2016 (5) TMI 553 - AT - Customs

Importers penalized for license violation, fraud, and misdeclaration; dismissal of appeals underscores seriousness.

The appellants were found to have imported Tranexamic Acid without a required license, engaging in fraudulent activities and misdeclaration. The ... Imposition of redemption fine and penalty - Appellant not a license holder under drug and Cosmetics Act, 1940 - Neither absolute confiscation of goods nor goods were contraband - Tranexamic Acid drug imported and after found nothing questionable in the test report, allowed to re-export - Appellant contended that the exemption granted under Rule 45 ibid requires no license for import of drug of the nature imported. Held that:- penalty of confiscation is a penalty in rem which is enforced against the goods. In such case, it is not necessary for the Customs authorities to prove that any particular person is concerned with their illicit importation or exportation. It is enough, if the Department furnishes prima facie proof of the offending goods being smuggled one. The second kind of penalty is one in personam which is enforced against the person concerned in the smuggling of the goods. In such case, the Department has to prove further that the person proceeded against was concerned in the smuggling. Evidence gathered by Revenue unambiguously proved that both the appellant were contributory to the fraud committed against Customs and they made an organised bid to be enriched at the cost of the nation. It is established principle of law that fraud and justice are sworn enemies. When the collusion and fraudulent design of the exporter, importer-appellant, K. Ramlal Jain and M/s. DHL Logistics Pvt. Ltd., surfaced, the impugned goods that came to India, became no mans property and confiscation being an action in rem, the dubious claim of ownership of the goods at different point of time calls for absolute confiscation thereof without any leniency for redemption and re-export of the same. Accordingly, the order of the adjudicating authority requires to be set aside on such count and absolute confiscation of the impugned goods is hereby ordered. In the course of hearing, Revenue informed that the impugned goods have already left India on payment of redemption fine. Therefore it is left to the Chairman of the CBE&C to deal this matter as the Board may consider appropriate in the fitness of the circumstances of the case to protect interest of Revenue since the action of redemption of the goods and re-export has caused detriment to interest of justice. - Decided against the appellant Issues Involved:1. Legality of the import of Tranexamic Acid without a license under the Drugs and Cosmetics Act, 1940.2. Imposition of redemption fine and penalties on the appellants.3. Alleged fraudulent activities and misdeclaration by the appellants.4. Role of M/s. DHL Logistics Pvt. Ltd. in the import process.Detailed Analysis:1. Legality of the Import of Tranexamic Acid without a License:The appellant company imported Tranexamic Acid without a Form 10 license as required under the Drugs and Cosmetics Act, 1940. The Assistant Drug Controller confirmed that Tranexamic Acid is classified as a drug, necessitating a license for its import. Despite the appellant's argument that the drug was not intended for use as a drug and thus did not require a license, the adjudicating authority found that the import violated the law. The appellant's reliance on Rule 45 of the Drugs and Cosmetics Rules, 1945 was dismissed as irrelevant since it pertains to the duties of the Government analyst and does not exempt the need for a license.2. Imposition of Redemption Fine and Penalties:The adjudicating authority imposed a redemption fine and penalties on the appellants for importing Tranexamic Acid without the necessary license. The appellant argued that the penalties were harsh and unwarranted, especially since the goods were re-exported and not absolutely confiscated. However, the authority justified the penalties, emphasizing the appellant's repeated violations and fraudulent intentions. The adjudicating authority noted that the appellant's actions were deliberate and aimed at evading the law, thus warranting the penalties imposed.3. Alleged Fraudulent Activities and Misdeclaration:The adjudicating authority found substantial evidence of fraudulent activities by the appellants. The appellant company and its proprietor, Shri K. Ramlal Jain, were found to have made false declarations and manipulated documents to mislead customs authorities. The appellant's attempt to amend the bill of entry to show M/s. DHL Logistics Pvt. Ltd. as the importer was part of a scheme to evade scrutiny. The investigation revealed that the appellant was a habitual importer of Tranexamic Acid without a license, and the fraudulent actions were aimed at avoiding penal consequences.4. Role of M/s. DHL Logistics Pvt. Ltd.:M/s. DHL Logistics Pvt. Ltd. was found to be a proxy for the appellant company, attempting to claim ownership of the imported goods without any legitimate basis. The adjudicating authority noted that M/s. DHL Logistics Pvt. Ltd. did not place any purchase order, make any remittances, or have a drug license. The company's involvement was part of the appellant's scheme to defraud customs authorities. The adjudicating authority recommended an inquiry by the Director General of Revenue Intelligence to investigate the role of M/s. DHL Logistics Pvt. Ltd. in the import of Tranexamic Acid and other similar activities.Conclusion:The adjudicating authority concluded that the appellants were involved in fraudulent activities and violated the Drugs and Cosmetics Act, 1940, and the Customs Act, 1962. The penalties and redemption fine were upheld, and the appeals were dismissed. The authority ordered the absolute confiscation of the imported goods and recommended further investigation by the Director General of Revenue Intelligence. The judgment emphasized that fraud nullifies all transactions and that the appellants' actions were detrimental to the interests of justice and the nation.