2017 (5) TMI 593 - AT - Customs

Undervaluation of imported goods - Brass Scrap, Electrolytic Copper Wire Bars/ Rods, LLDPE etc - ITC violation - mis-declaration of importer s relationship with the suppliers - non-existent importing firms - Confiscation - penalty - Held that - it is very much clear that the intention of the supplier as well as importing firms were not bonafide. M/s Donald did not come forward to show as to how they have entered into contracts with these non existing firms - Even during investigation or in adjudication process the bonafides of these firms could not be proved - The Appellant had been taking a ground that not having an IEC code is a procedural requirement but does not entitle the imported goods liable for confiscation. However it is to be seen that it is not the case of simply non availability of IEC Code but also that the importing firms were non existent which shows that the goods were intended to be imported improperly and thus making them liable for confiscation. The sale proceeds of the export goods cannot be remitted to the Appellant M/s Donal Macarthy. Moreover, no evidence of sale of the good were brought on records. Even if it is assumed that the imported goods in question has been disposed of by the custom/custodian, this is not the subject matter of this appeal, hence the issue, of sale of the goods and it s proceed, can not be entertained in the present appeals. Penalty on M/s Donald Macarthy and its Directors - Held that - the said appellant concern and its directors were solely responsible for sending goods to India in violation of customs laws. Hence the penalties were rightly imposed upon the appellant company and it s directors. Penalty on other two appellants Shri Deendayal Didwania and Shri Navneet Kumar Didwania - Held that - during searches no incriminating documents were found and no contumacious conduct or evidence has been brought on record which can show involvement of the said persons in importation of impugned goods. No instance has been brought to show that the Appellants attempted to clear the imported goods. Though some of the past consignments might have been cleared by these two appellants, however we find that no violation in import of those goods has been alleged - The only piece of evidence relied upon for imposing penalties on these two appellants is copy of auction notice issued by BPT in respect of consignments of Marvel Impex. We find that firstly, this is a public auction notice of BPT, secondly, investigation could not establish any wrong doing on the part of these appellants with reference to the said public auction notice - penalties cannot be imposed. Appeal allowed - decided partly in favor of appellant.

Summary

Issues Involved:
1. Confiscation of imported goods under Section 111(d) of the Customs Act, 1962.
2. Imposition of penalties under Section 112(a) of the Customs Act, 1962.
3. Legality of imports without Importer Exporter Code (IEC).
4. Ownership and reshipment of goods.
5. Validity of penalties on certain appellants.

Issue-wise Detailed Analysis:

1. Confiscation of Imported Goods:
The imported goods were ordered to be confiscated under Section 111(d) of the Customs Act, 1962, due to the violation of the Foreign Trade (Development & Regulations) Act, 1962. The investigation revealed that the goods were imported in the names of non-existent firms without IEC codes, rendering the imports illegal. The tribunal upheld the confiscation, stating that the absence of IEC codes and the non-existence of the importing firms indicated an intention to import goods improperly, making them liable for confiscation.

2. Imposition of Penalties:
Penalties were imposed under Section 112(a) on all appellants involved. The tribunal found that M/s Donald Macarthy and its directors were responsible for sending goods to India in violation of customs laws, justifying the penalties. However, penalties on Shri Deendayal Didwania and Shri Navneet Kumar Didwania were set aside due to the lack of incriminating evidence and contumacious conduct.

3. Legality of Imports without IEC:
The tribunal emphasized that possession of an IEC is a prerequisite for importation under Section 7 of the FT (DR) Act, 1992, and Rule 18 of the EXIM Policy. The absence of an IEC code and the non-existence of importing firms made the imports illegal. The tribunal rejected the appellants' argument that non-possession of an IEC was merely a procedural requirement, noting that it was a fundamental precondition for legal importation.

4. Ownership and Reshipment of Goods:
The tribunal found that M/s Donald Macarthy lost ownership of the goods once the title was transferred to non-existent firms without using legal banking channels. The request for reshipment was denied as no evidence was provided that the importing firms had refused to clear the goods. The tribunal held that the goods became prohibited due to the absence of an IEC and the non-existence of the firms, thus attracting the provisions of Section 111(d).

5. Validity of Penalties on Certain Appellants:
Penalties on M/s Donald Macarthy and its directors were upheld due to their direct involvement in the unauthorized importation. However, penalties on Shri Deendayal Didwania and Shri Navneet Kumar Didwania were quashed due to the absence of concrete evidence linking them to the importation of the impugned goods. The tribunal noted that no incriminating documents were found during searches, and their request for cross-examination of CHAs was unjustifiably denied.

Conclusion:
The appeals filed by M/s Donald Macarthy Trading Pte Ltd., Shri Vinod Kumar Didwania, and Smt. Nidhi Didwania were rejected, affirming the confiscation of goods and imposition of penalties. The appeals filed by Shri Deendayal Didwania and Shri Navneet Kumar Didwania were allowed, setting aside the penalties imposed on them.