2001 (2) TMI 246 - AT - Customs

Summary

Issues Involved:
1. Validity of the import license.
2. Confiscation of goods and imposition of penalties.
3. Acceptance of additional evidence.
4. Demand for differential duty and extended period of limitation.
5. Penalties under different provisions of the Customs Act.

Summary:

1. Validity of the Import License:
The Tribunal examined the validity of the Special Import Licence (SIL) used by M/s. H. Kumar Gems for importing silver bars. The investigation revealed that the SIL presented was fake, as confirmed by the DGFT, Pune. However, M/s. H. Kumar Gems later produced fresh SILs valid on the date of importation, which were accepted by the Customs authorities after verification. The Tribunal upheld the appellant's contention that the subsequent production of valid SILs should regularize the import, based on DGFT's clarification and established departmental practice.

2. Confiscation of Goods and Imposition of Penalties:
The Tribunal reviewed the charges against M/s. H. Kumar Gems and other appellants for violating various provisions of the Customs Act and Export-Import Policy. The Tribunal found that the original SIL was indeed fake, but the subsequent valid SILs regularized the import, negating the grounds for confiscation. Consequently, the penalties imposed under Section 114A and Section 112(a) of the Customs Act were not sustainable. The Tribunal allowed the appeals of M/s. H. Kumar Gems and Ms. Sunita Goel, setting aside the penalties. However, for Mrs. Vidya Mahadik, Sanjay Rai, and Suresh Chopra, the Tribunal reduced the penalties to Rs. 25 lakhs each, recognizing their roles in the transaction chain.

3. Acceptance of Additional Evidence:
The department sought to introduce additional evidence in the form of a show cause notice dated 29-5-2000, covering similar charges against the appellants involving 22 import licenses. The Tribunal allowed the production of this evidence for consideration, deeming it supportive and corroborative rather than filling any gaps in the original case.

4. Demand for Differential Duty and Extended Period of Limitation:
The Tribunal scrutinized the demand for differential duty under the proviso to Section 28(1) of the Customs Act. The show cause notice and subsequent corrigenda were found to be vague and not substantiated by cogent reasons. The Tribunal concluded that the demand was time-barred and that the extended period of limitation could not be invoked. Consequently, the demand for differential duty was not upheld.

5. Penalties under Different Provisions of the Customs Act:
The Tribunal examined the applicability of penalties under Section 114A and Section 112(a) of the Customs Act. Given the acceptance of subsequent valid SILs and the lack of clear evidence of suppression or misstatement by M/s. H. Kumar Gems, the Tribunal found that the penalties under these sections were not justified. The penalties imposed on Mrs. Vidya Mahadik, Sanjay Rai, and Suresh Chopra were reduced, considering their involvement in the transaction chain but recognizing mitigating factors.

Conclusion:
The appeals of M/s. H. Kumar Gems and Ms. Sunita Goel were allowed, setting aside the penalties. The penalties on Mrs. Vidya Mahadik, Sanjay Rai, and Suresh Chopra were reduced to Rs. 25 lakhs each. The department's appeal was dismissed, and the Tribunal's order was modified accordingly.