TMI Blog2018 (11) TMI 501X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of sub-section (2) of Section 110 of the Customs Act. The present show cause notice is issued in continuation to the earlier show cause notice issued by the DRI where the provisions of Section 124 of the Act has been invoked. The appellant has not provided the copies of these orders before us so as to arrive at the conclusion as to whether the impugned show cause notice and adjudication order is the extension of the previous show cause notices along with addendum which has been clearly spelt out with adjudicating authority - the present show cause notice in effect has to be treated as having been issued under Section 124 of the Customs Act in effect has to be treated as proviso under 110(2) of the Act. Compliance with KYC norms - Held that:- CHA helps not properly verified the functioning of the client from at the declared address by using reliable independent and authenticate documents. This was a serious lapse on part of the CHA in verifying the KYC before taking up the Custom clearance of consignment of rough diamond imported by M/s Neotex Exim Pvt. Ltd. - The appellants, considering the nature of the imported goods i.e. rough diamond, would have exercised more vigila ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e. rough diamond was highly inflated in the said Bill of Entry filed for the clearance of the goods. As per the jewellery appraiser, the actual value of the consignment was to the extent of USD 14,297 instead of the declared value of USD 88,641.40. After having a preliminary scrutiny of the documents, the case was transferred by the Commissionerate, to Department of Revenue, Intelligence (DRI), New Delhi for further investigation. During the course of enquiry by the DRI, it was alleged that the CHA company also was involved in the case of overvaluation of the import consignment, which was on the basis of report received from the Jewellery Expert. It was alleged that the CHA/Director failed to verify the KYC norms under the CHALR, 2004 and therefore, a Show Cause Notice bearing No. 33A/XI/32/2013-CI(NEO)/428 dated 29.1.2015 was issued to them asking as to why penalty should not be imposed on them under Section 112(a) (b), (iii) and (iv) and under Section 114AA of the Customs Act. The case was adjudicated by the impugned adjudication order and the appellants were imposed a penalty of ₹ 10 lakhs in case of the appellant No. 1 (HLPL) under Section 114AA of the Act and ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proached them in the first week of the January, 2014 for clearance of the aforesaid consignment and after verification of KYC documents they prepared the check list on the basis of documents supplied by the importer, which led to the filing of Bill of Entry. The Bill of entry was filed on the first check basis. That during the investigation it was found by the DRI that the import was routed through Axis Bank, who vide their letter dated 11.7.2014 informed the DRI that the amount has not been remitted to the foreign supplier and that the account was opened by one Shri Uday Bhagat. Thereafter, the consignment was seized by the DRI, on the reasonable belief that the goods imported are liable for confiscation under the provisions of Custom Act for the alleged violation as stated above. That during the course of enquiry, it was found by the DRI that the building which was declared in the KYC norm i.e. premises No. 1079-80, Gandhi Gali, Fatehpuri, New Delhi, was found locked. The statement of Shri Vivek Sharma, was recorded under Section 108 of the Customs Act who stated that: (a) He had gone to collect some import documents from Shri Uday Bhagat from his office premises at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DR supported the impugned order and reiterated the grounds contained therein. He has thus argued that impugned order is not suffering from any infirmities and required to be upheld. 5. We have heard rival contentions and perused the case record. The issue before us is to decide as to whether the appellants has any role in the deliberate overvaluation of the imported goods by the importer and also whether they have failed to verify the KYC norm as per the CBLR, 2013. We find that the show cause notice has been issued under Section 110(2) of the Act and not under the Section 124 of the Customs Act. For the better appreciation of the fact, we hereby reproduce the provisions of Section 110 of the Act: 110. Seizure of goods, documents and things.- (1) If the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods: Provided that where it is not practicable to seize any such goods, the proper officer may serve on the owner of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer. 1[(1A) The Central Government may, having reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its director and the CHA have submitted in their written submissions as well as during the course of PH that impugned Show Cause Notice has been issued under Section 110(2) of the Customs Act, 1962. In this regard they submitted that unless the SCN was issued under Section 124 of the Customs Act, 1962, penalty could not be imposed on the noticees. They relied upon the Karnataka High Court Judgement in Commissioner Vs. Kesar Marble Granites as reported in 2012 (278) ELT 42 (Kar.). I find that the ratio of this case is not applicable in the present case in hand. In Kesar Marbles Granites the SCN was mistakenly issued under Section 124 of the Customs Act, 1962 demanding duty of ₹ 1,43,45,371/- and proposing penalties. The assessee appeared and contended that the provisions of the Customs Act were not applicable to the present case. Realising the said mistake the revenue issued a letter dated 12.12.2000 for demand of duty under the provisions of the Central Excise Act, 1944. The circumstances of the present case are totally different. The goods under dispute were seized under Section 110 of the Customs Act, 1962 and SCN was rightly issued under Section 110(2) of the Customs A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e went to collect the documents, Shri Uday Bhagat asked him to come in a street at Fatehpuri, wherein he was standing before a building which did not have any sign board or bear a number. It is seen from the adjudication order that the declared residential premises of Shri Uday Bhagat and Shri Sunder Prakash Sharma, the Directors of M/s Neotex Exim Pvt. Ltd. that they were not residing at the declared premises. The adjudicating authority also found that the IEC of the importer revealed that no firm/business enterprises in the name of M/s Neotex Exim Pvt. Ltd. existed at the given address and the enquiries conducted at the declared residential premises revealed that the said address was incomplete or fictitious. Under the circumstances, we are in agreement with the finding of the ld. Adjudicating authority that CHA helps not properly verified the functioning of the client from at the declared address by using reliable independent and authenticate documents. This was a serious lapse on part of the CHA in verifying the KYC before taking up the Custom clearance of consignment of rough diamond imported by M/s Neotex Exim Pvt. Ltd. The appellants, considering the nature of the imported g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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