TaxTMI 
TaxTMI 
1996 (7) TMI 368
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.... of Rs. 5,00,000/- and on Shri V. K. Dubey penalty of Rs.5,00,000/- has been imposed under Section 112 of the Customs Act, 1962. Further he has ordered that upon M/s. Magpie Elechem Pvt. Ltd. electing to redeem the seized goods which are confiscated, the same will be cleared on payment of Customs duty on the value of imports taken as Rs. 11,72,046/- as per the value shown in the order as the appraised value. 4. The facts of the case are that in pursuance of a specific information that M/s. Magpie Elechem Pvt. Ltd. were importing Plain Paper Copier in SKD condition and were indulging in gross under-valuation of their import consignments and were also clearing brand new completely assembled photo- copiers as trade samples at incredibly low CIF value a close watch was kept by the officers of DRI at ICD, Pragati Maidan & CWC, Import Cargo Unit, Gurgaon Road, New Delhi to intercept the consignments of the said importer. The goods were found to have arrived by Container No. IEAU- 2467277 at ICD, Pragati Maidan and vide YMB No. 098-4465 2635 at the CWC Import Cargo Unit, New Delhi. The container at ICD Pragati Maidan was examined by the DRI Officers in the presence of Shri V. K. D....
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....s acquainted with Shri J.S. Shroff of M/s. Framjee & Co. Ltd., Hongkong and after verifying the rates, he finalised the contract for M/s. Magpie Elechem Pvt. Ltd., Alwar and he arranged finances for the import from one Shri D. B. Marwah who lives in East Patel Nager, New Delhi and other friends and by taking advance against sales from M/s. Alphabetics Pvt. Ltd., 6 - Bahadurshah Zafar Marg, New Delhi. He also stated that he had earlier cleared 10 Plain Paper Copiers which were sold to M/s. Alphabetics Pvt.Ltd., New Delhi; that for the import of the earlier consignments Shri D.B. Marwah had financed the imports and the present consignment was financed by M/s. Magpie Elechem Pvt. Ltd. He also stated that he would be getting Rs. 7000/- per plain paper copier for arranging the clearance. A large number of incriminating documents which were in the custody of Shri V. K. Dubey were taken over by the DRI Officers as the same were considered relevant and useful to the enquires conducted in the case. 7. The factory premises of M/s. Magpie Elechem Pvt. Ltd. at F-53 M.I.A., Alwar, Rajasthan were searched by the DRI Officers on 5-10-85. The search revealed that the said factory premises ....
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..... Shri D. B. Marwah, Prop. of M/s. Impex (India) Corporation, 43/22 East Patel Nagar, New Delhi in his statements dated 6-2-1986 and 7-2-1986 recorded under Section 108 of the Customs Act, 1962 inter alia, stated that he was introduced to M/s. Magpie Elechem Pvt.Ltd. through Shri V. K. Dubey; that he had never seen the factory premises; that he had no knowledge if M/s. Magpie Elechem Pvt. Ltd. had employed any skilled or non-skilled persons for the manufacture/assembly of PBC; that he had invested a sum of Rs. One Lakh for the import of the goods. He, however, admitted the existence of two letters dated 7-2-1985 written by his firm to M/s. Electra Systems; that he had received Rs. 25,000/- from M/s. Electra Systems as part payment of his service charges and no payments were received from M/s. Magpie Elechem Pvt. Ltd. He further deposed that service and consultancy charges should constitute part of the CIF value for the purpose of assessment. He further stated that by virtue of his knowledge and from the experience of the past, he was aware that complete machines when offered for sale in SKD conditions were usually quoted at a discount of 40% of the wholesale price. 12.&emsp....
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....rted Ascertained value (CIF) Penasonic FP-2520 Rs. 7481/-per kit 20 sets Rs. 42220/- per kit Penasonic FP-1300 Rs. 6197/-per kit 13 sets Rs. 19743/- per kit 16. In the light of the above, it reveals that the actual CIF value of each kit of Model Penasonic PF-2520 is 5.69 time more of the declared value. Similarly the CIF value of PPC Model Penasonic FP-1300 is 3.2 time more of the declared value. Accordingly the CIF value of the each B/E would work out as under:- S.No. B/E No. CIF Value declared Model Enhanced Value Remarks 1. 594 dated 13-9-1985 Rs.23844/- FP-2520 Rs.135672/- Value enhanc- ed by 5.69 times 2. 595 dated 13-9-1985 Rs.54168/- FP-2520 Rs.308215/- -do- 3. 597 dated 13-9-1985 Rs.54168/- FP-2520 Rs.308215/- -do 4. 598 dated 13-8-1985 Rs.16188/- FP-2520 Rs.92110/- -do- 5. 37024 dated 13-8-1985 Rs.13303/- FP-1300 Rs.42570/- Value enhanc- ed by 3.2 times 6. 37025 dated 13-8-1985 Rs.67270/- FP-1300 Rs.....
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....s. 11,72,046/- in violation of the aforesaid prohibitions imposed on the import thereof and also did not declare the correct CIF value of the aforesaid goods required under Section 46 of the Customs Act, 1962 rendering them liable to confiscation under Section 111(d) and S/Shri Kailash Chander Khaneja, V.K. Dubey by their acts of omission and commission have also rendered themselves liable to penal action under Section 112 of the Customs Act, 1962. 22. As such, M/s. Magpie Elechem Pvt. Ltd., D-137, Anand Vihar, Delhi-92, Shri Kailash Chander Khaneja and Shri V. K. Dubey, 2695, D.B. Gupta Road, Karol Bagh, New Delhi were called upon to show cause to the Collector of Customs, New Delhi as to why:- (i) The seized goods should not be confiscated under Section 111(d) & 111(m) of the Customs Act, 1962 and why the value of the seized goods should not be enhanced from Rs.2,28,941/- to Rs. 11,72,046/-; (ii) The Customs duty leviable on the enhanced value of Rs. 11,72,046/- should not be charged from them and (iii) why penal action under Section 112 of the Customs Act, 1962 should not be taken against them. 23. The Learned Collector after careful consideration of the....
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....various submissions made by the appellants before the Collector. He pointed out to certificate issued by the Department of Industries and submitted that the appellants were actual user of the imported items under OGL Licence. They had been manufacturing the photocopiers and paying Excise duty thereon. Therefore, it is his contention that the subsequent report obtained by the investigating agencies from the General Manager of Department of Industries that there was no infrastructure in the appellant's company with adequate machinery should not be relied. It is his contention that the actual user condition laid down in the Import Policy is satisfied by virtue of the SSI Certificate issued by the Department of Industries and that the Customs Authorities cannot go behind the licence and the Registration Certificate, which clearly demonstrates that the appellants' company was actual user manufacturing the Plain Paper Copiers. It is his submission that the Hon'ble Supreme Court's judgment rendered in the case of Sharp Business Machines Pvt. Ltd. v. Collector of Customs: as reported in 1990 (49) E.L.T. 640 is distinguishable and not applicable to the facts of the present case as the goods....
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..... Collector of Customs - 1992 (62) E.L.T. 815 v. The Commissioner of Income Tax v. Anwar Ali - AIR 1970 SC 1782 vi. Pragati Press v. Collector of Customs - 1994 (72) E.L.T. 620 Para 5.2 at page 626 27. As regards the imposition of penalty, the Learned Advocate submits that there was nothing malicious on the part of the appellants in importing the goods and there was no clandestine suppression of value or removal of goods. Therefore, there was no cause for imposing the penalty in the matter. In regard to the imposition of redemption fine, the Learned Advocate submits that the Learned Collector has not given any reasons for imposing the redemption fine. It is his submission that redemption fine is not imposable in every case and mere warning for any lapse on the part of the importer, has been justifiable. This was the view expressed by Calcutta High Court in the case of Pradeep Ch. Saha v. Additional Collector of Customs, as reported in 1993 (68) E.L.T. 525. He also submits that reasons have to be given for imposing redemption fine and in this regard relies on the judgment rendered in the case of Ashwin Vanaspati Industries (P) Limited v. Collector of Customs, as report....
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....signments is no ground for not proceeding against the importers, as there was no res adjudica in the taxation matter. As regards the imposition of penalty, the Learned DR submitted that the same is justifiable and in this regard he relied on the ratio of the following judgments :- (i)  P. K. Himatsingka & Co. v. Collector of Customs, [1996 (81) E.L.T. 350] (ii)  Concord International (P) Ltd. v. Collector of Customs, [1996 (81) E.L.T. 135] (iii) Shiv Shakti Enterprises v. Collector of Customs, [1991 (52) E.L.T. 439] 29. We have carefully considered the submissions made by both the sides and have perused the records. The question that arises for consideration in these appeals is as to whether the appellants have satisfied the actual user industrial condition for which the licence had been granted to manufacture the goods as per the licence. It has been alleged that the appellants had been importing Plain Paper Copiers in SKD condition and clearing brand new completely assembled photocopier as trade samples at incredibly low CIF value. The appellants had filed the Bill of Entry covering 20 sets of Plain Paper Photocopier in SKD condition of Model Penas....
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....ded any infrastructure in the factory. He admitted not having employed any technical qualified person skilled or non-skilled workers for manufacture/assembly of Plain Paper Photocopier till date. He admitted meeting with Shri V. K. Dubey who had informed him that since they were holding SSI registration and also import licence for import of Plain Paper Copier and since the licence was expiring within 3 months. He would arrange the finance and help for sale of the same by giving letter of authority dated 9-2-1985. He admitted about an agreement entered into by Shri V. K. Dubey along with M/s. Impex (India) Corporation and M/s. Electra Systems with regard to purchase of these imported items. The letter discloses that Impex India will charge service charges to the tune of 60% on the CIF value of the goods imported besides a sum of Rs. 2000/- per photocopier machine as consultancy charges. The letter also stipulates investment on imports upto Rs. 2 lakhs to Rs. 2.5 lakhs by M/s. Impex (India) Corporation. On going through these letter he told the investigating authorities that he had no knowledge of this type of agreement/understanding as all formalities like arranging finance had been....
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....e of Rs. 10,00,000/- is not justified in the matter. The declared value of the goods is said to be Rs. 2,28,941/-. As we had held that the enhanced value is not on the basis of comparable prices, we hold that the appellants are entitled for reduction in the redemption fine. Taking into consideration overall facts and circumstances of the case and citations referred to by the appellants, we reduce the redemption fine to Rs. 2,00,000/-. As regards the question of penalty, we notice that the appellants have admitted about their connivance and modus operandi adopted by them for violating the law. Therefore, the Revenue has made out a very clear case for imposition of fine and penalty. The Collector has imposed penalty of Rs. 5,00,000/- on Shri Kailash Chandra Khaneja, prop. M/s. Magpie Elechem Pvt. Ltd. and penalty of Rs. 5,00,000/- on Shri V.K. Dubey. As the Revenue has not established the allegation of under-valuation in the case and there is no attempt to evade duty, therefore, in the facts and circumstances of the case, the penalty on Shri Kailash Chandra Khaneja for violating the other terms of the licence as per law is reduced to Rs. 1,00,000/-. As regards Shri V.K. Dubey, we not....
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....f the Act and the Rules. In this context, High Court held that there is no warrant for the proposition that in every case maximum redemption fine has been imposed in the context proviso to Section 125 which states that redemption fine shall not exceed market price of goods confiscated. On reading of judgment, it is clear that the same is distinguishable and not applicable to the facts of the present case. 35. The Learned Advocate relied on the judgment rendered in the case of The Commissioner of Income Tax v. Anwar Ali, as reported in AIR 1970 SC 1782, wherein the Hon'ble Supreme Court held that proceedings under Section 28 of the Income Tax Act are of a penal nature and the burden is on the Revenue to prove that the receipt of the amount in dispute constitutes the income of the assessee. We notice that this citation is not at all relevant for the present case. 36. In the case of East India Commercial Co. Ltd. v. Collector of Customs, as reported in 1983 (13) E.L.T. 1342 (SC) = AIR 1962 SC 1893, it is noticed by the Hon'ble Supreme Court that the licence to import the goods was subject to condition not to sell goods imported. The goods imported had been received and....