TaxTMI 
TaxTMI 
2011 (4) TMI 316
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..... 2. The Commissioner s order was passed in adjudication of a show-cause notice which was issued on 31.3.1998 under Sections 28 and 124 of the Customs Act, for - (a) demanding duty on the aforesaid quantity of HDPE imported duty-free under two Advance Licences (No. 313812 dated 11.5.93 and No. 313813 of even date) and Notification No. 203/92-Cus dated 19.5.1992; (b) holding the said goods liable to confiscation and imposing penalties on Shri Nandlal Kishandas Khemani (Proprietor of M/s Nandlal Shivaldas), Shri Mahesh D Ganatra, Shri Naresh A Shah and Shri Ashwin C Shah. The show-cause notice was issued on the basis of the results of investigations conducted by the department. From the results of investigations, it appeared to the department that a quantity of 143.741MTs of HDPE was imported in the name of M/s Nandlal Shivaldas and cleared duty-free in terms of Advance Licence No. 313812 ibid and another quantity of 144.259 MTs of HDPE was similarly imported in the name of the same party and cleared duty-free in terms of Advance Licence No. 313813 ibid. The first quantity was covered by 9 Bills of Entry, which were filed in the name of M/s Nandlal Shi....
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....icees liable for penalty under Section 112(a) and (b) of the Act. A penalty was also proposed under Section 114A of the Act. These proposals were contested by the parties. The impugned order was passed in adjudication of this dispute. 3. Heard both sides. Learned Counsel for Shri Nandlal Kishandas Khemani (Proprietor of M/s Nandlal Shivaldas) has reiterated the grounds of Appeal No. C/311/03. It is submitted that, even according to the show-cause notice, the goods were actually imported and cleared by Shri Ashwin Shah although the Bills of Entry and other documents stood in the name of M/s Nandlal Shivaldas. Therefore, it was not open to the department to treat this appellant as the importer of the goods and demand duty from him. The learned Counsel submits that a part of the payment of duty during the course of investigation was made by others who virtually conceded duty liability. Therefore, it was not justifiable on the part of the adjudicating authority to confirm the entire demand of duty against this appellant. It is further submitted that this appellant did not deal with the goods after its importation and therefore, he cannot be penalized under Section 112 of the Ac....
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....l Kishandas Khemani. The licence broker was exonerated from penal liability under Section 112 of the Act. Considering this aspect, Counsel pleads, the penalty on Shri Naresh A Shah should be vacated or reduced. 5. Learned SDR, at the outset, points out that the appeal filed by Shri Naresh A Shah against an earlier order of the Tribunal (2005 (179) ELT 316) was dismissed by the Hon'ble High Court of Bombay vide Naresh A Shah Vs. Commissioner of Customs 2008 (223) ELT 137 (Bom). Therefore, according to him, Shri Naresh A Shah cannot have a case even for reduction of penalty. The learned SDR has argued that both the appellants had chosen to indulge in the trading of non-transferable Advance Licences with the knowledge that the ultimate buyer of the licences could defraud the revenue by making duty-free imports under the DEEC scheme. It is submitted that, as the Advance Licences involved in this case were not transferable, M/s Nandlal Shivaldas (licensee) were entitled to import the raw materials duty-free in terms of the licence and Customs Notification No. 203/92-Cus. They did not have the right to transfer the licence which did not bear DGFT s endorsement of transferability.....
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....as Khemani was very much aware to this non-transferability of the licences. He was also aware of the fact that he alone could make duty-free import under the licences in the DEEC scheme. Nevertheless, he transferred both the licences to Shri Mahesh Ganatra for a consideration of Rs.25 lakhs as alleged in the show-cause notice. Shri Mahesh Ganatra, in turn, sold the licences to Shri Naresh A Shah for a consideration of Rs.31 lakhs as alleged in the show-cause notice. Shri Naresh A Shah, in turn, sold the licences to Shri Ashwin Shah at a premium of 96% of the CIF value as alleged in the show-cause notice. These allegations were not denied by anybody. Therefore, we take it granted that the licences were actually and factually transferred in the above sequence. It is not in dispute that the Bills of Entry were filed in the name of M/s Nandlal Shivaldas and that, in one of his statements, Shri Nandlal Kishandas Khemani admitted duty liability and also paid an amount of Rs. 6 lakhs during the course of investigations. Even otherwise, in our considered view, the liability to pay duty on the raw materials imported under non-transferable Advance Licence held by a person as the licensee is ....
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.... by Shri Nandlal Kishandas Khemani. We, therefore, hold that Shri Nandlal Kishandas Khemani is liable to be penalized under Section 112 of the Customs Act on the basis of the findings recorded against him in para 19 of the impugned order. We note that Section 112(a) of the Act does not require physical handling of the goods by a person for a penalty on him. It is enough if it is found that a person, 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 the doing or omission of such act. Shri Nandlal Kishandas Khemani, at the time of transfer of the Advance Licences, was aware of the fact that those licences could be used by the buyer for duty-free import of raw materials to the detriment of the revenue. In any case, Shri Nandlal Kishandas Khemani as a licensee cannot plead ignorance of the relevant provisions of the EXIM Policy concerning DEEC scheme. Further, the goods were imported in the name of Shri Nandlal Kishandas Khemani and an amount of Rs.6 lakhs was paid by him towards duty thereon. Shri Nandlal Kishandas Khemani also admitted duty liability in his statement dated 31.7.1996. ....