TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 1172
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.... their Intelligence has gathered that the raw material imported for manufacture of bulk drugs by some drug manufacturers were allowed for warehousing under Section 59 of the Customs Act, 1962 and same was substituted with fake materials and that the original material was sent to the importers by the CHA, M/s. Far Port International, Chennai, without payment of duty. It was also gathered that such substituted fake material was still lying under customs bonded warehouses pending clearance. 2.2 The scrutiny of the records maintained at Bonds Department (Customs) and warehouses located at C.W.C., Thiruvottiyur, ICBC - I, Manali, ICBC - II, Tollgate revealed that there were four time-expired bonds in respect of the importers M/s. Vera Laboratories Ltd., Hyderabad (1st Appellant herein, now known as Mylon Laboratories Ltd.) as given below:- Sl. No. Bond No. & Date Warehouse Remarks 1. 3827/17.4.95 CWC, Thiruvottiyur Validity expired on 16.4.96. 2. 3836/17.4.95 -do- Validity expired on 16.4.96. 3. 11517/06.10.95 -do- Validity expired on 05.10.96. 4. 14387/12.11.95 -do- Validity expired on 11.11.96. 2.3 The goods lying in th....
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....f goods covered under Bond No. 3827 dated 17.4.95 the importers appears to have instructed the CHA to clear total quantity of 3,4,5 Trimethoxy Benzal Dehyde on payment of duty. But, the goods were received against fake Bill of Entry without proper clearance from Customs authorities and without payment of duty. In respect of goods covered under Bond No.11517/6.10.95 the importers M/s. Vera Laboratories have cleared 2000 kgs. out of 8000 kgs. of "Thiophene" against advance licence/payment of duty. Duty of Rs.17,08,267/- along with interest for the balance quantity is liable to be paid by the importer. Also, in respect of goods covered under Bond No. 14387/12.11.95 the importers have cleared 460 kgs. out of 1000 kgs. of "Triozole 1,2,4,1H" against advance licence/payment of duty and duty of Rs.1,51,215/-along with interest for the balance quantity is liable to be paid by the importer. 2.7 On further investigation, it was found that the CHA viz., M/s. Far Port International, Chennai had indulged in substituting the imported goods with material of no value while sending the goods to warehouse. 2.8 The 1st Appellant is claimed to have sent drafts in favour of "Collector of Customs ....
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....bonded warehouse had been clandestinely and unauthorisedly removed by the CHA and the duty had not been paid to customs in respect of these clearances. 2.11 The CHA is further alleged to have regularly cleared all the import consignments of M/s. Vera Laboratories Ltd., Hyderabad (1st Appellant) and during the period 1995-1999, they have handled about 170 consignments where duty payment is involved, through Custom House, Chennai; they have handled duty free clearances of M/s. Vera Laboratories Ltd. (1st Appellant) under DEEC/DEPB Schemes. Out of the total Bills of Entry recovered from the premises of 1st Appellant, two Bills of Entry were found to be fake and unauthentic as per the duty endorsements made on the Bill of Entry and scrutiny of the same with reference to the cash records available at Custom House, Chennai. The total duty amount involved in such fake and unauthentic Bills of Entry was Rs. 95,00,244/-. 2.12 Total duty amount to be paid on the time expired bonds still pending clearance is Rs. 18,59,482/-. The goods after clearance from Harbour, Chennai for the purpose of warehousing the CHA appeared to have been diverted to the residence of Shri D. Ramesh, Proprietor....
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....us raw materials required for the manufacture of their finished goods. To handle the Customs clearing activity at the Chennai Sea and Airports, they had engaged the services of M/s. Far Port International, Chennai, a proprietary concern of one Shri D. Ramesh. (c) (i) The appellants used to pay the duty in the form of crossed demand drafts, favouring the Commissioner of Customs A/c. Hetero Drugs in respect of the imports and receive the goods as mentioned and under the cover of Bills of Entry. The appellants were also taking Modvat credit on the strength of these Bills of Entry. These Bills of Entry were regularly scrutinised and defaced by the jurisdictional Central Excise authorities. ... .... (e) On enquiries made by the appellants, it was revealed that Shri D. Ramesh, Proprietor of M/s. Far Port International, had indulged in mala fide activities of substituting the goods at the Bonded Warehouse; that the CHA had sent the goods imported under the cover of fake Bills of Entry to the appellants; that the amounts sent by them in the form of demand drafts in favour of the "Commissioner of Customs - A/c. Hetero Drugs" after being deposited in the d....
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.... ... .... ... 11. In view of the above, when a demand draft is on par with a cheque that is not dishonoured, then following the Larger Bench of the Tribunal in the case of CCE, Jaipur-I v. Genus Overseas Electronics Ltd. reported in [2003 (155) E.L.T. 541 (Tri.-LB) = 2003 (56) RLT 759 (L.B)] which followed the decision of the Hon'ble High Court of Andhra Pradesh in the case of Sanghi Polyester Ltd. v. CCE - 2001 (134) E.L.T. 344 (A.P.) and of the Hon'ble Supreme Court in the case of K. Saraswathy v. P.S.S. Somasundaram Chettiar - (1989) 4 SCC 527 and Commissioner of Income Tax, Bombay South v. M/s. Ogale Glass Works Ltd. - AIR 1954 SC 429, the date of presentation of the demand draft by the CHA to the Customs authorities would be deemed to be the date on which the appellants would have paid the duty. Any further misuse of the said amounts, either by the CHA and/or with the connivance of the officials of the Customs House by any other importer, who might have availed or might not have availed the benefit cannot result in a visit of demand of duty or penalty on the appellants. ... ... .... 13. There cannot be an allegation of the appellants having any inten....
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....ty has arisen on account of the guilty act of the CHA and therefore, he alone would be liable to pay duty under Section 147(3) of the Customs Act, 1962. The Adjudicating authority has not gone into these aspects and has dealt with the issue in a very superficial manner, very eager to confirm the duty and penalty willy-nilly. Summing up, we hold that there is nothing on record to doubt the bona fides of the appellants, as there is clear evidence that the CHA had exceeded his authority. In terms of the Hetero Drugs (supra) decision in the interpretation of Section 147 of the Customs Act, 1962, the CHA gets the status of an importer and he alone is liable for the non-payment of duty to the Government, in these circumstances, the de novo order-in-original is devoid of any merits. The same is liable to be set aside. Hence, we allow the appeal with consequential relief." (emphasis added) 6. The above decisions / orders have only underlined the dubious modus operandi of CHA. Further, the claim of the 1st Appellant that it had given Demand Drafts for payment of Customs duty to their CHA in the name of "Collector of Customs A/c Vera Laboratories" remains uncontroverted and hence, when....