TaxTMI 
TaxTMI 
2008 (3) TMI 160
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....t of Rs. 18.80 lakhs against the confirmed demand and directed payment of balance duty by the importer, together with interest, and imposed penalties inter alia upon Shri Bhagwanji Trivedi. He has imposed a penalty of Rs. 20 lakhs each upon M/s. H.R. Trading Co. and M/s. Consumer Plastic Pvt. Ltd. and Rs. 20 lakhs on Shri Anil Parikh of M/s. H.R. Trading Co., and Rs. 5 lakhs on Shri Ajay Gandhi of M/s. Consumer Plastics Pvt. Ltd., under Section 112 of the Customs Act, 1962 and Rs. 5 lakhs each on Shri Bharat H. Shah and Shri Rajesh B. Gandhi under the provisions of Section 112 ibid. 2. We have heard both sides. 3. Penalty has been imposed upon the appellants on the ground that they had purchased goods imported duty free and cleared by M/s. Bhagwanji G. Trivedi against the advance licenses in respect of which the license holder had not discharged its export obligation prior to such sale resulting in contravention of condition No. (vi) of Notification No. 203/92-Cus., dated 19-5-2002 which reads as under: "Exempt material shall be utilized for discharge of export obligation and no part thereof shall be disposed of in any other manner before export obligation under the licens....
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.... and these were only paper transactions; that he had received premium of 35% of the license value in cash for the use of the advance license, which was obtained for importing goods duty free and selling the same without completing export obligation. Shri Bhagwanji G. Trivedi admitted his mistake and agreed to pay duty evaded. 6. From the statement of Bharat R. Shah it comes out that he was working as an import export consultant, that one Kirit Shah whom he knew, had in formed him that Shri Bhagwanji G. Trivedi wanted to obtain advance license from DGFT, Mumbai. Shri Kirit Shah gave him the required documents and necessary application signed by Shri Bhagwanji Trivedi; thereafter he (Bharat Shah) submitted the application to DGFT; that he did not know Shri Bhagwanji G. Trivedi nor had seen him till he received the first advance license dated 22-3-1994; in respect of the second licence dated 16-8-1994 all relevant documents were given by Shri Kirit Shah; that he received Rs. 2 lakhs as remuneration for procuring the advance license. 7. Shri Rajesh Gandhi has stated that he was working as license broker and that he had received a commission of 1% as brokerage for the transaction ....
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....r of M/s. Consumer Plastic Pvt. Ltd. to give the cover of legitimacy to the transaction. He confirmed that Rs. 12 lakhs was also paid to Shri Bhagwanji G. Trivedi after clearance of the goods and that 52% of the CIF value of the licence was paid as premium for the sale of the licence. 10. Shri Mukesh Shantilal Motani CHA, has confirmed that he received documents for clearance of 40MTs of duty free Titanium Dioxide from one Anil P. Parikh on behalf of M/s. H.R. Trading; that he filed 4 Bills of Entry in the name of Shri Bhagwanji G. Trivedi against advance licence dated 16-8-1994; that as per instructions of Shri Anil P. Parikh he had prepared documents of delivery in favour of Shri Bhagwanji G. Trivedi. 11. Shri Anil P. Parikh partner of M/s. H.R. Trading Co., stated that they had imported 40MTs of Titanium Dioxide in November and December 1994 against duty free licence issued in favour of Shri Bhagwanji G. Trivedi: that he had contacted Shri Rajesh Gandhi and directed him to get 4 bills of entry filed by Shri Bhagwanji G. Trivedi on High Sea Sales basis: Customs declaration, and blank letter-heads of M/s. Bhagwanji G. Trivedi duly signed by Shri Rajesh Gandhi were given to C....
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.... is not sufficient for imposition of penalty under Section 112(b). 14. The adjudicating authority has proceeded on the premise that it was inconceivable that a person of the standing of the appellants would not have tried to find out whether the raw material purchased by them was tainted or not. Therefore, the imposition of penalty is based only upon presumption and conjecture, and not on the basis of any proof of knowledge or reasonable belief on their part that they were dealing with goods liable to confiscation. The Commissioner, further, holds that license was subject to actual user conditions which is incorrect-the license was not subject to any such condition. Further, there was no such allegation in the show cause notice. Unlike an actual user license, advance license issued in terms of Notification 203/92 could be freely transferred either by DGFT itself by making suitable endorsement of transferability on the license or by the importer himself by disposing of the goods upon fulfilment of the export obligation and realizing of export proceeds. The law did not, therefore, enjoin upon any purchaser to make enquiries regarding fulfilment of the conditions of the notificatio....