Custom, Excise & Service Tax Tribunal
Munilal Mehra vs Commissioner Of Customs(Adj.)Mumbai on 3 January, 2008
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
COURT NO. 1
APPEAL NO.C/15 & 83/02
(Arising out of Order-in- Original/Appeal No.CAO No.311/2001/CAC/CC/ASS & 333/2001/CAC/CC/ASS dtd. 28.9.2001 & 18.10.2001 passed by the Commissioner of Customs(Adj.), Mumbai )
For approval and signature:
Honble Jyoti Balasundaram, Vice President
And
A.K.Srivastava, Member(Technical)
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1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
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Munilal Mehra
:
Appellant
VS
Commissioner of Customs(Adj.)Mumbai
Respondent
Appearance
Shri Anil Balani, advocate for Appellant
Shri C.Lama, Authorized Representative (DR)
CORAM:
Ms. Jyoti Balasundaram, Vice President
And
Mr.A.K.Srivastava, Member(Technical)
Date of decision 03/01/08
ORDER NO.
Per : Jyoti Balasundaram
The case of the department against the appellant is that he has acted as a front man for M/s. Le Designco, which was a partnership firm, by opening and operating the account of M/s. Tirupathy Silks and other non existent firms; no business was done in these firms; through these accounts an amount of Rs. 807.75 lakhs was transferred to the account of Le Designco; the cash deposited into these accounts represented sale proceeds of raw silk sold by Shri Javed Alam through Shri Subhash Gupta and Shri Jivraj S.Rathi although the sale of the raw silk which was imported against non transferable QABL was not permissible as export obligation was not fulfilled; and that the appellant had aided and abetted in selling of the exempted raw silk imported against 9 Advance Licences issued by Le Designco prior to the fulfillment of export obligation which was in contravention of provisions of EXIM policy 1992-97 and Notification No.204/92-Cus. Show cause notice dated 14.7.1998 was issued to the appellant proposing imposition of penalty. The same notice proposed confiscation of imported raw silk and recovery of Customs duty in terms of Notification No.204/92 Cus and 80/95 Cus and proposing levy of interest and imposition of penalty upon Le Designco. The notice also proposed imposition of penalty against Shri Javed Alam and others such as Shri J.S.Rathi and Shri Subhash Gupta. The notice was adjudicated by the Commissioner of Customs who upheld the liability to confiscation of Mulberry raw silk under Sec.111(o) of the Customs Act, 1962, confirmed duty demand of approximately Rs. 1.33 crores together with interest and imposed penalty of amount equal to duty on Le Designco and penalties of varying amounts on the co-noticees. Penalty of Rs. 10 lakh was imposed upon the appellant herein against which appeal No.C/15/02 has been filed. Appeal C/83/02 is against penalty of Rs, 3 lakhs imposed upon the appellant on the same ground in the 2nd impugned order.
2. We have heard both sides. We find that the appellant has not physically dealt with mulberry raw silk but only opened bank accounts in the name of various firms and deposited the sale proceeds of the mulberry raw silk and transferred the amounts to Le Designco. In this context, the decision of the Tribunal in the case of Godrej Boyce & Mfg.Co.Ltd. vs. CCE, Mumbai [2002 (148) E.L.T. 161] holding that the expression in any other manner dealing with any goods must relate to physical contact with the goods is relevant. In this case, the appellant has not physically dealt with any goods and therefore, penalty cannot be imposed upon him under Sec. 112(b) in the light of the above decision. The decision in the Godrej Boyce & Mfg.Co.Ltd. has been affirmed by the Larger Bench of the Tribunal in the case of Steel Tubes of India Ltd & Ors vs CCE, Indore [2007(83)RLT 378] wherein it has been held that for the purpose of imposition of penalty under Rule 209A of the C.Ex.Rules, 1944 a person must have dealt with goods physically and must have knowledge that the goods were liable to confiscation and that a person issuing invoices without movement of goods ( ie. without physically handling the goods) cannot be visited with penalty under this Rule. In Godrej Boyce & Mfg.Co.Ltd. case it has been clearly noted that Rule 209A of the Central Excise Rules is a carbon copy of Sec. 112(b). In the case of D.Ankineedu Chowdry vs. CC, Chennai [2004(178)E.L.T. 578] it has been held that the expression in any other manner dealing with occurring in Sec.112(b) of the Customs Act has to be read ejusdem generics with the preceding expression in the clause viz. carrying, removing, depositing etc. and in that sense it would mean some physical manner of dealing with the goods. In that case since it was not shown that the appellant had physically dealt with the impugned goods, the penalty imposed upon him was set aside.
3. The ld.JtCDR relies upon the decision of the Tribunal in the case of Patel Madhavlal Maganlal & Co. [2002(147)E.L.T.823] to contend that the sale proceeds were also liable to confiscation and are goods within the meaning of Sec.112(b). However, we note that this decision does not advance the Revenues case for the reason that the Tribunal has held therein that seized currency alleged to be proceeds of smuggling, is liable to confiscation under the provisions of Sec.121 of the Customs Act and not under Sec. 111 and therefore, penalty cannot be imposed under Sec.112 as Sec.112 provides for imposition of penalty on a person who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, depositing, keeping, concealing, selling or purchasing or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under Sec.111. In other words, only if goods are liable to confiscation under Sec.111 of the Customs Act, 1962, the question of imposition of penalty arises, subject to satisfaction of other conditions under the provisions of Sec.112.
4. In the light of the above discussion and following the ratio of the Larger Bench decision cited supra, we set aside the penalty imposed upon the appellant herein in both the cases and allow the appeals.
A.K. Srivastava Member(Technical) Ms. Jyoti Balasundaram Vice President pv 4