2018 (6) TMI 19 - AT - Customs

Penalty on proprietorship firm of appellant - proprietorship firm under the same name of different proprietor - name of firm was fraudulently used by some other importer, who was actual importer and fraudulently obtained IEC - appellant became the proprietor of the firm on 13.06.2008 on death of her father - Held that - The National Paper Agency against whom the order has been passed is not the present appellant i.e. National Paper Agency, under the proprietorship of Ms. Binal Damji Boricha. Therefore, Ms. Binal Damji Boricha has no locus standi to come in appeal against the order passed against National Paper Agency, wherein the present appellant was not the proprietor - In case of proprietorship, the name of the proprietorship firm is considered as fictitious; the identity of proprietor is recognised. Therefore the proprietorship firm under the same name of different proprietor is different from the proprietorship of the same name of another proprietor. The impugned order cannot be enforced on the present proprietor of National Paper Agency i.e. Ms. Binal Damji Boricha. However, the order is very much enforceable against the actual importers who fraudulently imported the goods by misusing the IEC and PAN no. of Shri Damji K. Boricha, for the reason that the import was made in August and September 2008 - appeal stands infructuous; hence disposed of.

Summary

Issues:
- Appeal against penalty imposition of ?10 lakhs on National Paper Agency
- Validity of penalty imposition on National Paper Agency under different proprietorship
- Enforcement of order against the actual importers
- Locus standi of Ms. Binal Damji Boricha to appeal against the order

Analysis:
1. Appeal against Penalty Imposition: The appeal was filed by National Paper Agency seeking to waive the penalty of ?10 lakhs imposed on the appellant. The imports in question were made during August to September 2008, after the previous proprietor, Shri Damji K. Boricha, had passed away. The appellant argued that the Importer Exporter Code (IEC) used for the imports was fraudulently obtained by another importer, making the penalty imposed on National Paper Agency unjust.

2. Validity of Penalty Imposition: The Tribunal observed that the National Paper Agency mentioned in the impugned order was under a different proprietorship, not under the ownership of Ms. Binal Damji Boricha, the present appellant. In a proprietorship firm, the identity of the proprietor is recognized, and the name of the firm is considered fictitious. Therefore, the National Paper Agency against whom the order was passed is distinct from the one owned by Ms. Binal Damji Boricha. The Tribunal clarified that the impugned order cannot be enforced against the present appellant and that the penalty should be enforced against the actual importers who fraudulently used the IEC and PAN details of the deceased proprietor.

3. Enforcement of Order Against Actual Importers: The Tribunal emphasized that the order should be enforced against the actual importers who misused the IEC and PAN details of the deceased proprietor, as they were the ones responsible for the fraudulent imports made after the proprietor's demise. This distinction was crucial in determining the parties against whom the penalty should be enforced, ensuring that the culpable entities faced the consequences of their actions.

4. Locus Standi of Ms. Binal Damji Boricha: The Tribunal concluded that since the order was not enforceable against the National Paper Agency under the proprietorship of Ms. Binal Damji Boricha, the appeal became infructuous. Therefore, the appeal was disposed of accordingly, with the Tribunal pronouncing the decision on 11/05/2018. The judgment highlighted the importance of legal identity and proprietorship distinctions in determining liability and enforcement of penalties in cases involving fraudulent practices in imports.