrit Laxmi Machine Works and its Director Shri N.K. Bramachari approached the Settlement Commission and paid the duty of Rs. 15,94,565/- along with 10% interest as ordered by the Hon'ble Settlement Commission. The Settlement Commission gave immunity in matters relating to penalty and prosecution to these noticees on the ground that the applicants have cooperated with the Settlement Commission in the proceedings before it and has made a full true disclosure.
g. In respect of other noticees which include the present appellants adjudication proceedings were continued and completed and penalties imposed by the Commissioner vide his order dated 13/07/2004. The penalties imposed on the appellants are as detailed below:
S.No. Name of the appellant Amount (Rs.)
1.
Shri S.K. Colombowala, Director, East West Freight Carriers Pvt. Ltd.
10,000/-
2. East West Freight Carriers Pvt. Ltd.
5,000/-
3. Shri Manharlal H. Vora, Authroised Sigantory, Shalin Bearings Corporation 2,00,000/-
4. Mr. Ashwin Shantilal Mehta of Nippon Bearing Pvt.
Ltd.
2,00,000/-
5. Nippon Bearing Pvt. Ltd.
1,00,000/-
6. Shalin Bearings Corporation 1,00,000/-
6. The proposed order of Ld. Member (Judicial) allows appeals of these persons on the ground Unit M/s. Amit Laxmi Machine Works and its Director were granted immunity from penalties by the order of the Settlement Commission and relies on the judgments relating to Kar Vivadh Samadhan Scheme and a judgment of the Single Member Bench of the Tribunal.
7. At the outset, it is observed that Kar Vivadh Samadhan Scheme is a one time scheme, which is on a different footing from the provisions relating to Settlement of cases by the Settlement Commission. The nature of applicants, the nature of relief granted and the conditions governing the Kar Vivadh Samadhan Scheme are also significantly different from the scheme of Settlement Commission.
8. Further M/s. Amrit Laxmi Machine Works and its Director approached the Settlement Commission and cooperated with the Settlement Commission and received immunity as provided under the Act. The present appellants have not chosen to go to the Settlement Commission.
9. The proposal to set aside the penalties on these appellants on the ground that M/s. Amrit Laxmi Machine Works and its Director have been granted immunity by the Settlement Commission based on case laws cited may not be appropriate.
10. In the present case, M/s. Amrit Laxmi Machine Works and its Director have not played the major role in fraudulently obtaining the duplicate advance licence and importing duty free bah bearings. They merely acted as licence lenders and name lenders. The facts of the case relating to Tribunal's decision by the Single Member Bench in the case of Shitala Prasad Sharma v. Commissioner of Central Excise, Mumbai-I, cited supra are also distinguishable, in as much as M/s. Amit Laxmi Machine Works cannot be considered as the main accused.
11. The leniency shown to M/s. Amrit Laxmi Machine Works and its Director are in the nature of leniency shown by the criminal courts to approvers. In this case the major activities leading to the fraud have been undertaken by the following persons. (i) Ashwin Mehta of M/s. Nippon Bearings Pvt. Ltd., (ii) Manharlal H. Vora of M/s. Shalin Bearing Corporation. Therefore, the penalties imposed on them and their firms may not deserve to be set aside as they have not adduced any evidence to upset the findings on their involvement. However, taking into account the duty evasion caused and the role played, penalties can be reduced as mentioned below:
S.No. Name of the appellant Amounts (Rs. )
1.
Shri Manharlal H. Vora 1,00,000/-
2. Mr. Ashwin Shantilal Mehta 1,00,000/-
3. Nippon Bearing Pvt. Ltd.
50,000/-
4. Shalin Bearings Corporation 50,000/-
12. As regards the role of the CHA and its Director there is no evidence of the knowledge and involvement in the fraudulent acquiring of the duplicate licence or use of the same to evade customs duty. It is held by the Commissioner that Colombowala could have easily sensed the fraudulent intention behind the deeds of Shri Vora and Shri Mehta and should have cautioned them of the consequences and should have informed the department if the caution was not adhered by them. Such a finding only shows that at the most there was negligence on the part of CHA and its Director and therefore no penalty is warranted on these two appellants.
Difference of Opinion
13. Whether the provisions relating to Settlement of cases under the Customs Act can be considered to be identical to Kar Vivadh Samadhan Scheme justifying invocation of case laws under the Kar Vivadh Samadhan Scheme?
14. Whether M/s. Amrit Laxmi Machine Works and its Director played main role in the fraud or the others, namely, Shri Manharlal H. Vora, Mr. Ashwin Shantilal Mehta, Nippon Bearing Pvt. Ltd., Shalin Bearings Corporation are the main persons in the crime?
15. Whether treating the appellants as mere co-noticees waiver of penalty should be granted on the ground that M/s. Amrit Laxmi Machine Works and its Director have obtained immunity from penalty by the order of the Settlement Commission.
16. Whether order proposed by Ld. Member (Judicial) or Member (Technical) should be endorsed?