TaxTMI 
TaxTMI 
2013 (5) TMI 787
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....eared 80 cartons of the said yarn on execution of bond and on payment of duty of Rs. 4,92,448/-. The remaining 223 cartons were lying in the bonded warehouse and the period was extended up to 9-10-1987. On a subsequent application for extension of time limit for keeping the goods in the warehouse, the same was rejected by the Asst. Commissioner, who also served an auction notice on 18-10-1987 in terms of the provisions of Section 72 of the Customs Act, directing the said appellant to deposit the customs duties within a period of 5 days from the date of receipt of the said notice. 2. The subsequent developments are important for deciding the appellant's liability to pay the duty or otherwise. It is seen that the appellant subsequently approached the Asst. Collector of Customs and submitted that as they were unable to consume the goods under import, they may be allowed to sell the same to M/s. Export India Overseas, who would lift the balance quantity of 223 cartons lying under bond in the warehouse. It was also disclosed in the said letter that M/s. Export India Overseas has the REP licences under which they will lift the goods in question for export purposes. The said reque....
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....(223 cartons). C.W.C. Ankleshwar In terms of the above permission letter of the Asst. Collector, the goods were actually allowed clearance to M/s. Export India Overseas against REP license produced by them without payment of duty. 3. Subsequently, Assistant Commissioner of Surat wrote a letter to Assistant Commissioner of Customs, Bombay on 1-2-1988 intimating that the goods lying in the warehouse "were allowed clearance" by M/s. Export India Overseas under REP license No. 2955688 free of duty. In response to the above letter, Bombay Customs sent wireless message on 21-3-1988 informing that the above licence produced by M/s. Export India Overseas do not figure in the Weekly Bulletin issued by the Licensing Authority for the above period and appeared to be fake. On receipt of the above information, the matter was further probed and it was found that the letter dated 28-12-1987 signed by the Assistant Commissioner of Customs, Bombay was also found to be fake. Accordingly, investigations were initiated against M/s. Export India Overseas, Ahmedabad and his residential premises were put to search. During the course of search a false rubber stamp of Bombay Customs along wit....
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....seas, it is M/s. Export India Overseas which has to be considered as the importer and not the present appellant. He further submitted that the appellant himself has been a victim of circumstances as the fact of REP license being forged was never in his knowledge as the same was in the knowledge of the Customs officers. The reference to various facts made by the Commissioner in the impugned order to hold that the entire conspiracy was hatched by M/s. I.C. Gandhi Texturising Industries does not inspire confidence from the evidences on record and even if the presuming though denying that the goods were cleared by M/s. Export India Overseas as a result of conspiracy, the same would not change the position in law inasmuch as admittedly it was M/s. Export India Overseas who cleared the goods against REP license and as such has to be held as the importer. 6. The Advocates appearing on behalf of M/s. Wadiwala Trading Co. and other appellants submitted that he was only engaged in disposal of the goods cleared by M/s. Export India Overseas and was not even aware of the REP licence being forged. There is no evidence on record to reflect upon his knowledge about the act of forged REP l....
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....elf out to be the importer. The goods having been permitted to be sold to M/s. Export India Overseas, it is now M/s. Export India Overseas, who were the owner and further not only that they also held themselves to be importer and represented themselves as importer before Customs and their such act was also accepted by the Customs authorities. As such by applying the definition of importer as contained in the above provisions, it is M/s. Export India Overseas who are required to be held as importer and not M/s. I.C. Gandhi Texturising Industries, who were the original importers but having sold the goods to M/s. Export India Overseas, who had become the owner, could no longer be held to be importer. The distinction made by the Commissioner that the said definition including owner of the goods would apply only in those cases when there is some dispute between the supplier of the goods and the importer and supplier finds out another buyer and to whom he sells the goods and the original import documents are substituted in the name of the new buyer and IGM is also amended. He has held that it is in this situation only that the definition of the importer as indicated in Section 2(26) incl....
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....diwala Trading Co. to other independent companies. In any case the said facts may raise doubts as already observed, but will not take the place of legal evitable evidence against M/s. I.C. Gandhi Texturising Industries. In any case having held that M/s. I.C. Gandhi Texturising Industries cannot be considered as importers, the duty liability confirmed against them cannot be upheld. The same is accordingly set aside along with imposition of penalty upon them as also on Shri R.G. Gandhi. 10. Similarly as regards M/s. Wadiwala Trading Co. and Sh. J.B. Wadiwala, we find that they purchased the goods from M/s. Export India Overseas and sold the same in the market to various parties. There is no concrete evidence on record to show that they were aware of the forged nature of the REP licences produced by M/s. Export India Overseas. As such, we do not find any justification for imposition of any penalty upon them. Similarly there is no evidence against Shri N. Sivaprasadan for imposition of penalty upon him. Accordingly, we set aside the penalties imposed upon these appellants. 11. In a nutshell, all the appeals are allowed with consequential relief. Before we part, we would....
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.... the definition of importer in the Customs Act which defines importer. According to the definition, the importer is either the owner or any person holding himself out to be a importer. In this case, ex-bond bill of entry was filed by M/s. I.C. Gandhi Texturising Industries Ltd. and therefore as per the definition it can be stated that they have held themselves out to be importer. But the appellant's contention is that since the goods have been sold with the knowledge of the Customs and DGFT and with their approval, the buyer M/s. Export India Overseas has to be treated as the owner. According to them, the appellant filed bill of entry only as a facilitation measure and therefore, the real owner and the importer has to be treated as M/s. Export India Overseas. 16. At this juncture, it is necessary to see the transactions between the parties involved which is very important. From the documentary evidence collected by the Revenue on record, bank accounts in the name of M/s. Wadiwala Trading Co. were opened in Central Bank of India on 11-1-1988 and Shri R.G. Gandhi was the introducer. Shri R.G. Gandhi is C.E.O. of M/s. I.C. Gandhi Texturising Silk Mills, Proprietor of M/s. Bala....
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....t ownership of yarn continued to remain with M/s. I.C. Gandhi Texturisers and M/s. I.C. Gandhi Silk Mills, Surat, both of whom did not have any REP licence. In fact, M/s. I.C. Gandhi Texturising Industries could have cleared the goods on payment of duty since the goods were imported under OGL. They choose to show 50 T of yarn as having been purchased by them, from M/s. Wadiwala Trading Co. and knowingly became one of the parties who purchased the goods from M/s. Wadiwala Trading Co. Revenue has admittedly not demanded duty from them or demanded or imposed penalty on this count since the duty on the whole consignment has been demanded from them. How can M/s. Export India Overseas or M/s. Wadiwala Trading Co. can become owner without paying any consideration is a question that has not been answered by the appellant. Even though in Para 46.1, the Commissioner has explained the transactions, he has not analysed the details probably because he felt that there was no need for the department to prove that M/s. I.C. Gandhi Texturising Industries Ltd. were the importer in view of the fact that they had filed bill of entry. The transactions and the analysis of transactions above, very clearl....
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....al Bank of India, Kanpith Branch, Surat which was introduced by Shri Rajesh G. Gandhi and the blank cheque book duly signed by him was given to Shri Rajesh G. Gandhi : that he did not know about the cheques issued by M/s. Wadiwala Trading Co. to M/s. Export India Overseas : that he was knowing that he was to lift duty free goods on fake licence and had to release to Shri Rajesh G. Gandhi of M/s. I.C. Gandhi Surat, and for that he has received drafts from Shri Wadiwala for the said sale and that he has not exported any material in the name of M/s. Export India Overseas. It is also relevant to note that Shri Sheth at the relevant time was a 60 year old man suffering from severe paralytic attack of the right side and lounge. 47.2 I also refer to the statement of Shri Jayantibhai Wadiwala dated 30-3-1988 wherein he stated that he knows Shri J.K. Sheth: that he met Shri J.K. Sheth in M/s. I.C. Gandhi Silk Mills, for the first time in June-July, 1987 and Shri Rejeshbhai Gandhi and introduced Shri J. K. Sheth as Exporter and also stated that Shri Sheth is holder of REP licence and Shri Sheth wanted to lift the goods from the Customs Warehouse of Shri Rajeshbhai and for which Shri ....
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.... 9900 14 7 14,55,300/- SALE : Date Weight (Kgs.) Rate (Rs.) Total Amount 19-11-1987 1650 210 3,46,500/- 2-1-1988 4200 175 7,35,000/- 2-1-1988 9900 170 16,83,000/- that he does not know why Shri Rajesh Gandhi has not purchased the goods from M/s. Export India Overseas and as to why they could not purchase the goods directly from M/s. Export India Overseas as M/s. I.C. Gandhi had sold the goods and therefore, they agreed to pay Rs. 2 to Rs. 2.50 lakhs to M/s. Wadiwala Trading Co. 47.3 In his statement dated 26-3-1988 Shri J.K. Sheth. Proprietor of M/s. Export India Overseas stated that he knew Shri Rajesh Gandhi of ICG Surat because of business and has met him sometimes; that he was introduced by Shri Jayantibhai Wadiwala of Surat before 6 months and he never met Shri Rajesh Gandhi along and at all time met Shri Rajesh Gandhi with Shri Jayantibhai Wadiwala; that M/s. Export India Overseas has accounts in Kanpith Branch of Central Bank of India, Surat and he signed the forms etc., that the bank book and cheque books of the said account was kept by Shri Jayantibhai Wadiwala; that he has signed blank cheques in....
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....cerned in dealing with the fraudulent clearance of the goods from the public Bonded Warehouse of ICG Texturising Industries. Ankleshwar on forged licence and fake documents, and he is knowingly concerned and dealt with the said goods with reasons to believe that they are liable to confiscation under Section 111 of the Customs Act, 1962 and accordingly, I unhesitatingly hold that he is liable for penal action under Section 112(a) of the Customs Act, 1962. " 20. From the above discussions, it becomes quite clear that orders passed by Commissioner is correct and does not call for any interference. Accordingly, the appeals filed by all the appellants are rejected. Sd/- (B.S.V. Murthy) Member (Technical) DIFFERENCE OF OPINION Whether the appeals shall be allowed as held by Member (Judicial) or the same are to be rejected as held by Member (Technical). Sd/- B.S.V. Murthy Member (Technical) Sd/- Archana Wadhwa Member (Judicial) 21.  [Per : B.S.V. Murthy, Member (T)]. - Vide order No. M/1107-1111/WZB/AHD/08, dated 4-9-2008, difference of opinion was recorded as under : "Whether the appeals shall be allowed as held by Member (J....
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....ty as held by learned Member (Judicial) or penalty has to be imposed on the captain since no mens rea required for imposition of penalty under Section 112(a) of Customs Act, 1962 and goods are liable to confiscation under Section 111(f) of Customs Act, 1962 Sd/- B.S.V. Murthy Member (Technical) Sd/- Archana Wadhwa Member (Judicial) (Pronounced in Court on 3-9-2010) 24. [Per : M.V. Ravindran, Member (J)]. - This difference of opinion is placed before me on the direction of the Hon'ble President for resolving the following differences. (i) In the facts and circumstances of the case, whether M/s. I.C. Gandhi Texturising Industries Ltd. can be considered as importer as held by Member (Technical) or M/s. Export India Overseas have to be held as importer as held by ld. Member (Judicial). (ii) In the facts and circumstances whether M/s. Export India Overseas can be considered as the owner of the goods at the time of filing bill of entry as held by learned Member (Judicial) or in view of the banking transactions and other facts and circumstances whether, M/s. I.C. Gandhi Texturising Industries Lt....
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....mporter, as appellant had sold the goods to M/s. Export India Overseas and hence M/s. Export India Overseas are the owner of the goods and are hence importer and filing of bill of entry is only a form of procedure. It is his submission that provisions of Section 28 of the Customs Act, 1962 does not contain the word "importer" to use the expression person chargeable to duty, the words have wider expression. It is his submission that the Revenue Authorities were approached by the appellant to allow clearance of warehoused goods to M/s. Export India Overseas, and such a request was extended by the authorities subject to fulfilment of certain conditions which were fulfilled by M/s. Export India Overseas. The REP licences which were produced by M/s. Export India Overseas were accepted by the Customs Authorities and goods were allowed to be cleared without payment of duty, which itself makes clear that M/s. Export India Overseas was considered to be importers and were allowed to step into shoes of appellant. It is his submission that the goods were allowed to be cleared on 19-11-1987 and the show cause notice has been issued on 28-9-1988 which is beyond the period of six months from the ....
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....oner (AR) would submit that M/s. I.C. Gandhi Texturising Industries Ltd. is a firm of which Shri Rajesh G. Gandhi was the CEO. It is his submission that the firm transferred some amounts to M/s. Wadiwala Trading Co. for the purchase of the goods and in turn all these amounts were transferred by M/s. Wadiwala Trading Co. to M/s. Export India Overseas on the same day. It is his submission that M/s. Export India Overseas on the same day transferred the amount to M/s. I.C. Gandhi Silk Mills and M/s. I.C. Gandhi Texturising Industries Ltd. to show legitimacy of the transactions of sale and purchase. It is his submission that what comes out clearly is M/s. Export India Overseas never paid any money for purchase of goods from M/s. I.C. Gandhi Texturising Industries Ltd. or M/s. I.C. Gandhi Silk Mills, Surat and documentary evidences collected by the Revenue on record would indicate that the bank accounts opened for these transactions were introduced by Shri Rajesh G. Gandhi who is the CEO of the appellant M/s. I.C. Gandhi Texturising Industries Ltd. It is his submission that there is a statement of Shri Jayantihhai Wadiwala that he had purchased goods from M/s. Export India Overseas and s....
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....he ex-bond bill of entry for removal of 223 cartons. It is the claim of the appellant that the appellant had sold these consignments to M/s. Export India Overseas and said M/s. Export India Overseas had sought to clear the consignment by producing REP licences which was permitted to be done so by the authorities. 30. In my view, the first and foremost issue which needs to be decided in this case who is the importer. ICGTI claims that they are not the importer once they have sold the consignment. I find that as per the provisions of Section 2(26) of the Customs Act, 1962 an importer is defined as under : "(26) "importer", in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes any owner or any person holding himself out to be the importer;" 31. It can be seen from the above reproduced definition of importer, that importer includes owner or any person holding himself out to be the importer. In the case in hand, it is undisputed that the appellant ICGTI had in fact filed ex-bond bill of entry for 223 cartons to be cleared under REP licences of M/s. Export India Overseas. It cannot be said ....
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.... other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, shall be liable, - (i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding the value of the goods or five thousand rupees, whichever is the greater; (ii) in the case of dutiable goods, other than prohibited goods, to a penalty not exceeding the duty sought to be evaded on such goods or five thousand rupees, whichever is the greater; (iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under section 77 (in either case hereafter in this section referred to as the declared value) is higher than the value thereof, to a penalty not exceeding the difference between the declared value and the value thereof or five thousand rupees, whichever is the greater; (iv) in the case of goods falling both under clauses (i) and (iii), to a penalty not exceeding the value of the goods....