2014 (5) TMI 714 - AT - Customs

Penalty u/s 112 - Mis declaration of goods - Goods declared as Chicpeas - ownership of goods - financier of importer - Held that - goods were declared in the IGM as Chic Peas and the IGM was in the name of M/s. Dhanlaxmi Enterprises (I). Section 2(26) of the Customs Act, 1962, defines who the importer is. As per the said provisions, the importer is who files the Bill of Entry for importation of the goods and who claims the owner of the goods. Admittedly, in this case no Bill of Entry has been filed and nobody claimed to have imported the goods, although the findings of the adjudicating authority state that Shri Ravi Divecha was the master-mind to import the goods. In that case, it cannot be held that Shri Ravi Divecha or Shri Pravin Gupta are the importers of the impugned goods. As nobody has claimed to be owner of the goods therefore, as per the IGM the importer is only M/s. Dhanlaxmi Enterprises (I). If at all penalty is to be imposed that has to be considered by the adjudicating authority during the adjudication proceedings. In this case, a penalty of ₹ 50,000/- have also been confirmed against Shri Mukund Mayani, proprietor of M/s Dhanlaxmi Enterprises (I). Further, it is on record tht Shri Pravin Gupta has financed a sum of ₹ 5,00,000/- to Shri Ravi Divecha on persuasion of Shri Jayesh Gosalia, who is not an impugned party to the show-cause notice. To finance an importer does not make the appellants being importer of the goods and in the case of Ashwin Doshi (supra) this Tribunal held that although the appellant has financed for the importation of the consignments but there is no whisper about the ownership and the financer having handled or have made any declaration on the Bill of Entry filed, penalty under Section 112(a) cannot be imposed - decided in favour of assessee.

Summary

Issues:
Imposition of penalties under Section 112(i) of the Customs Act, 1962 on appellants Shri Pravin Gupta and Shri Ravi Divecha for alleged involvement in smuggling cloves mis-declared as chicpeas.

Analysis:

Issue 1: Alleged Involvement of Shri Pravin Gupta
The case involved penalties imposed on Shri Pravin Gupta for financing a loan of Rs. 5,00,000/- to Shri Ravi Divecha for importing the smuggled goods. The appellant argued that he was not involved in the consignments and merely provided financial support. The appellant contended that since no Bill of Entry was filed by anyone for the import, the question of mis-declaration did not arise, making penalties under Section 112(i) inapplicable. The appellant relied on various tribunal decisions and a judgment of the Bombay High Court to support his case. The Tribunal held that without a filed Bill of Entry, the financier's involvement did not establish ownership or importation, thus penalties were not applicable to Shri Pravin Gupta.

Issue 2: Alleged Involvement of Shri Ravi Divecha
Regarding Shri Ravi Divecha, the case alleged him to be the mastermind behind the importation, but he claimed only a commission and did not file a Bill of Entry. The appellant argued that without a filed Bill of Entry, mis-declaration could not be proven, and hence, penalties were not warranted. The appellant cited tribunal decisions to support this argument. The Tribunal found that since no Bill of Entry was filed by Shri Ravi Divecha and he did not claim ownership, penalties under Section 112(i) were not justified.

Issue 3: Interpretation of Importer under Customs Act
The Tribunal analyzed the definition of an importer under Section 2(26) of the Customs Act, emphasizing that the entity filing the Bill of Entry and claiming ownership is considered the importer. In this case, as no one claimed ownership or filed a Bill of Entry except M/s. Dhanlaxmi Enterprises (I), penalties could only be considered against the said entity. The Tribunal highlighted that financing importation did not establish ownership, as seen in previous tribunal rulings. Therefore, penalties on both Shri Pravin Gupta and Shri Ravi Divecha were deemed not applicable due to the absence of filed Bill of Entry and ownership claims.

In conclusion, the Tribunal allowed the appeals, stating that penalties were not warranted based on the lack of filed Bill of Entry and ownership claims by the appellants. The judgment emphasized the importance of establishing ownership and importation through filed documentation to impose penalties under the Customs Act, 1962.