2022 (11) TMI 1098 - AT - Customs

Levy of penalty of IEC code holder and middleman - Allowing third party to use its IEC code - Bonafide Belief - Misdeclaration of imported goods by third party - readymade garments - it is alleged that the seized ladies readymade garments were being imported by resorting to mis- declaration under the guise of disposable cups as declared in the bills of lading - Confiscation - consolidated penalty under Section 112(a) read with Section 114AA of Customs Act - HELD THAT - Sh. Amit Nagi on advice of Sh. Ravinder Puri allowed the use of his IEC code for import to be made by Sh. Rajan Arora. It is further evident that both these appellants believed Sh. Rajan Arora in good faith that he wants to use the IEC code of M/s Dev International for import of crockery/ glasses/ disposable glasses. Further, it is evident that both these appellant were not aware about the actual goods being imported by Sh. Rajan Arora in connivance with Sh. Ramesh Wadhera. It is further apparent that such misuse of IEC of M/s Dev International could not have been done without the active connivance of the CHA M/s Jai Impex - there has been no interrogation with the CHA for facilitating import by Sh. Rajan Arora by using the IEC code of Sh. Amit Nagi, without proper authorisation. There is no active role played by these appellants save and except facilitating the use of IEC code of M/s Dev International by another for some monetary consideration - the penalty of Rs. 12 lakhs on Sh. Amit Nagi under Section 112(a) is reduced to Rs.50,000/- - appeal allowed in part.

Summary

Issues Involved:
1. Misuse of Importer Exporter Code (IEC)
2. Mis-declaration of imported goods
3. Liability and penalty under Customs Act, 1962
4. Role of various individuals in the illegal import

Issue-wise Detailed Analysis:

1. Misuse of Importer Exporter Code (IEC):
The appellant, Sh. Amit Nagi, allowed the use of his IEC for import activities facilitated by Sh. Ravinder Puri. The IEC was used by Sh. Rajan Arora for importing goods under the guise of disposable glasses, while the actual goods were ladies' readymade garments. The judgment notes that both appellants believed in good faith that the IEC would be used for importing crockery and disposable glasses. The Tribunal found no active role by the appellants in the misuse, except for facilitating the use of the IEC for monetary consideration.

2. Mis-declaration of Imported Goods:
The investigation revealed that 13 containers declared to contain disposable glasses actually contained ladies' readymade garments. The mis-declaration was orchestrated by Sh. Rajan Arora in connivance with Sh. Ramesh Wadhera. The goods were seized under the provisions of the Customs Act, 1962, for mis-declaration and concealment. The Tribunal noted that the appellants were unaware of the actual contents of the containers.

3. Liability and Penalty under Customs Act, 1962:
The Adjudicating Authority imposed penalties based on the involvement of the appellants in facilitating the import. The penalties were as follows:
- Sh. Amit Nagi: Rs. 12 lakhs under Section 112(a)
- M/s Dev International: Rs. 12 lakhs under Section 112(a)
- Sh. Ramesh Wadhera: Rs. 12 lakhs under Section 112(a)
- Sh. Rajan Arora: Rs. 15 lakhs under Sections 112(a) and 114AA
- Sh. Ravinder Puri: Rs. 15 lakhs under Sections 112(a) and 114AA

The Tribunal, however, reduced the penalties significantly, acknowledging the lack of active involvement and awareness of the appellants regarding the mis-declaration:
- Sh. Amit Nagi: Reduced to Rs. 50,000
- Sh. Ravinder Puri: Reduced to Rs. 1 lakh
- Penalty on M/s Dev International was set aside as simultaneous penalties on the proprietor and the firm are not exigible.

4. Role of Various Individuals in the Illegal Import:
The judgment detailed the roles of several individuals:
- Sh. Rajan Arora and Sh. Ramesh Wadhera were the primary orchestrators of the mis-declaration.
- Sh. Ravinder Puri facilitated the use of the IEC for monetary consideration but was unaware of the actual goods being imported.
- Sh. Amit Nagi provided his IEC based on the advice of Sh. Ravinder Puri, believing it would be used for legitimate imports.

The Tribunal concluded that the appellants did not play an active role in the illegal import, except for facilitating the use of the IEC. The penalties were therefore reduced, and the appeals were allowed in part with consequential benefits.