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1991 (2) TMI 140 - SC - CustomsWhether before obtaining clearance of the machinery imported under import licence dated February 14 1979 the appellant had informed the customs authorities that the said machinery had been transferred to the Company under agreement dated July 31 1979? Held that - The appellant after getting goods cleared from the customs transferred the same to the Company and thereby the appellant failed to observe the condition on the basis of which the benefit of concessional rate of duty under Heading 84.66 of the Customs Tariff was obtained. The goods were therefore liable to confiscation under Clause (o) of Section 111 of the Act and penalty could be imposed under Section 112 of the Act. As mentioned earlier the difference between the duty payable and the duty actually paid by the appellant was 1, 26, 163.45 and the maximum amount of penalty that could be imposed was five times of that amount. Keeping in view the facts and circumstances of the case the Collector has imposed a penalty of 50, 000/- which imposition has been upheld by the Appellate Tribunal. We find no ground for interfering with the said direction about imposition of penalty. Appeal dismissed.
Issues Involved:
1. Suppression and wilful misstatement of facts. 2. Re-assessment of customs duty. 3. Imposition of penalty. Detailed Analysis: 1. Suppression and Wilful Misstatement of Facts: The appellant, a partnership firm, imported machinery under an import licence dated February 14, 1979, for the expansion of its business. The firm later transferred its business, including the import licence, to a newly incorporated company. The customs authorities issued a show cause notice on June 4, 1982, alleging that the appellant had not installed the imported machinery in its premises and had misdeclared and suppressed facts to claim the benefit of concessional customs duty under Heading 84.66 of the Customs Tariff. The appellant contended that it had informed the Deputy Chief Controller of Imports & Exports about the transfer of business and machinery. However, the customs authorities argued that the appellant did not inform them about the transfer before obtaining clearance of the machinery. The court held that the customs authorities' action was based on the contravention of the Customs Act, not the breach of import licence conditions, and thus, the appellant's argument was irrelevant. 2. Re-assessment of Customs Duty: The appellant filed a Bill of Entry and an application for registration under the Project Import (Registration of Contracts) Regulations, 1965, declaring that the imported machinery was for substantial expansion of its existing unit. The customs authorities assessed the duty at a concessional rate under Heading 84.66. However, since the appellant transferred the machinery to the new company instead of using it for its own expansion, the concessional rate was deemed inapplicable. The court held that this constituted a short levy of customs duty, justifying the re-assessment under Section 28 of the Customs Act. The enhanced period of five years for issuing the show cause notice was applicable due to the wilful misstatement and suppression of facts by the appellant. 3. Imposition of Penalty: The Collector imposed a penalty of Rs. 50,000/- on the appellant under Section 112 of the Customs Act, which was upheld by the Appellate Tribunal. The court noted that the penalty was justified under Clause (o) of Section 111, as the appellant had failed to observe the conditions for concessional duty by transferring the machinery to the new company. The maximum penalty under Section 112 could be five times the duty sought to be evaded. Given the duty difference of Rs. 1,26,163.45, the imposed penalty was within the permissible limit. The court found no grounds to interfere with the penalty imposition. Conclusion: The appeal was dismissed, affirming the re-assessment of customs duty and the imposition of a penalty, with no order as to costs.
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