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TMI Blog1990 (9) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... r there was any Letter of Authority issued in favour of the respondents importer. The respondents however vide their letter dated 1-10-1985 stated that they had no connection with M/s. Prathiba Industries and they had never sent any copy of the import licence to the clearing agent and they would forward the import licence and other documents shortly. Subsequently a statement was recorded from Shri Jawahar N. Shah, the proprietor of the respondents firm. He in his statement, inter alia, indicated that one Shri K.C. Jain, the broker in ball bearing trade approached him and gave a plan to import ball bearings in the name M/s. Kalpana Import Export Agency (the respondents firm) and accordingly he placed the order with the foreign supplier vide his letter dated 3-12-1984. All the formalities were done as per the directions of the aforesaid K.C. Jain and all the financial arrangements were done by Shri K.C. Jain, who managed to get the authority letter from M/s. National Iron Industries, Bangalore. Shri K.C. Jain after retiring the documents from the bank, handed over one set to Shri Satish B. Shah of Ahmedabad and requested him to arrange for clearing agent at Kandla. In his subsequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board issued directions under their Order F. No. 389/614/90-AU dated 21-3-1990 directing the Collector to file an appeal against the said order on the ground that the value of the goods has appreciated many times so much so that the landed cost of the goods at today s duty level comes to Rs. 67.38 lakhs as against the landed cost of the goods imported at Rs. 5.39 lakhs. Hence the redemption fine of Rs. 1.00 lac imposed on the goods is considered inadequate as compared to the margin of profit in the instant case. Hence the Board has held that the order of the Additional Collector is not proper and an appeal was directed to be filed for imposition of suitable fine and penalty. On the basis of this order, authorising letter, the Collector of Customs, Kandla, has filed the present appeal before us. The prayer made in the said appeal memo is to the effect that the impugned order may be set aside and the same may be remanded for re-adjudication to original , adjudicating authority and to pass any other order as may be deemed fit so as to cover the huge margin of profit prevailing for the subject goods. 6. The respondents M/s. Kalpana Import Export Agency have also filed a Cross Objec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He also contended that the licence of M/s. National Iron Industries was not produced till the date of adjudication and hence even the possession of licence by the respondents is open to doubt. He urged that the market price of the goods ordered confiscation should be the one prevalent at the time of ordering confiscation and not the market price at the time of import. All the relevant factors which would determine the margin of profit should be considered at the time of ordering confiscation and fixing the quantum of redemption fine which has not been done by the ld. Additional Collector in this case that is why the department has to come in appeal against this improper order. 9. Shri K. Srinivasan, the ld. Consultant, on behalf of M/s. Kalpana Import Export Agency (the respondents herein) contended that as per the Cross Objection filed by the respondents, the order of confiscation and imposition of penalty is bad in law. On the date of shipment the licence was very much valid. The licence was suspended on 27-4-1985 and cancelled on 5-6-1985. The import has taken place on 15-2-1985. In the circumstances, when the import took place, the licence was very much valid and subseque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not given to the Customs House Agent and he could not contact Shri Jawahar Shah of the importing firm for returning the licence and it was held up with him which he has since given to Shri Jawahar Shah through a friend on 04-7-1990. 11. On behalf of the Department, an affidavit was also filed by the Assistant Collector that the licence has not been made available by the respondents and according to their version, the licence was lying with K.C. Jain, who has not given the licence in spite of repeated requests. 12. After hearing both the sides, we find that in this case, the Respondents to the appeal filed by the Department have challenged the very order of confiscation and imposition of penalty by way of cross objection, which is to be treated as an appeal as per the provisions of sub-sec. (4) of Section 129A of the Customs Act. Before going into the question of adequacy of redemption fine and penalty, it would be necessary to determine the question of liability of the goods to confiscation and also the liability of the Respondent to penalty. Hence, we prefer to take up the contentions raised in the cross objection first before going to the Department s appeal. 13. Before co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondents over the goods as a letter of authority holder by way of civil right does not get established. However, this is not the issue on which the Department has challenged the order. Hence, we do not propose to go in detail into the question of offer for redemption extended to the respondents. But these facts cannot be ignored while applying the ratio of the judgment of the Supreme Court in this case. When the respondents admittedly have not even got any financial commitment over the goods as per their statement, which is not refuted, the facts of this case do not come within the four corners of the facts dealt with by the Supreme Court in the case of East India Commercial Company. Even the judgment of the Bombay High Court in the case of Kantilal Manilal to the effect that the letter of authority1 acquires a civil right does not come to their rescue in the context of the admitted position that the entire operations were done by Shri K.C. Jain including the financing of the import. In the circumstances, the letter of authority was only a facade for shielding someone behind the import. That someone is not the licence holder as revealed from the statement. Whosoever be that person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed below : 125. Option to pay fine in lieu of confiscation. - (1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods (or where such owner is not known, the person from whose possession or custody such goods have been seized) an option to pay in lieu of confiscation such fine as the said officer thinks fit: Provided that, without prejudice to the provisions of the proviso to subsection (2) of Sec 115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon." 17. From the above, it is observed that whenever the adjudicating officer gives the option for redemption on payment of fine, such fine shall not exceed the market price of the goods confiscated, less the duty chargeable thereon. The market price referred to in the said Sec. 125, in our view can only be the market price prevalent at the time of import for the reason that the maximum fine is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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