Customs, Excise and Gold Tribunal - Mumbai
Aafloat Textiles (India) Ltd. And Ors. vs Commissioner Of Customs ... on 5 January, 2006
Equivalent citations: 2006(104)ECC38, 2006ECR38(TRI.-MUMBAI)
ORDER
Jyoti Balasundaram, Vice President
1. The above appeals arising out of common orders-in-original involve common issues and are hence heard together and disposed off by this common order.
2. Vide the impugned order the Commissioner of Customs has confirmed a duty demand of Rs. 6,69,40,149/- (Rupees six crores sixty nine lakhs forty thousand one hundred forty nine only) on 9 consignments of gold and silver imported by M/s. Aafloat Textiles (India) Ltd. (formerly known as M/s. Akai Impex Ltd.) (hereinafter referred to as importer) under Section 28 along with appropriate interest under Section 28AB of the Customs Act 1962, by denying the benefit of exemption in terms of Notification No. 117/94-Cus. dt. 27.4.1997, upheld liability of the goods to confiscation under Section 111(d) and (o) of the Act, but since the goods were not available, has not ordered confiscation thereof, and inter alia imposed penalties equal to duty amount on the importer under Section 114A and inter alia imposed penalties of Rs. 50 lakhs (Rupees fifty lakhs only) on Shri Mahendra Shah and Rs. 25 Lakhs (Rupees twenty five lakhs only) each on the other four appellants. The case of the department is that the SILs purchased by the importer from brokers for clearance of gold and silver were forged and therefore not valid for the consignments in question.
3. The brief facts as unfolding from the Commissioner's order are that the office premises of one M/s. Gazebo and M/s. Mahavir Corporation, were searched by officers of DRI and copy of SIL No. 3536539 dt.6.8.1997 issued to M/s. Track Industries, Kanpur, was recovered. The Jt. Director General of Foreign Trade, Kanpur informed that no such licence had been issued and that the signature and security seal of their Foreign Trade Development Officer had been forged. The proprietor of M/s. Gazebo, Shri R.T. Shah stated on 19.1.1998 that he had purchased the above bogus SIL from one Shri Sushil Kumar Lohia who, in turn admitted that the SIL was given to him by one Shri Manoj Kumar Jain and that he had obtained several bogus SILs from one Naresh Sheth and Shri Dinesh Buchasia, whose residential premises were searched and certain documents were recovered and his statement recorded, wherein he stated that he had only dealt in 7 SILs which he bought at low premium from one Rajesh Chopra and that the SILs were forged. Shri Shinivas Pannalal Kalantri, General Manager of the importer company stated that gold/silver had been imported under SIL during the year 1996-97 and 97-98, that one M/s. Lalbhai Trading Co. and two others were the clearing agents; that Shri Prakash Mohta of Finance Department looked after the purchase of SILs. The Chairman of the importer company stated that he looked after negotiation and purchase of bullion and sale of bullion; that Shri Prakash Mohta looked after purchase of licences, clearance of goods, delivery, payment to supplier etc. and that licence brokers through whom SILs were purchased and whom he knew, were Mr. Pachisia and Mr. Ketan Shah. The statement of Shri Prakash Mohta, was also recorded in which he confirmed that he was looking after purchase of SILs for import of bullion and subsequently selling them in the local market. Shri Mahendra Shah stated that he had sold bogus SILs to the importer company. Shri Rasiklal Mehta stated that he and one Atul Garodia met one Shri D.R. Gulati in Bombay who told that he could provide bogus SIL for which he would charge 3% to 4% premium, that Shri Gulati used to provide bogus SILs and Shri Garodia used to sell them in market and give them a premium of 3%.
4. Based on the above, show cause notice dt. 6.4.1999/29.4.99 was issued to the importer proposing recovery of duty, together with interest, confiscation or the imported goods and imposition of penalty. Notice was issued to the others, proposing penal action under Section 112(a) of the Act. The notice was adjudicated by the Commissioner who held that the gold/silver imported was liable to confiscation, confirmed the demand raised under the proviso to Section 28(1) of the Customs Act, and imposed penalties as set out in the opening paragraph of this order; hence these appeals.
5. We have heard both sides.
6. We find that the appeal can be disposed of on the point of limitation without going into the merits of the matter. The importer company is a transferee of licences (the present case relates to 9 consignments out of the total 22 consignments imported during the relevant period). Duty has been demanded under the proviso to Section 28(1) of the Act, on the basis of acts of commission or omission on the part of third parties with whom the transferee has no privity of contract. The finding of the Commissioner against the importers is that they had purchased SILs from Mahendra Shah, made payments and imported the silver/gold utilizing the bogus SILs and sold the imported goods in the local market. The show cause notice proceeds on the basis that Shri Mahendra Shah was the agent of the importers; however there is no evidence to support or substantiate this allegation. The Commissioner has not rebutted the stand of the importers that Mahendra Shah is not their agent. In these circumstances, there is no willful mis-statement or suppression of facts with an intention to evade payment of duty on the part of the importers so as to attract the proviso to Section 28(1) against them. We, therefore agree with the importers that the demands are barred by limitation, in the light of Tribunal's decision in the case of H. Kumar Gems 2001 (137) ELT 61. The submission of the Ld. SDR that since forged licences are void ab-initio and therefore the buyer cannot have a better title than he himself has been answered against the Revenue by the Larger Bench decision in the case of M/s. Hico Enterprises Order No. M.1152/WZB/05C-I dt. 20.9.05. The further argument that the provisions of the Limitation Act, 1963 would apply in such cases and the limitation period is to be computed from the date of discovery of the forgery is not tenable, in the light of the specific statutory provisions for limitation in the Customs Act. The decision of the Tribunal in the case of ICI India Ltd. v. Commissioner of Customs, Calcutta relied upon by Ld. DR is distinguishable for the reason that the notice in that case was issued within the normal period of limitation under Section 28, and not under the proviso thereto. For the same reason, the affirmation of this judgment of the Hon'ble Calcutta High Court in and by the Apex Court are not applicable in the present case. Moreover, we note that the Tribunal has held that the provisions of Section 114A were not applicable qua the transferee and since the provisions of Section 114A and the proviso to Section 28(1) are pari materia, the proviso to Section 28(1) is not applicable against the importers.
7. In view of our finding that the demands are barred by limitation, penalties imposed upon the importers are set aside. Penalties imposed on Shri Prakash Mohta, Shri S.N. Baheti, Shri Kamlesh Mehta and Shri Rasiklal Mehta are also set aside. The penalty imposed upon Shri Mahendra Shah under the provisions of Section 112(a) of the Customs Act, is also set aside as, even though he admittedly had knowledge that the SILs were forged/ fake, such knowledge is not sufficient to hold that there was any omission or commission on his part so as to render the imported silver/gold liable to confiscation under Section 111(d) and (o) of the Act.
8. In the result, we set aside the impugned order and allow the appeals.