TaxTMI 
TaxTMI 
1997 (10) TMI 291
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....res, stranded wires and wire ropes galvanized and as also ungalvanized. The company sold these products in domestic as also in foreign market. In the year 1986, Shri Jankiram, the appellant took over as Chairman-cum-Managing Director of M/s. Asian Wire Ropes Ltd. (AWRL) and Shri Subhash Gupta continued as Director of the company. 4. On receipt of the information by the Respondents that M/s. AWRL, Hyderabad were indulging in the malpractice of importing different and costly material misdeclared as low/high carbon steel wire rods and electrolytic zinc free of duty under the DEEC Scheme and disposing the same in the local market for a profit and that the material actually imported was not required for use in the manufacture of the goods exported that is "steel wire ropes". A detailed investigation was carried out and it was found that the goods actually imported free of duty under the DEEC Scheme by M/s. AWRL were unauthorisedly disposed of by M/s. AWRL through Mr. Kumud Dharia, the appellant who was carrying out trade activities under different firms, in the domestic market. In fact, M/s. AWRL made import of free cutting steel conforming to EN-1A British Specification by misd....
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.... u/s 111 (d) and (m) of the Customs Act, 1962. The Collector, Customs further held that these goods are not physically available for confiscation. Therefore, fine in lieu of confiscation of the said goods can be recovered only through penalty and ordered recovery of duty amounting to Rs. 2,19,01,589/- along with interest @ 18% p.a. from M/s. AWRL, Hyderabad in terms of proviso to Sec. 28(1) read with para 29(3) (ii) of Appendix 19 of the Import-Export Policy 1985-88. He also imposed a penalty of Rs. 1.0 crore on M/s. AWRL u/s 112(a) of the Customs Act, 1962. A penalty of Rs. 50 lac each on S/Shri M. Jankiram and Subhash Gupta u/s 112 (a) and (b) of the Customs Act, 1962. A penalty of Rs. 20 lac was also imposed on Shri Kumud Dharia, proprietor of M/s. Beekay Industries, Karta of M/s. MEK International (HUF) and Director of M/s. Maldhari Steels Pvt. Ltd. u/s 112 (a) of the Customs Act, 1962. A penalty of Rs. 20 lac was also imposed on M/s. Maldhari Steels Pvt. Ltd. u/s. 112(b) of the Customs Act, 1962 and a penalty of Rs. 10 lac was also imposed on M/s. Maldhari Sales Corporation u/s 112 (b) of the Customs Act, 1962. 7. The appellants filed these appeals against the above-me....
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....cause notice and the adjudication order in respect of the quantity of 123.300 MTs. He submits that the respondents are aware of the fact that the quantity involved in the case was 3300 MTs. and they have mentioned the fact in the earlier show-cause notice and in the adjudication order and therefore the second show-cause notice is time-barred. He further submits that M/s. AWRL was availing the benefit of Not. Nos. 44/67 and 116/86-Cus. As per the provisions of the Notification, the goods imported are to be utilized in the manufacture of the resultant product and para 244 of the Import Policy 1988-91 provides that if any condition is violated, duty can be demanded. He submits that if the firm has violated any condition of the exemption Notification, the Revenue can demand the duty and no penalty can be imposed. He further submitted that once the licence is granted to the firm, the customs authorities cannot investigate the nexus of the goods imported and their utilization in the manufacture of the resultant product. He therefore, submitted that it is well settled law that penalty cannot be imposed twice over in respect of the same cause and action. 10. Learned Counsel appeari....
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....nsible for the alleged violation committed by the company. 11. Regarding second show-cause notice, the appellant also made submissions that the second show-cause notice was time-barred as the whole of the quantity of import was mentioned in the earlier show-cause notice as argued by the Counsel of Shri Jankiram (appellant). 12. Ld. Counsel appearing on behalf of Shri Kumud Dharia, the appellant submitted that Shri Kumud Dharia was carrying on business in the name and style of M/s. Beekay Industries as sole proprietor. The appellant was also karta of M/s. Mek International (HUF) and Director of M/s. Maldhari Steels Pvt. Ltd. He was also looking after the business of M/s. Maldhari Sales Corporation. 13. The appellant at the relevant time was dealing as broker in steel trading and he was supplying indigenous goods like high carbon, E-Q and M.S. wire rods. The appellant was approached by S/Shri Subhash Gupta and Jankiram on behalf of one M/s. AWRL for disposal of the imported goods in the local market and the appellant was appointed as a total agent of M/s. AWRL for clearance and disposal of the imported goods for which he acted on the instructions of the said S....
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....nufacture of the final product which were exported by the appellants. He submitted that the appellants were permitted to import the high carbon steel but in fact they imported low carbon steel which is free cutting steel of EN-1A specification. He relied upon the statements recorded under Section 108 of Customs Act, 1962 during the investigation which shows the fact that the appellants also used to prepare the false documents for presenting to the customs authorities. 16. In respect of two show cause notices, he submitted that the first show cause notice relates to only three consignments whereas the second show cause notice to other 8 consignments. He submits that both the show-cause notices relate to different consignments. Therefore, he submits that the proceedings under both the show cause notices were valid. He relied upon the decision of the Hon'ble Supreme Court in the case of State of Gujarat v. Mohanlal Jitamalji Porwal and Another - 1987 (29) E.L.T. 483 (S.C.) = AIR 1987 SC 1321. 17. Heard both sides. In these appeals, M/s. AWRL were working under the Duty Exemption Entitlement Certificate (DEEC) Scheme. They were importing leaded low carbon free cutting s....
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....itted that the import of leaded free cutting free steel of EN-1A quality was arranged by Shri Subhash Gupta. 22. Shri T.N. Prahlad, Accounts Manager of M/s. AWRL in his statement admitted that the transport bills purported to show dispatches of imported goods from Bombay to Hyderabad were in fact obtained without actually despatching the goods. He also explained in his statement the difference between the sale proceeds shown in the company's record and the actual sale proceeds which worked out to over a crore in respect of imported goods and he submitted that the difference between the sale proceeds shown on company's record and the actual sale proceeds were shared between Mr. Subhash Gupta and Mr. Jankiram. He also explained that how various records were kept and how the unaccounted payments used to be divided between Mr. Subhash Gupta and Mr. Jankiram or on their behalf to various persons/firms. He futher submitted that the payments for customs duty, clearing charges, BPT charges, etc. were all met by Shri Kumud Dharia. 23. Shri K. Satyanarayana, Import & Export Manager of M/s. AWRL, in his statement, had admitted that M/s. AWRL were manufacturer and exporters of ....
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....ct of galvanising, he submitted that no imported zinc was used by M/s. AWRL, Hyderabad. 25. Mr. P.V.G. Nair, another employee of M/s. AWRL had made similar statement. 26. Shri Hiralal Kiraj Shah, partner of M/s. Minaxi Transport Carriers, in his statement, submitted that about 56 lorry receipts of M/s. Minaxi Transport Carriers and M/s. Manish Transport Agency were issued in the name of M/s. AWRL but no goods were delivered at Hyderabad and the said lorry receipts were bogus and issued at the instance of Shri Kumud Dharia on temptation of money. 27. Shri Kumud Dharia the appellant through whom the imported goods were sold, in his statement, stated that the imported steel wire ropes were declared in the import documents as per licence description but the goods actually imported were EN-1A quality and he had sold not only the said steel wire rods but even the zinc imported by M/s. AWRL under their Advance Licences. He admitted that he sold the said materials in the name of his firms (1) Beekay Industries (2) M/s. Mek International (HUF) (3) M/s. Maldhari Sales Corpn. and (4) M/s. Maldhari Steels P. Ltd., either directly or through his sub-brokers. He submitted....
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....ported are covered by a Duty Exemption Entitlement Certificate (hereinafter referred to as the said Certificate), issued by the licensing authority in the form specified in the Schedule to this notification, in respect of the value, quantity, description, quality and technical characteristics, as specified in Part 'C' of the said Certificate; (b) the importer at the time of clearance of the imported materials makes:- (i) a claim in writing to the Collector of Customs for such exemption and executes a bond or legal undertaking before such authority as may be approved by the Central Government for complying with the conditions specified in this notification; (ii) a declaration before the Assistant Collector of Customs binding himself to pay on demand an amount equal to the duty leviable but for the exemption, on the imported materials in respect of which the conditions specified in this notification have not been complied with; (c) the goods corresponding to the resultant products and the mandatory spares, in respect of value, quantity, description....
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....the documents to avail the exemption. The various statements show that the affairs of M/s. AWRL were controlled by S/Shri Subhash Gupta and Jankiram and they also sold the imported goods through Shri Kumud Dharia to various firms. 34. The contentions of the appellant that in the first show-cause notice, there was mentioned a total quantity of goods in question. We find that the earlier show-cause notice is only in respect of three consignments and these three consignment of steel wire ropes were weighing 732.390 MTs., 146.570 MTs. and 353.340 MTs. and the adjudication order has restricted these quantities. The second show-cause notice covers other 8 consignments. Therefore, we do not find any force in the contentions of the appellants in the show-cause notice, i.e. the earlier show-cause notice covers the whole quantity of disputed goods. 35. The contention of the buyers of the imported goods was that they were the bona fide purchasers of the goods, they were not being aware of the fact that the goods in question were imported under faked documents or contrary to the exemption notification. They purchased the goods through Kumud Dharia who was an agent of M/s. AWRL ....