TMI Blog2009 (7) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... ation in case of certain importers and penalty of 2 lac imposed by adjudicating authority, sustainable – Seizure and confiscation assailed on the ground that bills of entry not submitted - In fact, admittedly, parties had submitted replenishment licence of Rs. 32 crore but genuineness of the same was never verified and those licences were not even returned to him. In such circumstances, we find no fault with the findings of the Tribunal that these consignments could not be confiscated. – Further held that Means rea may not be necessary for imposing penalty for contravention of provisions of Custom Act, 1962 - 4, 10, 11, 35 of 2007 and others - - - Dated:- 31-7-2009 - <?xml:namespace prefix = st2 /> Ferdino I. Rebello and J.H. Bhatia, JJ. Customs Appeal Nos. 4, 10, 11, 35 of 2007, 97 of 2006, 36 and 37 of 2007 with Civil Writ Petition No. 7516 of 2006 S/Shri R.V. Desai, Sr. Counsel with V.H. Kantharia, P.S. Jetly and R.B. Pardeshi, Advocates, for the Appellant. S/Shri A.A. Kumbhakoni with Ms. Manjari Parasnis, S.N. Katawala with Vinod Kothari and Brijesh Pathak i/by M/s. Apex Law Partners, Advocates, for the Respondent. [Judgment per: J.H. Bhatia, J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... number on two licences. However, the Commissioner of Customs made enquiry from the Join Director of Foreign Trade and it was confirmed that letter dated 7-2-2001 was never issued by the Joint Director, Foreign Trade and he also confirmed that ail the three licences, which were presented were not issued by the Directorate Foreign Trade. It was revealed that licence no. 03345531 dated 29-9-1999 was issued authorising import to the extent of Rs. 5,36,863/- and it was issued in the name of M/s. Nilesh Diamonds. However, the licence bearing the same number and name of the same party with date 29-9-1999 for the amount of Rs. 6.72 and Rs. 5.36 crore were not issued. Similarly, Joint Director informed that another licence no. 03348094 was issued on 24-12-1999 for the amount of Rs. 25,39,760/- but licence bearing same number and date for Rs. 7.18 crore was not issued. In view of this information, investigation was commenced and search of the residential premises at Sukh Sagar Apartments was taken. That flat was shown to be occupied by Gyanchand Jain proprietor of M/s. Vijaybhav Exports, Rajesh Jain proprietor of M/s. Deepali Exports, Hiralal Jain proprietor of M/s. Vaibhav Exports and Kaml ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a also confirmed these facts in their statements recorded under Section 108 of the Customs authorities. They stated that replenishment licences were freely available in the market on payment of certain premium and that premium was required to be paid by cheque or debit note. Hiralal Jain had procured two original licences bearing no. 03345531 worth Rs. 5,36,863/- and licence no. 03348094 worth Rs. 25,39,760/- on payment of premium as per the market rates. According to him, he had handed over these two original licences to one Gautam Bagri and Gautam Bagri had given him two forged licences of different values bearing nos. 03345531 of different values and one forged licence bearing no. 03348094 showing amount of Rs. 7.18 crore. For this , some amount was paid to Gautam Bagri in cash. Hiralal Jain admitted that payment required to be made to Gautam Bagri for the aforesaid licences was much less than premium required to be paid on replenishment licences in the market and thus, he used to augment his profit. 5. In view of the material collected during the investigation and the statements of different persons, show-cause notices were issued to all the concerned parties by the Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause there is no difference in law between the proprietorship concerns and the proprietors. Both of them agreed that three consignments of M/s. Deepali Exports and one consignment of Vijaybhav Exports which were not sought to be cleared by presentation of bills of entries could not be confiscated. They also agreed that the penalty imposed on M/s. Kiran Exports, Munjani Brothers and M/s. D.S. Brothers be set aside. However, these two members of the Tribunal differed on the quantum of fine/penalty to be imposed on the four firms, M/s. Vijaybhav Exports, M/s. Deepali Exports, M/s. Vaibhav Exports and M/s. Pushpak Impex. They also differed on the redemption fine to be imposed on M/s. Vijaybhav Exports and M/s. Deepali Exports. In view of this difference, matter was referred to the Third Member of the Tribunal, who agreed with Judicial Member Mr. Krishna Kumar. As a result, the Tribunal set aside the penalty imposed on Hiralal Jain, Kamlesh Khicha, Gyanchand Jain and Rajesh Jain. They also set aside penalty against Kiran Exports, Munjani Brothers and D.S.Brothers. Absolute confiscation of consignments of M/s. Vijaybhav Exports and Deepali Exports, in respect of which bills of entries w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ports, as prescribed, may import against the REP licence. Therefore, it is necessary that he should have exported diamonds first and after export, he may secure REP licence on the strength of which he can make imports and such imports can be admittedly used for the home consumption. There is no export obligation attached to such licence. Under para 8.3, Diamond Imprest Licence may be issued in advance for the import of rough diamonds but such licence carries export obligations which has to be discharged in accordance with procedure laid down . In the present case, we are not concerned with Diamonds Imprest licence because the respondents got certain imports cleared and sought clearance of some consignments on the basis of certain REP licences purported to have been issued by Director General of the Foreign Trade. 8. 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. From this, it appears that prohibition against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposed by any law for the time being in force in this country" is liable to be confiscated. "Any prohibition" referred to in that section applies to every type of "prohibition". That prohibition may be complete or partial. Any restriction on import or export is to an extent a prohibition. The expression "any prohibition" in Section 111(d) of the Customs Act, 1962 includes restrictions. Merely because Section 3 of the Imports and Exports (Control) Act, 1947 uses three different expressions "prohibiting", "restricting" or "otherwise controlling", we cannot cut down the amplitude of the word "any prohibition" in Section 111(d) of the Act. "Any prohibition" means every prohibition. In other words all types of prohibitions. Restriction is one type of prohibition. From Item (I) of Schedule I, Part IV to Import Control Order, 1955, it is clear that import of living animals of all sorts is prohibited. But certain exceptions are provided for. But none the less the prohibition continues." In view of these observations, it becomes clear that the prohibition within the meaning of Section 111(d) of the Customs Act may be a complete prohibition or may be mere restriction or regulation. If the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be forged. It was renewed by the licencing authorities without detecting that it is a fake licence. Therefore, it was held that such a licence was no licence under the law. In Commissioner of Customs, Kandla v. Essar Oil Ltd. - 2004 (172) E.L.T. 433 (S.C.) ,Their Lordships observed as follows: "30. A "fraud" is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss. It is a cheating intended to get an advantage." Fraud vitiates every solemn act. In ICI India Limited v. Commissioner of Customs (Port), Calcutta - 2005 (184) E.L.T. 339 (Cal.), the import licences, which were freely available in the market and which are negotiable were found to be forged. It was held that the document itself is found forged, whether there was collusion or fraud on the part of appellant in issue of the licence/scrips becomes absolutely immaterial and irrelevant. If such licence is forged then the same is non est and, therefore, not valid. 10. In view of the legal position stated above, if replenishment licence is found to be forged, it must be held that it was no licence and if any import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s previously used and this resulted in further enquiry and investigation. Previously used licence of the same number and date of the value of Rs. 5.36 crore as also second licence for value of Rs. 6.27 crore were found to be fake and forged. It was confirmed that the original licence of this number and date was issued in the name of M/s. Nilesh Diamonds for Rs. 5,36,863/- only. Not only this, there is sufficient evidence on record to show that Hira Lal @ Ajit, Proprietor of M/s. Vaibhav Exports, had produced a letter dated 7-2-2001 purported to have been issued by the Joint Director of Foreign Trade to confirm that two different licences were issued but by mistake same number was typed on both. However, on further investigation, that letter was also found to be forged. Similarly, licence no. 03348094 dated 24-12-1999 of the value of Rs. 7.18 crore was also found to be fake. In fact, original licence of that number and date was issued only for the amount of Rs. 25,39,760/-. 12. Record reveals that statements of Gyanchand, Rajesh, Hiralal Jain and Kamlesh Khicha were recorded. Gyanchand and Rajesh Jain clearly stated that M/s. Vijaybhav Exports and M/s. Deepali Exports were opened ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere true. Contents of the statements find sufficient corroboration from the unassailable documentary evidence in the form of record with the Customs authorities about the previous clearances by these concerns and verification of the licences from Director General Foreign Trade. Members of the Tribunal observed that these persons had no mens rea or that had no knowledge that the documents were forged. However, on perusal of complete record, we are fully satisfied that the statements made by Hiralal Jain and others were completely ignored by the Tribunal before coming to such conclusions. 13. The learned Senior Counsel for the Revenue contended that for imposition of penalty under the provisions of the Customs Act, it is not necessary to establish mens-rea because these are the quasi-civil proceedings. In support of this, he relied upon the Chairman, SEBI v. Shriram Mutual Fund and Another - (2006) 5 Supreme Court Cases 361 wherein Their Lordships observed as follows in paragraph 35: "35. In our considered opinion, penalty is attracted as soon as the contravention of the statutory obligation as contemplated by the Act and the Regulations is established and hence the intention of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey were acting directly under control and as per the directions and instructions from Hiralal Jain. Hiralal Jain used to secure forged replenishment licences and used the same for huge imports in the name of these four entities. He was the real master mind in procuring and using the forged licences. Taking into consideration facts and circumstances, it is impossible to hold that Hiralal Jain did not have knowledge that the licences were forged. Even though mens rea may not be necessary for the purpose of imposing penalty for the contravention of the statutory provisions of the Customs Act, we find that Hiralal Jain had in fact such intention and had purposefully secured forged documents with the help of one Gautam Bagri. It is immaterial and irrelevant as to who had actually forged documents and as to how they were forged. Fact remains that Hiralal Jain was fully aware that the licences were forged and this fact was known to Gyanchand Jain, Rajesh Jain as well as Kamlesh Khicha , who also used those forged licences. 14. In view of these circumstances, we find that the goods imported by these parties were liable to be confiscated under Section 111(d) of the Customs Act as they we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h option to concerned person in cases of prohibited imports. Therefore, it is not necessary that in every case, where the import of goods is prohibited, there should be absolute confiscation. In this reference, it has to be noted that under the Export and Import Policy, the import of diamonds is only restricted and not completely prohibited and the restriction is that one should obtain necessary licence. There is no dispute that replenishment licences are freely transferable and negotiable. The learned Members of the Tribunal noted that such licences were freely available in the market, on payment of premium at the rate of 1.5 to 4.75 % of the face value of the licence. They have also observed that normally premium would be around 3% of the face value. It means any person could obtain such replenishment licence from the market on payment of certain premium on the face value of the same. That licence is required to be produced at the time of submission of the bill of entry. It is conceded by the learned counsel for both the parties that at present there is no restriction on the import of diamonds. In view of the circumstances in which respondents and particularly Hiralal Jain secure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that if this penalty would be 3% of the total value of the imports, penalty would be much more. However, as there was no appeal against the order of the Commissioner by Revenue, he would not distribute the penalty imposed by the Commissioner. However, the Technical Member would impose penalty of Rs. 42 lakh on Pushpak Impex and Rs. 36 lakh on Vaibhav Exports as against the penalty of Rs. l crore and Rs. 80 lakh imposed on them by the Commissioner taking into consideration the value of imports by them. We find ourselves in agreement with the Technical Member in respect of penalty. 16. We also find that as per the record, M/s. Kiran Exports , M/s. Munjani Brothers and M/s. D.S. Brothers had also imported diamonds against the forged licence but the diamonds were not available for confiscation. Applying principle of caveat emptor as held applicable by the Supreme Court in Commissioner of Customs (Preventive) v. Aafloat Textiles (I) P. Ltd., we find that the Commissioner was justified in imposing penalty of Rs. 2 lakh on each of them. 17. Admittedly, out of four consignments, one was for Vijaybhav and 3 were for M/s. Deepali Exports. These consignments were received after the inves ..... X X X X Extracts X X X X X X X X Extracts X X X X
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