TaxTMI 
TaxTMI 
2006 (4) TMI 462
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..... Deepali Exports, M/s. Vaibhav Exports and M/s. Pushpak Impex were importing rough diamonds and getting the same cleared on the strength of replenishment licence. M/s. Vijaybhav and M/s. Deepali Exports had filed bills of entries seeking clearance against R.E.P. Licences and during scrutiny of the R.E.P. Licences it was noticed that R.E.P. Licence No. 03345531 dated 21-9-1999 issued in favour of M/s. Nilesh Diamonds was already fully utilised. Therefore, the clearance was kept in abeyance. While verifying the licence in detail, a doubt was raised regarding genuineness of licence No. 03348094 dated 24-12-1999 transferred in favour of M/s. Deepali Exports. On a reference made to Jt. DGFT Mumbai, he confirmed that the licences issued to M/s. Nilesh Diamond for the value shown in Dollar and Rupees is not correct. M/s. Vijaybhav and M/s. Deepali Exports vide their letter dated 12-2-2001, 13-2-01 & 14-2-01 submitted 23 fresh REP licences collectively valued Rs. 32,23,64,073/- which were duly transferred to them in order to cover the consignments pending for clearance and also consignments cleared earlier against the import licences. They also requested to clear their consignment against....
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....bhav for which no bills of entries are filed, are liable to confiscation or not. (c) Whether the foreign supplier is entitled for re-shipment in view of the importer's subsequent disclaiming the title of goods. (d) Whether the goods cleared in the past on the basis of forged replenishment licences by M/s. Vijaybhav, M/s. Deepali Exports, M/s. Vaibhav Exports and M/s. Pushpak Impex are liable for confiscation or not. (e) Whether the goods imported by other firms i.e. M/s. Kiran Exports, M/s. Munjani Brothers, and M/s. D.S. Brothers on the basis of forged licences purchased by them are liable to confiscation or not. (f) Whether the importers and the individuals concerned in the fraudulent clearances are liable to penalty under the provision of the said Act. 5. The ld. Counsel for the appellant contented that the Customs does not have any case to sustain the confiscation of the 5 consignments for which substituted licences were produced much before it's seizure and were valid on the date of shipment. The allegation of the Customs is that the appellants are party to the forgery of the for....
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....h diamonds. Appellants' claim in the limelight of Tribunal judgment in the case of H. Kumar Gems v. Commissioner of Customs, Ahmedabad reported in 2001 (137) E.L.T. Page-61 (Tribunal-Mumbai). However, we agree with ld. Commissioner that the appellant cannot claim benefit for the goods before the tribunal. Appellant had no knowledge of the alleged forgery. In the appeal Hiralal alias Ajit Jain in his statement recorded on 28-2-2001 had stated that he was offered by Shri Gautam Bagri to join the business of forged licences in order to compensate the loss incurred in the share business. He has received forged licences from Shri Gautam Bagri. We agree with the ld. Commissioner that the 5 consignments of rough diamonds are liable to confiscation for an attempt to import against forged import licence under Section 111(d) of the said Act. The ld. Commissioner has ordered absolute confiscation of the rough diamonds imported by M/s. Vijaybhav valued at Rs. 59,26,545/- and diamonds valued at Rs. 2,28,00,628/- imported by M/s. Deepali Exports. As per Section 125 of the said Act officer adjudging confiscation may give to the owner of the goods or where such owner is not known, the person from ....
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.... have also taken into consideration the fact that Shri Hiralal Jain consistently said during recording of the statement under Section 108 of the said Act that he had purchased forged licences through Shri Gautam Bagri in lieu of huge payment, the ld. Commissioner does not accept his explanation as seen in para 103 of the impugned order. However, when the ld. Cominissioner accepted guilt of Shri Hiralal Jain on the basis of his own statement that he was aware of the forged nature of the licences, his other part of the statement implicating that Shri Gautam Bagri has been overlooked as no show cause notice was issued to Shri Gautam Bagri. Further in part 176 of the impugned order, the ld. Commissioner's reference to the F.I.R.. filed by DGFT pertaining to the missing blank forms and states that these are crucial evidence on the involvement of Shri Hiralal Jain in the act of forgery. However, the Hon'ble Chief Metropolitan Magistrate, Esplanade Court, Mumbai vide his order dated 11-3-2003 has acquitted Shri Hiralal Jain and DGFT has not filed any appeal. Ld. Commissioner further observed in para 75 of the impugned order that the fate of the original licences referred in para 74 of the....
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....at all the REP licences produced for clearance of rough diamonds were forged. In the case of above clearance the REP licences had been accepted by the Customs Authorities after scrutiny and allowed clearances. Customs officers are required to verify the genuineness of the REP licences at the time of scrutiny and no such Customs Officers have been issued show cause notice for collusion with the importers. Therefore, it cannot be presumed that even in respect of 3 consignments, at the time of filing bill of entries, the importers might have claimed clearances against forged REP licences, in fact no bill of entries have been filed. This particularly shows that the group of these appellants have submitted REP licences worth Rs. 32 crores and they have been repeatedly asking the Department to allow clearance against these licences. Therefore, it cannot be held that an attempt was made by the appellants to clear the 3 consignments against forged licences and therefore the subject goods are not liable to confiscation under Section 111(d) of the said Act. 8. The ld. Commissioner in para 88 of the impugned order observes that M/s. Deepali Exports and M/s. Vijaybhav are not bona fide impo....
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....ding on this point. 11. Ld. Commissioner has held that the rough diamonds imported in the past by M/s. Deepali Exports, M/s. Vaibhav Exports and M/s. Pushpak Impex are liable to confiscation but the goods are not available for confiscation and had imposed penalty on M/s. Deepali Exports, Vaibhav Exports, and M/s. Pushpak Impex and also individual penalties on Shri Hiralal Jain, Shri Kamlesh Khicha, Shri Gyanchand Jain and Shri Rajesh Jain. Ld. Commissioner in para 92 of the impugned order has observed that investigation has revealed that all the appellants had sought in the past clearance for rough diamonds on the strength of 29 forged licences by M/s. Vijaybhav, 28 forged licences by M/s. Deepali Exports, 4 forced licences by Vaibhav Exports and that they were fully aware that the licences presented by them before the Customs authorities were forged. We agree with the ld. Commissioner that Shri Kamlesh Kumar Khicha had stated in his statement that the licences presented were forged as is supported by a letter from DGFT as recorded in para 74 of the impugned order. Therefore, we agree with ld. Commissioner that the rough diamonds imported against forged licences are liable to co....
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....ion of penalty. We find that penalty is under Section 112(a) of the said Act on these 3 appellants. 112(a) would apply to person who in relation to any goods does or omits to do any act which act or omission would render such goods liable to confiscation under Section 111 or abets in doing or omission of such act The case of the appellants is that in claiming clearance of rough diamonds against the forged licences they did not know that they were forged. Thus merely finding forged licences without any knowledge would not make these appellants liable to penalty under Section 112(a), particularly when ld. Commissioner does not hold that there was a mala fide intention on their part and when these appellants are bona fide purchasers for value. Therefore, we hold that M/s. Kiran Exports, Munjani Brothers & M/s. D.S. Brothers are not liable to penalty and, therefore, appeals are allowed. All the appeals are disposed off in the above terms. Sd/- (Krishna Kumar) Member (Judicial) 15. [Contra per : Chittaranjan Satapathy, Member (T)]. - I have carefully perused the proposed order recorded by the Hon'ble Member (Judicial). The main facts of the case as recorded in Para 49 of ....
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....hav - Rs. 70 lakhs (ii) M/s. Deepali Exports - Rs. 1 crore (iii) M/s. Vaibhav Exports - Rs. 80 lakhs (iv) M/s. Pushpak Impex - Rs. 1 crore (v) Shri Hiralal Uttamchand Jain - Rs. 1 crore (vi) Shri Kamlesh Khicha - Rs. 1 crore (vii) Shri Gyanchand Jain - Rs. 5 lakhs (viii) Shri Rajesh Jain - Rs. 5 lakhs (ix) M/s. Kiran Exports - Rs. 2 lakhs (x) M/s. Munjani Brothers - Rs. 2 lakhs (xi) M/s. D.S. Brothers - Rs. 2 lakhs 17. The proposed order recorded above upholds the confiscation of the seized diamonds but allows redemption of rough diamonds valued at Rs. 59,26,545/- on a redemption fine of Rs. 1.8 lakhs and redemption of rough diamonds valued at Rs. 2.28 crores on payment of a redemption fine of Rs. 6.5 lakhs. It also proposes that three consignments of rough diamonds seized on 16-4-2001 for which no Bills of Entry were field are not liable to confiscation. The order also proposes reduction in the penalties as follows : - (i) M/s. Deepali Exports - Rs. 10 lakhs (ii) M/s. Vaibhav Exports....
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....he word 'prohibition' in Section 111(d) of the Customs Act, 1962 means all types of prohibitions including restriction, which is one type of prohibition. 21. I agree with the Hon'ble Member (J) that separate penalties on the proprietors are not warranted. I also agree with him that benefits to the extent of 3% have accrued to the appellants in respect of imports made by them using forged licences. Hence keeping in view such clearances already effected by the appellants, I am of the view that the following penalties would be justified (calculated at 3% of clearance value) particularly when the goods are not available for confiscation and imposition of redemption fine : - (i) M/s. Vijaybhav : Rs. 4.3 crores (ii) M/s. Deepali Exports : Rs. 4.7 crores (iii) M/s. Pushpak Impex : Rs. 42 lakhs (iv) M/s. Vaibhav Exports : Rs. 36 lakhs (v) M/s. Kiran Exports : Rs. 10.5 lakhs (vi) M/s. Munjani Brothers : Rs. 21 lakhs (vii) M/s. D.S. Brothers : Rs. 5.3 lakhs 22. However, since the adjudicating Commissioner had imposed penalties of lower amounts as indicated at paragraph 16 above on appellants at Sl. Nos.....
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....e action or omission is in claiming clearances of rough diamonds on the basis of forged licenses, and therefore the question is whether the appellants had any mala fide intention in claiming clearances against the alleged forged licenses and whether they had any role in the forgery of licenses and further whether there are any extenuating circumstances warranting reduction in penalties imposed by learned Commissioner in the impugned order has to be examined. 27. Admitted facts on the record are that : (i) Shri Hiralal Jain has consistently in his statements record under Section 108 of the Customs Act stated that he has purchased forged licenses through Shri Gautam Bagari. (ii) The ld. Commissioner did not accept the explanation given by Shri Hiralal Jain. (iii) No Show Cause-Notice was issued to Shri Gautam Bagari though indicated by Shri Hiralal Jain, in his statements and the ld. Commissioner relied upon these statements to hold guilty but the Customs Authorities in the criminal case lodged against Shri Hiralal Jain in respect of missing blank forms ended in acquittal and no appeal has been filed. 28. The ld. counsel ....
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....ion as to whether the Department had established the forgery or not. What is relevant is whether the appellants were involved in the forgery of the licenses and whether there was any mala fide intention on their part could be culled out from the record. The statement of Shri Hiralal Jain recorded on 1-3-2001 shows that he used to purchase 3 to 4 licenses a day from the open market. As against such large quantity of import licenses purchased only few of them are held to be forged. The Hon'ble Member (Judicial) in para 19 of his order has observed that Customs Officers did not detect the fraud. Further M/s. D.S. Brothers who had purchased rough Diamonds from M/s. Hindustan Diamond Co. Ltd., used the same forged licenses and DGFT could not detect forged licenses. Thus Customs and DGFT could not detect the forged licenses, how would the appellants comes to know that the import licenses were forged. It is further on record that the appellants had produced licenses worth Rs. 32.00 Crores which were not returned to them and thus they were deprived of the same. It is also seen from the record that the learned Commissioner has not held that there was a mala fide intention on the part of the....