TaxTMI 
TaxTMI 
2013 (6) TMI 694
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.... recalled by the Court in the exercise of its inherent jurisdiction by the order dated 30th April, 2010, it was impermissible for the Tribunal to rely upon the observations contained in the earlier Judgment. As a matter of fact, subsequently on 25th August, 2010, the proceedings were remitted back to the Tribunal for de novo consideration. The order of remand passed by the Division Bench reads as follows:- "In the result, accepting the contentions advanced by both the parties and on the joint motion made by them, without examining the merits or demerits of the impugned order, the same is set aside. All these appeals are remanded back to the Tribunal restoring them to their file with the direction to decide the same by a reasoned order following the principles of natural justice taking into account the subsequent information acquired by the parties. All rival contentions on merits are kept open. The Tribunal is expected to dispose of the appeals with expeditious dispatch at any rate within a period of eight weeks from the date of receipt of copy of this order." 7. As a result, the Tribunal was seized of Appeals which arose out of the original order passed by the Commissio....
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....er dated 30-4-2010 whereby the earlier order dated 31-7-2009 was recalled and the writ petition and appeals were restored for fresh disposal on merits. This fresh disposal of the case came about on 25-8-2010 when the Hon'ble High Court issued the remand order directing the Tribunal to take fresh decision in the case by following the principles of natural justice and taking into account the subsequent information acquired by the parties. All rival contentions on merits were kept open. In pursuance of this remand order, this Tribunal passed the order dated 24th November, 2010 wherein it was held that - (1) In respect of goods not covered by any bills of entry, the confiscation was set aside; (2) In respect of goods covered by bills of entry filed by the importers, the order of confiscation was upheld under Section 111(d) of the Customs Act and an option to redeem the goods on payment of fine was given under Section 125 of the Customs Act; (3) The quantum of fine was fixed at 20% of the value of the goods; and (4) The value of the goods not covered by the bills of entry and those covered by the bills of entry was fixed at 50% each of the sale proceeds amounting to about Rs. 4.95 crore....
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....tory for both of them, submitted a letter dated 7-2-2001 purported to have been issued by the Jt. Director of Foreign Trade, Mumbai, to the effect that mistake was committed by the Directorate by putting same number on two licences. A doubt also arose about REP Licence No. 03348094, dated 24-12-1999 transferred in favour of M/s. Deepali Exports. On a reference made to Jt. DGFT Mumbai, it was confirmed that the letter dated 7-2-2001 was never issued by the Jt. Director, Foreign Trade. It was also revealed that Licence No. 03345531, dated 29-9-1999 was issued authorizing import to the extent of Rs. 5,36,863/- in the name of M/s. Nilesh Diamonds. However, licences bearing the same number and name of the same party with date 29-9-1999 for the amount of Rs. 6.72 crores and Rs. 5.36 crores were never issued. Similarly in respect of Licence No. 03348094, dated 24-12-1999, the same was for an amount of Rs. 25,39,760/- but the licence bearing the same number and date for Rs. 7.18 crores was never issued. M/s. Vijaybhav and M/s. Deepali Exports submitted 23 fresh REP licences collectively valued at Rs. 32,23,64,073/- (transferred to them) to cover the consignments pending clearance and also ....
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....the licences were procured by Hiralal Jain and they were aware that the licences were forged. Hiralal Jain and Kamlesh Khicha also confirmed these facts in their statements recorded under Section 108 of the Customs Act. They stated that REP licences were freely available in the market for a premium which was required to be paid by cheque or debit note. Hiralal Jain had procured 2 original licences bearing No. 03345531 worth Rs. 5,36,863/- and Licence No. 03348094 worth Rs. 25,39,760/- on payment of premium as per market rates. Thereafter, he had handed over these 2 original licences to one Gautam Bagri and the said Gautam Bagri had given him 2 forged licences bearing the same No. 03345531 for Rs. 6.72 crores and Rs. 5.36 crores and one forged licence bearing No. 03348094 showing an amount of Rs. 7.18 crores. For this, some amount was paid to Gautam Bagri in cash and Hiralal Jain admitted that payment required to be made to Gautam Bagri for the aforesaid forged licences was much less than the premium required to be paid for the REP licences in the market and he used to make profit this way. 5. On conclusion of investigation show cause notices were issued to all the concerned....
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....nd penalties of Rs. 2 lakhs each were imposed on these three importers. It is against these decisions, the appellants are before us. 6. The main arguments of the ld. Counsels for the appellants can be summarized as follows :- (a) Revenue came to the conclusion that the 5 consignments, that is, 1 by Vijaybhav of value Rs. 59,26,545/- (CIF) and 4 by Deepali Exports of value Rs. 2,28,08,628/- (CIF) were attempted to be cleared against forged licences and therefore, they were liable to absolute confiscation under Section 111(d) of the Customs Act and imposition of penalty on the appellants. Confiscation and penal provisions can be invoked only after the assessment is completed. In this case, all the 5 Bills of Entry are pending assessment and hence any levy of penalty and ordering absolute confiscation would be ab initio not sustainable as the confiscation and penalty provisions can be invoked only when there is a final order of assessment. In the instant case, the goods were not finally assessed and, therefore, the question of invoking the penal provisions and ordering absolute confiscation under Section 124 of the Customs Act, 1962 does not arise at....
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....han the date of importation, with a request to accept the same as substitute for the defective SIL which was produced along with the Bill of Entry. In the cited case, the Tribunal took the view that such request of the importer could be accepted in terms of the DGFT's clarification that the consignment could be cleared against freely acquired SIL provided that the licence presented for clearance is valid on the date of import in terms of Para 4.15 of the Handbook of Procedures 1997-2002. Contextually, the learned counsel has also fairly pointed out that the decision in H. Kumar Gems (supra) is under challenge by the department. He has also pointed out that the appellate court has not granted stay of operation of the said decision. In the present case, it is submitted, Replenishment Licences worth Rs. 32 crores, which were valid on the date of importation of the diamonds in question, were produced by the importers before the department. The Tribunal's decision in H. Kumar Gems case was also cited before the adjudicating authority. It is submitted that the learned Commissioner did not state valid reasons for rejecting the plea for clearance of the goods under the Replenishment Licenc....
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...., notings and markings made by the Examiner of Questioned Documents on these documents. Though this aspect has not been highlighted anywhere in the show cause notice, but it is the appellants contention that examination of the document were part of the investigations in the present case. Since the respondent has not brought on record the examination report as part of RUD, it means that nothing objectionable has been found. This means that the DGFT letter dated 7-2-2001 as well as the Questioned 2 REP Licences are Original and issued by DGFT, which Shri Gautam Bagri in turn had procured and sold the same to appellants for a premium and for which there is evidence of debit notes issued by Shri Gautam Bagri. (e) The Customs did not get the genuineness of the REP Licences Nos. 03345531, dated 29-9-1999 and 03348094, dated 24-12-1999 verified from DGFT Vigilance section. Even the letter dated 14-2-2001 addressed by the DGFT in response to Customs letter dated 1-2-2001 does not seem to suggest anywhere that the 2 REP Licences were forged. The DGFT have merely confirmed that the values shown in the Customs letter dated 12-2-2001 was not correct. This indicates t....
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....urt has set aside the charge sheet issued for recovery/theft of the 2 blank forms allegedly found in the residence of the appellant as also the theft of 99 blank Licences as not proved. This establishes that Shri Ajit Jain had no role in the theft of the aforesaid Blank Licences. It is noteworthy to state here that the DGFT in their FIR before the Police Station had merely stated that the 99 blank Licence forms to be stolen. Inasmuch as, the DGFT did not impute forgery in the FIR of the 56 REP licences using the blank Licence forms of DGFT. This would also imply that the DGFT had never taken a stand that the 56 REP Licenses referred to in Column (5) of Para No. 74 of the Order to be forged. It is also not the case of the Customs Department by way of leading evidences that the appellants had in their custody 56 out of the 99 blank stolen forms to replicate the data contained in the 56 Original REP licences. This is because appellants have been totally absolved of the charges of theft of the 99 blank Licences. Therefore, the question of acquiring 56 blank licences from any other sources to replicate data of the 56 REP licences would mean to first acquire 56 blank forms other than the....
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....sp; The learned counsels submits in view of the above case laws, his clients are entitled to return of the sale proceeds of the diamonds auctioned off by the department in breach of relevant instructions of the Board vide C.B.E. & C. Circular No. 711/4/2006-Cus., dated 14-2-2006. It is submitted that all the diamonds were disposed of after 14-2-2006 in contravention of the above circular and, therefore, the department should be made to pay penal interest on the sale proceeds when refunded. (h) It is submitted on behalf of appellants, Shri Rajesh Jain & Shri Gyanchand Jain that both of them were not the actual owners of the firm, M/s. Vijaybhav and M/s. Deepali Exports. Hence, no penalty could have been imposed on Shri Rajesh Jain and Shri Gyanchand Jain as they are dummies in the light of the decision of the Tribunal in the case of Mayil Mark Nilayam v. Commissioner - 2009 (241) E.L.T. 422 (Tri.-Chennai). (i) The appellants, therefore, say and submit that : (i) Neither clearance have been proved nor the value of clearance of these consignment by following the due pro....
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....to the Bill of Entry No. 100271 dated 3rd February, 2001 was transferred to one of the appellants i.e. M/s. Vijaybhav on 25th January, 2001. The face value of the REP Licence mentioned in the Transfer letter of 25th January, 2001 was INR 5.36 crores, as against the correct value of Rs. 5.36 lakhs as stated in the DGFT's letter dated 14th February, 2001. A forged letter dated 7th February, 2001 purported to have been issued by the Licensing Authority, i.e. Joint DGFT, Mumbai addressed to the Deputy Commissioner of Customs was produced by Hiralal Uttamchand Jain along with Shri Gyanchand Jain, who was the proprietor of M/s. Vijaybhav. The DGFT has denied issuing any such letter dated 7th February, 2001 in their letter dated 14th February, 2001. In other words, M/s. Vijaybhav who submitted Licence No. "03345531" grossly inflated its value to INR 5.36 crores as against the correct value of INR 5.36 lakhs. Similar forgery was done in respect of REP licences submitted to the Customs earlier for import of rough diamonds. This act of forgery/fabrication of 56 REP Licences is further corroborated by the letter dated 3-5-2001, and connected correspondence bearing subject "Illegal Import of R....
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....rect value of the said Licence No. "03345531" dated 29th September, 1999 at INR 5.36 lakhs. Therefore, the said M/s. Vijaybhav knowingly and deliberately with an intention to deceive and cheat the Revenue, produced 2 fabricated licences of the same number on two different occasions, i.e., in April, 2000 with a forged/inflated value of INR 6.72 crores and then for second time in January, 2001 for a forged/inflated value of INR 5.36 crores despite knowing fully well that the Licence Bearing No. "03345531" dated 29th September, 1999 was fully utilized by them, already, in April, 2000. (d) Investigations revealed that a REP Licence Bearing No. "03348094" dated 24th December, 1999 was submitted by M/s. Deepali Exports under Bill of Entry No. 100286, dated 5th February, 2001. This Licence was transferred to the said M/s. Deepali Exports by M/s. Vijaybhav on 18th January, 2001. Along with the REP Licence, M/s. Deepali Exports also submitted the REP Licence No. "03345531", transferred to the said appellant on 30th January, 2001, which was forged/fabricated as explained above. This REP Licence No. "03345531", which was forged and fabricated by the said M/s. Vijayb....
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....REP Licence, in the chain of transfers, was transferred in the name of M/s. Vijaybhav. DGFT has confirmed that the inflated values in Column 5 of Table-A of the show cause notice are not the correct values. Further, all the forged 56 REP Licenses were issued in the year 1999 which were valid for 18 months from the date of issue. The investigation commenced in the year February, 2001 after which the fabrication/fraud/forgery of the said REP Licences was detected. By that time, the said fabricated Licenses were already utilized by the appellants herein. Hence, there was no question of DGFT cancelling the forged Licences which were already fully utilized at the time when the fraud was detected, during the course of investigation. (g) Further during the investigation and search conducted at the premises of the appellants, one utilized REP Licence bearing No. "030004907" dated 30th March, 2000, issued in favour of M/s. Firestone Trading Pvt. Ltd. was also found. Subsequently the Director of M/s. Firestone in his statement recorded under Section 108, stated that M/s. Firestone sold the said licence for a premium of INR 28,74,346 to H. Deepak & Co. which t....
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....eir involvement in the larger fraud. All these aspects have not been denied by the appellants, despite the fact that the onus of proof under the scheme of the Customs Act is on them to establish their non-involvement/innocence as claimed by them. Such onus is not discharged by the appellants herein. In support of the above proposition the Revenue relies on the following judgments/case laws :- (a) K.I. International Ltd. v. Commissioner of Customs, Chennai, 2012 (282) E.L.T. 67 (Tri.-Chennai.) (b) Rico Gems Corporation v. Chief Controller of Import and Export, 1992 (58) E.L.T. 390 (Bom.) (c) CC, Amritsar v. Sona Castings, 2011-TIOL-189-CESTAT-DEL = 2010 (259) E.L.T. 693 (Tri.-Del.). (i) The Revenue submits that they have sold the diamonds as per the Disposal Order dated 6th February, 2006 in accordance with law and in terms of the Adjudication Order dated 11th July, 2003. In the absence of any stay of the said Adjudication Order by any Court, there is no question of returning the sale proceeds alleged to be clai....
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....ow cause notice and elucidated in the Order-in-Original, the Department's investigation has revealed 56 forged REP Licences. The fabrication, forgery and fraud is directly attributable to the appellants, M/s. Vijaybhav, M/s. Deepali Exports, M/s. Vaibhav Exports, M/s. Pushpak Impex and/or their proprietors. Details of the forged REP Licences including the extent and value of improper imports and the utilization of the fabricated REP Licenses are given in the Table below : Name of the firm Name of the proprietor S/Shri No. of fabricated licences utilised (out of 56 REP licences) No. of bills of entry Value of import (Rs.) Crore Value of utilisation under the fabricated REP licence (Rs.) Crores Vijaybhav Gyanchand Jain 29 288 144.59 139.24 Deepali Exports Rajesh Jain 28 313 157.72 154.82 Pushpak Impex Kamlesh Kheecha 04 22 14.02 13.99 Vaibhav Exports Hiralal Jain 04 26 12.02 11.98 (k) The reliance placed by the appellants on the Order of the Hon'ble CMM Court is completely misplaced, misconstrued and has no application to the fraud committed by ....
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....tement inter alia, referring to the share/sub-broking business stated that he received all payments through cheque from the said Jain as far as those share transactions were concerned. This statement which directly attributes the appellants role in the fraud/fabrication of the REP Licences is not retracted by the said Gautam Bagri. In view thereof, the Commissioner in the Order-in-Original has, inter alia, rightly concluded that the appellants were looking for an alibi and that there was no evidence to show that the 56 forged licences were dealt with by Shri Gautam Bagri. (o) Reliance is placed on the decisions of the Hon'ble Madras High Court in the case of Commissioner of Customs (AIR), Chennai-I v. Samynathan Murugesan reported in 2009 (247) E.L.T. 21 (Mad.) affirmed by the Hon'ble Supreme Court [2010 (254) E.L.T. A15 (S.C.)] and of the Hon'ble Apex Court in the case of Om Prakash Bhatia and Garg Woollen Mills reported in 1998 (104) E.L.T. 306 (S.C.). In these premises it is prayed that the appeals be dismissed with costs. 8. In their rejoinder, the Id. Counsels for the appellants ....
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....hereof. The department chose not to challenge the Order dated 31-7-2009 passed by the Hon'ble High Court, which is a matter of record. Since the goods are not available and in view of the judgments of the Hon'ble High Court, Bombay, in the cases of Sudarshan Cargo and Finesse, no redemption fine be imposed on the impugned goods where Bills of Entry have been filed i.e. relating to the first seizure dated 28-2-2001. (7) There has been a huge loss caused to the appellants due to Rs. 32 crores licence (face value) lying with Customs since the year 2001. The loss caused on this account itself is approximately Rs. 1 crore considering the cost of acquisition as 3%. In addition to compound the loss of the appellants, further licences of the face value of Rs. 6 crores was submitted by the appellants on 7-10-2009 in compliance with the order dated 31-7-2009 passed by the Hon'ble Tribunal. Thus there has been a further loss on account of the acquisition of the said licences suffered by the appellants. (8) The impossibility as well as quantum of redemption fine as well as personal penalty may kindly be considered on merits keeping in mind ....
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....lants liable to penalty for their commissions and omissions and if so, what should be the quantum of penalty? (g) Since the seized goods have been disposed of by the Revenue during the pendency of the appeal proceedings, should the sale proceeds be returned to the appellants and if so, to what extent? (h) If the sale proceeds are held returnable to the appellants, should the department pay interest and if so, at what rate and from what date? 9.2. Certain objections of a preliminary nature have been raised by the appellants. The appellants have argued that in the present case the bills of entry filed by the appellants were not assessed by the department and without assessing the bills of entry, the adjudicating authority could not have confiscated the goods and imposed penalties. This argument is completely misplaced. The importability of the goods has to be examined first and only if the goods are importable, the question of assessment arises. The distinction between the two functions has been beautifully explained by the Apex Court in the context of Sea Customs Act, 1878 in U.O.I. v. Security & Finance (P) Ltd. 1983 (13) E.L.....
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....ely. 9.3 The second objection raised by the appellant is that without the licensing authority initiating action with regard to the forged licences, the customs authorities could not have initiated any action under the Customs Act. This objection also has no merit. Section 111(d) of the Act provides for liability to confiscation in cases where goods are imported in violation/contravention of any law for the time being in force. The power to initiate action under Section 111 vests with the customs authorities, In the present case, the details of the REP licences submitted by the appellants were forwarded to the Jt. DGFT, the licensing authority to ascertain the genuineness of the licences and the licensing authority confirmed that the said licences were not issued by the said authority. This clearly evidences that the licences submitted were fake/forged and the cause of action under Section 111(d) arose. An identical issue was considered by the Hon'ble Apex Court in Sheshank Sea Foods Pvt. Ltd. v. Union of India [1996 (88) E.L.T. 626 (S.C.)] and the Hon'ble Court held as follows :- "8. Section 111(o) is the sheet anchor of the respondent's case. It reads thus : 111....
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....mull [1983 (13) E.L.T. 1546 (S.C.)] extracted below would suffice to highlight this point. "32. Smuggling is clandestine conveying of goods to avoid legal duties. Secrecy and stealth being its covering guards, it is impossible for the Preventive Department to unravel every link of the process. Many facts relating to this illicit business remain in the special or peculiar knowledge of the person concerned in it. On the principle underlying section 106, Evidence Act, the burden to establish those facts is cast on the person concerned: and if he fails to establish or explain those facts, an adverse inference of facts may arise against him, which coupled with the presumptive evidence adduced by the prosecution or the Department would rebut the initial presumption of innocence in favour of that person, and in the result prove him guilty....." In the present case, as discussed below, the Revenue has established that REP licences produced by the appellants were fake/forged. Thereafter the onus shifts on the appellant to prove how they acquired these licences and if so from whom. Revenue need not establish how the forgery was done. So long as it is established that the licences are f....
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....er, there was a restriction on the import of rough diamonds under the Exim Policy at the relevant time and the policy prescribed that rough diamonds could be imported either under a Diamond Imprest Licence or under Replenishment Licence. If the diamonds are imported without such licence, then import would be in violation of the restriction. Section 2(33) of the Customs Act defines prohibited goods as follows :- "prohibited goods" means any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with;" 9.8 The Hon'ble Apex Court had occasion to examine the scope of the term prohibition occurring in Section 111(d) of the Customs Act in Sheikh Mohd. Omer v. Collector of Customs, Calcutta and Others - 1983 (13) E.L.T. 1439 (S.C.) and it was held as follows :- "..............It was urged on behalf of the appellant that expression "prohibition" in Section 111(d) must be considered as a total prohibition and that expression does not bring within its f....
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.... next contention of the learned counsel for the respondents was that the licence used by the petitioner for the purpose of clearing the goods was not a genuine license, but was a forged one, and therefore there was no license at all; and that being so, the import of the goods was unlawful and the goods even though cleared from the Customs barrier, were liable to confiscation and the petitioner who was responsible for using a forged licence for clearing the goods was in addition liable to an order of penalty. In support of this contention reliance was placed on a decision of the Supreme Court in Fedco (P) Ltd. v. S.N. Bilgrami [1999 (110) E.L.T. 92 (S.C.)]. In that case it was held that the entire scheme of control and regulation of imports by licenses was on the basis that the licence was granted on a correct statement of relevant fact and that if the grant of the licence was induced by fraud or misrepresentation that basis disappeared. It was also held that it would be absolutely unreasonable that such licence should be allowed to continue. In my view this contention of the learned counsel for the respondents is well founded. The import of goods on a licence. In the case of goods ....
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....f the DEPB is forged, then the same in non est and therefore, there is no valid DEPB. As such no credit can be derived thereunder. In such circumstances, one may defend his case that one may not be liable for collusion or fraud and exposed to other penalties therefor, but still then one would be liable to pay the duty and interest and for other statutory consequences which one cannot avoid." 9.11 An identical question arose before the Supreme Court in the context of exports in Om Prakash Bhatia v. Commissioner of Customs, Delhi, 2003 (155) E.L.T. 423 (S.C.). The relevant extracts from the said judgment is reproduced below :- 8. Next - as the order for confiscation of goods is passed by referring to Section 113(d) of the Act, we would refer to the same. It reads as under :- "113. Confiscation of goods attempted to be improperly exported etc. - The following export goods shall be liable to confiscation :- (d) any goods attempted to be exported or brought within the limits of any customs area for the purpose of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force." 9. The aforesaid Sect....
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....scation under Section 111(d) of the Customs Act. 9.13 In the present case before us there is substantial and voluminous documentary evidence unearthed by the Revenue to show that the REP licences were forged/fabricated. In their letter dated 14-2-2001, JDFT, Mumbai has confirmed that in respect of REP Licence No. 03345531, dated 29-9-1999, the same was issued to M/s. Nilesh Diamonds for a value of Rs. 5,36,868.22 and only one licence was issued bearing the same number and date. However, the appellants in this case have submitted two such licenses bearing the same number and date for a face value of Rs. 5.36 crores (along with transfer letters dated 25-1-2001 in favour of Vijaybhav who in turn transferred the same to M/s. Deepali Exports vide transfer letter dated 30-1-2001) and Rs. 6.72 crores (along with transfer letter dated 22-2-2000 in favour of Vijaybhav). To prove that the said licences have been issued by DGFT, a letter dated 7-2-2001 purported to have been issued by the said office was produced by the appellants before the customs authorities. DGFT vide letter dated 14-2-2001 has denied having issued any letter dated 7-2-2001. Similarly in the case of REP Licence No....
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....s owned by Hiralal Jain used 4 forged licences in 26 B/E for import of diamonds worth Rs. 11.98 crores while Pushpak Impex of which Kamlesh Khicha is the proprietor used 4 forged licences for clearance of imports worth Rs. 14.02 crores. 9.14 Besides the above documentary evidences, the statements recorded under Section 108 of the Customs Act from the appellants also reveal the fraud committed by them. In their statements recorded on 28-2-2001, both Mr. Gyanchand Jain and Rajesh Jain have admitted that they were paid employees of Hiralal Jain and they were made proprietors of Vijaybhav and Deepali Exports and were acting as per the instructions given by him. Both of them have also admitted that the REP licences were procured by Hiralal Jain and the licences so procured were forged and in spite of that, they used to present the same before the Customs authorities for clearance of consignments by their respective concerns. It is also an admitted position that they had constituted Hiralal Jain and Kamlesh Khicha as their authorized signatories and they used to carry on several activities on their behalf. Both Kamlesh Khicha and Hiralal Jain have made confessional statements to ....
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.... practice require that Court would seek assurance getting corroboration from other evidence adduced by the prosecution." In the light of the decision of the Hon'ble Apex Court coupled with the strong corroboratory evidence available on record, the statements are a reliable piece of evidence and can form the basis for conviction. 9.16 In Commissioner of Customs v. Aafloat Textiles (I) P. Ltd. [2009 (235) E.L.T. 587 (S.C.)], the Hon'ble Apex Court held that the principle of "Caveat Emptor" is applicable even when a person makes imports under the cover of forged licence. The Supreme Court held as follows:- "27. Whether the buyer had made any enquiry as to the genuineness of the licence is within his special knowledge. He has to establish that he made enquiry and took requisite precautions to find out about the genuineness of the SIL which he was purchasing. If he has not done that consequences have to follow....." 9.17 In the light of the voluminous evidences available on record and the legal position emerging from the judgments cited above, we find that the goods imported by the appellants are liable to be confiscated under Section 111(d) of the Customs Act....
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....d are prohibited under the Customs Act or under any other law for the time being in force. If the goods are not prohibited, the adjudging officer has no discretion and it is mandatory to give the option of payment of fine in lieu of confiscation. However, in the case of prohibited imports, the adjudging officer has the discretion. The following observation of Lord Halsbury, L.C. in Sharpe v. Wakefield, has been quoted with approval in many judicial pronouncements as to what constitutes statutory discretion. "Discretion, in general, is the discernment of what is right and proper. It denotes knowledge and prudence, that discernment which enables a person to judge critically of what is correct and proper united with caution; nice discernment, and judgment directed by circumspection; deliberate judgment; sound judgment; a science or understanding to discern between falsity and the truth; between wrong and right; between shadow and substance, between equity and colourable glosses and pretenses, and not to do according to the will and private affections of persons. When it is said that something is to be done within the discretion of the authorities, that something is to be done accor....
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....firmed by the Supreme Court would be relevant. In the Garg Woollen Mills case, the appellants therein imported synthetic woollen rags and serviceable garments were concealed amongst mutilated garments. The adjudicating authority confiscated the entire consignment absolutely apart from imposing penalties on the appellants. The Tribunal on appeal upheld the confiscation and the appellant approached the Supreme Court and the Hon'ble Apex Court held as follows:- "5.........Under Section 125 a discretion has been conferred on the officer to give the option to pay fine in lieu of confiscation in cases of goods, the importation or exportation whereof is prohibited under the Act or under any other law for the time being in force but in respect of other goods the officer is obliged to give such an option. In the present case, having regard to the facts and circumstances in which the goods were said to be imported and the patent fraud committed in importing the goods, the Additional Collector has found that the goods had been imported in violation of the provisions of Import (Control) Order, 1955 read with Section 3(i) of the Import and Export (Control) Act, 1947. In the circumstances he ....
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....ported in violation of the provisions of Import (Control) Order, 1955 read with Section 3(i) of the Import and Export (Control) Act, 1947. In the circumstances he considered it appropriate to direct absolute confiscation of the goods which indicates that he did not consider it a fit case for exercise of his discretion to give an option to pay the redemption fine under Section 125 of the Act. The Tribunal also felt that since this was a case in which fraud was involved, the order of the Additional Collector directing absolute confiscation of the goods did not call for any interference. We do not find any reason to take a different view." In the present case too, the concealment had weighed with the Commissioner to order absolute confiscation. He was right, the Tribunal erred.' The decision of the Hon'ble High Court was challenged by way of SLP before the Hon'ble Apex Court. While dismissing the petition, the Supreme Court passed the following order : "Applying the ratio of the judgment in the case of Om Prakash Bhatia v. Commissioner of Customs Delhi, reported in 2003 (155) E.L.T. 423 (S.C.), to the facts of the present case, we find that, in the present case, the assessee ....
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....in sale proceeds amounting to over Rs. 4.95 crores accrued. We have already held that there can be no confiscation and, for that matter, no redemption fine in relation to the diamonds in respect of which no Bill of Entry was filed. Confiscation would be applicable only to the other diamonds covered by Bills of Entry, and the share of these goods in the sale proceeds would be approximately 50% of Rs. 4.95 crores. Therefore, we direct the Revenue to refund Rs. 2.475 crores to the appellants M/s. Vijaybhav and M/s. Deepali Exports who shall share the same in proportion to the value of goods seized from them. The appellants also would be eligible for simple interest @ 9% p.a. the said amount from the date of seizure in terms of the decision of the Hon'ble High Court of Delhi in Kailash Rubber Factory Ltd. v. Commissioner [2002 (143) E.L.T. 60 (Del.)]. 9.26 The appellants have contended that the disposal of the diamonds during the pendency of the proceedings before the Tribunal has adversely affected their interests and have imputed motives for such disposal. It is also argued that no redemption fine can be imposed since goods are not available for redemption. Both these argumen....
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....ction 112(a), there is no requirement of mens rea. In the present case mens rea is clearly evident from the documentary evidences available on record and also from the statements of the appellants. Penalties of Rs. 70 lakhs and Rs. one crore has been imposed on the appellants M/s. Vijaybhav and M/s. Deepali Exports respectively. Considering the fact that all these frauds have been committed to save the premium on REP licences which is on an average 3% of the value of the licences and also considering the fact that 3% of the face value of the forged licences far exceeds the penalties imposed, we do not find it necessary or appropriate to interfere with the penalties imposed on these two appellants. In the facts and circumstances of the case, the penalties imposed cannot be said to be harsh or excessive. As regards the penalties of Rs. 80 lakhs and Rs. 1 crore imposed on M/s. Vaibhav Exports and M/s. Pushpak Impex, 3% of the value of imports on the basis of forged licences works out to Rs. 42 lakhs and Rs. 36 lakhs. Therefore, in respect of these two appellants, we reduce the penalties from Rs. 80 lakhs and Rs. 1 crore to Rs. 42 lakhs and Rs. 36 lakhs respectively. Since all the firm....