2017 (10) TMI 1135 - AT - Customs

Penalty - import of mobile phones - restricted item or not - conspiracy to import goods - front/ bogus firms - Held that - The investigation carried out at DRI established that Shri Preet Mohinder Singh along with Shri Mukesh Arora and Shri Ankur Gupta have conspired in misusing IEC code number of Shri Anil Kumar, Proprietor of M/s. Samay International for a monetary consideration of ₹ 15000/- to ₹ 20,000/- per month. Shri Preet Mohinder Singh along with others ordered importation of mobile phones. Investigation has further established that the goods have been mis-declared in terms of description as well as value - Shri Preet Mohinder Singh has played a vital role in illegal import of mobile phone using the IEC code number of M/s. Samay International. Penalty imposed on Shri Preet Mohinder Singh upheld - appeal dismissed - decided against appellant.

Summary

Issues:
1. Misuse of Import Export Code (IEC) by syndicates in Delhi.
2. Allegations of under-invoicing and evasion of customs duty.
3. Confiscation of imported goods and imposition of penalties.
4. Ownership and liability of individuals involved in the smuggling activity.

Analysis:
1. The case involved an investigation by the Delhi Zonal Unit of DRI into syndicates operating in Delhi engaged in under-invoiced imports using bogus firms like M/s. Samay International. The syndicates remitted illegal funds abroad through these firms. Searches and statements were conducted, leading to a show cause notice against M/s. Samay International.

2. The DRI alleged that M/s. Samay International was a front firm, with individuals like Shri Mukesh Arora and Shri Ankur Gupta involved in importing goods under false pretenses. The imported goods were found to be misdeclared, with mobile phones replaced by tablet PCs to evade customs duty. The order-in-original enhanced the value of imported goods and ordered confiscation, along with imposing penalties on involved individuals.

3. The Commissioner (Appeals) upheld the order-in-original, leading to appeals by Shri Anil Kumar and Shri Preet Mohinder Singh. Arguments were made regarding the justification for confiscation, ownership of goods, and involvement in the smuggling activity. The Revenue contended that the misuse of IEC codes and misdeclaration warranted confiscation and penalties, which were rightly imposed.

4. The judgment affirmed the findings of misuse of IEC codes by Shri Anil Kumar, Shri Preet Mohinder Singh, and others. Shri Anil Kumar allowed his firm's IEC code to be used for illegal activities, leading to the confiscation of goods and imposition of penalties. Shri Preet Mohinder Singh's involvement in the conspiracy was also established, justifying the penalties imposed on him. The appeals were rejected, upholding the impugned order.

This detailed analysis covers the issues of misuse of IEC, under-invoicing, confiscation of goods, penalties, and the liability of individuals involved in the smuggling operation as addressed in the judgment by the Appellate Tribunal CESTAT NEW DELHI.