1987 (10) TMI 213 - HC - Customs

Firm's Penalty Upheld for Import License Fraud

The Court upheld the penalty of Rs. 2 lakhs imposed on a firm for misrepresentation and fraud in obtaining import licenses. The Appellate Committee's ... Writ jurisdiction Issues:1. Validity of show cause notice and appellate order dated 10th December, 1985.2. Cancellation of import licenses due to misrepresentation and fraud.3. Imposition of penalty under Section 4I(1)(c)(i) of the Imports and Exports (Control) Act and Clause 8(f) of the Imports (Control) Order.4. Appeal against the penalty imposed and the decision of the Appellate Committee.5. Consideration of mercy appeal and discretion in penalty imposition.Analysis:1. The writ petition challenged the appellate order dated 10th December, 1985, which was directed against the Government of India, Ministry of Commerce (Appellate Committee Cell). The petitioner had obtained import licenses in 1979 and 1980, but they were cancelled due to misrepresentation and fraud. Despite the petitioner's arguments, the Court found no merit in admitting the writ petition.2. The petitioner's import licenses were cancelled by the Competent Authority for obtaining them based on indigenous material instead of imported material. Subsequently, a notice was issued under the Imports and Exports (Control) Act for misrepresentation. The Competent Authority imposed a penalty of Rs. 2,00,000 on the firm for the mistake, considering their admission and small-scale operation. The Appellate Committee upheld this decision, noting the false statements made by the petitioner.3. The Appellate Committee considered the petitioner's plea for leniency due to being a Small Scale Industrial Unit and the partners' alleged illiteracy. The Committee analyzed the value of imported goods, unutilized goods, and production values to determine the approximate value of unaccounted goods. Despite the petitioner's admission of misrepresentation, the Committee declined to interfere with the penalty imposed.4. The Appellate Committee's decision was viewed as a mercy appeal, and the penalty amount of Rs. 2 lakhs was upheld after considering all relevant facts. The Court emphasized that such penalties are imposed at the discretion of the authorities, and there was no reason to interfere with the penalty in this case. The show cause notice was discharged, and the writ petition was dismissed.5. The judgment highlighted the discretionary nature of penalty imposition and the importance of considering all facts before determining the penalty amount. Despite the potential for a higher penalty under the law, the Appellate Committee's decision to impose a Rs. 2 lakh penalty was upheld based on the circumstances of the case. The Court found no grounds to challenge the penalty decision, emphasizing the authority's discretion in such matters.