2002 (9) TMI 167 - AT - Customs

Appeal rejected, confirming confiscation orders and penalties under Customs Act.

The appeal by R. Janardhanan was rejected, affirming the confiscation orders, redemption fines, and penalties imposed by the Chief Commissioner. The ... Actual user condition - sale of imported secondhand capital goods contrary to import policy - confiscation under Section 111(d) and 111(o) of the Customs Act, 1962 - redemption fine - penalty under Section 112(a) of the Customs Act, 1962 - namelenders / beneficial ownership and control - circumstantial evidence and presumption of intention to sell - sale to purported 'actual users' does not absolve conditioned importerActual user condition - sale of imported secondhand capital goods contrary to import policy - confiscation under Section 111(d) and 111(o) of the Customs Act, 1962 - Whether the imported secondhand printing machines sold in the local market contravened the actual user condition and are liable to confiscation - HELD THAT: - The Tribunal upheld the finding that 460 machines were imported in names of 23 firms floated by the appellant and that 389 machines were admitted to have been cleared and sold in the local market. Declarations had been filed at assessment undertaking to adhere to the actual user condition and to use/install the machines in the importers' own premises. Sale in the market, even to persons described as actual users, breached the conditioned import because the import was contingent on the importer himself being the actual user. The factual matrix - admissions, the floating of firms in relatives' and friends' names, and the subsequent disposal - constituted direct and circumstantial evidence that the imports were not bona fide for installation and use. In these circumstances the sold machines became unauthorized and liable to confiscation under the cited provisions of the Customs Act, 1962. [Paras 17, 18, 20, 21]389 machines sold in the local market contravened the actual user condition and are liable for confiscation under Section 111(d) and 111(o) of the Customs Act, 1962.Circumstantial evidence and presumption of intention to sell - confiscation under Section 111(d) and 111(o) of the Customs Act, 1962 - namelenders / beneficial ownership and control - Whether the 71 secondhand machines seized from godowns (and not at declared premises) were meant for sale and liable to confiscation - HELD THAT: - The Chief Commissioner's findings - reproduced and accepted by the Tribunal - establish that none of the 71 machines were at the premises declared by the importers and that they were seized from godowns controlled by the appellant. Given the admitted sale of 389 machines and the fact that the 71 seized machines were not installed at declared premises, the circumstantial evidence permits the inference that these machines too were intended for sale. Relying on the principle that direct and circumstantial evidence may raise a presumption sufficient for confiscation, the Tribunal affirmed that the seized machines were liable to confiscation under the same provisions. [Paras 19, 20]The 71 seized machines, being off the declared premises and found in godowns under the appellant's control, were intended for sale and are liable for confiscation under Section 111(d) and 111(o) of the Customs Act, 1962.Redemption fine - penalty under Section 112(a) of the Customs Act, 1962 - sale to purported 'actual users' does not absolve conditioned importer - Whether imposition of redemption fine and penalties on the appellant (including quantum) was justified - HELD THAT: - The Tribunal applied established precedents permitting redemption fines where confiscable goods have been released or are not physically available, and recognised the quasijudicial discretion to fix quantum. On the facts - deliberate commercial sale in violation of conditioned imports, appellant as the kingpin, and substantial value of goods - the Tribunal found the imposition of redemption fines (in respect of the sold machines and the seized machines) and the penalty under Section 112(a) to be within permissible judicial discretion. The quantum of fines and penalty was found not excessive in view of precedent and appellate guidance that fines should be fixed having regard to facts and should not confer a bonanza; here the fines imposed were under 10% of assessed value and the penalty under 10% of the value, which the Tribunal declined to interfere with. [Paras 9, 11, 21, 22]Redemption fines and penalties imposed on the appellant were justified and not interfered with; the quantum of fines and penalty is confirmed.Final Conclusion: Appeal dismissed. The Tribunal affirms that the sale and noninstallation of imported secondhand printing machines breached the actual user condition, that both the sold machines and the seized machines are liable to confiscation under Section 111(d) and 111(o) of the Customs Act, 1962, and that the redemption fines and penalties imposed on the appellant are justified and are not liable to reduction. Issues Involved:- Violation of actual user condition by selling imported second-hand machines.- Liability of the sold machines for confiscation.- Confiscation of machines under seizure.- Imposition of penalties on the noticees.Detailed Analysis:1. Violation of Actual User Condition:The Chief Commissioner found that 23 companies were floated by R. Janardhanan, who controlled the import and sale of 460 second-hand printing machines. The firms were merely name lenders, and 389 machines were sold in the local market, violating the actual user condition under para 5.4 of the EXIM policy. The importers had declared adherence to the actual user condition but sold the machines, constituting a grave violation of the import policy. The Chief Commissioner concluded that the noticees contravened the actual user condition, making the goods unauthorized and liable for confiscation under Sections 111(d) and 111(o) of the Customs Act, 1962.2. Liability of Sold Machines for Confiscation:The Chief Commissioner held that the 389 sold machines were liable for confiscation under Sections 111(d) and 111(o) of the Customs Act, 1962, despite their physical unavailability. The sale of goods in the market constituted an offense, leading to the imposition of a redemption fine of Rs. 25 lakhs on R. Janardhanan, as per the Supreme Court's judgment in M/s. Western Components v. Commissioner.3. Confiscation of Machines Under Seizure:The Chief Commissioner noted that the 71 seized machines were not at the premises of the importers and were intended for sale, evidenced by their storage in different locations. This led to the conclusion that the machines were meant for sale, not installation, violating the import policy. Consequently, these machines were ordered for confiscation under Sections 111(d) and 111(o) of the Customs Act, 1962, with an option for redemption on payment of a fine of Rs. 3 lakhs.4. Imposition of Penalties:The Chief Commissioner imposed a penalty of Rs. 10 lakhs on R. Janardhanan under Section 112(a) of the Customs Act, 1962, for his central role in the import and sale scheme. Additionally, a penalty of Rs. 5000/- each was imposed on 20 persons for their involvement. The Chief Commissioner justified the penalties based on the seriousness of the offense and the clear intention to profit by violating the actual user conditions of the EXIM policy.Conclusion:The appeal by R. Janardhanan was rejected, affirming the confiscation orders, redemption fines, and penalties imposed by the Chief Commissioner. The judgment emphasized the adherence to the actual user condition and the consequences of violating import policy provisions.