1981 (2) TMI 91 - SC - Customs

Order under Section 111(d) of the Act which provides for confiscation of improperly imported goods, personal penalty and fine in lieu of confiscation challenged Held that - On the material produced before us it seems there may be some basis for the grievance made. Of course the fine to be imposed in lieu of confiscation is in the discretion of the customs authorities, but it would be unfair if the punishments awarded respectively to the appellants and the licensee mills were glaringly disproportionate when, as would appear from the facts summarised above, both were guilty of trafficking in licence. Accordingly, while affirming the decision of the Government of India on other points, we set aside the part of the impugned orders maintaining the fines levied by the Board and send the cases back to the Board to consider whether the fines imposed on M/s. Madhusudan Gordhandas are really disproportionate to the penalty imposed on the licensee mills and levy such fines as would appear just and proper to the Board on such consideration. The Bank Guarantee furnished by the appellants for clearing the goods in question pursuant to the orders of this Court will remain enforceable till the final disposal of these cases. Appeal allowed in part.

Summary

Issues:
1. Interpretation of transactions involving import licences and goods under the Customs Act, 1962.
2. Determination of the real importers and owners of the goods in question.
3. Application of legal principles regarding the transfer and sale of import licences.
4. Consideration of fines imposed for trafficking in licences and proportionality of penalties between different parties involved.

Detailed Analysis:
1. The judgment pertains to six appeals arising from orders passed by the Central Government under Section 131 of the Customs Act, 1962. The appeals involved orders by the Central Board of Excise and Customs regarding confiscation of goods and imposition of penalties under Section 111(d) of the Act. The Board allowed redemption of goods on payment of fines and remitted personal penalties imposed by the Collector of Customs.

2. The cases involved transactions under the Cotton Textiles Export Incentive Scheme where import licences were issued for various textile items. The agreements for sale of goods were made with a private company, and the import process was managed by another entity. The Customs authorities found that the managing entity acted as the real importer and owner of the goods, leading to confiscation and penalties.

3. The Customs authorities, Board, and Government of India determined that the managing entity was the actual importer and owner of the goods, despite the licences being in the name of textile mills. The authorities rejected arguments regarding the transfer of import quotas only and not licences, emphasizing that the actions amounted to trafficking in licences, which is prohibited by law.

4. The judgment addressed the imposition of fines for trafficking in licences and highlighted a potential disparity in penalties between the managing entity and the textile mills. While affirming most decisions, the Court set aside fines and remanded the cases to the Board to reconsider the proportionality of penalties imposed on different parties. The Bank Guarantee provided by the appellants was to remain enforceable until final disposal of the cases.