TMI Blog2011 (4) TMI 1035X X X X Extracts X X X X X X X X Extracts X X X X ..... on firm - held that:- penalty can be imposed either on him or on M/s. Meerut Exim and there is no justification for separate penalty on M/s. Meerut Exim or its Proprietor Shri Ashwani Kumar Jain as a proprietorship firm and its proprietor are not separate entities but are one entity. In view of this, while the penalty under Section 112 on Shri Ashwani Kumar Jain is upheld, penalty under Section 112 on M/s. Import Exim is set aside. However, looking to the fact that penalty equal to the duty demand has been imposed on the importer firm under Section 114A, penalty on Shri Ashwani Kumar Jain under Section 112(a) is reduced to Rs. 25,00,000/-. Fine u/s 125 - goods not available for confiscation - held that:- in case of Blue Dart Express v. Commissioner of Customs (1999 -TMI - 90903 - CEGAT, NEW DELHI) it was held that no fine can be imposed under Section 125(1) of the Customs Act, 1962 in respect of the goods held to be liable for confiscation but which are not available for confiscation for the reason that the same at the time of import had been cleared unconditionally without any objection - redemption fine in lieu of confiscation under Section 125(1) is not a fine as understood ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernational used to deal in indigenous and imported bearings, that though on paper he was also a 10% partner in M/s. Royal International, actually Shri Trilok Nath Mittal is the sole owner of M/s. Royal International, that Shri Trilok Nath Mittal alongwith Shri Ashwani Kumar Jain of Meerut used to import ball bearings and roller bearings, that Shri A.K. Jain was an exporter and alongwith him, Shri Trilok Nath Mittal made a plan for illicit import of bearings which were to be cleared from ICD, Meerut by mis-declaring their country of origin, brand quantity and value, and that he (Shri P.K. Gupta) was getting a commission @ Rs. 1.5 per bearing from Shri Trilok Nath Mittal, that the bearings after being cleared from ICD, Meerut used to be sent to the factory of Shri Ashwani Kumar Jain, M/s. Dooab Exim and after being sorted out, the same used to be sold by issuing the invoices in the name of bogus firms, that one consignment of bearings mainly of Japanese Nachi brand had been imported around May 2000 and second consignment had been cleared from ICD, Meerut on 17-7-2000 and had reached the factory of M/s. Dooab Exim in the same night, that intimation regarding arrival of the bearings ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Corporation for handling and transporting containers from ICD, Tuglakabad to ICD, Meerut, Shri Brahm Dev Sharma, Superintendent, U.P. State Warehousing Corporation camp office ICD, Tuglakabad, Shri Rajeev Dhawan, Import Shipping Agent of M/s. Containers Maritine Agency (P) Ltd. and Shri Raman Kumar Dadhwal, Manager M/s. Inter Shipping Travels and Exhibition (P) Ltd. On inquiry with these persons and also from the documents recovered from them, it appeared that Shri Ashwani Kumar Jain, Proprietor of M/s. Meerut Exim, assisted by his brother-in-law Shri Balbir Singh Sethi, Partner of M/s. Dooab Exim, had imported two consignment of bearings in June and July 2000 by not only under declaring their value, but also their country of origin, description and quantity and in this manner had evaded huge amount of Customs duty and that in this Shri Trilok Nath Mittal and Shri P.K. Gupta were also their co-conspirators. The total duty evaded in respect of the consignment cleared under bill of entry No. 23 dated 5-6-2000 appeared to Rs. 29,28,428/-, and duty evaded in respect of consignment cleared under bill of entry No. 26 dated 17-7-2000 appeared to Rs. 78,89,311/-. It also appeared that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l) of Customs Act, 1962 with option to be redeemed on payment of redemption fine in lieu of confiscation of Rs. 1,00,00,000/-; (d) bearings value at Rs. 20,93,799/- CIF imported/cleared under bill of entry No. 23 dated 5-6-2000 were ordered to be confiscated under Section 111(m) and 111(l) of Customs Act, 1962 with option to be redeemed on fine of Rs. 15,00,000/-; (e) the bearings value at Rs. 69,58,578/- CIF imported and cleared under bill of entry No. 23 dated 5-6-2000, which were not available for confiscated, were also ordered to be confiscated, under Section 111(m) and 111(l) and fine of Rs. 50,00,000/- was imposed on M/s. Meerut Exim under Section 125 of Customs Act; (f) penalty of Rs. 1,75,00,000/- was imposed on M/s. Meerut Exim and penalty of equal amount was imposed on Shri Ashwani Kumar Jain, Proprietor under Section 112 of Customs Act, 1962; (g) penalty of Rs. 1,00,00,000/- was imposed on Shri Balbir Singh Sethi, Authorised Signatory of M/s. Meerut Exim under Section 112 of Customs Act, 1962; (h) penalty of Rs. 1,50,00,000/- each was imposed on Shri Trilok Nath Mittal and Shri Pawan Kumar Gupta under Section 112(b) of Customs Act, 1962; and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Additional Solicitor General submitted that the aforementioned findings of the Tribunal are untenable. He has also drawn our attention to the show cause notice dated 5-1-2001 issued by the Directorate of Revenue Intelligence, I.P. Bhawan, I.P. Estate, New Delhi, the relevant portion of which reads as under : (iii) The said M/s. Meerut Exim, Meerut, Shri Ashwani Kumar Jain, Prop. M/s. Meerut Exim, Meerut, who masterminded the entire operation. Shri Balbir Singh Sethi, who was actively involved in the entire operation as an authorised signatory of M/s. Meerut Exim, Meerut, and ensured the improper clearance from Customs and subsequent storage of goods, Shri Trilok Nath Mittal, who was also actively involved in planning the operation with A.K. Jain, and later on was involved in disposing of the smuggled goods in the market knowing well that they were improperly imported goods and were liable to confiscation appear liable to penal action under Section 112 (a) and (b) and/or Section 114A of the Customs Act, 1962. 4. Mr. Parasaran has also drawn our attention to the order dated 29-10-2001 passed by the Commissioner, Customs Central Excise, Meerut, in which the learned Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he godown in the premises of M/s. Dooab Exim, that there is no evidence on record indicating that Shri Sethi had made this import or was in any way knowingly concerned in transportation, storage, sale etc. of the goods, in question, that Shri Sethi had retracts his statement dated 20-7-2000, but the Commissioner did not consider his retraction, that the Commissioner has imposed penalty on M/s. Meerut Exim under Section 114A equal to the total duty demand of Rs. 1,18,17,739/-, the major portion of which had been paid prior to the issue of show cause notice, that the penalty under Section 114A can be imposed only of the amount equal to the short paid duty which had not been paid at the time of issue of show cause notice, that a firm and its proprietor are not two separate entities and, therefore, imposition of penalty on him (Shri Ashwani Kumar Jain) as well as his firm M/s. Meerut Exim is incorrect, that in any case, when penalty under Section 114A had been imposed a separate penalty under Section 112(a) on him and his firm M/s. Meerut Exim were not called for, that redemption fine cannot be imposed on the goods which are not available for confiscation and as such, the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Meerut Exim, that from his statement dated 20th July 2000 recorded under Section 108 of Customs Act, 1962, it is clear that he was aware of the fraud being committed by Shri Ashwani Kumar Jain and not only this, the premises in which the bearings after being cleared were stored belonged to Shri Balbir Singh Sethi, that Shri Balbir Singh Sethi was thus not only involved in illicit clearance of goods but was also involved in their storage in his premises, knowing very well that the quantity and value of the goods had been grossly misdeclared and hence the same were liable for confiscation, that as regards imposition of fine under Section 125 of Customs Act, 1962 in respect of the goods not available for confiscation, the redemption fine can be imposed even if the goods are not available for confiscation and in this regard he relies upon the judgment of Hon ble Supreme Court in the case of Weston Components Ltd. v. CC, New Delhi reported in 2000 (115) E.L.T. 278 (S.C.), wherein it was held that redemption fine is imposable even after the release of goods on execution of bond and mere fact that the goods were released on bond, would not take away the powers of Customs Authorities to l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levy of fine under Section 125 of Customs Act, 1962 on the goods valued on Rs. 69,58,578/- CIF imported under bill of entry No. 23 dated 5-6-2000, which admittedly were not available for confiscation as the same had been unconditionally released at the time of their import. 5. Coming first to the question of imposition of penalty on Shri Balbir Singh Sethi, there is no dispute about the fact that it is Shri Balbir Singh Sethi, who on the instructions of Shri Ashwani Kumar Jain, had filed the bill of entry No. 26 dated 17-7-2000, had got the goods cleared from the customs and arranged the transportation of the goods to the premises of M/s. Dooab Exim, where the goods had been stored. There is also no dispute that he is a partner of M/s. Dooab Exim. As per his statement dated 20-7-2000 recorded under Section 108 of Customs Act, 1962, Shri Balbir Singh Sethi on the evening of 17-7-2000 had approached Shri M.K. Gupta, the Customs Superintendent posted at ICD, Meerut. From the statement of Shri M.K. Gupta, Customs Superintendent and the statement of Shri Ajay Kumar, Inspector, Customs posted at ICD it is clear that the consignment of bearings, which arrived at ICD, Meerut on 17-7-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt covered by bill of entry No. 26 dated 17-7-2000 was cleared without any examination and without even bringing the container inside the ICD, and it is Shri Balbir Singh Sethi who had dealt with the customs, he could not be unaware of the illicit nature of the import. No consignment of any imported goods and that too when the goods being prone to under valuation are of sensitive nature, would be cleared by the Customs in normal course without examination and without even the consignments coming to the premises of the ICD for examination. In view of these circumstances, it is difficult to believe that Shri Balbir Singh Sethi had no knowledge about the illicit nature of the consignment which had been cleared by him, transported up to the premises to M/s. Dooab Exim and thereafter stored there. Under Section 112(a) of Customs Act, 1962 penalty is attracted on any person, who, in relation to any goods, does or omits to do, any act which act or omission would render such goods liable to confiscation under Section 111, or abets the doing or omission of such an act, or any person, who acquires possession of or is in any manner person carrying, removing, concealing, selling or purchasing, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 28(2) is Rs. 1,18,17,739/- and, therefore, the penalty imposable would be the same amount. The penalty cannot be reduced or waived just because a part of the duty demand or the entire amount had been paid prior to the issue of the show cause notice. Hon ble Supreme Court in the case of CCE, Jaipur v. Rajasthan Spinning Weaving Mills Ltd. reported in 2010 (255) E.L.T. 481 (S.C.) while interpreting Section 11AC of Central Excise Act, 1944, which is in pari materia with the provisions of Section 114A of Customs Act, 1962, has held that penalty equal to the duty demand determined under Section 11A(2) would be imposable on a person liable to pay the duty, whenever the conditions for imposition of such penalty, as mentioned in this Section, i.e. the short levy, short payment, non-levy or enormous refund of duty having taken place due to fraud, collusion, wilful misstatement, suppression of facts etc., are satisfied and for imposition of penalty under this Section it is not material that the duty had been paid prior to the issue of show cause notice. The ratio of Hon ble Supreme Court in the case of CCE, Jaipur v. Rajasthan Spinning Weaving Mills Ltd. (supra) is squarely applicabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elhi reported in 2003 (155) E.L.T. 423 (S.C.) has held that over invoicing of the goods for export would mean attempt to export prohibited goods and the goods attempted to be exported by mis-declaring their value would be liable for confiscation under Section 113 of the Customs Act, 1962. Beside this, the Act of mis-declaration of description, value and quantity would also make the goods for liable for confiscation under Section 111(m). Since the Act of mis-declaration of description, value and quantity of the goods by M/s. Meerut Exim rendered the goods liable for confiscation, M/s. Meerut Exim would be liable for penalty under Section 112(a) of Customs Act, 1962. 6.2 However, we agree with the appellant s contention that since Shri Ashwani Kumar Jain is the Proprietor of M/s. Meerut Exim, penalty can be imposed either on him or on M/s. Meerut Exim and there is no justification for separate penalty on M/s. Meerut Exim or its Proprietor Shri Ashwani Kumar Jain as a proprietorship firm and its proprietor are not separate entities but are one entity. In view of this, while the penalty under Section 112 on Shri Ashwani Kumar Jain is upheld, penalty under Section 112 on M/s. Import E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that on confiscation of goods, the property in them shall vest in the Central Government and therefore if the owner of the goods wants the goods back he will have to pay fine, what Section 125(1) prescribes is only giving an option for release of the goods to the owner/the person from whom the goods had been seized, which the person may or may not exercise. Thus, what Section 125(1) provides for is redemption fine, which the owner of the goods/person from whose possession the goods had been seized, is required to pay, in addition to duty, if any payable under Section 125(2), if he wants to release the goods. The question arises as to whether the redemption fine can be imposed and recovered if the goods are not available for confiscation for the reason that the same had been released prior to confiscation order. In this regard, there can be two situations - (a) At the time of import, there is dispute about liability of goods to confiscation under Section 111 or 113 of the Customs Act, 1962 and pending the settlement of dispute, on the request of the importer/exporter, the goods are allowed to be cleared against a provisional release bond - the condition of bond being to produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not available for confiscation. Hon ble Punjab Haryana High Court in case of CC, Amritsar v. Raja Impex (P) Ltd. reported in 2008 (229) E.L.T. 185 (P H) has held that if initially, some goods are cleared unconditionally and subsequently proceedings are initiated for under valuation and other irregularities, redemption fine under Section 125(1) cannot be imposed and that when goods are not available for confiscation, Section 125 would be applicable only in those cases where the goods had been released by the concerned authorities subject to furnishing bond/undertaking etc. This Tribunal in case of Blue Dart Express v. Commissioner of Customs reported in 1999 (111) E.L.T. 102 (T) while holding that no fine can be imposed under Section 125(1) of the Customs Act, 1962 in respect of the goods held to be liable for confiscation but which are not available for confiscation for the reason that the same at the time of import had been cleared unconditionally without any objection, observed that redemption fine in lieu of confiscation under Section 125(1) is not a fine as understood in criminal jurisprudence, that it is not a penalty in that sense, that it is only an option to the per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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