TaxTMI 
TaxTMI 
2025 (8) TMI 730
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.... the order imposing penalty under Section 112(a) of the Customs Act, 1962? c) Whether in the facts and in the circumstances of the case, the Tribunal is justified in holding that the goods did not become prohibited goods in terms of Section 111(a) of the Customs Act, 1962 and whether these goods were sought to be cleared claiming exemption under Notification No. 53/07 Cus dated 6.3.1997 (as amended)?" 3. Brief facts of the case are as under: 3.1 The respondent-M/s. Marvel Fashions was a 100% Export-Oriented Undertakings ['EOU' for short] having requisite license to import any material for the manufacture of the goods to be imported. 3.2 One M/s. Avlon Syntex Pvt. Ltd intended to import 100% Polyester Dyed Piled Fabrics which was sold to M/s. Marvel Fashions on High Sea Sales basis by entering into an agreement. Thereafter, M/s. Marvel Fashions filed 04 Bills of Entry claiming exemption under Notification No. 53/1997-CUA as under: Sr.No Bill of Entry for Warehousing No and Date High Sale Agreement Date Invoice No and Date Changshu Winwell Import and Export Co. Ltd. Changshu City, China Bill of Lading Noand dates 1 2184 dated 30.10.2001 14.09....
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....nder Para 9.2 of the Export and Import (Exim) Policy 1997-2002 through only one clearing agent M/s. Salasar Shipping Services at Mumbai and M/s. Shakti Enterprise at Kandla Port. It was also found during scrutiny that all the 74 consignments, which were acquired under Bill of Entry for re-warehousing, were disposed of as cleared under DTA sales by claiming such material as misprints, rejects and wastage mainly to 29 parties at Surat and 04 parties at Hyderabad. 3.6 A show-cause notice was therefore, issued after recording of statements of the concerned persons who were partners of M/s. Marvel Fashions including statement of Mr. Mohsin Akukara, statement of Shri Vivek Gohil-Director at M/s. Avlon Syntex Pvt. Ltd as to why the goods imported through 04 Bills of Entry should not be confiscated. 3.7 During the adjudication process, a defence was raised on behalf of M/s. Marvel Fashions contending that the show-cause notice was time barred since the goods were seized on 12.06.2003 by the officers of DRI, Mumbai and a show-cause notice was issued on 10.12.2003. It was also contended that the contract for purchase of 100% Polyester Dyed Piled Fabrics was made on High Sea Sales basis....
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....he Development Commissioner and the Board of Approval and there was nothing on record to indicate that such permission was sought to be revoked by the Customs Department and therefore, it was eligible to import goods without payment of duty and admittedly, when the goods were not prohibited under the Customs Act or any other law, the same could not have been confiscated by invoking section 111(d) of the Act. 3.12 The Tribunal therefore, set aside the impugned Order-in-Original and resultantly, the order imposing penalty was also set aside. 4. Learned advocate Mr. C.B. Gupta reiterated submissions made before the Tribunal and relied upon the observations made in the Order-in-Original for confiscation of the goods and levy of the penalty. 5. Section 111(d) of the Act reads as under: "111. Confiscation of improperly imported goods, etc.- The following goods brought from a place outside India shall be liable to confiscation:- (d) any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being ....
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.... Thus, it is clear that the transaction of sale was made only on paper to hoodwink the Customs and to facilitate the fraudulent duty free clearance of the impugned goods in the name of Marvel Fashion claiming exemption under notification No 53/97-Cus. This mis-declaration made by them to the Customs showing that the goods have been sold to M/s. Marvel Fashions on High Sea Sale basis was not factually correct and this was done with fraudulent intention to evade Customs duty. Thus they are guilty of violation of rule 14(1) and 14(2) of the Foreign Trade (Regulations) Rules, 1993. In view of the above, I hold that M/s. Avlon and Shri Vivek O. Goel, Director of the Company are liable for penalty under section 112(a) of the Customs Act." 7. It appears that the adjudicating authority has invoked section 111(d) of the Act on misconception that misdeclaration was made by M/s. Marvel Fashions to the Customs Department showing that the goods were purchased on a High Sea Sales basis and with a fraudulent intent to evade custom duty resulting into violation of Rules 14(1) and 14(2) of the Rules. Rules 11, 14(1) and 14(2) of the Rules, as it existed at the relevant time, read as under: ....