1993 (11) TMI 142 - AT - Customs

Summary

Issues Involved:
1. Absolute confiscation of goods under Section 111(d) of the Customs Act.
2. Imposition of penalties on individuals.
3. Legitimacy of importer status and clearance of goods.
4. Requests for redemption of goods and production of valid licences.
5. Procedural fairness in adjudication and issuance of show cause notices.

Detailed Analysis:

1. Absolute Confiscation of Goods under Section 111(d) of the Customs Act:
The Collector of Customs ordered the absolute confiscation of 75 cartons of staple pins valued at Rs. 76,121/- under Section 111(d) of the Customs Act. The consignment was imported under the Import Export Pass Book Scheme fraudulently. The goods were ordered by an individual (referred to as the appellant) using a pass book purchased on a premium, and the Bill of Entry was filed in the name of M/s. Vikram Overseas. The Collector's decision was based on the discovery of fraudulent activities, including the sale of pass books on premium and the diversion of goods into the market.

2. Imposition of Penalties on Individuals:
Penalties were imposed on several parties, including the three appellants before the Tribunal. The penalties were as follows:
- Shri Biren Shah: Rs. 50,000/-
- Shri Mahendra Sheth: Rs. 20,000/-
- Shri Kishore Bhagat: Rs. 20,000/-

The penalties were imposed under Section 112(a)(ii) of the Customs Act for their involvement in the trafficking of goods imported duty-free under the Import Export Pass Book Scheme.

3. Legitimacy of Importer Status and Clearance of Goods:
The appellant, Shri Biren Shah, claimed to be the importer as per Section 2(26) of the Customs Act, arguing that he placed the order and the supplier transferred the documents to him after M/s. Vikram Overseas disclaimed the goods. However, the Tribunal found that M/s. Vikram Overseas had already held themselves out as the importer by filing the Bill of Entry. The Tribunal ruled that the substitution of the importer was not permissible, especially in cases involving fraud, as per Section 30(3) of the Customs Act.

4. Requests for Redemption of Goods and Production of Valid Licences:
Shri Biren Shah requested the clearance of goods on payment of duty or the production of a valid REP licence. He also sought redemption of the goods on payment of a reasonable fine if the request for clearance without fine was not agreed upon. The Tribunal rejected these requests, noting that the appellant did not reveal the possession of any valid licence during the adjudication proceedings. The Tribunal emphasized that allowing such requests would perpetuate fraud by enabling the acquisition of backdated licences.

5. Procedural Fairness in Adjudication and Issuance of Show Cause Notices:
The Tribunal found that the adjudicating authority's findings regarding Shri Mahendra Sheth and Shri Kishore Bhagat were cryptic and lacked specific allegations and evidence. The penalties imposed on them were remanded for de novo consideration by the Collector. The Tribunal directed that specific allegations and supporting evidence should be clearly communicated to the appellants, either through a show cause notice or orally during a hearing, and recorded in the order.

Conclusion:
- The order of absolute confiscation of goods was upheld.
- The penalty on Shri Biren Shah was reduced to Rs. 25,000/-.
- The appeals of Shri Mahendra Sheth and Shri Kishore Bhagat were remanded for de novo consideration due to procedural deficiencies in the original adjudication.