2005 (7) TMI 19 - AT - Customs

Customs - Import- DEEC passbook misused for import of consignment which is non-entitle for benefit- No necessary document produced on demands by importer- Duty demand on impugned quantity set aside and Confiscation of two consignments set aside and penalty reduced by adjudicating authority

Issues Involved:

1. Misuse of Import-Export Passbook and diversion of duty-free imported materials.
2. Liability to customs duty on 9 consignments of dyes.
3. Confiscation of dyes under seizure.
4. Imposition of penalties under Section 112(a) of the Customs Act, 1962.
5. Confiscation and duty demand on 5 provisionally released consignments.

Issue-wise Detailed Analysis:

1. Misuse of Import-Export Passbook and Diversion of Duty-Free Imported Materials:

The case originated from information regarding the misuse of Import-Export Passbook and the diversion of duty-free imported materials by sale in the local market. Investigations revealed that the importer had obtained DEEC Pass Book 0011275 dated 30-3-89. Statements from clearing agents and other individuals showed that duty-free goods imported by the importer were not dispatched to the carpet factory at Varanasi but delivered to various local parties. These parties admitted to purchasing the Import-Export Passbook from manufacturers and exporting carpets, including the importer, and paying premiums for the goods. The clearing agents corroborated these admissions, and bogus lorry receipts were prepared to falsely show transport to the importer's factory.

2. Liability to Customs Duty on 9 Consignments of Dyes:

The importer claimed that the 9 consignments of dyes were used in their factory for manufacturing carpets, supported by Form 31, contingent vouchers, and ledger extracts. However, evidence showed that 4 consignments were delivered to local parties after clearance, corroborated by clearing agents and bogus lorry receipts. The importer failed to produce any documentary evidence to disprove this. Similarly, 3 consignments cleared by M/s. Shah & Mehta were also delivered to local parties, with no transport receipts or 'N' forms produced by the importer. The Commissioner concluded that the consumption register was concocted, and the statements were not voluntary retractions. Therefore, the duty demand of Rs. 41,97,964/- on 9 consignments was upheld.

3. Confiscation of Dyes Under Seizure:

The Commissioner confiscated 5 consignments of dyes provisionally released against bond and a consignment of dyes of Samron Brilliant Blue under Section 111(m) on the ground that the dye was not suitable for dyeing wool, which was not covered by the Import-Export Pass Book. However, the duty demand of Rs. 62,42,587/- on the 5 provisionally released consignments was set aside due to the absence of evidence showing their diversion and sale in the local market. The confiscation of 2 consignments of disperse dyes was also set aside as the Dy. Chief Chemist's report was not conclusive, and evidence showed that wool could be dyed with disperse dye.

4. Imposition of Penalties Under Section 112(a) of the Customs Act, 1962:

Penalties were imposed on the appellants due to the liability to duty on the 9 consignments. However, considering the facts and circumstances, the penalties were reduced as follows:
- M/s. Motilal & Bros. - Rs. 1,00,000/-
- Shri S. K. Barnwal - Rs. 25,000/-
- Shri Vasant Ajmera - Rs. 10,000/-
- Shri Sunil J. Shah - Rs. 10,000/-

5. Confiscation and Duty Demand on 5 Provisionally Released Consignments:

The duty demand of Rs. 62,42,587/- on 5 provisionally released consignments was set aside due to a lack of evidence of their diversion to the local market. The confiscation of 2 consignments of disperse dyes was also set aside due to inconclusive evidence regarding their suitability for dyeing wool.

Conclusion:

The appeals were partly allowed, with the duty demand on 9 consignments upheld, penalties reduced, and the duty demand and confiscation on 5 provisionally released consignments set aside.

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