Karnataka High Court
Commissioner Of Customs vs M/S M N S Exports (P) Ltd on 16 June, 2011
Bench: V.G.Sabhahit, Ravi Malimath
IN THE HIGH COURT QF KARNATAKA AT BANGALC--;_P;§:'f"%--«._ -._
BATES "ms THE 16*" DAY 0? JUNE '
PRESENT
THE H{}N'BLE MR. 3usT1ci'EwV.$z'. C3.S;§\'&:3-H'g5;HViT
TH E H0r§1'B'z;rs1% ':4 Emu vM.A:L1MATH
%%%% 0s=...2507
BETWEEN? "
CommEssiener":;=f_VC:zsi:-snis
__. 9.8; Na 5400
(LR, §:':?»€;i'tdi§'r2gg-Quee:i'é"Réad
A"§ar§ga§§:'§ Q01. WAPPELLANT
§§'-§_7%".'V!?§:"_;2.eregayiia Rec? 332;. Afivecate)
£9933, .svLN.s. Exggrizs {P} Lisp;
fig. 3.9/3, Ksfianakunie Viiiags
M
Bmasanapura Cross R333
Kanakapura Road
Baizgafere.
2, Shri Narayana Bhat
Managing Director
M/s. MNS Exp0r1:s(P} £13.,
No, 19/3, Konanakunte \./Viéréage
Békasanaaura Cress Read
Kanakapura Road
Bangaiors.
3. Shri. Vikram 33%;':
No. 16, Pflfappa Lane
3.M, Read Cr_:jss_ , I
Bar1gaiore~52'.3,.' 2: A ' -f"~-_._,,.RESPONDENTS
{By Sré Va Lakéhr:a"§'i;.z}'z%i'ara%sV?s&s_'""
Sri SridshTa_r'a§}_; ' A1;fi;ygca_tes 'f:>'zx R2, K R3=Served) Thwss/3;§p«€éE '?'i.V§_éd»T'u-r3:€3'er.~*sectien 130 of the Customs Act, 1962 ar*%3_§nsg_eut_ <35 <,s.ri«;!§>.r dated 03049200? passed in Agspeal VN_e§ Cu'st§>ms¥Z6Q8./OE}; C/615/2800 8: Q11/2900 in __its Fimsi {ftrder 4'1._2'--414,/208? praying to fermuiate the s'u--bsta.n'tia§-LQuestion Of"i'3w stated therein and set aside the '-.Qr:é'e;<,af _VCE.ST/-KT', SZB; Bangaiore passed in Appea! Na, {::;.s'tgsn'1'si/V5::Vs;GG.,_"_1::/515/2000 8: <1/:3,/2030 in its 'Finai 0r::.er1;;%12+4:V4g;T:Q'@7 dated 033942907. Th:'3 1~a;:>peaE flaming 3;: for heamégf this say, deiéxzerefi the fsEEOw§r:g:~ §->';g.»w
-4...
reeresentetive contrary te the prev§sEene......ef..'_'7'; "
Section 14?{2) ef the Custeme Act 79'"
The detaiied facts leading e,e~te~e«:?1e'ee,.ebe*ve""$'a_§a'e; AA substentiai Question :31' iaw are.=aVs.._fe1£0i3¢s_:'i M,/S. MNS Exports!3'r§vate..£;i':'r;2»ie_te§:§';;._sét:uefe€i 19/3%, Kenanekunte Viffage; Eicensed as IQQQ/3 E><po;j1;.é:A):Ar:*ie_ntei;dA Lffbrijji: {;;'cé;:..¢g":\::of55/95) having Exporters Cczjde _%\:Ve:';-€_'§§2_'fisezgegf' by RBI, and was afietted '-'§§E><--;§o'§'te:*~V~--'C:'ede Ne.i37"9iOO6107 issued are engaged in the maeufaetu re reae3v{Ee'e de::.'§jarments, {.}§'} gev'{h'e'2"i'nVg specific: information from the T. Preventive, Bengaiere that the ' :E><pe:*tes's Private Limited, bee eleeree V"'-..444_@e.:§theei"eeirgezent ef duty certeée geecis ene had been '€;§:§%ge:jt':e'§§ iete the eemeetie market in vieiatiee ef the fireviséores of the Custems Act, 1962; aceerti.'{:;:g§y,;:VV:"t'ti'e::_""'s "
effieers visited ah the premises Private Limited, on 26-4-1999 and:"1«'ve-t_Et£'et§ 1t*E%1_e' stock ef the duty free Em;3ot't?ev{:i'~.,..§t:ater'ia_£s» ":3§;:'se...t*t1e Bone Register meénteinefd wEth'stt:Ve'~.BiE'§s of.E?'irs*;r3g. flit was noticed that certain d%sé'r1et:eric§e:;'feference to the physicaé stock at vL§nit.~"'?~i»e§}§!~,V"ifieraganehettt. Kanakapura Reed, §§é_ega4t':ete:~_??'8,_._.-V3j:,thVe'"s'éme did not taiiy with the the Bond Register;
During the _<:'01uxz9seV..Qt«.ve4:tté"ea_t§ot; it was infermed by the said firm t't'set"tthe' saticitti§s'é-rebatzcies noticed by the offéeers were o.::-vag:co:_:"r;t, '<'>'s"'t'er*n"<:s\./ei of certain duty free goecfs by V.tEtAem'w:{L:tst£'de't*the iéééfotv E01,} premises and was stored in 'e<§j'eV§_n'¥:;eg_"»..Ver=e':n:iVsjes situated at 68/25 Jaraganeheféé, Kaea£§epe{e"£§€.V2:'it:t1 Read, BangaE0te-?8. immediately the effécers e§s%::ee the sate eeijeénéng premises and teek stock :t'§e"~«_geeds stared arse neticed that eety free imparted tt'-.___""t"ee;:ée ef eéffereet eerietéesg. eeigeeaédteg reeteriei, tfeeeeg 4:.
-5- fining meteriai, eta; totafing te Rs§1i;1?'!674/»~ er*:d ::».:'§ enquiry it was infermed that there was we granted by the Cesteme autherities ciandesténety removed frem the and had stared the same in the_adjo'&'nA§}ég ;3ren'<2'ée,3es." T'E*~7:éef"< 'V vaiue ef the goods were asseseed handed over to M/s.MN:'§"'~VExprj}£efe:':.§Vt;'§V€zef:e for safe custody after f' eece-:eeeE};; __fandertaking. Thereafter the %§':ve'§;?§Egat§=en f:he said geods had been 'end stocked at the Enstance:V'ef S:'ée' Inspecter who was ineharge zc.f the§r* at Bengaiere, during the year :9.9V?--*9$';*s_§'nee'.'--tEie.yV§%2ere reguiariy imeortmg goods exgerg-eV.meeth eVb'<5'Ls't 3O to 40 bins cf entry were filed, 'Sgji"ii;B'E*:é§S%a;§é2€Eee';;ested that he wanted a eensignmem: to he eA§e4 a redV.ée ':::_.%':e name ef M;'s.Mi\§S Exporters Limitee and CeEE:3§'é{>V§i1~vv§Eh the empieyees Raviprekeehf D.Presem':e Efiremee eieng wéth Vikren Séeie maize wee efse e .57..
éicenseee fer 138% EGU certain geeds were broL;_s;;_'Ei:f'e..:f:V~cfje'§*:.. _ _ the Code Importer in the name of Private Limfted and the said Bhaéigargi-..eA§ef:'g...:§a;E'E%w4"tEj'reeeV:.;1ve.' empteyees and Vikram Jein cene_e§red"A§rfi;i we.s~"eV'jmede _}:<:::
see that the said goods were Ki*e§eesVed éi*:~ negme ef M/SJ/INS Exporters ,1ee.§ivuf£*ae_»sam'e eves re- exeorted in the A.name_...Qf._1-.M?§%73ex'i?vef{:§ii,_----"Vlntematienat Limited, Jain. an enquiry the eassed the fofiowéng Grdew .... , , _ __ (1) I [c;*e;~5an5:*Vda:%g2-s§_2%7<:§L;2;i£;ng to Rs. 7,293,522/~ Wfier $e'c._ }"2.}3f At*be""€':usfams Act, 1962, frem _ ._f§9;§r's?__jAV':'4;fx!S §;><e;3<:2:%ts', ff? respect ef {he goods
-8fi"~--,4;?5.4'99, wfzieh were ciandestineiy kept outside {he ficence A .;§rerr2ise'5{. ' L x .={;fi}E Q'eme.ec1 8 duty of ,es,34,54,33e;> from '-.:"*'§"S; MNS Experts, eeder $51128 ef {fie éifeeéems £35: 2962, ie reepeei 02' She _ 8 M Cansfgnments impartea' é:':'"id€i" the Ccver 07' 12 Aidfss and {he refated Biffs 0:' Entry which been cammurzicafeci {"0 them in the SCN, (ii?) I impose a penafty (Rupees Sever: {aims gnfy) «. "
Exparzfs Pvt. Ltd_, Banga!C.rfé;,;~...;:r3déz' Sea', the Customs Act, 1962.
(iv) 1' arder can¢é?f.?a:i§j:3 -.{£cence bearing No.5Sf,96 ggréhréijx' "Exports Pvt. Lta'.,4,_V §;1§.-selftzfiéfi' u(3}"of Section 58 of 2."/'} =€f A ( !mps§éé.':"- " of Rs.1,0G,Q8G/~ (Ra;p'€=e:=:s;' ané Shri. Narayan Shaft, Managzégy ':2;;<é«::§r "cif M/5. ms Exports", _ .fj5:'arz§r;f§;'::V%re, :)§}der..§;ec. 212 of the Customs Act;
': x;§§;kM ,u a genafty cf Rs.:§,G§,8<'f}§/--
(R:;;i¢:fe$ fen Iafms arms) 3;? Sn'. H. 8!:»as§<a;; V " *--}T_{?3p 'es:£'ar 3:' Cusfemsf under Sec.222(b)('ii) 0?' V' éféé ilzzgzfems fi;cf,,I9§2;
(vii) I imgase a penaffy Q2' Rs,5Q,0€§£?,/eA.A[:V'"
(Rupees fifty thausand anfy} _;:3n»__Smt;"'S'i?£f§;2 Shree, W/9, Shri.H,Bbasf<a;i, :2;7de;AA[é3n'§:£;-1 the Customs Act, 1962.
(viii) ,2' Empsse 5 pena!ty____§f»._Rs.i5,(§€I,;fl§Q/f?
(Rupees five Iak}1_§;-- onfi/)§ .A L/i!<fl3};r2 Jain of M/S, Texworth fhAfé%i'2'éfFon.5_3tf,; vAA. b:f'.?§»{?_1g7a/ore, under Sec, _ ([3 ) Cbsifims Act, 2962! 3 «. ' -.
(xx; " 'i;?*,r:7igf:7;f,>s<'§9:7'fV'cV*;i fi1e{jal€y ks. 5,oo,aoo/- (Rfipees ' each an Sim'.
Ra:/i;3Ar'ai:<5:rsg'?,"" . and Sim'.
Sreeg2ivééa., Rab, ezéépleyees sf' M/5. MAJS A' P:.;:;;'' """ '"Ltd., Bangafore, under ' S§€:._vi'f25;§}{{i) cf the Cusisms A€t,1962,""
_8ein§"««._agg_'r§'ea}éé E3: the sameg Ev';/3'f'«'3NS Exgmrters Pswate W"":v "-.§E':Tn§:ed,%"aiéé its Managing Birecter and aéso Sri vékram .Z_% a'§rz,*--fé§ed aggéais 9:: the féis Q? the Cmstems, Excése and ~10- Service Tax epeeiiete Trtbamai and the Triburrei by erder dated 3--4-2002?' passed the finai eepeels were déspesed of. Being aggrieved 3 "
an eepeai was feed before this remitted the matter be the CEFST/AT;"wrf:r2eut 'V the questions er' iaw, after 3ettiri§.:e;:ide the: e'r'e*-erw.'}riHe£ed 8--4w2CIC25 with a direct%e;:rj'~».:e in erfcevrdance with iaw. The Trébgnal ef the respondent C0re"p'e'e3§"Sri:=A._ e.Premod and Sri fhe Company or Sri activity. The entire transactierr the knewiedge ef the Compare; arze' %;:rre..'.Z£r1ik'eiee's were manéputeted at the ='j'V'VV§rsst'ar;Veue Sr; Brre$'ka"r; who was an empieyee in the and Sri Vikram Earn. Even Err the eer'ep§__e:Vie: Eeefere the Crrrrxieai Ceurt the Managing ."'.-'4._'jE3§i'f.'3CiT€3rE"' net maee e party awe ne meieréefi was :*s'r;e::é*e zrerretever ageing: the rvéarreging Skeeter eee ee ~11- nexus wag estabiisheé between the éisgauted transactéféhs sf EVE/s.MNS Exgsrters Pwivate Limited". G3' Directer, Accerdingéy {£19 Commisséener T' erdgr Empesmg éuty and pena£ty»;. ;r§§:;:{;géd M/S.MNS Exflsrters Pm/ate Li>rfl_ited_4Q--.Aés nd i£5"..".+§"73'_§:':é1§VEt%9" 'V Directer under Section 112 Cusfcn§SAT;5¢<:tV::v;Béing aggrieved by the said ortiic'-:--_*:w,t*«_ én'1§0::§EVti0n sf penalty against Sr: Vikram 3'ai_:j this appeai is flied' 4, ThisV'é;:{p..éa§_ ':':;j'adr'n§'tted far considering the aforesaid sLi'b§ta§}t?é':;!_ Vof Eaw' The teamed caunsei __.V.ap§ea€§:i:fi'VgL'for téévéigzgpeéiéant submitted that the empkuyees = of jibe £fE 2s :;:;~4rfi :i-éiézt company anfi its Managing Directer \i'i"3<ré{*ri:'}V'éi'§_"_v»%s'~§;§aEs§e a§s:mg with the Campany gmpioyees
-Vané i:?:ey"--':Ef1.aa3'«¥£~ mi: filed any apgeai am 'weir statement 'A "'V.uf1de:4_Séétéo:: 168 shewg that the same was dame witheut §{'n$:a;%efige Q? 32% Cgmgany. Ever: tmugés gm cemgiami i¢flOl2--} was flied against the Managing Directer" ef the respc:rii§~e'§§.::"'.,A Cerhpahy the finding 01' the Corhrhissieher that nexus between the transaction and t:he'i:»-*;h'e aware of the same Er: \ii€W ef thep:reéeme%.i_vea_u.he_er_ °- Section 147(2) and he rehuttah§e__h%3.eter%.e§._is*;>VVre~s;hii:e:i'rerid therefore the decésierz of the Tri£2-u:1e'L§-.£é*~r:Aentrery».te..»::4?(2) and (3) and therefore not é{,:st'ai'i2e,hi:e. %'
5. The; 'i':=;§:rnecI:1._ fer the respondents Regrrirer passed by the Tribune! :»:<3'i?..1.:'?'VectA'.§§"Vjestif§ed and does not suffer frevrh .-sezhbstantiai question of law has to he anéiicvegfed.e'geAi'hsét"'iéVhe appefiant. given Carefui Cehsieeration te the eehtAe_§fr§ie::s."ef'Ehe Eeerhed eeehsei eepearing fer the gzerizies em§'1~serutinized the material er} recere. ....l3.....
ii'. Section 147' 01' the Customs (hereinafter caiied as 'the Act') dea%s with th.e_.'vi":'abi'ii§y "lo? ' Principe: and Agent . Section 14?{2);}eae s' J "{2} Any such thing do'§1e"'~bVy ah" agent»..Vc§f{_tE:-e... ewner, imperter or exporter Vue;r., anVy 'jsheii, uniess the contrary :3':p««-;:pve1d; _5e-'igéé-med tehéve been done with the kn<§$«}Ee¢:ig§e,.:iéaE:d of such owner, importer" pr in any proceedings A<:§t,fi importer or experter efi. uiagefléabie as if the thing ha'd"'§3eef<~;V d<:§'%:§§:~V.l;3\,2-.§;ieiseEf'.""~»- Further $eti'i:.i_<> n,14?.{A3f§V.Aree"Q'--e a§ under; _ __fW?j_en é1'f33,<..._g).ez*son is expresshx or impliediy _ a§1t.h_Ver§_sesj --t2§k"~-the ewner, importer er exeorter of any 'ggeetisx %2.Ejs..3§ent in respect sf such geods for afé erAa_§'§y* eff gfierposes ef this Act; such persen shaii, ',_witheuti7.;3reju€§%Ce to the Eéabiiity sea' the sweet, "._§m;::3arte'r'*' er exporter of eeeh geeés fer such " . ' ;> :sr-géefsee:
We
--14e Prevéded that whereeny gfi-:2't~,'5"L"é-$°r:.et %e\}i'e::l..e.r'§Es sherbfevied or erreneo'{;-.e§y.AreLfu.;mffei§.'e[ve§i'~eceeunt of any reason ethegthen Vw:§f_ei:ec*:,; h'e'g§§--§1ence or defauit ef t%:~'e"'««;e§;;~en€=,_ $3:_s.:fi:':i"§ not be recovered freeg.V€Af§e':V-_V_a.ge_;:.:;'e_;j:ieee'_'2;j_the opinion of As$istazj_:e___VC'e§{i'rflé.::§eiVe:i_e'r er Deputy Comm;.}5sier§ei*7,_--<§f'_ same Cannot: be recovered from -thev':e;n}'r:«e'%;-Jfgxperter er exporter." .-'~11: is :i'ear__enVVthe 'scr.L._{i:i_n%g of the materéat that, apart from VtAh'e;S'i:a.te~r:j'en:'x.§iv*zen by the empioyees whe are also held gu%':'t§f"*Veof to make payment of penaity there ' [is ne 'e%;h:'e; fhateriai whatever to connect the Cempany Experts Private Limited and its Managing ._.jfDiA:r"e<:¥teAr. Thés eésputed transaction has been camed eut by '"=_:;*fe£§u3ie:1 with three emeéeyees of the respeeeen: Cempany ane SEE Bhaskar whe wee an empieyee in the Ceeteme fieeartmersi arse Sr; Vékram Eeiné The Tr%b:.m.e§ aéeo reeeeeee 335% the feet that in the eriméraei case fie .....16..,.
the su¥::«stantia% questim of Eaw against the appeEEantVpé.§ST._ the fefiowéng erder:~ The apgeaé is dismissed.
Rsk/--