TMI Blog2013 (5) TMI 787X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the appellant had sold these consignments to M/s. Export India Overseas and said M/s. Export India Overseas had sought to clear the consignment by producing REP licences which was permitted to be done so by the authorities. It can be seen from the reproduced definition of importer, that importer includes owner or any person holding himself out to be the importer. In the case in hand, it is undisputed that the appellant ICGTI had in fact filed ex-bond bill of entry for 223 cartons to be cleared under REP licences of M/s. Export India Overseas. It cannot be said that the appellant is not an importer as he would get covered in the expression “any person holding himself out to be the importer”. The justification given by the ld. counsel for filing of the ex-bond bill of entry by ICGTI is that ICGTI being a person who had in-bonded the consignment, is required to file the ex-bond bill of entry, is unsubstantiated by pointing out any provision of law. If it is the case of ICGTI, that they have sold the consignment to M/s. Export India Overseas, they should have left it to the said purchaser to do the documentation and clear the consignment. Having themselves held out to be impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tally valued at ₹ 4,56,755/- and filed a bill of entry for warehousing the same. Clearances were allowed under Open General Licence (OGL) and the goods were assessed to duty at the applicable rates. The consignment was warehoused in-bond at the public bonded warehouse at Ankleshwar. The said appellant subsequently cleared 80 cartons of the said yarn on execution of bond and on payment of duty of ₹ 4,92,448/-. The remaining 223 cartons were lying in the bonded warehouse and the period was extended up to 9-10-1987. On a subsequent application for extension of time limit for keeping the goods in the warehouse, the same was rejected by the Asst. Commissioner, who also served an auction notice on 18-10-1987 in terms of the provisions of Section 72 of the Customs Act, directing the said appellant to deposit the customs duties within a period of 5 days from the date of receipt of the said notice. 2. The subsequent developments are important for deciding the appellant s liability to pay the duty or otherwise. It is seen that the appellant subsequently approached the Asst. Collector of Customs and submitted that as they were unable to consume the goods under import, they may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove Into-Bond consignment was cleared under REP licence to the undersigned at Broach Central Excise office on 18-11-1987, without fail. Name of the party Into Bond No. date Quantity Warehouse where the consignment lying I.C.G. Texturising Industries, Ankleshwar Bond No. T.4319/10-10-1986 7359 kgs. (223 cartons). C.W.C. Ankleshwar In terms of the above permission letter of the Asst. Collector, the goods were actually allowed clearance to M/s. Export India Overseas against REP license produced by them without payment of duty. 3. Subsequently, Assistant Commissioner of Surat wrote a letter to Assistant Commissioner of Customs, Bombay on 1-2-1988 intimating that the goods lying in the warehouse were allowed clearance by M/s. Export India Overseas under REP license No. 2955688 free of duty. In response to the above letter, Bombay Customs sent wireless message on 21-3-1988 informing that the above licence produced by M/s. Export India Overseas do not figure in the Weekly Bulletin issued by the Licensing Authority for the above period and appeared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r that it is the said appellant who has entered into a bond and as such duty confirmation against him was justified is not correct in view of the definition of the importer as contained in Section 2(26) of the Customs Act. He submitted that the Revenue having accepted M/s. Export India Overseas as the importer of the goods and having cleared the goods to them against REP license produced by M/s. Export India Overseas, it is M/s. Export India Overseas which has to be considered as the importer and not the present appellant. He further submitted that the appellant himself has been a victim of circumstances as the fact of REP license being forged was never in his knowledge as the same was in the knowledge of the Customs officers. The reference to various facts made by the Commissioner in the impugned order to hold that the entire conspiracy was hatched by M/s. I.C. Gandhi Texturising Industries does not inspire confidence from the evidences on record and even if the presuming though denying that the goods were cleared by M/s. Export India Overseas as a result of conspiracy, the same would not change the position in law inasmuch as admittedly it was M/s. Export India Overseas who clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (26) of the Customs Act. For better appreciation, we reproduce the said section. 2(26). importer , in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes any owner or any person holding himself out to be the importer; As is clear from the above, the importer includes owner of the goods or any person holding himself out to be the importer. The goods having been permitted to be sold to M/s. Export India Overseas, it is now M/s. Export India Overseas, who were the owner and further not only that they also held themselves to be importer and represented themselves as importer before Customs and their such act was also accepted by the Customs authorities. As such by applying the definition of importer as contained in the above provisions, it is M/s. Export India Overseas who are required to be held as importer and not M/s. I.C. Gandhi Texturising Industries, who were the original importers but having sold the goods to M/s. Export India Overseas, who had become the owner, could no longer be held to be importer. The distinction made by the Commissioner that the said definition including owner of the goods wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take the place of conclusive and legal evidence. Similarly the fact of purchasing back of 50 cartons out of 223 cartons by M/s. I.C. Gandhi Texturising Industries stands explained by them that since subsequent to clearance they felt the need of 50 cartons, the same were repurchased and proper bank transactions were made. The balance of the cartons out of 223 cartons stand sold by M/s. Wadiwala Trading Co. to other independent companies. In any case the said facts may raise doubts as already observed, but will not take the place of legal evitable evidence against M/s. I.C. Gandhi Texturising Industries. In any case having held that M/s. I.C. Gandhi Texturising Industries cannot be considered as importers, the duty liability confirmed against them cannot be upheld. The same is accordingly set aside along with imposition of penalty upon them as also on Shri R.G. Gandhi. 10. Similarly as regards M/s. Wadiwala Trading Co. and Sh. J.B. Wadiwala, we find that they purchased the goods from M/s. Export India Overseas and sold the same in the market to various parties. There is no concrete evidence on record to show that they were aware of the forged nature of the REP licences produced b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by them in the bonded warehouse since they did not have funds for clearing the goods on payment of duty since an auction notice had already been issued by Customs on 2-11-1987. The main issue to be decided before anything else is as to who should be treated as importer and who is liable to pay the duty. 15. The learned advocate relied upon the definition of importer in the Customs Act which defines importer. According to the definition, the importer is either the owner or any person holding himself out to be a importer. In this case, ex-bond bill of entry was filed by M/s. I.C. Gandhi Texturising Industries Ltd. and therefore as per the definition it can be stated that they have held themselves out to be importer. But the appellant s contention is that since the goods have been sold with the knowledge of the Customs and DGFT and with their approval, the buyer M/s. Export India Overseas has to be treated as the owner. According to them, the appellant filed bill of entry only as a facilitation measure and therefore, the real owner and the importer has to be treated as M/s. Export India Overseas. 16. At this juncture, it is necessary to see the transactions between the partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Export India Overseas never paid any money for purchase of goods from M/s. I.C. Gandhi Texturising Industries or M/s. I.C. Gandhi Silk Mills, Surat. 18. On one hand, the appellants claim that because of liquidity problem and they did not have money to pay the duty, they had found M/s. Export India Overseas who had REP licence to clear the goods. On the other hand, they have financed M/s. Wadiwala Trading Co. and M/s. Export India Overseas to show purchases from M/s. I.C. Gandhi Texturisers and M/s. I.C. Gandhi Silk Mills, Surat. This shows that ownership of yarn continued to remain with M/s. I.C. Gandhi Texturisers and M/s. I.C. Gandhi Silk Mills, Surat, both of whom did not have any REP licence. In fact, M/s. I.C. Gandhi Texturising Industries could have cleared the goods on payment of duty since the goods were imported under OGL. They choose to show 50 T of yarn as having been purchased by them, from M/s. Wadiwala Trading Co. and knowingly became one of the parties who purchased the goods from M/s. Wadiwala Trading Co. Revenue has admittedly not demanded duty from them or demanded or imposed penalty on this count since the duty on the whole consignment has been demanded fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1 In order to appreciate the role of Shri Rajesh G. Gandhi, who is C.E.O. of M/s. I.C. Gandhi, Surat and Proprietor of M/s. Balaji Textiles, Ankleshwar and I.C. Texturising Industries at Ankleshwar. I refer the statement of Shri J.K. Sheth recorded on 25-3-1988 wherein he has stated that S/Shri Wadiwala and Rajesh G. Gandhi directed to remove the goods lying in the bonded warehouse and that they have obtained his signature on the blank letter-heads of M/s. Export India Overseas : that the account of M/s. Export India Overseas in the Central Bank of India, Kanpith Branch, Surat which was introduced by Shri Rajesh G. Gandhi and the blank cheque book duly signed by him was given to Shri Rajesh G. Gandhi : that he did not know about the cheques issued by M/s. Wadiwala Trading Co. to M/s. Export India Overseas : that he was knowing that he was to lift duty free goods on fake licence and had to release to Shri Rajesh G. Gandhi of M/s. I.C. Gandhi Surat, and for that he has received drafts from Shri Wadiwala for the said sale and that he has not exported any material in the name of M/s. Export India Overseas. It is also relevant to note that Shri Sheth at the relevant time was a 60 year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o., Begumpura, Surat. 6 57/4-12-1987 264 60,720/- Rajesh Textiles, Maliniwadi, Salabatpura, Surat. 7 58/4-12-1987 231 53,130/- J.R. Textiles, Salabatpura, Surat. 8 59/5-2-1987 264 59,928/- Rakesh Textiles, 306, Opp. J. R. Dyg., Pandesra, Surat. 9 04/2-1-1988 595 1,27,710/- Jupiter Textiles, Nani Begumwadi, Surat. He further deposited that in his presence, Shri J.K. Sheth and Shri Rajesh Gandhi had fixed the rate of goods as and when they took the delivery of goods; that he had purchased the goods at the rate shown below from M/s. Export India Overseas and the said goods had been sold to M/s. I.C. Gandhi Silk Mills and M/s. I.C. Gandhi Texturising Industries at the rate shown below :- PURCHASE : Date Weight (Kgs.) Rate (Rs.) Total Amount 19- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso introduced Shri Jayantihhai B. Wadiwala for opening the bank account as he had no account in Central Bank of India. 47.5 From the above, it is established that Shri Rajesh G. Gandhi, CEO of M/s. I.C. Gandhi Texturising Industries. Ankleshwar knew Shri J.K. Sheth and Shri J.B. Wadiwala. Vahivatkarta of M/s. Wadiwala Trading Co. since very long. Shri Rajesh G. Gandhi with the help of Shri J.K. Sheth, Shri J.B. Wadiwala and Shri N. Shivprasadan of M/s. I.C. Group of Industries hatched a conspiracy for fraudulent duty free clearance of the yarn lying in the Customs Bonds against REP licence. A fictitious firm in the name of M/s. Export India Overseas was created, arranged, used forged REP import licence P/K-3049300, dated 10-12-1986 in connivance with Shri J.K. Sheth. J.B. Wadiwala and N. Shivprasadan and that forged stamps recovered from the residential premises of Shri J.K. Sheth had been used in faking documents. The letter purported to have been issued by Jt. C.C. of I.E.. New Delhi is also fake and forged. M/s. ICG. Ankleshwar filled Ex-bond Bill of Entry along with the letter dated 10-11-1987 from M/s. Export India Overseas, a fictitious firm addressed to ACCE, Division-V, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Texturising reported in 2010 (255) E.L.T. 353 (Guj.) = 2010 (20) S.T.R. 564 (Guj.). With these observations, Hon ble President directed that, the matter be returned and placed before the concerned Bench. 23. As directed by the Hon ble President, the difference of opinion is revised as under : DIFFERENCE OF OPINION (i) In the facts and circumstances of the case, whether M/s. I.C. Gandhi Texturising Industries Ltd. can be considered as importer as held by Member (Techincal) or M/s. Export India Overseas have to be held as importer as held by learned Member (Judicial). (ii) In the facts and circumstances whether M/s. Export India Overseas can be considered as the owner of the goods at the time of filing bill of entry as held by learned Member (Judicial) or in view of the banking transactions and other facts and circumstances whether, M/s. I.C. Gandhi Texturising Industries Ltd. has to be held as owner of the goods as held by Member (Technical). (iii) In the facts and circumstances of the case whether duty demand with interest demanded from M/s. I.C. Gandhi Texturising Industries Ltd. and penalty imposed on them is required to be set aside as held by learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icial) or penalty has to be imposed on the captain since no mens rea required for imposition of penalty under Section 112(a) of Customs Act, 1962 and goods are liable to confiscation under Section 111(f) of Customs Act, 1962. 25. Ld. counsel Shri Hardik Modh appearing on behalf of M/s. I.C. Gandhi Texturising Industries Ltd., Shri Rajesh G. Gandhi and Shri N. Shivaprasadan, would read the relevant facts as recorded by the differing members and submit that the appellant sold the said goods to M/s. Export India Overseas and also kept the customs department informed of the same. It is his submission that the clearance of the consignment was taken after the permission was received from the Assistant Collector of Customs for the clearance of goods under REP licence. It is his submission that once M/s. Export India Overseas made an application for duty free clearance and permission was granted by the authorities, the said EIO becomes person chargeable to duty within the meaning of Section 28(1) of the Customs Act, 1962. It is his submission that this view can be taken, as in-bond goods can be transferred and transferee can clear the goods by filing ex-bond bill of entry for goods wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies that M/s. Export India Overseas produced fake or forged licences for clearance was not in the knowledge of the appellant. It is his submission that it is conclusively proved that rubber stamp and other incriminating documents were recovered from the premises of one Shri J.K. Sheth said who is the proprietor of M/s. Export India Overseas. It is his submission that the appellant had acted bona fide during the transactions and merely having the bank account in the same branch and introducing M/s. Wadiwala Trading Co. for opening of bank account does not prove that the appellant had knowledge or reason to believe that licenses were forged. It is his submission that in fact, the Assistant Collector, Customs granted clearance of the consignment without payment of duty under the very same REP license after examining the same and finally submits that the appellant did not derive any benefit or gain from the duty free clearances of the goods. 26. Ld. consultant Shri N.J. Gheewala appears on behalf of M/s. Wadiwala Trading Co. and Shri Jayantibhai Wadiwala. He would submit that he has no submission to make, as Shri Jayantibhai Wadiwala who was the proprietor of M/s. Wadiwala Trading C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w and is to be looked out from the angle who is the importer, which in this case, is categorically proved as M/s. I.C. Gandhi Texturising Industries Ltd. 28. I have considered the submissions made at length and perused the records. 29. On perusal of the records, I find that entire issue in this case can be settled by answering only one question as to who is the importer in this case i.e. whether M/s. I.C. Gandhi Texturising Industries Ltd. (ICGTI) has to be considered as an importer or M/s. Export India Overseas (EIO) has to be held as an importer. At the outset, I would like to state here that the facts are not much in dispute. The consignment of yarn was imported by ICGTI and filed the bill of entry for warehousing the same. It is also undisputed that the said polyester filament yarn (PFY) was allowed to be imported under OGL. It is also undisputed that out of the consignment of 303 cartons of PFY, ICGTI had cleared 80 cartons of the said yarn on execution of the bond and payment of duty. Balance remaining 223 cartons were lying in the bonded warehouse and period for storing such goods in the bonded warehouse was up to 18-10-1987 and subsequent applications for extension of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the REP licence which was produced by M/s. Export India Overseas were fake and forged. In my opinion, the view arrived at by the Hon ble Member (Technical) that ICGTI has to be considered as an importer is correct. 32. As regards other differences which are listed before me, they become academic in nature inasmuch as that the appellant ICGTI, being held as an importer, is liable to discharge the duty liability, all other consequences follow. 33. In my view, since I have held that ICGTI being an importer, it needs to be held against the importer for not discharging the duty liability. 34. As regards the difference of opinion on penalties imposed, I find that the penalties are imposed under Section 112(a) of the Customs Act, 1962 and I also find that there is no confiscation of the goods or nor there is any finding that the goods are liable for confiscation under Section 111 of the Customs Act, 1962. The provisions of Section 112 of the Customs Act, 1962 very clearly read as under : SECTION 112. Penalty for improper importation of goods, etc. - Any person, - (a) who, in relation to any goods, does or omits to do any act which act or omission would render such good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fiscation under Section 111 of the Customs Act, 1962, in my considered opinion, penalties imposed by the adjudicating authority under Section 112(a) of the Customs Act, 1962 does not stand the test of the law. There are various decisions which state that if goods are not held as liable for confiscation under Section 111 of the Customs Act, 1962, penalty cannot be imposed under Section 112 of the Customs Act, 1962. As I have held that there are no finding of imported goods are liable for confiscation, in my considered view penalty under Section 112(b) of the Customs Act, 1962, is unwarranted on the said ICGTI. Accordingly, in the peculiar facts and circumstances of this case, I concur with the views of Hon ble Member (Judicial) that no penalties can be imposed under Section 112 of the Customs Act, 1962. 36. As regards the appellant M/s. Wadiwala Trading Co. and Shri Jayantibhai Wadiwala, penalties imposed on them, has abated due to death of Shri Jayantibhai Wadiwala. 37. I have perused the certified copy of death certificate of Shri Jayantibhai Wadiwala as issued by Surat Municipal Corporation, I find it so. Since the appellant M/s. Wadiwala Trading Co. is proprietorship fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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