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2013 (6) TMI 694 - AT - CustomsConfiscation of goods - Violation of exim policy - Improperly imported goods - Import of rough diamonds - Forged documents - Imposition of penalty - Held that:- Revenue has established that REP licences produced by the appellants were fake/forged. Thereafter the onus shifts on the appellant to prove how they acquired these licences and if so from whom. Revenue need not establish how the forgery was done. So long as it is established that the licences are forged, Revenue has discharged the burden of proof cast on it and we hold accordingly. - Section 111(d) of the Customs Act provides that “any goods which are imported or attempted to be imported or are brought within the Indian Customs Waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force, shall be liable to confiscation”. Thus prohibition could be imposed under the Customs Act or any other law for the time being in force and if prohibition is imposed on the import of any goods, such goods imported shall be liable to confiscation. The Customs Act itself did not prohibit import of diamonds at the relevant time in the case before us. However, there was a restriction on the import of rough diamonds under the Exim Policy at the relevant time and the policy prescribed that rough diamonds could be imported either under a Diamond Imprest Licence or under Replenishment Licence. If the diamonds are imported without such licence, then import would be in violation of the restriction. Thus prohibition under Section 111(d) of the Customs Act may be a complete prohibition or may be a mere restriction or regulation. If there is a violation of any prohibition, restriction or such other controlling regulation, it would amount to violation of prohibition within the meaning of Section 111(d). - if a replenishment licence is found to be forged, it must be held that it is no licence. If any imports are made on the strength of such forged licences, the same would amount to import without a valid licence as required under law. Such imports would be in violation of the Exim Policy and the Foreign Trade (Development & Regulation) Act. Consequently, the goods imported would be liable to confiscation under Section 111(d) of the Customs Act. Besides the documentary evidences, the statements recorded under Section 108 of the Customs Act from the appellants also reveal the fraud committed by them. In their statements recorded on 28-2-2001, both Mr. Gyanchand Jain and Rajesh Jain have admitted that they were paid employees of Hiralal Jain and they were made proprietors of Vijaybhav and Deepali Exports and were acting as per the instructions given by him. Both of them have also admitted that the REP licences were procured by Hiralal Jain and the licences so procured were forged and in spite of that, they used to present the same before the Customs authorities for clearance of consignments by their respective concerns. It is also an admitted position that they had constituted Hiralal Jain and Kamlesh Khicha as their authorized signatories and they used to carry on several activities on their behalf. Both Kamlesh Khicha and Hiralal Jain have made confessional statements to this effect. Goods imported by the appellants are liable to be confiscated under Section 111(d) of the Customs Act since they were imported/sought to be imported under the cover of forged licences, which in law were no licences. The same position would apply in respect of past imports also, though the goods are not available for confiscation in those cases. In such cases penalty would be imposable as held in Dadha Pharma Private Ltd. v. Secretary to Govt. of India [1977 (10) TMI 43 - HIGH COURT OF JUDICATURE AT MADRAS] Whether the confiscation should be absolute or option of redemption may be given to the parties - appellant has repeatedly cleared the goods under the cover of forged licences (56 forged licences have been used in clearance of 601 consignments valued at over ₹ 300 crores) and the value of such forged licences were hugely inflated, in many cases by 100 times the original value of the licence. Forged licences are no licence at all. In our considered view, taking into account the huge magnitude of the offence, the appellants do not deserve the benefit of redemption on payment of fine. The appellants have relied on the decision of the Apex Court in the case of Northern Plastics Ltd. (1999 (9) TMI 86 - SUPREME COURT OF INDIA) in support of their claim for redemption. On going through the facts involved in that case, we find that the ratio of the said decision would not apply to the facts involved in the present case before us. In that case, the Apex Court held that the goods were not misdeclared by the appellant and they were also eligible for import under OGL. In view of those findings, it was held that the goods were not liable to confiscation. In the present case, we have come to the conclusion that the goods are liable to confiscation under the provisions of Section 111(d) of the Customs Act since they have been imported under the cover of forged licences and the appellant importers were party to the forgery. Thus the ratio of Northern Plastics case is of no relevance. Rough diamonds in respect of which no Bills of Entry had been filed were valued at over ₹ 2.81 crores and the rough diamonds for which Bills of Entry had been filed were valued at over ₹ 2.87 crores. The total value comes to ₹ 5.68 crores. All the goods were admittedly disposed of by the department through auction, wherein sale proceeds amounting to over ₹ 4.95 crores accrued. We have already held that there can be no confiscation and, for that matter, no redemption fine in relation to the diamonds in respect of which no Bill of Entry was filed. Confiscation would be applicable only to the other diamonds covered by Bills of Entry, and the share of these goods in the sale proceeds would be approximately 50% of ₹ 4.95 crores. Therefore, we direct the Revenue to refund ₹ 2.475 crores to the appellants M/s. Vijaybhav and M/s. Deepali Exports who shall share the same in proportion to the value of goods seized from them. The appellants also would be eligible for simple interest @ 9% p.a. the said amount from the date of seizure in terms of the decision of the Hon’ble High Court of Delhi in Kailash Rubber Factory Ltd. v. Commissioner [2002 (3) TMI 57 - HIGH COURT OF DELHI]. Mens rea is clearly evident from the documentary evidences available on record and also from the statements of the appellants. Penalties of ₹ 70 lakhs and Rs. one crore has been imposed on the appellants M/s. Vijaybhav and M/s. Deepali Exports respectively. Considering the fact that all these frauds have been committed to save the premium on REP licences which is on an average 3% of the value of the licences and also considering the fact that 3% of the face value of the forged licences far exceeds the penalties imposed, we do not find it necessary or appropriate to interfere with the penalties imposed on these two appellants. In the facts and circumstances of the case, the penalties imposed cannot be said to be harsh or excessive. As regards the penalties of ₹ 80 lakhs and ₹ 1 crore imposed on M/s. Vaibhav Exports and M/s. Pushpak Impex, 3% of the value of imports on the basis of forged licences works out to ₹ 42 lakhs and ₹ 36 lakhs. Therefore, in respect of these two appellants, we reduce the penalties from ₹ 80 lakhs and ₹ 1 crore to ₹ 42 lakhs and ₹ 36 lakhs respectively. - Decided partly in favour of assessees.
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