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2010 DIGILAW 215 (GUJ)

COMMISSIONER OF CUSTOMS v. SANJAY AGARWAL

2010-04-21

D.A.MEHTA, H.N.DEVANI

body2010
JUDGMENT 1. In both these appeals appellant-revenue has challenged common order dated 26.05.2008 passed by the Customs, Excise and Service Tax Appellate Tribunal (the Tribunal) proposing the following questions stated to be substantial questions of law: (i)Whether in the facts and circumstances of the case, the Tribunal is justified in rejecting the appeal of the revenue on the ground that the broker had admittedly traded in a forged license despite trading in non-transferable advance license being illegal and impermissible under the import policy ? (ii)Whether in the facts and circumstances of the case, the Tribunal is justified and has committed a substantial error of law in relying upon the decision rendered in the case of CC, Mumbai vs. M.D. Corporation, reported in 2001 (127) ELT 270 (Tri.Mum.) which itself is not final and appealed against ? (iii) Whether in the facts and circumstances of the case, the Tribunal is justified and has committed a substantial error of law in holding that the adjudicating authority while imposing penalty upon the respondent, had not discussed his role at all and not given a clear finding against him, despite the order-in-original gave a clear finding on the role attributable to the respondent and thereby whether the Tribunal has erred in law in misconstruing and misreading the facts on record? 2. The facts stated briefly are that investigation came to be carried out in respect of imports made by one M/s. Abhiman Export against DEPB licences. It was found that DEPB licences No.0510031451 and 0510033328 dated 5.2.2001 and 8.3.2001 respectively, allegedly issued by Joint Director General of Foreign Trade (DGFT), New Delhi were forged. The said position was confirmed by letter dated 20.7.2001 of the DGFT. M/s. Abhiman Export had sold the forged DEPB licences in the market which were purchased by one M/s. Rajshanti Metals Ltd. M/s. Rajshanti Metals filed various Bills of Entry claiming exemption from customs duties vide Customs Notification No.34/97 dated 7.4.1997. On the basis of the above referred DEPB licences the goods were cleared by granting exemption. During the course of investigation, the statement of the Chief Executive of M/s. Rajshanti Metals Ltd., was recorded wherein it was stated that DEPB licences and related release advance had been collected by their CHA M/s. Prime Forwarders on their behalf from Shri Sanjay Agarwal of Rimu International, the respondent herein. 3. During the course of investigation, the statement of the Chief Executive of M/s. Rajshanti Metals Ltd., was recorded wherein it was stated that DEPB licences and related release advance had been collected by their CHA M/s. Prime Forwarders on their behalf from Shri Sanjay Agarwal of Rimu International, the respondent herein. 3. Show cause notice dated 24.09.2001 came to be issued against M/s. Rajshanti Metals Ltd. and two others including the respondent herein, which came to be adjudicated vide order dated 7.5.2002 whereby, interalia, penalty of Rs.7,12,331/- came to be imposed on the respondent herein under section 112 of the Customs Act, 1962 (the Act). Being aggrieved, the respondent preferred separate appeals before Commissioner (Appeals) in relation to each of the two DEPB licences, which came to be allowed on the ground that the respondent herein was only a co-noticee whereas the appeal of the main party M/s. Rajshanti Metals, Jamnagar, had been allowed by Commissioner (Appeals). Revenue carried the matter in appeal before the Tribunal but failed. 4. Mr. R.M. Chhaya, learned Senior Standing Counsel for the appellant-revenue has invited attention to the fact that the order of Commissioner (Appeals) allowing the appeal of M/s. Rajshanti Metals Ltd. came to be challenged by the revenue before the Tribunal and was allowed. It is pointed out that the respondent herein had acted as a broker in relation to the purchases of the said DEPB licences by M/s. Rajshanti Metals Ltd, which licences were found to be fake and forged. Hence, the involvement of the broker in the transaction pertaining to sale of forged licences was evident. In the circumstances the Tribunal was not justified in upholding the order of Commissioner (Appeals). It is also submitted that the decision of the Tribunal in the case CC, Mumbai vs. M.D. Corporation, 2001 (127) ELT 270 (Tri.Mum.) on which reliance has been placed by the Tribunal has been challenged by the revenue and has not attained finality and as such the Tribunal ought not to have relied upon the said decision. 5. It is also submitted that the decision of the Tribunal in the case CC, Mumbai vs. M.D. Corporation, 2001 (127) ELT 270 (Tri.Mum.) on which reliance has been placed by the Tribunal has been challenged by the revenue and has not attained finality and as such the Tribunal ought not to have relied upon the said decision. 5. As can be seen from the impugned order of the Tribunal, while it is true that the Tribunal has observed that the decision of the Tribunal in the case of CC, Mumbai V. M.D. Corporation (supra), was fully applicable to the facts of the case, the Tribunal has also found that the original adjudicating authority while imposing penalty upon respondent, has not discussed his role at all and not given clear finding against him. It is in these circumstances that the Tribunal did not find any reason to impose penalty upon the respondent, who had acted as a broker. 6. From the facts noted hereinabove, it is apparent that the allegation against the respondent is as regards his alleged involvement in the transfer of forged DEPB licenses. The transfer of a DEPB licence precedes the clearance of goods on the basis of the same. Insofar as the customs authorities are concerned they come into the picture at the stage of clearance of goods. Insofar as transfer of DEPB licences and the validity or otherwise of the same, it is the DGFT authorities who are the concerned authorities. Forgery of DEPB licence may entail prosecution under the ordinary criminal law or under any other provision of the EXIM Policy under which the DEPB licences are issued. Hence, any infringement of law in relation to DEPB licences would fall solely within the domain of the DGFT and it is they who are competent to take any action in respect thereof. The Customs Authorities are not competent to take action in relation to forgery of or validity of a DEPB licence. They are concerned with the clearances of the goods; hence if goods are cleared under cover of fake licences, they can take action against those involved in clearance of the goods under cover of the fake licence. 7. The Customs Authorities are not competent to take action in relation to forgery of or validity of a DEPB licence. They are concerned with the clearances of the goods; hence if goods are cleared under cover of fake licences, they can take action against those involved in clearance of the goods under cover of the fake licence. 7. Adverting to the facts of the present case, a perusal of the order-in-original indicates that the respondent has been held liable for committing acts which rendered the imported goods liable for confiscation under section 111(o) and consequently, has been held liable for penal action under section 112(a) of the Act. It may therefore, be germane to refer to the said provisions. 8. Section 111 of the Act, which provides for Confiscation of improperly imported goods, etc. lays down the modes of importing goods brought from a place outside India which would render the goods liable to confiscation. In view of the provisions of Clause (o) thereof, any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under the Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer, would be liable to confiscation. Thus section 111 of the Customs Act comes into play provided the goods are brought from a place outside India by adopting any of the modes specified thereunder so as to render the goods are liable to confiscation. 9. Section 112 of the Act reads thus: 12. Penalty for improper importation of goods, etc. Thus section 111 of the Customs Act comes into play provided the goods are brought from a place outside India by adopting any of the modes specified thereunder so as to render the goods are liable to confiscation. 9. Section 112 of the Act reads thus: 12. Penalty for improper importation of goods, etc. Any person (a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under Section 111, or abets the doing or omission of such an act, or (b) who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, 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 Section 111,shall be liable (i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding the value of the goods or five thousand rupees, whichever is the greater; (ii) in the case of dutiable goods, other than prohibited goods to a penalty not exceeding the duty sought to be evaded on such goods or five thousand rupees, whichever is the greater; (iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under Section 77 (in either case hereafter in this section referred to as the declared value) is higher than the value thereof, to a penalty not exceeding the difference between the declared value and the value thereof or five thousand rupees, whichever is the greater; (iv) in the case of goods falling both under clauses (i) and (iii), to a penalty not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest; (v) in the case of goods falling both under clauses (i) and (iii), to a penalty not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest. 10. 10. On a plain reading of section 112 of the Act, it is apparent that the same provides for penalty for improper importation of goods, etc. Thus any person who acts or omits to do any act in relation to goods so as to render such goods liable to confiscation under section 111 or acquires possession of or deals with goods in the manner provided under clause (b) of section 112 would be liable to penalty as laid down thereunder. Thus, both, section 111 and section 112 of the Act operate in relation to improper importation of goods. 11. Coming to the facts of the present case, the respondent herein is alleged to have been involved in a transaction relating to purchase of DEPB licenses by M/s. Rajshanti Metals Ltd. Undoubtedly, the transaction relating to purchase of DEPB licences, is at a stage prior to clearance of the goods under the Customs Act. The alleged act of the respondent, therefore, cannot be said to be an act or omission pertaining to improper importation of goods. Hence, apart from the fact that there is no evidence of any direct involvement of the respondent as regards forgery of the licences, even otherwise the provisions of section 111 and 112 of the Act would not be attracted so as to vest the Customs Authorities with the power to take action against the present respondent in connection with his alleged involvement in the purchase of the DEPB licences. Insofar as the Customs authorities are concerned, they are competent to take action against such persons who have used the forged DEPB licences to import goods, which would result in improper importation of goods as laid down under section 111, and consequently would fall within the purview of section 112 of the Act. 12. In the light of the aforesaid discussion, it cannot be stated that the impugned order of the Tribunal suffers from any legal infirmity so as to warrant interference. 13. In absence of any question of law as proposed or otherwise, much less any substantial question of law, the appeals are dismissed.