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TMI Blog2024 (5) TMI 528X X X X Extracts X X X X X X X X Extracts X X X X ..... tered for import in the manner prescribed by section 46 of Customs Act, 1962 but also either 'counterfeit' or importable only against authorization from Directorate General of Foreign Trade, against compliance with quality prescriptions of Bureau of Indian Standards (BIS) or against appropriate permission from the licencing authority under Drugs and Cosmetics Act, 1940. In addition, some of the impugned goods were held as liable to enhanced duty from resort to enhancement of valuation under the authority of section 17 of Customs Act, 1962 with consequential effect on imposition of penalty either under section 112 of Customs Act, 1962, for acts of omission or commission that rendered the goods liable to confiscation under section 111 of Customs Act, 1962, or under section 114AA of Customs Act, 1962 for having furnished false declarations to customs authorities. Or, as argued by Learned Counsel for appellants, that view of the adjudicating authority is patently erroneous. 2. Four consignments, comprising of declaration of two lots of miscellaneous articles and one each of computer parts and accessories, of three importers, converging from having been facilitated by a single 'customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the declared values for levy of duty of Rs. 10,13,312/- and Rs. 10,00,123/- respectively on goods to be redeemed and for quantification of penalty on the whole. 4. The imports of M/s Creative Sales and M/s Unique Impex, against bills of entry no. 651227/03.12.2021 and no. 651227/03.12.2021 declaring 'computer cabinet with SMPS and accessories' valued at Rs. 34,24,560/- and Rs. 34,61,343/- respectively, were, on examination, found to comprise, in addition to conforming marginally with declaration to the extent of Rs. 4,48,283/- and Rs. 3,33,623/- respectively though even so to be 'second hand' that were not freely importable, 'cosmetics' and 'pharmaceutical products' valued at Rs. 64,81,648/- and Rs. 79,71,523/- respectively and without the authorizations envisaged in Drugs and Cosmetics Act, 1940. Besides proposal for imposition of penalties on individuals concerned, including Shri Mobin Mohammad Asif Shaikh and Shri Sachin Kantilal Patel as proprietors of the importing entities, the notice dated 10th June 2022 proposed confiscation of all goods under section 111(d), 111(f), 111(l) and 111(m) of Customs Act, 1962 while revising the assessable value upwards to Rs.69,29,931/- and R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scation under section 111(d) of Customs Act, 1962. 7. At this stage, we may do worse than examine two puzzling aspects in the impugned order: destruction of confiscated goods and recourse to section 111(f) of Customs Act, 1962. Nowhere does Customs Act, 1962 even refer to willful destruction of 'goods' under any circumstances and, indeed, it would be violation of law and misappropriation of public property to contemplate such extinguishment by an officer of customs of that which the creator statute vests in the Central Government under the authority of section 126 of Customs Act, 1962. The Tribunal, in its order [final order no. A/85949-85952/2023 dated 11th May 2023], in Doc Brown and ors v. Commissioner of Customs (NS-V), Nhava Sheva, disposing off appeal [no. C/86237/2022] challenging order [order-in- original no. 01/2022-23/CC/NS-V/CAC/JNCH dated 6th April 2022] of Commissioner of Customs (NS-V), Nhava Sheva, had opportunity to scrutinize the legality of arrogating of such authority and held that '3. ...... The adjudicating authority has directed not only absolute confiscation but also destruction of the goods. Customs Act, 1962 does not afford, by any of its provisions, aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h '(2) ..shall include all goods mentioned in the bill of lading...' in section 46 of Customs Act, 1962, must, admittedly, absolve absence of any goods from the scope of confiscatory jurisdiction. That would leave any inaccuracy, relating to value, weight or any other particular that may have the effect of incorrect assessment and levy of duty, beyond the pale of Customs Act, 1962 as far as importer is concerned. In the context, therefore, dispute over confiscability under section 111(m) of Customs Act, 1962 is limited to the value declared for the goods presented for assessment against the related bills of entry. Though the value of the entirety of the consignments, declared and undeclared as well as available and unavailable, were re-assessed by recourse to rule 7 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 after resorting to rule 12 therein for rejection of declared value, ostensibly for the purpose of confiscation and imposition of penalty even of those not proposed to be offered for redemption, the revision pertaining to those that were available could, conceivably and at least to such extent, justify invoking of section 111(m) of Customs Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 3(4) of the said Rules to proceed with sequential application of the several alternative 'transaction' or other 'value' for assessment. There is no doubt that section 2(41) of Customs Act, 1962 does set out the meaning thereof, including as determined under section 14 of Customs Act, 1962, but we see no justification in the impugned order to conclude that such exercise is prescriptive as a preliminary in all imports or, indeed, that a definition can 'wag' the empowerment to levy duty which is the express intent set out in section 14 of Customs Act, 1962; it could, thus, be safely said that determination of 'value', if resorted to under the aegis of section 14 of Customs Act, 1962, must be proceeded with, and undeviatingly so, in the manner set out therein. The omnibus fastening of value to the four consignments, as a whole, without eliciting the value of each of the articles separately is mere lip service to obligation devolving under section 14 of Customs Act, 1962, as well as the Rules supra, which lay emphasis on 'goods' that can be ignored only at peril to consequences. It is also demonstrative of purposive adjudication which extinguished its credibility in law. 12. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t IEC's has contravened the provisions of the Customs Act, 1962 and Rules made there under, in as much as the value of the goods have been grossly mis-declared/undeclared with an intention to evade payment of appropriate customs duty. The undervaluation has also been accepted by the beneficial owners (Shri Ismail Tambawala and Shri Abdul Wahab) in their statement recorded under Section 108 of the Customs Act, 1962. 18.5 Therefore, in view of above, it appears that the value declared by the beneficial owners importing goods on different IEC's to Customs for clearance of the aforesaid imported goods cannot be considered as representing true transaction value under Rule 3 of CVR, 2007 in as much as the importer, by adopting undervaluation and quantity mismatch of the goods as the actual transaction value of the goods imported and hence, the declared value is therefore liable for rejection under Rule 12 of CVR, 2007. Under Rule 12 of CVR, 2007, where there are reasons to doubt the truth and accuracy of intelligence, the value declared in relation to any in goods then such value shall be rejected and the value will be re-determined in accordance with the provisions of the rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be 'second hand' upon examination. The value of declared goods have not been demonstrated as meriting re-valuation. We are also unable to fathom the discrimination in determination of the duty liability of M/s Ghare Impex, whose goods were almost entirely confiscated and ordered for destruction, while not effecting the same exercise for the other two importers similarly situated. The value of undeclared goods are not relevant to the proceedings except for imposition of penalty owing to absolute confiscation as well as to the only plea of appellants that goods may be allowed to be re-exported. There is no requirement for duty to be levied in either contingency. Nonetheless, the rigour of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 is not to be discarded merely because there is no intent to levy duty as the definition of 'value' in section 2 does not offer scope for such dilution. 14. Furthermore, the notice, as well as the impugned order, is bereft of any discussion, in relation to the declared and undeclared goods, on the availability of 'identical' or 'similar' goods that was purportedly used as reference by the 'approved valuer' when the adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tual property rights. They prescribe a remedy to prevent importation of goods that infringe intellectual property rights recognized and defned under the parent statutes relating to copyright, patent, trademarks, designs and geographical indications. 10.3. The above position can be understood from a reading the defnitions under Rules 1(a) to 2(d) of the IPR Rules. Rule 2 of the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 defnes "goods infringing intellectual property rights" to mean "any goods which are made, reproduced, put into circulation or otherwise used in breach of the intellectual property laws in India or outside India and without the consent of the right holder or a person duly authorized to do so by the right holder". Clause (b) of Rule 2 of the said Rules defnes, "intellectual property" which means a copyright as defned in the Copyright Act, 1957, trademark as defned in the Trade Marks Act, 1999, patent as defned in the Patents Act, 1970, design as defned in the Designs Act, 2000 and geographical indications as defned in the Geographical Indications of Goods (Registration and Protection Act, 1999. Under clause (c) of Rule 2 of the said Rules, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the claim that these appear to have been shipped in ignorance and even in the absence of any agreement with the supplier for such shipment. In re Global Enterprises, it has been held that '6. As the imported goods, though required to be, are not compliant with the standards, they fail to overcome the bar of prohibition at the threshold. Hence the question of duty liability, differential or otherwise, will not arise. This is in conformity with the decision of the Hon'ble Supreme Court in re Sewpujanrai Indrasanarai Ltd. that requirement to discharge duty liability will have to be established before it can be demanded. However, failure to comply with the norms prescribed by Bureau of Indian Standards would render the goods liable to confiscation. Such liability to confiscation does not necessarily have to be consummated by confiscation under Section 111 of Customs Act, 1962. There is a dangerous consequence to such confiscation. If the option of redemption is not offered, or even exercised, possession of confiscated goods vests with the Central Government which will have to bear the consequence of such possession with attendant cost to the exchequer. On the other hand, if the op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of under valuation of the goods and contravention of other provision of Customs Act,1962 would arise thereafter, to dispose the goods accordingly. This Tribunal dealing with disposal of imported goods not in compliance with the Bureau of Indian Standards, expressed more or less similar view in the case of Global Enterprises v. Commissioner of Customs 2019 (369) ELT 1596 (Mum. - Trib). xxxx 17. We also set aside the penalties imposed on all the individual appellants viz. Shri Sunil Yadav - Director, Shri Siddiq Yusuf Merchant, and also on Shri Sandip Tandekar - Power of Attorney Holder of CHA.' We see no reason to adopt a contrary stand and, accordingly, allow re-export subject to disposal of plea on confiscation of these goods under section 111(l) and 111(d) of Customs Act, 1962 which, in relation to these goods, remain unevaluated so far. 17. The goods ordered to be confiscated, with or without being attended upon by destruction, were hold to have been prohibited for import into India or deemed thereby, correctly or incorrectly, by operation of law. That these were not declared in the corresponding entries prescribed by Customs Act, 1962 add no whit to confiscability and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by any other detriment under section 125 of Customs Act, 1962. 19. There is no finding on the manner in which section 114AA of Customs Act, 1962 was relevant to the import or the manner in which penalty under section 112 is liable to be fastened on the several entities and individuals. The adjudicating authority has merely asserted that '197. As regards submission by Shri Sanjay Thakker, Customs broker representing M/s Shree Sai Shipping Agency that he was only facilitating clearance of the impugned goods and was not concerned with selling/purchasing concealing of the impugned goods. From the statement recorded of Shri Sanjay Thakker, Customs Broker by the DRI officers, it is apparent that he was fully aware about the fictitious nature of the importers. He also admitted that he had never met the importer but solely relied on the documents submitted them. His defense seems to be that once document is self-certified he does not have any responsibility. This is just an excuse. The entire responsibility of KYC has been placed on the Customs Brokers. If just self attestation was enough than there was no need to put of responsibility of KYC on Customs Broker. Further, as per the CBLR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enables imposition of penalty in the absence of prescription elsewhere in the statute, it does not empower conceiving of contraventions and breaches not elsewhere specified. It is intended to be invoked for breach of statutory stipulations that must be enumerated before recourse can be had to imposing detriment. The narration of '199. Further, I find that Shri Sagar Jalinder Ghare, Shri Mubin Mohd Asif Sheikh, and Shri Sachin Kantian Patel had provided their IEC code intentionally to Shri Ismail Tambawala, Shri Abdul Wahab, Shri Manish Vanigota for their personal benefit of Rs. 10,000/- for each import. In their statement to officers of DRI they have accepted the fact of giving their IEC to these entities for import of the impugned goods. I find that this act of Shri Sagar Jalinder Ghare, Shri Mubin Mohd Asif Sheikh, and Shri Sachin Kantilal Patel can be termed as "name lender" for the import of goods by Shri Ismail Tambawala, Shri Abdul Wahab. and Shri Manish Vanigota the actual beneficiaries of the import. The Importer Exporter Code number (IEC) is a unique ten digit number allotted by the Directorate General of Foreign Trade (DGFT) and is linked with the PAN number. It is man ..... X X X X Extracts X X X X X X X X Extracts X X X X
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