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Commissioner of Customs (EP) , Mumbai Versus Sahil Industries, Kiran Madhubala Choksi And Pragnesh Jain

2016 (5) TMI 892 - CESTAT MUMBAI

Imposition of penalty - Section 114A and 112 of the Customs Act, 1962 - Diversion of imported polyester fabrics/cotton fabrics/HDPE - False declaration of manufacturer-exporter as Sahil industries - Held that:- the adjudicating authority has considered all the evidences on record and therefore, correct in setting aside or dropping of the proceedings initiated for imposition of penalties on Shri Kiran Choksi and Shri Pragnesh Jain. - Decided against the revenue - Appeal No. C/805/06-Mum - 01-04-2 .....

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penalties on Shri Kiran Choksi and Shri Pragnesh Jain under Section 114A of the Customs Act, 1962 and Section 112 of the same Act respectively. 3. The relevant facts that arise for consideration are that DRI received intelligence regarding diversion of imported polyester fabrics/cotton fabrics/HDPE, falsely declaring the manufacturer-exporter as Sahil Industries. Statements of various persons were recorded and Shri Kiran Choksi and Shri Pragnesh Jain had been implicated by various persons and th .....

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venue that Shri Kiran Choksi, one of the respondents, was also involved in diversion of materials obtained under advance licence in the case of Shree Rajshree Plastics. Based upon such findings, show cause notices were issued to the respondents. The adjudicating authority vide order-in-original dated 5.4.2004 confirmed the demands raised and imposed penalty on Shri Kiran Choksi and did not impose any penalty on Shri Pragnesh Jain. This order-in-original was contested before the Tribunal and the .....

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Kiran Choksi and Shri Pragnesh Jain. 4. The learned departmental representative, after taking us through the entire file, show cause notice, first order-in-original and subsequent order-in-original, would submit that the adjudicating authority has entered a factual error in not imposing penalties on both the respondents. He would submit that Shri Kiran Choksi was dealing with the suppliers, making payment to suppliers, paying duty by depositing money in Bank and ultimately diverting the goods to .....

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ipation of two employees of Shri Kiran Choksi in the diversion of imported goods. It is his further submission that the same Commissioner (Adj.) in the first order-in-original held that Shri Kiran Choksi is de facto owner of importing firm Sahil Industries and he is liable to pay the differential duty and imposed penalties under Section 112. It is his submission that the same adjudicating authority has recorded no findings on any new facts which led to change in his opinion for dropping the pena .....

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hes the role of Shri Kiran Choksi for importing goods under the name and style of Sahil Industries, and hatched a conspiracy to fraudulently obtain licences for duty free imports and dispose of such goods in local market for a profit. He would submit that the CHA, Shri Pragnesh Jain, has helped Shri Kiran Choksi to do so due to his continuous long standing association in business. Hence he also needs to be penalized. He would rely upon a judgment of the apex court in the case of Air Customs Offi .....

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rprise reported in 2014 (302) ELT 191 (Mad.); (ii) CC, Chennai vs. Pattu Exports Pvt. Ltd. reported in 2015 (317) ELT 663 (Mad.); (iii) Amar Jyoti Packers vs. CCE reported in 2007 (207) ELT 345 (Del.) / 2007 (211) ELT A134 (SC); (iv) Sushil Agarwal vs. CC(I), Mumbai reported in 2013 (293) ELT 663 (Bom.); (v) Achiever Intl. vs. CC, Delhi reported in 2012 (286) ELT 180 (Del.). It is his further submission that in the case of Amar Jyoti Packers, the Honble Supreme Court has held that corporate vei .....

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esh Jain would reiterate the findings recorded by the adjudicating authority for dropping the penalties on their clients. 6. We have considered the submissions made at length by both sides and perused the records. 7. On perusal of the records, we find that the remand order of the Tribunal in this case for de novo adjudication in respect of penalties to be imposed on Shri Kiran Choksi reads as under:- Appellant, Kiran Choksi, may be accorded an opportunity to scrutinise and take copies of the doc .....

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in the entire order-in-original from para 96 to 108 of the impugned order has dwelt upon the evidences relied upon by the Revenue for seeking imposition of penalties on Shri Kiran Choksi. The sum and substance of the departments seeking to impose penalty under Section 114A was that Shri Kiran Choksi was de facto owner of Sahil Industries and had imported the goods under various advance licences and subsequently diverted them to the local market. Hence Sahil Industries being a proprietary conce .....

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of Shri A.J. Kerawalla does not indicate that Shri Choksi was representing Sahil Industries for procuring from C.A. certificate; from various statements of high seas sellers, it was gathered that there was no conclusive proof to establish Shri Kiran Choksi as the importer of the alleged goods as many of these high sea sellers suspected or believed that Shri Kiran Choksi was the purchaser and mere belief that Shri Kiran Choksi was the owner of Sahil Industries cannot be legally accepted since sus .....

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ran Choksi to alleged goods involved in the case. The adjudicating authority has also recorded that Shri Kiran Choksi in his statements had stated that two employees were only employed as sweepers and they were not given any work; who had implicated Shri Kiran Choksi; there appeared to be no investigation to ascertain the truth of the statement of Shri Kiran Choksi and it would indicate that Shri Kiran Choksi was preparing documents and depositing money in the Bank account of Sahil Industries, w .....

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ndition required for imposing penalty is that the duty liability needs to be determined on the person. In the case in hand, the earlier order-in-original has been set aside inasmuch as it holds Shri Kiran Choksi as the importer. This itself would mean that the provisions of Section 114A of the Customs Act, 1962 cannot be invoked against Shri Kiran Choksi for finding as recorded by the learned Commissioner seems to be correct. 10. As regards penalty to be imposed on Shri Pragnesh Jain under Secti .....

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any of the Rules and Regulations and that the key persons involved namely Shri Sawant, Shri Choksi or Shri Vinod Chaudhary have nowhere alleged that he had any knowledge about diversion of the goods imported under the relevant advance licences. It was also pointed out that as a Clearing Agent his job ended with the clearance of the goods and that the subsequent events consequent to the clearance of the alleged goods from the Customs Area is of no relevance, especially, when there is no evidence .....

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