2019 (6) TMI 1034 - AT - Customs

Diversion of goods imported for exhibition instead of re-export - appellant have used ATA Carnet route by importing, under the guise of exhibitions at Delhi and Mumbai, and diverting the same without payment of duty instead of re-exporting - HELD THAT - In the instant case, it is clear that M/s Billiards Tulsa Inc USA have the Carnets No.US 5/97 09282 and US 5/97 09296; a Guarantee was given by the FICCI for the importation of the same in terms of the Notification No 157/90-Cus dated 28-3-1990 and agreeably M/s Billiards Tulsa Inc USA have applied to Ministry of Finance, seeking permission to sell the goods in domestic market on finding unable to export. In case of any violations, by M/s Billiards Tulsa Inc USA, like selling the goods to M/s J.K. International Revenue was free to take action as per law to recover duty and other dues if any as per the law laid down therein. If M/s J.K. International have sold the goods in domestic market and realized Customs duty, Revenue could invoke suitable provisions of Law to recover that amount from M/s J.K. International. It is not open to department to recover the duty from M/s JK International in terms of proviso to Section 28 of Customs, Act, 1962. Therefore, to that extent, the show cause notice and the order is not maintainable. As the demand made on M/s J.K. International is not sustainable under Section 28 of Customs Act, 1962, we are not going in to the merits of valuation of the goods. Imposition of penalties - HELD THAT - There is force in the submissions made by the Learned AR that Shri Jeetendra Shah, in his statement recorded during investigation, stated that he along with Shri Mukesh J. Shah and Shri R. D. Mehta had supervised the imports under ATA Carnet; all the imports were at the behest and directions of Shri Mukesh J. Shah and he acted as per directions of Shri Mukesh J. Shah; Billiards of Tulsa sold all the machines to M/s. J. K. International, which were subsequently sold to M/s. Galaxy Fun world Pvt. Ltd. It is pertinent to note that the statement was not retracted and therefore, has evidentiary value - both M/s J.K. International and Shri Jeetendra H Shah have rendered themselves liable for penalty under Section 112 of the Customs, Act, 1962, however quantum is reduced. As it is held that duty cannot be recovered from M/s J. K. International under the provisions of Section 28 of Customs Act, 1962, consequentially question of penalty under Section 114 A doesn t arise. Appeal allowed in part.

Summary

Issues Involved:
1. Legality of duty demand on M/s. J.K. International.
2. Validity of confiscation and valuation of imported amusement machines.
3. Imposition of penalties on M/s. J.K. International, Shri Jeetendra H. Shah, M/s. Billiards of Tulsa, M/s. Galaxy Fun World, and Shri Mukesh J. Shah.
4. Non-imposition of penalty under Section 114A of the Customs Act, 1962.

Detailed Analysis:

1. Legality of Duty Demand on M/s. J.K. International:
The appellant argued that M/s. J.K. International was neither the importer nor in possession of the goods when seized, thus not liable for duty under Section 28 or Section 124 of the Customs Act, 1962. The Tribunal found merit in this argument, noting that the goods were imported by M/s. Billiards Tulsa Inc. USA under ATA Carnet and sold to M/s. J.K. International, who then sold them to M/s. Galaxy Fun World Pvt. Ltd. The Tribunal concluded that the demand for duty from M/s. J.K. International was not sustainable under Section 28 of the Customs Act, 1962.

2. Validity of Confiscation and Valuation of Imported Amusement Machines:
The Tribunal noted that the goods were imported under ATA Carnet for exhibition purposes and were supposed to be re-exported. Instead, they were sold domestically without paying customs duty. The Tribunal found that the valuation of amusement machines was not properly followed as per the Valuation Rules, particularly in the de novo proceedings. The Tribunal emphasized that the valuation should not be based on statements but on proper valuation rules.

3. Imposition of Penalties:
The Tribunal held that while the duty demand on M/s. J.K. International was not sustainable, the penalties under Section 112 of the Customs Act, 1962, were justified due to their role in rendering the goods liable for confiscation. The penalties on M/s. J.K. International and Shri Jeetendra H. Shah were reduced considering the age of the case and litigation circumstances. The penalties on M/s. Galaxy Fun World and Shri Mukesh J. Shah were dismissed due to non-prosecution.

4. Non-imposition of Penalty under Section 114A of the Customs Act, 1962:
The Tribunal found that the imposition of penalties under both Section 112 and Section 114A was not tenable under the law. Since the duty demand under Section 28 was not sustainable, the question of penalty under Section 114A did not arise. Consequently, the Revenue's appeal for imposing penalties under Section 114A was dismissed.

Conclusion:
The Tribunal modified the impugned order, holding that the duty demand on M/s. J.K. International was not sustainable. The penalties on M/s. J.K. International and Shri Jeetendra H. Shah were reduced, and the redemption fine was also reduced. Appeals by M/s. Billiards of Tulsa, M/s. Galaxy Fun World, and Shri Mukesh J. Shah were dismissed for non-prosecution. The Tribunal emphasized the importance of following proper legal provisions and valuation rules in customs duty cases.