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M/s. Antoine & Becouerel Organic Chemical Co. And K. Ramlal Jain Versus Commissioner Of Customs (Airport & Air Cargo) , Chennai

2016 (5) TMI 553 - CESTAT CHENNAI

Imposition of redemption fine and penalty - Appellant not a license holder under drug and Cosmetics Act, 1940 - Neither absolute confiscation of goods nor goods were contraband - Tranexamic Acid drug imported and after found nothing questionable in the test report, allowed to re-export - Appellant contended that the exemption granted under Rule 45 ibid requires no license for import of drug of the nature imported. - Held that:- penalty of confiscation is a penalty in rem which is enforced ag .....

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in the smuggling. - Evidence gathered by Revenue unambiguously proved that both the appellant were contributory to the fraud committed against Customs and they made an organised bid to be enriched at the cost of the nation. It is established principle of law that fraud and justice are sworn enemies. When the collusion and fraudulent design of the exporter, importer-appellant, K. Ramlal Jain and M/s. DHL Logistics Pvt. Ltd., surfaced, the impugned goods that came to India, became no mans prop .....

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Therefore it is left to the Chairman of the CBE&C to deal this matter as the Board may consider appropriate in the fitness of the circumstances of the case to protect interest of Revenue since the action of redemption of the goods and re-export has caused detriment to interest of justice. - Decided against the appellant - C/41606,41607/2014 - Final Order Nos. 40676-40677 / 2016 - Dated:- 29-4-2016 - SHRI D.N. PANDA, JUDICIAL MEMBER For the Appellant : Shri N. Viswanathan, Adv. For the Responden .....

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o the Customs laboratory report is perused nothing questionable conduct of the appellant can be found. However, to reduce litigation, appellant considered it proper to send back the goods to the exporter. Customs also agreed for such export. But unnecessarily redemption fine and penalties have been imposed. There was neither absolute confiscation of goods nor goods were contraband. However, department acted hyper technically to question the goods bringing the consol agent M/s. DHL Logistics Pvt. .....

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as misconstrued by the authority overlooking sub-rule (2) of Rule 41 of the Drugs and Cosmetics Rules, 1945. That rule does not permit any harsh action against the importer. For no reason the Customs authorities considered that the drugimported was prohibitory in nature. The exemption granted under Rule 45 of the Drugs and Cosmetics Rules, 1945 requires no license for import of drug of the nature imported. 1.3 Arguing on the appeal of Shri K. Ramlal Jain, it was the submission of the learned cou .....

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rned Authority below while imposing such fine. So also, penalty to the extent of ₹ 5,00,000/- is not imposable when the appellant was neither an importer nor in any way connected with the import. Further, the penalty of ₹ 1,00,000/- imposed on the appellant Shri K. Ramlal Jain may be waived. 2.1 On the other hand, Revenues submission is that the appellant M/s Antoine & Becouerel Organic Chemical Co., was the real importer which can be appreciated from page 6 of appeal folder bec .....

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, 1940 and application of that law as well as law of Customs. The appellant importer was master-mind and it was named as buyers in all documents that came to India from the time of export from the exporting country. 2.2 According to learned departmental representative, it is necessity of Rule 24A of the Drugs and Cosmetics Rules, 1945 for registration of the exporter in India. That was not done. He says that this is clear finding in para 43 of the Adjudication order. When the Drugs and Cosmetics .....

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t of the past consignments. This appellant was habitual offender being importer of the offending goods. Therefore, it does not deserve any leniency. He relied on page 69 of the appeal folder to emphasise that this importer deliberately induced file amended Bill of Entry when he was in the scene of importing offending goods from the date of export thereof from abroad. The misdeclaration of the appellant is an offence when he evaded and attempted to escape from the scrutiny of law. 2.4 Para 61 of .....

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to importlifesaving drugs violating provisions of the Drugs and Cosmetics Act, 1940 as well as Customs Act, 1962 without Form 10 licences. Statements were recorded from these persons which are incriminating in nature and inculpatory. Therefore, they do not deserve any leniency for reduction of penalty and redemption fine. 4. Heard both sides and perused the records. 5. Present appeals arose against adjudication made in respect of import of tranexamic Acid, packed in 60 drums imported by the app .....

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n this batch of appeal were brought to the fold of law by adjudication order dated 28.03.2014 along with 3 others finding them to be connected with the import of Tranexamic Acid from the period 2012. While the appellant M/s. Antoine & Becouerel Organic Chemical Co., was found to be the importer, as per invoices aforesaid issued by Chinese exporter, M/s. Prisun Pharma-chem Co. Ltd., the appellant Shri K. Ramlal Jain was found to be its proprietor. Other persons involved in the import were one .....

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o live consignments of same goods imported by the appellant concern, under Bills of entry bearing Nos.9746060, dated 02.04.2013 and 9760867, dated 04.04.2013 were awaiting clearance. Those Bills of Entrywere subject to scrutiny by Customs and it was informed by Revenue that these two Bills of entry have been adjudicated vide Order in Original No.266/2016, dated 30.03.2016. 8. After filing the aforesaid MAWB followed by HAWB, all on a sudden application was made by the M/s. DHL Logistics Pvt. Ltd .....

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, 9183769, dated 31.01.2013, 93317619, dated 14.02.2013 and 9694255, dated 29.03.2013. 9. According to Customs, the goods imported under the MAWB and HAWB aforesaid were drug and import thereof requires Form 10 licence under Drugs and Cosmetics Act, 1940. The appellant without having such a licence imported the same. When a detailed enquiry was made, appellant although stated that the goods are not drug it failed to provide the details of the buyers thereof for successive enquiry and ascertain a .....

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ion found that there were two consignors of the goods from China, one was M/s. Prisun Pharmachem Co. Ltd., and M/s. ITW Test and Measurement, of Shanghai. 11. Learned Adjudicating authority examined the matter framing the following issues in para 35 of his order as follows:- (i) Whether live consignment of Tranexamic Acid packed in 60 drums valued at ₹ 48,17,745/- (Rupees Forty Eight Lakhs Seventeen Thousand Four Hundred and Seventy Five only) USD 87750/- (US Dollar Eighty Seven Thousand S .....

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scated under section 111 (d) of the Customs Act, 1962 read with the provisions of the Drugs and Cosmetics Act, 1940 & Drugs and Cosmetics Rules, 1945; and (ii) Penalty under section 112 (a) and/or section 114AA of Customs Act, 1962 should be imposed on the persons and entities named in the notice. 12. The Adjudicating Authority found that the Assistant Drug Controller (India), Air Cargo Complex, Chennai-600 027 vide his letter No.TOD/AIR/CHE/32/2013/652, dated 13.11.2013 informed that the im .....

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e real proprietor of the importer appellant and Sohanchand was benamidar. The importer influenced M/s. DHL Logistics Pvt. Ltd., to file application for amendment of the bill of entry holding outit to be importer of the impugned goods to escape scrutiny of investigation. However, such amendment was not permitted by the Customs authorities. 13. When a detailed investigation was carried out, the bank accounts of the importing concern in Union Bank of India, Sowcarpet Branch and ICICI Bank, Sowcarpe .....

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value of USD 87750 was discharged by the bank on behalf of its customer M/s. Antoine & Becouerel Organic Chemical Company, Chennai for an amount of USD 87750. Although, payment was made on behalf of such customer, a false claim was made by that customer company before Customs on 17.4.2013 by a declaration with the caption TO WHOMSOEVER IT MAY CONCERN stating that the goods covered by MAWB No. 043/572/55590 were sent to it by mistake by M/s. Prisun Pharma chem Co. Ltd., of China (consignor-ex .....

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ellant-importer arranged a communication from the Chinese exporter to deliberately file false amendment application before Customs by M/s. DHL Logistics Pvt. Ltd., holding out that concern as the importer of the impugned goods. It also had no drug licence in Form 10. The Chinese exporter M/s. Prisun Pharmachem by its declaration dated 16.4.2013 captioning TO WHOMSOEVER IT MAY CONCERN stated that the consignment covered by MAWB was sent to M/s. Antoine & Becouerel Organic Chemical Co., errone .....

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Pvt. Ltd., had also no such licence. 16. It is curious to note that the communication came from the Chinese exporter on 16.4.2013 was false and on the next date i.e., 17.4.2013, the appellant-importer issued a declaration as stated above to enable M/s.DHL Logistics Pvt. Ltd., to file letter dated 22.4.2013 before Customs for amendment of the MAWB. Strangely, the ICICI bank, Sowcarpet has sent the remittance to the exporter nearly a month before for and on behalf of the appellant-importer M/s.Ant .....

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Ref. para 44 of the adjudication order). Shri Ramlal Jain although denied the allegations against him as owner of the appellant-concern stating that Sohan Chand was the owner thereof, he failed to establish that leading any cogent and credible evidence in that regard. It is surprising how he operated the bank accounts as aforesaid dealing with crores of rupees to make the remittances, if Sohan Chand was the owner of the importing concern. Sohanchand was only the name lender to Ramlal Jain. Ramla .....

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re proved to be drug upon testing by the Drugs Controller. Appellant further submitted that there is no drug licence required for an exporter who manufactures outside India. But, Rule 24A of the Drugs and Cosmetics Rules, 1945 rules out such proposition. Added to this, Rule 23 of the said rules requires an import licence in Form No. 10 as was suggested by the Drugs Controller as well as Revenue. Appellant places reliance on Rule 45 of the said Rules, 1945. But, no such rule comes to the rescue o .....

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ibited goods as defined by section 2(39) read with section 2(33) of the Customs Act, 1962. Many facts relating to the ill design remained in the special and peculiar knowledge of the appellants concerned with that. Echoing evidence, series of factors and several circumstances were determinative. Questionable conduct and oblique motive of the appellant contributed to their implication to the charge. 20. When fraud surfaces, that unravels all. Revenues stand is fortified from the Apex Court judgm .....

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were in close connivance. The Apex Court in the case of S P Chengalavaraya Naidu Vs Jagannath - AIR 1994 SC 853 and in the case of Ram Preeti Yadav Vs UP Board of High School and Intermediate Education - AIR 2003 SC 4268 has held that no court in this land will allow a person to keep an advantage which he obtained by fraud. 21. When the material evidence established fraud against Revenue white collar crimes committed under absolute secrecy shall not be exonerated from penal consequence of law f .....

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ither by letter or words, which includes the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letter. It has been held by Apex Court in the case of Commissioner of Customs, Kandla v. Essar Oil Ltd. - 2004 (172) E.L.T. 433 (S.C.) that by fraud is meant an intention to deceive; whether it is from any expectation of advantage to the party himself or from the ill will towards the other is immaterial. The expression fraud i .....

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epresentation has been made (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly, careless whether it be true or false. This aspect of the matter has been considered by Apex Court in Roshan Deen Vs PreetiLal [2002 (1) SCC 100], Ram Preeti Yadav Vs U.P. Board of High School and Intermediate Education [2003 (8) SCC 311], Ram Chandra Singh s case (supra) and Ashok Leyland Ltd. Vs State of T.N. and Another [2004 (3) SCC 1]. Suppression of a material document would also amount to .....

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Customs claiming ownership of the import. Entire material fact and evidence warrant lifting of the corporate veil due to dubious claim of ownership of the goods and two parties holding out themselves to be importer of the offending goods at different point of time. The goods were therefore confiscable. M/s. DHL Logistics Pvt. Ltd., was not the actual importer as per evidence. Beginning from the origin of the goods from China from the exporter till that reached India and MAWB presented to Customs .....

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ority may act as may be considered appropriate in accordance with law. 25. It is also surprising to note that all of a sudden M/s.DHL Logistics Pvt Ltd., came to file application to amend the HAWB when it was neither the investor of the goods nor placed any purchase order with the consignor-appellant nor any remittances were made by it to the exporter. Such finding is enough to rule out the claim of the M/s. DHL Logistics Pvt. Ltd., as owner of the imported goods. M/s. DHL Logistics Pvt. Ltd., a .....

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he goods. In such case, it is not necessary for the Customs authorities to prove that any particular person is concerned with their illicit importation or exportation. It is enough, if the Department furnishes prima facie proof of the offending goods being smuggled one. The second kind of penalty is one in personam which is enforced against the person concerned in the smuggling of the goods. In such case, the Department has to prove further that the person proceeded against was concerned in the .....

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