2002 (11) TMI 597 - AT - Customs

Summary

Issues Involved:
1. Stay of operation of the impugned order.
2. Refund of deposits made by Shri V.K. Gandhi and M/s. Anant B. Timbadia & Company.
3. Liability and penalty under the Customs Act, 1962.
4. Adjustment of deposits towards duty and penalty.

Detailed Analysis:

1. Stay of Operation of the Impugned Order:
The Revenue filed applications for the stay of operation of the impugned order by the Commissioner of Customs, Mumbai, which confirmed a duty demand of Rs. 9,74,52,797/- against M/s. Kunal Overseas Limited and its Partner, and imposed a penalty of Rs. 10 crores. The Commissioner dropped proceedings against other co-noticees, including the respondents in the present applications. The Tribunal found no prima facie substance in the department's contention for stay and dismissed the application C/Stay-2398/2002.

2. Refund of Deposits Made by Shri V.K. Gandhi and M/s. Anant B. Timbadia & Company:
The Commissioner directed the refund of Rs. 2,00,30,000/- paid by Shri V.K. Gandhi and Rs. 20,00,000/- paid by M/s. Anant B. Timbadia & Company. The Revenue contended that these amounts should be adjusted towards duty and penalty against M/s. Kunal Overseas Limited. The Tribunal noted that the payment by Dimple Overseas Limited (on behalf of V.K. Gandhi) was accepted as a bargain deposit for seeking release from jail and was not towards duty. Similarly, the Rs. 20 lakhs paid by Anant B. Timbadia was not treated as duty in the show cause notice. Consequently, the Tribunal dismissed applications C/Stay-2450/2002-Mum. and C/Stay-2451/2002-Mum.

3. Liability and Penalty under the Customs Act, 1962:
The Tribunal noted that M/s. Kunal Overseas Limited was charged with obtaining advance licences under the DEEC scheme without a manufacturing unit, importing duty-free raw materials, and selling them in the domestic market, thus evading customs duty. The show cause notice proposed recovery of duty and penal action under Sections 112(a) and (b) or 114A of the Customs Act, 1962. The Commissioner confirmed the demand and imposed a penalty of Rs. 10 crores on M/s. Kunal Overseas Limited and Paresh Parekh jointly but dropped proceedings against other noticees. The Tribunal upheld the Commissioner's decision, noting that the show cause notice did not fix any legal liability to pay duty on Shri V.K. Gandhi or Anant B. Timbadia.

4. Adjustment of Deposits Towards Duty and Penalty:
The Revenue argued that the deposits made by Shri V.K. Gandhi/Dimple Overseas Limited and M/s. Anant B. Timbadia & Company should be adjusted towards the duty and penalty against M/s. Kunal Overseas Limited. The Tribunal found no prima facie case for such adjustment, noting that the deposits were not made towards duty but were accepted as a bargain deposit during the investigation. The Tribunal also noted that the amount paid by Dimple Overseas Limited was deposited in the Bombay High Court, and the High Court directed that the bank guarantee furnished for withdrawing the amount would stand discharged if no appeal was filed by the Revenue within three months or if no stay was granted.

Conclusion:
The Tribunal dismissed the stay applications against Shri V.K. Gandhi and Anant B. Timbadia, and the appeal and application against M/s. Anant B. Timbadia & Company were dismissed as not maintainable. The Tribunal upheld the Commissioner's order directing the refund of the amounts paid by Shri V.K. Gandhi and Anant B. Timbadia, finding no prima facie case for the adjustment of these amounts towards duty and penalty against M/s. Kunal Overseas Limited.