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2017 (10) TMI 1198 - AT - CustomsSale of liquor - Duty free shop - public notice no. 5/2006 - it was alleged that appellant have made sales of liquor from the stock of duty free imports in contravention of various conditions which are required to be adhered to by M/s. Alpha as a duty free shop. Such goods are to be considered as cleared from the bonded warehouse in contravention of the conditions in which goods were allowed to be stored in the bonded warehouse - section 72 (1)(a) of the Customs Act - confiscation - redemption fine - penalty. Held that: - The decision of the Hon’ble High Court of Karnataka in the case of Flemingo Duty Free Shops Pvt. Ltd. [2009 (7) TMI 161 - HIGH COURT OF KARNATAKA AT BANGALORE], discussed by the Adjudicating Authority has settled the issue that duty free shops are to be considered as bonded warehouses within the meaning of section 28 of the Customs Act as it is distinguishable. M/s. Alpha were issued customs bonded warehouse license and permitted to operate duty free shops in various areas of the IGI airport New Delhi. The customs department has thoroughly investigated into the facts of M/s. Alpha in terms of the bond executed for the PBWL as well as conditions for grant of permission of running the DFS, which has been made with the strict condition that import of goods such as liquor, tobacco etc. were allowed duty free only for the purpose of selling the same to international passengers. They were also required to maintain detailed documentation by which the customs authorities could verify and ascertain whether the strict conditions prescribed for DFS / PBWL have been complied by M/s. Alpha. The scrutiny of the documents relating to DFS and PBWL have revealed that the appellant have completely disregarded the conditions under which licenses were granted to them. Bills were found to have been issued without mentioning required details like name, passport number, flight number, etc. of the passenger to whom liquor has been sold. The scrutiny has further revealed that the employees of the appellant have fraudulently recorded false details pertaining to the passenger to whom liquor has been sold. Fake passport numbers and wrong names were found to have been routinely recorded. Many of the passport numbers, upon verification with regional passport office, were found to be bogus. The names of passengers recorded were found to have never travelled in international flights. The statements recorded from various functionaries of M/s. Alpha have categorically established that such falsification of record was systematically carried out for diverting duty free imported liquor to domestic passengers in complete disregard of the conditions under which PBWL as well as DFS licenses were issued to M/s. Alpha. The well designed fraud committed against Revenue came to light only with the detailed investigations undertaken. M/s. Alpha were granted PBWL as well as permission to operate DFS. The investigation has revealed that through the action of the employees of M/s. Alpha, liquor has been sold to unauthorised passengers in clear violation of the terms of the bond executed. The acts of the employees have been done in their official capacity and are binding on the employer who cannot escape the vicarious responsibility. The duty free imported liquor, which had been warehoused, was found to be removed in contravention of the warehousing bonds. Consequently, the customs duty is required to be paid in terms of section 72 (1)(a). The goods cleared are also liable for confiscation. But, since the goods were not seized by the department no redemption fine can be imposed. However, the appellant will be liable for levy of penalties. The various employees of M/s. Alpha are also liable for penalty u/s 117. Appeal dismissed - decided against appellant.
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