2001 (3) TMI 421 - AT - Customs

Summary

Issues:
1. Interpretation of liability to confiscation of goods and imposition of penalty under Section 111.
2. Determination of the importer in a high sea sale transaction.
3. Application of penalty provisions under Section 112 of the Act.
4. Liability of brokers in customs transactions.

Issue 1: Interpretation of liability to confiscation of goods and imposition of penalty under Section 111.
The case involved the import of HDPE by M/s. Amichand Shantilal & Co., which was later sold to a non-existent company, M/s. Relaxo Plastics. The Customs Department discovered forged licenses and non-existence of the buyer. The Collector of Customs allowed clearance of goods on payment of duty. The Tribunal held that confiscation under Section 111 was not possible as the goods were permissible under the Open General License. The Tribunal dismissed the appeal by the Department seeking penalties, stating that since the goods were not liable to confiscation, penalties could not be imposed.

Issue 2: Determination of the importer in a high sea sale transaction.
In a similar case involving M/s. M.D. Corporation, the goods were also sold to the same non-existent company, M/s. Relaxo Plastics. The Collector of Customs permitted clearance of goods for M.D. Corporation. The Tribunal affirmed that M.D. Corporation was the importer, and the entity Relaxo Plastics was non-existent. The Tribunal held that the amendment showing Relaxo Plastics as the importer was invalid, and penalties could not be imposed on M.D. Corporation for attempting to clear the goods.

Issue 3: Application of penalty provisions under Section 112 of the Act.
The Tribunal clarified that penalties under Section 112 could not be imposed in cases where goods were not liable to confiscation. It rejected the Department's appeal seeking penalties on brokers for illegal trading involving non-transferable advance licenses. The Tribunal emphasized that enforcing contraventions of import policies was not the Customs Department's role, and penalties could not be imposed without proper notice.

Issue 4: Liability of brokers in customs transactions.
The Tribunal dismissed the appeals filed by the Department against M/s. Amichand Shantilal & Co., Shri Rajesh Damani, Shri Rajesh Desai, and M/s. Relaxo Plastics. It stated that since M/s. Relaxo Plastics did not exist, the question of imposing penalties on them did not arise. The Tribunal upheld the decision of the two-member bench and concluded that penalties on the brokers were not justified without proper notice and eligibility claims.

In conclusion, the judgment clarified the liability of importers in high sea sale transactions, the application of penalty provisions, and the role of brokers in customs transactions, emphasizing the importance of proper documentation and adherence to import policies.