2006 (4) TMI 462 - AT - Customs

Tribunal ruling: Confiscation upheld for forged diamond licenses, but redemption allowed with fines.

VIJAY BHAV Versus COMMISSIONER OF CUSTOMS, MUMBAI

The Tribunal upheld the confiscation of 5 consignments of rough diamonds cleared with forged licenses but allowed redemption on payment of a fine. The ... - Issues Involved:1. Confiscation of 5 consignments of rough diamonds under forged replenishment licenses.2. Confiscation of 3 consignments of rough diamonds without filed bills of entry.3. Entitlement of foreign supplier for re-shipment.4. Confiscation of goods cleared in the past on forged licenses.5. Confiscation of goods imported by other firms on forged licenses.6. Liability of importers and individuals for penalties under the Customs Act.Issue-Wise Analysis:1. Confiscation of 5 consignments of rough diamonds under forged replenishment licenses:The Tribunal found that the importers attempted to clear rough diamonds using forged replenishment licenses, making the goods liable to confiscation under Section 111(d) of the Customs Act, 1962. Despite the subsequent submission of valid licenses worth Rs. 32 crores, the initial attempt to clear the goods with forged licenses was established. The Tribunal upheld the confiscation but allowed the appellants to redeem the confiscated goods on payment of a redemption fine, considering the availability of valid licenses and the nominal premium for such licenses.2. Confiscation of 3 consignments of rough diamonds without filed bills of entry:The Tribunal deliberated whether the 3 consignments seized without filed bills of entry were liable to confiscation. It concluded that since no bills of entry were filed, there was no claim against any particular import license. The Tribunal noted that REP licenses were available at low premiums and that the importers had submitted valid licenses worth Rs. 32 crores. Therefore, it held that the 3 consignments were not liable to confiscation under Section 111(d) and should be cleared against the submitted licenses after verifying their genuineness.3. Entitlement of foreign supplier for re-shipment:The Tribunal did not provide a specific finding on the entitlement of the foreign supplier for re-shipment due to the lack of an appeal by the concerned foreign supplier. The consignment in question was seized, and no payment was made to the supplier, leaving the issue unaddressed.4. Confiscation of goods cleared in the past on forged licenses:The Tribunal agreed with the Commissioner that rough diamonds imported in the past using forged licenses were liable to confiscation. However, since the goods were not available for confiscation, penalties were imposed on the importing firms and individuals involved. The Tribunal held that no separate penalties could be imposed on both the proprietors and their proprietary firms, thus reducing the penalties imposed by the Commissioner.5. Confiscation of goods imported by other firms on forged licenses:The Tribunal found that the rough diamonds imported by M/s. Kiran Exports, M/s. Munjani Brothers, and M/s. D.S. Brothers using forged licenses were liable to confiscation under Section 111(d). However, since the Commissioner did not find mala fide intention on their part and they were bona fide purchasers for value, the Tribunal held that these firms were not liable for penalties under Section 112(a) and allowed their appeals.6. Liability of importers and individuals for penalties under the Customs Act:The Tribunal considered the penalties imposed by the Commissioner on various firms and individuals. It reduced the penalties for M/s. Deepali Exports, M/s. Vaibhav Exports, and M/s. Pushpak Impex, considering the lack of clear evidence of forgery involvement and the availability of valid licenses. The Tribunal set aside penalties on individuals, stating that separate penalties on proprietors and their firms were not warranted. It also noted that the penalties should be proportionate to the role played by the individuals and firms, and the appellants had already suffered financial losses due to the seizure of rough diamonds.Separate Judgments:The judgment reflects a difference of opinion between the Member (Judicial) and Member (Technical) regarding the quantum of penalties. The Member (Judicial) proposed reduced penalties and redemption of confiscated goods, while the Member (Technical) emphasized higher penalties based on the value of imports. The third member, agreeing with the Member (Judicial), resolved the difference, leading to the majority order favoring reduced penalties and allowing redemption of confiscated goods.Majority Order:The appeals were disposed of according to the majority order recorded by the Member (Judicial), reducing the penalties and allowing the redemption of confiscated goods.