2003 (3) TMI 434 - AT - Customs

Import license dispute over Vitamin B2 upheld, penalties reduced on appeal

The case involved issues regarding the validity of an import licence for riboflavin vitamin B2, transfer of licences between companies, compliance with ... Transfer of import licence - physical possession of Customs copy of licence - exchange control copy not substitutable for Customs copy - tendering/presentation of licence to Customs by the importer - confiscation of goods for import without licence - penalty not imposable in absence of deliberate evasionTransfer of import licence - confiscation of goods for import without licence - Whether the import of riboflavin was covered by valid licences and whether confiscation was justified. - HELD THAT: - The Tribunal remanded for consideration of whether the licences claimed by the appellant covered the imported goods. Evidence showed the licences were issued originally to Betul Oil & Flour Mills Ltd., transferred to Veekay Products Pvt. Ltd., and alleged to have been transferred in part to the appellant. The affidavit of Veekay's chairman indicated transfer had occurred on or before the affidavit date but did not establish that the licences were in the appellant's possession at the time of import. The Customs copies of the licences had been seized and were not physically with the appellant when the bill of entry was filed. In these circumstances the Commissioner correctly found that the importation was not covered by licences presented by the importer and that the goods were therefore uncovered, justifying confiscation with option to redeem under the governing enforcement scheme.Importation was not shown to be covered by licences presented by the appellant; confiscation order upheld.Physical possession of Customs copy of licence - exchange control copy not substitutable for Customs copy - tendering/presentation of licence to Customs by the importer - Whether handing over licences to the Special Investigation Branch (SIIB) or possession of exchange control copies sufficed as tendering licences for clearance. - HELD THAT: - The practice requires the importer (or its agent) to present the bill of entry along with required documents, including the Customs copy of the import licence, to the assessing officer for clearance. The exchange control copy serves a different purpose and cannot substitute for the Customs copy needed for clearance. The licences were handed to an SIIB officer by the original licensee, and even if transfer to the appellant had occurred, the original licensee was not the appellant's agent and the act of depositing the licences with SIIB did not constitute presentation by the importer. The appellant therefore failed to comply with the requirement to tender the Customs copy for clearance.Handing over licences to SIIB or producing only exchange control copies did not amount to tendering the necessary Customs copy for clearance; such tendering by the importer was mandatory.Penalty not imposable in absence of deliberate evasion - Whether penalty should be imposed on the appellant for the importation not covered by licence. - HELD THAT: - Although the import was found not to have been covered by requisite licences, the facts show no deliberate attempt by the appellant to evade prohibition. The controversy primarily concerned acceptability and possession of licences between the original licensee and Customs. Given the absence of deliberate evasion or blameworthy conduct by the appellant in the circumstances, the imposition of penalty was not justified.Penalty set aside.Final Conclusion: Appeal allowed in part: the Commissioner's finding that the imports were not covered by licences and the confiscation (with option to redeem) is sustained, but the penalty imposed on the appellant is set aside for want of deliberate evasion. Issues:1. Validity of import licence for riboflavin vitamin B2 (feed grade).2. Transfer of import licences from Betul Oil & Flour Mills Ltd. to Veekay Products Pvt. Ltd. and then to Puja Enterprises.3. Compliance with customs regulations regarding tendering of import licences for clearance.4. Confiscation of goods and imposition of penalty by the Commissioner.Issue 1: The primary issue in this case was the validity of the import licence for riboflavin vitamin B2 (feed grade) presented by Puja Enterprises. The Commissioner initially held the import to be unauthorized due to the unaccepted licence, leading to confiscation of the goods and imposition of a penalty. However, the Tribunal remanded the matter to consider the submission that the licence was available but not readily produced. The subsequent hearing reiterated the Commissioner's decision based on the seized licences and lack of proof of transfer to Puja Enterprises.Issue 2: The case involved the transfer of import licences from Betul Oil & Flour Mills Ltd. to Veekay Products Pvt. Ltd. and then to Puja Enterprises. The appellant contended that the licences were validly transferred and in their possession, supported by exchange control copies. However, discrepancies in the affidavit and lack of physical possession of the licences raised doubts about the timing and validity of the transfer, ultimately affecting the clearance process.Issue 3: The dispute also centered around the compliance with customs regulations regarding the tendering of import licences for clearance. The appellant argued that the tendering of licences by Veekay Products Pvt. Ltd.'s chairman should suffice, but the tribunal emphasized the necessity of the customs copy for clearance. The failure to physically possess and present the customs copy before customs officials hindered the clearance process, highlighting the importance of direct compliance by the importer or their agent.Issue 4: The Commissioner's decision to confiscate the goods and impose a penalty was based on the conclusion that the importation was not covered by a valid licence. Despite acknowledging the lack of deliberate evasion by the appellant, the Commissioner upheld the confiscation. However, the Tribunal intervened, setting aside the penalty due to the appellant's inadvertent entanglement in the dispute between the original licensee and the Custom House, ultimately allowing the appeal in part.