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2014 (11) TMI 527 - AT - CustomsConfiscation of goods - Goods imported under advance license - Fraud - penalties under Section 112(a) and/or 112(b) - Rejection of the CIF value - Denial of the benefit of Notification No. 31/97 - Held that:- original licence was lost in September, 1999. Hence the said licence could not have been handed over for endorsement of transferability. Only the duplicate licence could have been handed over for transferability and the same could have been done only after its issuance, that is, on or after 22-11-1999. It is for this reason that the endorsement in the amendment sheet No. 1 was made on 9-12-1999 for transferability. Since the licence was submitted for transferability after 30 months of the issuance of the licence, the validity of the licence could have been only for a total period of 36 months from the date of issuance of the licence. The original licence dated 22-11-1996 permitted import of 248 nos. of bearings of specified serial nos. Vide amendment sheet dated 11-5-1999, the number of bearings eligible for import was retained at 248 only but the serial nos. of the bearings were modified. In other words, as per the original licence read with the import list, only 248 nos. of bearings were physically incorporated in the export product and only these were eligible for duty free import under the said licence. From the records, it is seen that this quantity of bearings had already been imported by May, 1999. Therefore, as per the policy, no further bearings could have been allowed to be imported against the said licence. Therefore, endorsement made on 8-12-1999 by the licensing authority in the duplicate licence issued on 22-11-1999 allowing import of 4248 nos. of bearings was not permissible under the EXIM policy as it stood at the relevant time. The advance licence, which was subject to actual user condition and which had expired on 21-5-1999 and which was non-transferable was sought to be revalidated and made transferable, and items which were not permissible to be imported were sought to be included by both changing the description of the goods and the value thereof by misrepresentation and fraud. To achieve these objectives, false Chartered Engineer’s certificate were procured and submitted to the licensing authorities and front companies as were made use of, to act as front men for the purpose of importation. The goods which were subject to actual user condition were imported and diverted to Delhi for the purpose of trading. When these facts were brought to the notice of the licensing authority, the amendments made to the licence were cancelled and the licence was restored to its pre-amendment position as on 11-5-1999. Therefore, violations of Section 111(d) of the Customs Act, 1962 is clearly established. Similarly the advance licence envisaged that goods which were actually used in the export product was only eligible for importation and by misdeclaring by manipulation of Chartered Engineer’s certificate, attempt was made avail ineligible exemptions and part of the goods was also diverted for trading purpose. These activities clearly attracts provisions of Section 111(o) of the Customs Act, 1962. Thus, in the instant case in respect of the goods dealt in order dated 31-5-2004 the goods were liable to confiscation both under Section 111(d) and Section 111(o) and in respect of goods dealt in order dated 29-6-2004 the goods were liable to confiscation under Section 111(d) The importers have been given option to redeem the goods by payment of fine under Section 125 of the Customs Act, 1962. While imposing the fine, the adjudicating authority has kept in mind reduction in the market value of the goods, deterioration of the quality of the goods, reduction in the rates of the duty, demurrages incurred and after taking into account these facts into consideration, he has imposed a redemption fine which is approximately 10% of the CIF value of the goods. Considering the fact that bearing is an item which fetches high premium in the market, the redemption fine imposed by the adjudicating authority in the instant case cannot be said to be unreasonable. Therefore, we uphold the redemption fine imposed by the adjudicating authority in lieu of confiscation in the above two orders As regards the penalty under Section 114A on the importers, the same is equal to the duty and interest short paid. In the instant case as discussed above the advance licence was sought to be modified/amended by suppression and wilful misstatement of facts and duty was sought to be evaded due to these reasons. Therefore, the penalty equivalent to duty under Section 114A is mandatory. Inasmuch as we have upheld the demand for duty, the penalty of equivalent amount under Section 114A is also confirmed and upheld. - licence was with an actual user condition and was non-transferable. The goods imported were seized after having been diverted. The notification stipulates use of goods in the product exported. Thus if the goods are imported in violation of the conditions of exemption and the licence issued for the purpose, they are liable to confiscation under Section 111(o) of the Customs Act and consequently penalty is also imposable - Following decision of Commissioner of Customs v. CESTAT, Chennai [2009 (4) TMI 83 - MADRAS HIGH COURT] - Decided against assessee.
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