TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 1171
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....e the same on payment of redemption fine; confirms the customs duty under section 28(4) of the Customs Act; and imposes a penalty upon the appellant under section 114A of the Customs Act. 2. Customs Appeal No. 50707 of 2020 has been filed by Raunaq Kapoor, Director of the appellant, to assail that part of the order dated 12.12.2019 passed by the Principal Commissioner that imposes a penalty upon him under section 112 of the Customs Act. 3. Customs Appeal No. 50708 of 2020 has been filed by Amarjeet Kapoor, Director of the appellant, and Partner of M/s. Kapoor N Company [Kapoor N Company] to assail that part of the order dated 12.12.2019 passed by the Principal Commissioner that imposes penalties upon him under section 112 of the Customs Act. 4. Customs Appeal No. 50709 of 2020 has been filed by Sandeep Kapoor, Director of the appellant, and Partner of Kapoor N Company to assail that part of the order dated 12.12.2019 passed by the Principal Commissioner that imposes penalties upon him under section 112 of the Customs Act. 5. Customs Appeal No. 50710 of 2020 has been filed by Kapoor N Company to assail that portion of the order dated 12.12.2019 passed by the Principal Co....
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....er, the DRI issued a show cause notice dated 06.10.2017 after 4 years 363 days from the date of search. In the show cause notice, as against 4424 watches that were initially detained at the time of search, DRI confined its case only to 838 watches on the ground that in respect of 807 watches serial numbers were not mentioned in the import documents; in respect of 24 watches model number and serial number mis-matched with model number and serial number mentioned in the import documents; and in respect of 7 watches the appellant could not furnish any documents. The show cause notice proposed a demand of customs duty amounting to Rs. 4,66,79,491/- with interest by invoking the extended period of limitation under section 28(4) of the Customs Act. The show cause notice also proposed confiscation of the watches and penalty under sections 112 or 114A of the Customs Act. 12. DRI also issued a show cause notice dated 08.10.2013 to Amit Kumar proposing confiscation of the 14 watches recovered from him, besides proposing imposition of penalty upon him under section 112, section 114 and section 114AA of the Customs Act. Amit Kumar filed Writ Petition (C) No. 417 of 2014 before the Delhi Hig....
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....As the details of Sl. No. or Model No. or Sl. No. and Model No. of the watch as given in the Panchnama and as given in the Import Document/Invoice in respect of 24 watches (Marked as BM in the verification charts) as detailed below do not match, it appears that the documents submitted do no pertain to the detained watches which leads to the conclusion that these watches have been illegally imported into India by resorting to smuggling. 17.1 Further, no documents relating to purchase/import in respect of 7 watches, as mentioned below (Marked as Y in the verification chart) have been produced, hence, it appears that these watches have been illegally imported into India by resorting to smuggling. 17.3 Further for 807 watches (as per Annexure - A), the details of Serial No. of the watches were not available on the import documents / supplier invoice, hence, it appears that these watches have been illegally imported into India by resorting to smuggling.***** ***** 21.1 Whereas, it appears that M/s Kapoor Watch Company Pvt. Ltd. and M/s Kapoor N Company, controlled by Shri Sandeep Kapoor (Director in M/s Kapoor Watch Company Pvt. Ltd. and Partner in M/....
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....ugh at the time of Search, Serial Numbers were found on the watches and mentioned in the Panchnamas drawn at the spot but the Serial Numbers were not found mentioned in the procurement / purchase documents, Noticee submits that neither under the Customs Act, 1962 or Rules made thereunder, nor under Foreign Trade (Development & Regulation) Act, 1992 or Rules thereunder, nor under the Central Sales Tax Act, 1956 and Delhi VAT Act, 2004 there is any requirement to maintain records with reference to Serial Number. At all the Customs ports throughout India, watches were imported by various importers and cleared by the Customs Officers with reference to Model Numbers only. 8.2 It was only with effect from March, 2015 in compliance to DRI's Alert Circular that the Custom Officers started insisting upon inclusion of Serial Number of the watches exceeding the price of Rs. 5,00,000/- in the invoices and accordingly Noticee also started insisting the supplier to mention the Serial Numbers in the invoices and started entering the same in the Bills of Entry. Prior to March, 2015 there was no practice of mentioning the Serial Number on the Bills of Entry or Invoices and the Customs ....
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....pplied) 17. In respect of 24 watches falling under category BM, the appellant submitted that: "8.5 As regard the watches categorized by DRI in category B.M. Noticee submits that discrepancies pointed out by DRI are ex-facie frivolous and were duly explained by the Accountant and Shri Sandeep Kapoor in his statement dated 25.02.2016 ***** ***** 8.6 Noticee categorically states that the documents furnished in respect of these 24 watches pertained to these watches only and any mismatches pointed out by DRI cannot negate this fact." (emphasis supplied) 18. In regard to the invocation of the extended period of limitation under section 28(4) of the Customs Act, the appellant submitted: "9.3 It is undisputed that on 09.10.2012 when the searches were conducted all the 838 watches impugned in the Show Cause Notice were available in the show rooms and duly entered in the Stock Registers along with the date of procurement of respective watches and as per Stock Register, all these watches were received and entered into Stock Register much before the date of search. Therefore, the watches having been imported or purchased more than 5 years prior to t....
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....respective Panchnamas (as detailed in Annexure -A to this SCN) no import documents were produced or the documents produced did not pertain to these detained watches and therefore these imported watches were procured by M/s Kapoor Watch Company Pvt. Ltd. and M/s Kapoor N Comnpany by resorting to smuggling. Further. the watches are covered under Section 123 of the Customs Act, 1962, and the burden of proof for licit possession of the above-said 838 imported watches was on M/s Kapoor Watch Company Pvt. Ltd. and M/s Kapoor N Company and they have failed to produce documents relating to licit import and possession of these watches. As explained in the Show Cause Notice, no documents could be submitted by Noticees in respect of 07 watches, documents submitted did not match with the details of the goods in respect of 24 watches in major mismatch and in 807 case Sl. No. were not given in import document viz supplier invoice. The contention of noticee company that there was no requirement to mention Sl. No. in import document before DRI issued alert circular in March 2015, does not stand against Section 123 of the Customs Act, 1962. In terms of the said section, the onus to prove the licit ....
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....espect of 807 watches falling under category C on the ground that serial numbers were not mentioned in the import documents. All the Bills of Entry were assessed by the custom officers after scrutiny of the documents and the watches were released after due examination and no objection was raised that serial numbers of the watches should have been mentioned in the Bills of Entry; (ii) There was no requirement of mentioning the serial numbers of the watches in the Bills of Entry at that time and it was only on 05.03.2015 that the DRI issued an Alert Circular that serial numbers should be mentioned in the Bills of Entry; (iii) The findings recorded by the Principal Commissioner in respect of 24 watches falling under category BM and 7 watches falling under category Y are also erroneous; (iv) The show cause notice was issued even after the expiry of five years from the date of submissions of Bills of Entry and, therefore, the demand could not have been confirmed; (v) The findings have been recorded on the basis of the statement made by co-noticee, Amit Kumar, under section 108 of the Customs Act. This statement cannot be considered as relevant as the ....
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.... in category Y recovered from the appellant. 26. According to the appellant, all these watches had been imported prior to 2012 and the proper officers had cleared the goods after examination of the relevant import documents. It is only when the DRI intercepted a foreign national on 08.10.2012 with 2 watches that investigation started. The foreign national stated in the statement made under section 108 of the Customs Act that he had brought these 2 watches illicitly without declaration to customs to handover those to Amit Kumar. Amit Kumar, in his statement recorded on 08.10.2012, stated that he was an employee of the appellant and had taken the delivery of the said 2 watches on behalf of the Director of the appellant. 27. A search was carried out by the DRI at 7 showrooms of the appellant, service center of sister concern and showroom of Kapoor N Company and the residence of the Directors of the appellant on 09/10.10.2012. The show cause notice was, however, issued to the appellant and others on 06.10.2012 in respect of 838 watches (807 + 24 + 7). 28. The allegation against the appellant in respect of 807 watches is that the serial numbers were not mentioned in the Bills o....
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....o. and model no. of the wrist watch is invariably mentioned in the bill of entry as well as invoice/packing list. 3. In view of the above, it is requested that field formations under your charge may be suitably alerted with direction for taking necessary action in the matter. Action taken by the field formations and results achieved in this regard may be communicated to this Directorate in due course." (emphasis supplied) 30. The contention of the appellant that there was no necessity of mentioning the serial numbers in Bills of Entry at the relevant time when these 807 watches were imported, therefore, deserves to be accepted. This apart, at the time of import of these watches, the customs officers had cleared the goods after examination and if there was any necessity of mentioning the serial number of the watches, the customs officers would have noticed this fact at that point of time. 31. In respect of 24 watches in category BM, the show cause notice alleges that the serial number or model number of the watches as mentioned in the Panchnama does not match with the import documents/invoice and, therefore, the documents submitted by the appellant do not pertain t....
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....statement or suppression of facts, the proper officer can issue the show cause notice within five years from the relevant date. The relevant date has been provided in Explanation 1 to mean the date on which the proper officer makes an order for clearance of the goods. 37. In the present case, it is not in dispute that all the 838 watches were imported prior to 2012 and were duly entered in the stock register of the appellant. The dates entered in the stock register would be only after the date when the watches were imported. The import documents also reveal that the watches were imported prior to 2012. There is, therefore, substance in the contention of the appellant that show cause notice could not have been issued in the present case as more than five years had elapsed from the relevant date. 38. This apart, the show cause notice has presumed the relevant date to be the date when the search was carried out on 08/09.10.2017. It has, therefore, been alleged that the extended period of limitation of five years could be invoked. In the first instance, this assumption is not justified as the relevant date cannot be the date on which the search was carried out. Secondly, the show....
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.... placed in the impugned order by the Principal Commissioner on various statements made under section 108 of the Customs Act to hold that the watches were smuggled. These statements cannot be treated as relevant since the procedure contemplated under section 138B of the Customs Act was not followed. 43. This is what was held by the Division Bench of the Tribunal in M/s. Surya Wires Pvt. Ltd. vs. Principal Commissioner, CGST, Raipur [Excise Appeal No. 51148 of 2020 decided on 01.04.2025]. The Tribunal examined the provisions of sections 108 and 138B of the Customs Act as also the provisions of sections 14 and 9D of the Central Excise Act, 1944 and observed as follows: "21. It would be seen section 14 of the Central Excise Act and section 108 of the Customs Act enable the concerned Officers to summon any person whose attendance they consider necessary to give evidence in any inquiry which such Officers are making. The statements of the persons so summoned are then recorded under these provisions. It is these statements which are referred to either in section 9D of the Central Excise Act or in section 138B of the Customs Act. A bare perusal of sub-section (1) of these two s....
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....djudicating authority and the adjudicating authority forms an opinion that the statements should be admitted in evidence. It is thereafter that an opportunity has to be provided for cross-examination of such persons. The provisions of section 9D of the Central Excise Act and section 138B(1)(b) of the Customs Act have been held to be mandatory and failure to comply with the procedure would mean that no reliance can be placed on the statements recorded either under section 14D of the Central Excise Act or under section 108 of the Customs Act. The Courts have also explained the rationale behind the precautions contained in the two sections. It has been observed that the statements recorded during inquiry/investigation by officers has every chance of being recorded under coercion or compulsion and it is in order to neutralize this possibility that statements of the witnesses have to be recorded before the adjudicating authority, after which such statements can be admitted in evidence." (emphasis supplied) 45. The relevant findings of the Principal Commissioner regarding the imposition of penalty upon Amit Kumar are reproduced below: "56. I find that Shri Amit Kumar in hi....