TMI Blog1986 (1) TMI 250X X X X Extracts X X X X X X X X Extracts X X X X ..... e Bank of Madura under the impugned order and for imposition of penalty on responded Vinod Kumar in appeal No. 254/85. 2. M/s. A.M. Ahmed Company, Custom House Agents, Madras, filed Bill of Entry No. 3085 dated 25.3.1982 for clearance of a consignment of 750.18 M-Ts. of hot rolled mild steel channels, joints and angles valued at Rs. 19,94,466/- c.i.f. imported in the name of M/s. Kanna Industries, respondents in appeal No. 253/85, from Romania. On 8.4.1982, M/s. A.M. Ahmed Company also filed another Bill of Entry No. 843 for clearance of 516.140 M.Ts of hot relied mild steel plates, valued at Rs. 14,29,555/- c.i.f., imported in the name of M/s. Hanson Enterprises, Patel Marg, Ghaziabad. The imported goods were sought to be cleared under O.G.L. Appendix 10 item 2 of the Import Trade Control Policy for 1981-82 on the strength of S.S.I, certificates issued in the name of the respective parties. The Customs Department received intelligence that the goods were actually imported by Vinod Kumar, Respondent in Appeal No. 254/85 by making use of a printed letter-head of M/s. Kanna Industries, Madras and by forging the signatures of the proprietor of that firm, V.K. Marimuthu. Actual v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ram Kishore, proprietor of M/s. Hansons Enterprises, Patel Marg, Ghaziabad, who in turn had been introduced to the Bank by respondent Vinod Kumar. As stated earlier V.K. Marimuthu, Proprietor of M/s. Kanna Industries, in his statement referred to supra, denied having ever opened any current account in the Bank of Madura, much less knowing any one by name Ram Kishore, proprietor of M/s. Hansons Enterprises, Ghaziabad. A letter of the Bank dated 24.10.1981 to the effect that M/s. Kanna Industries Madras, is an allied concern of M/s. Vinod Kumar and Co., was also recovered and letter of credits were found to have been issued by the Bank in favour of M/s. Kanna Industries on the basis of a letter of guarantee executed by Vinod Kumar for Rs. 46,20,000/- without charging any margin. Enquiries also revealed that M/s. Hansons Enterprises as well as Ram Kishore, the alleged proprietor for whom the consignment covered by Bill of Entry No. 843 viz. 516.140 MTs of hot rolled mild steel plates was imported, were found to be bogus, fictitious and non-existent parties. Investigation also revealed that Vinod Kumar had introduced the non-existent fictitious Ram Kishore of non-existent Hansons Ente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em by the Collector of Customs, Madras, under the impugned orders. 4. The main question that would arise for consideration in the instant case is whether the imported goods under confiscation are entitled to be cleared under Open General Licence by the Bank of Madura as joint holder of licence on payment of duty alone and whether the goods imported are liable to confiscation under law and if so, the quantum of fine in lieu of confiscation imposed under the impugned orders on the Bank of Madura is just proper or would call for further enhancement. It may be noted in this context that excepting the Bank of Madura, the other respondents in the appeal preferred by the Collector of Customs, Madras, remained exparte. 5. The learned counsel Shri Sunder, appearing for the Bank of Madura submitted that in terms of paragraph 349 of the Hand Book of Import-Export Procedures, 1981-82, when an importer opens and irrevocable letter of credit through a bank and later fails to honour his bills, the bank concerned could be considered as a joint holder of licence to the extent of the goods covered by the credit so as to enable the bank to honour its commitment with foreign supplier. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heavy. 6. Shri Narasimhan, Senior Central Government Standing Counsel, appearing for the Department urged that the evidence on record clearly bears out that it is only with the active assistance of Bank of Madura, Madras, Vinod Kumar, one of the respondents herein, has maneuvered to open a current account in the name M/s. Kanna Industries, Madras, as well as in the name of M/s. Hansons Enterprises, Patel Marg, Ghaziabad. It was further urged that the letters of credit in favour of the aforesaid parties have been opened by the Bank only on the basis of a letter of guarantee furnished by Vinod Kumar. The learned counsel drew our attention to the Bank Office notes respectively dated 24.10.1981 and 29.10.1981 put up to their Chief Officer in connection with the issue of letters of credit respectively in favour of M/s. Kanna Industries and M/s. Hansons Enterprises showing them as allied concerns of M/s. Vinod Kumar Co., owned by Vinod Kumar. It was further contended that as per the Bank s records current account of M/s. Hansons Enterprises was opened on introduction of one Ram Kishore by Vinod Kumar and it is Ram Kishore who introduced V.K. Marimuttu, proprietor of Kanna Industries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed counsel further urged that the Central Board of Excise and Customs has issued a statutory direction to the Collector of Customs, Madras, in terms of Section 129D(1) to prefer an appeal before this Tribunal praying for enhancement of fine and imposition of penalty so far as the Bank of Madura is concerned and for penalty so far as the respondent Vinod Kumar and others are concerned. 7. In reply to the submissions of the Central Government Standing Counsel, the learned counsel for Bank of Madura submitted that in the appeal preferred by the Collector in pursuance of the statutory direction of the Board there is no prayer for imposition of penalty and therefore, the Department as appellant must be deemed to have waived and given up their plea relating to imposition of penalty. In such a situation, this Tribunal, it was contended, would not have jurisdiction to impose penalty neither pleaded nor prayed for in the appeal before it. 8. We have carefully considered the submissions of the parties herein. The goods concerned in this case can be imported under OGL in terms of Appendix 10 of the Policy 1981-82 only subject to actual users condition. So far as Kanna Industries is concer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ietor of M/s. Hansons Enterprises of Ghaziabad, chose to introduce to Bank of Madura, Marimuthu of Madras, proprietor of Kanna Industries for opening a current account and immediately on opening of such a current account, the Bank should have thought it prudent to open a letter of credit for such a huge amount in respect of the steel imports subject to actual users condition. This attitude of the Bank in staking its financial security on the basis of a letter of guarantee given by respondent Vinod Kumar has to be viewed and adjudged in the context of the established fact that Vinod Kumar himself was not even an income-tax assessee. We are satisfied that the Bank of Madura has been clearly privy to the illegal import of the items master-minded by Vinod Kumar on the basis of forged documents in contravention of law. The plea of the Bank of Madura that as a joint holder of licence in terms of Para 349 of the Hand Book of Procedure 1981-82 they would be entitled to the release of the goods without imposition of fine is not legally tenable. As we have already indicated, the goods in question are permitted to be imported under OGL only subject to actual users conditions. But of the two p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the circumstances under which the letters of credit have been opened by the Bank of Madura for the eventual import of the goods in question, we feel that the quantum of fine imposed on the Bank of Madura calls for an upward revision in the factual background of this case. We accordingly enhance the same to Rs. 20 lakhs (Rupees twenty laks only) for the import relating to M/s. Kanna Industries and to Rs. 15 lakhs (Rupees fifteen lakhs only) in respect of the import relating to M/s. Hansons Enterprises. Regarding the question of imposition of penalty, the relevant consideration under the Act is that only person who in relation to any goods does or omits to do any act which act or omission would render such goods liable for confiscation under Section 111, or abets the doing or omission of such an act, shall be liable for a penalty. In the instant case, notwithstanding the fact that Bank of Madura without exercising proper diligence and reasonable care, acting in a most imprudent way, has acted in flagrant violation and breach of all codes and regulations of financial discipline expected of a scheduled bank, no act or omission of the Bank can be said to have been rendered the impor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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