2017 (10) TMI 1075 - AT - Customs

Misdeclaration of import - Imports were made by M/s. Chanakya Impex as a pretended high seas buyer of the goods while bills of lading were in the name of M/s Sun Impex, M/s Kanakratna Steel and M/s Reliance Stainless Steel - it was also alleged that M/s. Chanakya Impex was using its advance licence to unduly benefit the present appellants without payment of duty and to channelizing such imported goods to them ultimately. Held that - In the garb of high seas sellers of imported goods, the appellants M/s. Sun Impex, Kanakratna Steels and Reliance Stainless Steel, they used M/s. Chanakya Impex, and became beneficiary of fraud of use of advance licence of M/s. Chanakya Impex to clear their imports. They all had arrangement to transport the imported goods to their destination and M/s. Chanakya Impex had also pecuniary interest in the fraud. The appellants being facilitators and perpetuators of the fraud were abettors of the breach of law. Appellants have no defence at all to refute any of the allegations of Revenue in their grounds of appeal while Revenue proved its call on all counts with cogent and credible evidence. Appeal dismissed - decided against appellant.

Summary

Issues:
Fraudulent import scheme under the Advance License scheme leading to duty evasion and breach of law.

Analysis:
1. The appellants, M/s. Chanakya Impex and M/s. Paradigm, were part of a fraudulent scheme involving the diversion of duty-free imported goods to the local market, causing a loss to the government exchequer. The imports were made under the guise of high seas buyers, with bills of lading in different names. The appellants used their advance license to evade duty and channelize the goods to themselves. They were found to have enriched themselves through false documentation, leading to penalties imposed on them.

2. Investigations revealed that M/s. Chanakya Impex had obtained multiple Advance Licenses and diverted the imported goods to local markets. The supporting manufacturer, M/s. Paradigm, was found to have no manufacturing activity despite being involved in the scheme. Various individuals and entities were identified as conspirators and active participants in the fraud, with detailed accounts of how the scheme operated and how goods were diverted without payment of duty.

3. The adjudication order confirmed the duty demand on M/s. Chanakya Impex, along with confiscation of goods and imposition of fines. Penalties were also imposed on several individuals and entities involved in the scheme. Appeals filed by the appellants were dismissed due to non-compliance with stay orders, and the Tribunal upheld the penalties imposed, considering the magnitude of the fraud and the loss to the government revenue.

4. The Tribunal, after considering the evidence and material facts, concluded that the appellants were part of a duty evasion racket, consciously contributing to the fraud against Revenue. The appellants acted as facilitators and abettors of the breach of law, benefiting from the fraudulent use of advance licenses and evasion of duty. Despite the lack of defense from the appellants, Revenue's allegations were substantiated with credible evidence, leading to the dismissal of all appeals.

In conclusion, the judgment highlights a complex fraudulent import scheme orchestrated by the appellants, resulting in significant duty evasion and breach of law. The detailed investigations, corroborated evidence, and legal precedents cited support the Tribunal's decision to uphold penalties and dismiss all appeals in this case.