2015 (2) TMI 128 - AT - Customs

Court upholds Show Cause Notice by ADG, DRI, reduces fines & penalties under Customs Act.

The court upheld the issuance of the Show Cause Notice by ADG, DRI, the confiscation of goods under Section 111(d) of the Customs Act, and the imposition ... Confiscation of goods - Imposition of penalty - Whether show cause notice issued by the ADG, DRI as proper officer is sustainable or not and whether the confiscation of the goods under Section 111 (d) of Customs Act as ordered by the adjudicating authority and imposition of redemption fine in lieu of confiscation under Section 125 and imposition of penalty under Section 112 of Customs Act on the appellants is correct or otherwise - Held that:- DRI officers had detained 53 items of various TV broadcasting equipments from the premises of main appellant i.e. Vijay TV on 29.12.98 as no valid documents were produced to prove that these are imported and duty paid. Out of these, 32 items were purchased by M/s.Vijay TV from the local dealers and others and the remaining items were taken on hire/lease/loan. The investigating officers had released 37 items to the appellants on production of valid documents showing licit nature of import. Out of 6 items, the items at Sl.No.11, 16 (i), 35, 37, 38, 39 and 41 were purchased by the appellants and the remaining items were procured on hire or lease basis. It is abundantly clear that the department had pursued the trail from the last person who purchased the goods to the immediate seller. I find that the investigations started at the appellants' premises and it extended to various places in Mumbai, Bangalore, New Delhi, and in fact the department had sufficiently proved their case to the last possible evidence. Only when the ultimate person who happens to be non-existant or it led to purchase from local Burma Bazaar as evidenced above, the investigation could not proceed any further. This clearly proves that the department had discharged its burden with so much evidence on record to prove that the impugned goods which are in possession of the appellants are illicitly imported without payment of duty as no proof of illicit import produced. Therefore, the onus is on the appellants. The ratio of Hon'ble Apex Court's decision in the case of CC, Madras And Others Vs D. Bhoormull - [1974 (4) TMI 33 - SUPREME COURT OF INDIA] and Kanungo & Co. Vs CC Calcutta and Others - [1972 (2) TMI 35 - SUPREME COURT OF INDIA] squarely applies to the present case. Further, the Hon'ble High Court of Karnataka in the case of CC Bangalore Vs Vikram Jain (2009 (9) TMI 179 - KARNATAKA HIGH COURT) by relying the apex court decision has held that the department is not required to prove with mathematical precision that the goods are smuggled or non-duty paid. The very fact that appellant being a private limited company operating its own TV channel acquired these impugned items of foreign origin for use in the production programme as well as broadcasting purpose. Considering the nature and importance of each items which are of foreign origin meant for use in their production studios etc. there is no doubt that being an owner of a TV Channel definitely is aware before hand that these impugned goods are not licitly imported and not suffered customs duty. It is further confirmed beyond doubt that out of 53 items detained by the DRI, the appellants themselves produced valid documents for 37 items on licit import whereas on these items they failed to prove with any documents and this confirms that even before purchase of these goods or entering into hire/lease agreement, the appellants were fully aware of its illicit importation and acquired the same. Their contentions that they have obtained bills/invoices from the dealers is beyond acceptable as having fully known that the goods are of foreign origin and they cannot claim ignorance that they have bonafide belief that these goods are validly imported and sold to them. Appellants' contention that the burden of proof is not discharged by the department is not maintainable as the department has sufficiently discharged the proof. Accordingly, I hold that the goods are liable for confiscation and the adjudicating authority has rightly ordered for confiscation of the said goods under Section 111 (d) of Customs Act and the order of confiscation of the goods is upheld. As regards the imposition of redemption fine in lieu of confiscation under Section 125 of the Customs Act, by taking into consideration that the said items are purchased or hired by the appellants and these were meant for their own use for rendering TV and broadcasting service and not for sale, I take a lenient view and the redemption fine imposed by the adjudicating authority M/s. Vijay TV and M/s. Motherland Pictures needs reduction. As regards the imposition of penalty on the appellants under Section 112 of the Act, the lower authority has rightly imposed penalties on all the appellants. The appellant s contention is not acceptable for the reason discussed in the preceding paragraphs as once it is held that the appellants contravened the provisions of the Act and the goods are liable for confiscation, the appellants are liable for penalty. The appellants relying on Tribunal decision in the case of M/s. Ameet Industrial Corpn. (2005 (2) TMI 581 - CESTAT, MUMBAI) for waiver of penalty is of no help to the appellants. As seen from the trail leading to involvement of 3 to 4 persons before the first appellant purchased/acquired on hire of these items, each person is unable to prove the licit nature of imports. There are number of judicial rulings by the Hon’ble High Courts and the Tribunal decisions where the penalty imposed under Section 112 is upheld on identical issues. I rely on the Hon’ble High Court of Delhi order in the case of Ajay Dahyabhai Sridhar Vs. CC, Delhi - [2010 (11) TMI 826 - DELHI HIGH COURT] and this Tribunal Division Bench decision in the case of Mujeeb Rahman Vs. CC,Chennai - [2010 (1) TMI 994 - CESTAT CHENNAI]. Therefore, I hold that the appellants are liable for penalty under Section 112 of the Act. However, by taking overall facts and circumstances of the case and the submissions of each appellants, a lenient view is warranted for reduction in penalty. - Decided partly in favour of assesee. Issues Involved:1. Jurisdiction of ADG, DRI to issue the Show Cause Notice (SCN).2. Confiscation of goods under Section 111(d) of the Customs Act.3. Imposition of redemption fine under Section 125 of the Customs Act.4. Imposition of penalties under Section 112 of the Customs Act.Detailed Analysis:1. Jurisdiction of ADG, DRI to issue the Show Cause Notice (SCN):The main appellant contended that the Additional Director General (ADG), DRI was not the proper officer to issue the SCN, relying on the Supreme Court decision in the case of CC Vs Sayed Ali. However, the court found that this issue was resolved by a retrospective amendment to Section 28 of the Customs Act, which deemed all officers of Customs, including ADG, DRI, to be proper officers for the purposes of assessment under Section 17. The Tribunal upheld the validity of the SCN issued by ADG, DRI, citing the retrospective amendment and relevant case laws such as Bharti Airtel Ltd. Vs CC, Bangalore and Sushil Agarwal Vs CC, Mumbai.2. Confiscation of Goods under Section 111(d) of the Customs Act:The appellants argued that the goods were not 'prohibited goods' and thus not liable for confiscation under Section 111(d). The court clarified that 'prohibited goods' include any goods whose import conditions under the Customs Act or any other law were not complied with. The court referred to the Supreme Court decision in Om Prakash Bhatia Vs CC Delhi, which held that any contravention of import conditions renders the goods liable for confiscation. The court found that the department had conducted extensive investigations tracing the goods' origins, which led to non-existent entities or local markets like Burma Bazaar, proving the illicit nature of the imports. Therefore, the goods were rightly confiscated under Section 111(d).3. Imposition of Redemption Fine under Section 125 of the Customs Act:The appellants contended that since the goods were not liable for confiscation, the redemption fine under Section 125 was not sustainable. The court, however, upheld the confiscation but took a lenient view considering the goods were for the appellants' use in broadcasting services and not for sale. Consequently, the redemption fine imposed on M/s. Vijay TV was reduced from Rs. 30 lakhs to Rs. 13 lakhs, and on M/s. Motherland Pictures from Rs. 1.50 lakhs to Rs. 50,000.4. Imposition of Penalties under Section 112 of the Customs Act:The appellants argued against the penalties, stating there was no mens rea and they acted in good faith. The court found that the appellants, being a private limited company operating a TV channel, should have verified the licit import of the goods. The court held that the appellants were aware of the illicit nature of the imports and thus liable for penalties. However, considering the overall facts and circumstances, the penalties were reduced. The penalty on M/s. Vijay TV was reduced from Rs. 8 lakhs to Rs. 2 lakhs, on M/s. Motherland Pictures from Rs. 1 lakh to Rs. 50,000, and on the remaining appellants from Rs. 2 lakhs each to Rs. 50,000 each.Conclusion:The court upheld the issuance of the SCN by ADG, DRI, the confiscation of goods under Section 111(d), and the imposition of redemption fine and penalties under Sections 125 and 112 of the Customs Act, respectively, but reduced the quantum of fines and penalties considering the specific circumstances of the case. All six appeals were partly allowed by reducing the fines and penalties.