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of <h1>Appellants' Violations Upheld: Fraud Nullifies Benefits</h1> <h3>Eastern Peripherals Pvt Ltd, Bhupendra V. Shah Golden Computers Ltd., Memory Electronics Pvt Ltd, Navin S. Kulkarni, V. Raghavendran Microland Ltd. Versus Commissioner of Customs Airport, Mumbai</h3> Eastern Peripherals Pvt Ltd, Bhupendra V. Shah Golden Computers Ltd., Memory Electronics Pvt Ltd, Navin S. Kulkarni, V. Raghavendran Microland Ltd. Versus ... Issues Involved:1. Violation of Industrial Licence terms and DTA sale entitlement.2. Non-fulfillment of value addition requirements.3. Mis-declaration and unauthorized import of foreign brand computers.4. Non-realization of export proceeds.5. Jurisdiction of the Commissioner of Customs (Preventive) to issue the show cause notice.6. Imposition of penalties on various entities and individuals.Detailed Analysis:1. Violation of Industrial Licence Terms and DTA Sale Entitlement:The appellants were found to have grossly violated the terms and conditions of their Industrial Licence and DTA sale entitlement. Foreign brand computers were imported under the guise of components and parts and sold under DTA sale entitlement. The investigation revealed that M/s. EPL imported complete computer systems in the guise of parts and components to avail duty exemptions and circumvent import restrictions. The Commissioner held that the foreign brand computer systems sold in the DTA were liable to confiscation under Section 111(d) & (o) of the Customs Act, 1962.2. Non-fulfillment of Value Addition Requirements:The appellants failed to achieve the required value addition of 20% as stipulated in the Export-Import Policy. The value addition achieved during 1990-91, 1991-92, 1992-93, and 1993-94 was only 10.85%, 6.88%, 10.25%, and 6.30%, respectively. The Commissioner confirmed the duty demand of Rs. 11,48,66,320/- payable on the goods of CIF Value of Rs. 10,87,84,034/- and imposed penalties on various entities and individuals for non-fulfillment of value addition requirements.3. Mis-declaration and Unauthorized Import of Foreign Brand Computers:M/s. EPL imported complete computer systems by mis-declaring them as parts and components, thereby availing ineligible duty exemptions. The goods were imported without the necessary import licenses, violating the Export-Import Policy. The Commissioner held that the goods were liable to confiscation under Section 111(d), 111(m), and 111(o) of the Customs Act, 1962. The appellants' contention that they had imported parts and components was rejected based on evidence that they imported fully manufactured computer systems, which were dismantled before importation.4. Non-realization of Export Proceeds:The appellants failed to repatriate export proceeds amounting to Rs. 15.76 crores, as confirmed by the RBI. This non-realization of export proceeds was a violation of the conditions governing the DTA sale entitlement and the Export-Import Policy. The Commissioner deducted the DTA sale entitlement earlier issued to M/s. EPL from the DTA sale entitlement of another EPZ unit belonging to the Tandon Group of Companies.5. Jurisdiction of the Commissioner of Customs (Preventive) to Issue the Show Cause Notice:The appellants contended that the Commissioner of Customs (Preventive) did not have jurisdiction to issue the show cause notice. However, this argument was rejected based on the retrospective amendment to Section 28 of the Customs Act, 1962, which conferred the power of assessment under Sections 17 and 28 on all officers appointed as officers of Customs. The Bombay High Court upheld the jurisdiction of the Customs Officers for issuing show cause notices.6. Imposition of Penalties on Various Entities and Individuals:The Commissioner imposed penalties on various entities and individuals for their active role in the import and sale of foreign brand computer systems in violation of the Export-Import Policy and Customs Notifications. Penalties were imposed under Section 112(a) & (b) of the Customs Act, 1962, on M/s. EPL, M/s. Golden Computers Pvt. Ltd., M/s. Memory Electronics Ltd., M/s. Microland Ltd., and their respective officials. The Tribunal upheld these penalties, noting the active involvement of these entities and individuals in the fraudulent activities.Conclusion:The Tribunal dismissed the appeals, upholding the findings of the Commissioner that the appellants had violated the terms and conditions of the Industrial Licence, DTA sale entitlement, and Export-Import Policy. The duty demands and penalties imposed were found to be justified and sustainable in law. The Tribunal emphasized that fraud nullifies everything and that statutory benefits cannot be extended when a fraud is committed.
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