2000 (9) TMI 131 - AT - Central Excise

Importer Liability Upheld, Emphasizing Due Diligence and Legal Constraints

The Tribunal affirmed the Collector's decision regarding the liability of the parties involved in the import transaction, dismissing the appeals and ... Penalty (Customs) Issues:1. Import of goods under false pretenses.2. Seizure and proposed confiscation of goods.3. Allegations of fraud and cheating.4. Liability of parties involved.5. Imposition of penalty on brokers.Issue 1 - Import of goods under false pretenses:The case involved the import of polyethylene by M.D. Corporation, which was later claimed to have been sold to Relaxo Plastics while the goods were still in transit. Investigations revealed discrepancies in the advance license used for clearance, leading to suspicions of forgery and non-existence of Relaxo Plastics. The customs house conducted inquiries implicating various individuals and brokers in the transaction.Issue 2 - Seizure and proposed confiscation of goods:Based on investigations, the department seized the goods and proposed their confiscation under section 111 of the Act. The Collector's order found M.D. Corporation and others liable for confiscation, although M.D. Corporation waived the issue of a written notice. The contention was raised regarding the issuance of notices to the involved parties.Issue 3 - Allegations of fraud and cheating:M.D. Corporation and Uttam Bhura contended that they acted in the normal course of trade and were unaware of the fraudulent activities surrounding Relaxo Plastics. The Collector accepted this plea, exonerating M.D. Corporation from charges of cheating or fraud, and ordered the release of the goods to them, which was appealed by the department.Issue 4 - Liability of parties involved:The appeal questioned the Collector's finding of no fraud or cheating by M.D. Corporation. The Tribunal noted the involvement of various individuals in the transaction and the possibility of Bhura and M.D. Corporation attempting to avail duty-free clearance through forged licenses. While acknowledging the potential violations under Section 135A of the Act, the Tribunal focused on the liability to confiscation of goods and penalties for the parties involved.Issue 5 - Imposition of penalty on brokers:The department's appeal sought penalties on brokers for illegal trading related to non-transferable advance licenses. However, the Tribunal ruled against imposing penalties on the brokers, stating that the customs department's role does not extend to enforcing import policy contraventions unless explicitly claimed, and there was insufficient justification for penalizing the brokers.In conclusion, the Tribunal dismissed the appeals, affirming the Collector's decision regarding the liability of the parties involved and the confiscation of goods. The judgment highlighted the complexities of import transactions, the importance of due diligence in trade practices, and the limitations of penalties under the relevant legal provisions.