2017 (9) TMI 1134 - AT - Customs

Interpretation of statute - importer - who is the importer of the impugned goods? - Held that - in the statements given before the authorities Shri Prashun Jain has never admitted to his importing these goods. The admission is regarding arranging for parties who will provide financial assistance and procurement of imported goods. It indicates his involvement with the import consignment as facilitator, not as importer. In fact, it was mentioned that he and Shri Biplav Kumar has arrangement between them to the effect that Shri Prashun Jain will arrange for parties who will provide finance and procurement of imported goods and Shri Biplav Kumar will arrange for clearance of goods. In the second statement, the appellant stated that the goods were imported by Shri Prashant Gupta, the appellant is suppose to help the importer in clearing the goods through customs - the appellant can be considered as importer of the impugned goods. Seizure of consignment - Held that - the proceedings with reference to past clearance are in further weaker ground. The contents of the past clearance, their identity and who processed the import on whose behalf could not be established. Even on the principle of preponderance of probability as invoked by the Original Authority, the present case falls much short of required proof. The selective reliance of part of the retracted statements alone cannot be the basis for sustaining the duty demand against the appellant. On careful consideration of the evidences available on record, we hold that Shri Prashun Jain cannot be held as importer in the present case. Penalty u/s 114 AA, under Section 28 and 112 of the Act - Held that - if a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of this act shall be liable to a penalty not exceeding five times, the value of goods. We note that the said provisions are wide enough to cover the acts of the appellant as brought out during the investigation. Considering that the evidences of such involvement in the past clearances are not available to a sustainable level and involvement in the present consignment has been established based on available evidence, we find that a penalty of ₹ 5 lakhs under Section 114AA will meet the ends of justice. Other than this penalty, we find that the appellant cannot be put to any liability for duty or penalty, under Section 28 and 112 of the Act. Penalty imposed on M/s Om Freight Forwarders P. Ltd. - Held that - the person from whom the goods were seized has to establish the bonafideness with valid document. Further, we also note that the reliance placed by the Original Authority on the Tribunal decision dealing with unclaimed consignment has no application to the facts of this case to decide the penalty on the forwarding agent. Even if it is admitted that the delivery order was issued without verifying the antecedent of the person, this will not amount to abetting an act or omission of such act, which requires prior knowledge of possible breach of legal provision, by the main offender. The Original Authority stated that by issuing delivery order without proper verification, the appellants have abetted the unlawful import of impugned consignments in connivance with Shri Prashun Jain. This assertion is not supported by any evidence. The charge of abetting can be established only when there is an prior knowledge on the part of abettor regarding possible offence by the main offender. The omission on the part of M/s CMC is not liable to penalty as an abettor as they had no knowledge of the offence as well as they had no intention to defraud the exchequer by indulging in the offence of smuggling. The charge against M/s CMC was that they have enabled filing of bill of entry without verifying the authorized person s status. On a similar situation, the Original Authority arrived at a different conclusion in respect of the freight forwarders. Here also the charge of negligence cannot lead to an offence as abettor. The reasons adopted by the Original Authority for M/s CMC are equally applicable to the present appellant also. The appeal filed by Shri Prashun Jain is partly allowed and the appeal filed by M/s Om Freight Forwarders P. Ltd. is allowed - decided partly in favor of appellant.

Summary

Issues Involved:
1. Determination of the importer of the impugned goods.
2. Legitimacy of the customs duty demand and penalties imposed on Shri Prashun Jain.
3. Justification for penalties imposed on M/s Om Freight Forwarders P. Ltd.

Detailed Analysis:

1. Determination of the Importer of the Impugned Goods:
The primary issue was identifying the importer of the goods declared as herald frame but found to be Micro SD Memory Card and RAM. The confessional statements of Shri Prashun Jain, who had the gate pass for the goods, were pivotal. However, these statements did not conclusively establish him as the owner or importer. The Tribunal noted serious inconsistencies and infirmities in the impugned order, highlighting that Shri Prashun Jain's involvement was more as a facilitator rather than an importer. The Tribunal found that the evidence did not support the claim that Shri Prashun Jain was the importer, as his statements were retracted, and there was no corroborative evidence to substantiate the claim. Consequently, the Tribunal held that Shri Prashun Jain could not be considered the importer.

2. Legitimacy of the Customs Duty Demand and Penalties Imposed on Shri Prashun Jain:
The Tribunal examined whether the customs duty demand and penalties under Sections 112 and 114AA of the Customs Act, 1962, were justifiable against Shri Prashun Jain. It was found that the duty demand and penalties were based on retracted statements and lacked corroborative evidence. The Tribunal noted that the appellant never admitted to importing the goods and was primarily involved in facilitating the import process. Therefore, the duty demand and penalties under Section 28 and 112 were not sustainable. However, considering Shri Prashun Jain's involvement and prior knowledge of the goods' contents, a penalty of ?5 lakhs under Section 114AA was deemed appropriate for his role in making false declarations.

3. Justification for Penalties Imposed on M/s Om Freight Forwarders P. Ltd.:
The Tribunal reviewed the penalties imposed on M/s Om Freight Forwarders P. Ltd. under Sections 112 and 114AA. It was noted that the show cause notice proposed penalties under Sections 112 and 117, but the Original Authority imposed penalties under Section 114AA, which was not sustainable as it was beyond the scope of the notice. The Tribunal found that the freight forwarders were engaged in their regular business and had no prior knowledge of any customs violation. The penalty under Section 112 was also deemed unsustainable as there was no evidence of abetment or prior knowledge of the offence. The Tribunal highlighted that similar reasoning was applied to M/s CMC, who were exonerated due to lack of mens-rea and benefit from the contravention. Thus, the penalties on M/s Om Freight Forwarders P. Ltd. were set aside.

Conclusion:
The Tribunal allowed the appeal of Shri Prashun Jain partially, reducing his liability to a penalty of ?5 lakhs under Section 114AA, and fully allowed the appeal of M/s Om Freight Forwarders P. Ltd., setting aside all penalties imposed on them.