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TMI Blog1989 (4) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... opies of 10 bills of entry from M/s. Nirmal Sea Freight Pvt. Ltd., Madras Custom House Agents on 18-3-1986 : - (i) M/s. Alconic International Merchandise, H-328, New Rajinder Nagar, New Delhi. (ii) M/s. Amber Electronics, H-317, New Rajinder Nagar, New Delhi. (iii) M/s. Shivam Electronics, 69-04, Nabikarim, Pahar Ganj, New Delhi, (iv) M/s. Monica Enterprises, Blk Nil-36-B, First Floor, Malvia Nagar, New Delhi-110012. (v) M/s. Cosmopolitan Electronics, A-2/217, Paschim Vihar, New Delhi-63. The particulars of the 10 bills of entry are given below :- Sr. No. Bill of entry/duly Deposit No. & Date. Name of the Importer, as declared in the bill of entry. 1 2 3 1. 2. D-765/17-3-86 M/s. Shivam Electronics. 3. D-780/17-3-86 M/s. Amber Electronics. 4. D-771/17-3-86 M/s. Alconic International Merchandise. 5. 6. 7. 8. D-816/17-3-86 D-767/17-3-86 D-766/17-3-86 M/s. Monica Enterprises. 9. D-768/17-3-86 M/s. Cosmopolitan Electronics. 10. D-772/17-3-86 M/s. Alconic International Merchandise. (ii) The General Manager of M/s. Nirmal Sea Freight Pvt. Ltd., clarified that the aforesaid 10 bills of entry were processed by them at the request of one Shri Jatinder Up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s M/s. Nirmal Sea Freight Pvt. Ltd., in his statement dated 25-3-1986, denied having filed such letters on behalf of the importers seeking amendment of the quantity declared in the 10 bills of entry in question. The Custom House Agents also confirmed that from the time the assessment of those bills of entry was over, the duplicate copies of the same were retained by Shri Jatinder Uppal himself. He further stated that the Custom House Agents were not aware of the attempts made on 20th and 21st March, 1986, if any, in placing the goods for examination and clearance. (v) Enquiries made at New Delhi revealed that M/s. Alconic International Merchandise and M/s. Amber Electronics were existing at the given addresses, but no firms by the names of M/s. Monica Enterprises at Block Nil 36-B, First Floor, Malvia Nagar, New Delhi-12, M/s. Shivam Electronics at 6904, Nabikarim, Pahar Ganj, New Delhi and M/s. Cosmopolitan Electronics at A-2/217, Paschim Vihar, New Delhi-63 were existing/working at the given addresses. Statements recorded from the inmates/neighbours of the above three premises indicated that such firms were not existing. A statement was given by Smt. Suman Rajpal, wife of Shri J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from this, M/s. Unisef Electronics India were also floated by him with a non-resident Indian as partner; in 1984, another company in the name of Unisef Electronics (India) Pvt. Ltd. was floated by him. He further stated that he had interest in the following firms : - Sr. No. Name of the Company. Partners/Proprietors. His Connection. 1. M/s. Alconic International Merchandise Jatinder Uppal Proprietor. 2. M/s. Amber Electronics. Self Proprietor. 3. M/s. Unisef Electronics (India) (a) Self (b) Sunder Das (c) Narayan Singh Partner. Partner. Partner. 4. M/s. Unisef Electronics (India) Pvt. Ltd. (a) Self (b) Mrs. Uppal Mg. Director. Director. 5. M/s. Shivam Electronics. (a) Mrs. Uppal (b) Sudharsan Kumar Partner. Partner. 6. M/s. Ramintons (India). (a) Mrs. Uppal Proprietor. 7. M/s. Om Electronics. Mrs. Kuldeep Kumar Proprietor. 8. M/s. Sunlit International. Ashok Nandhvani Proprietor. Elsewhere in the said statement dated 27-3-1986, Shri Uppal stated that he was a partner in M/s. Alconic International Merchandise with Shri Ashok Nandwani. The firms mentioned against serials No. 3, 6, 7 & 8 above, which were established in September, 1984, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dise 4. D-773 Dt. 17-3-86 M/s. Monica Enterprises 5. M/s. Monica Enterprises Sanyo Radio Cassette Recorders Model M-1700H 6. D-767 Dt. 17-3-86 In the statement given before the Assistant Director, Directorate of Revenue Intelligence, Madras, Shri Shabbir Ahmed stated that the imported articles were nothing but complete units (three models referred to above) in semi-knocked-down condition and were capable of being assembled into full sets as mentioned supra. (xi) (a) It was found that M/s. Shivam Electronics imported 740 sets of SANYO car Stereo cassette players FT 420M Red Sound in SKD condition vide bills of entry No. D-764 and D-765 dated 17-3-1986 as against the declared quantity of 370 sets of electronic components invoiced as sub-assembly, hardware and tape deck mechanism. (b) M/s. Monica Enterprises imported 3,000 sets of Sanyo Cassette Tape Recorder-cum-Radio Model No. 1700H of Japanese Make in semi-knocked-down condition along with printed corrugated commercial carton and the thermocol packing, etc., duly indicating manufacturers' serial numbers of the sets vide bills of entry No. D-816 and 767 both dated 17-3-1986 as against the declared quantity of 1,500 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant Director, D.R.I., Madras, stating, inter alia, that he had not revealed the receipt of the telex to the Assistant Director, DRI, Madras on 22-3-1986 although he had knowledge about it, as it was not in hand. (xiv) Examination reports on the bills of entry, expert's opinion and the representative samples of the consignments were shown to Shri Uppal and he was asked to offer his explanation. After seeing the examination reports, he admitted that the goods imported under 7 bills of entry bearing Nos. D-780, D-771, D-773, D-816, D-767, D-764, and D-765 all dated 17-3-1986 were in SKD condition. He also stated that the toys sought to be imported as plastic moulded extruded components under OGL Appendix-6, List 8, Part I, serial No. 516 under Bill of Entry No. D-772 dated 17-3-1986 were fully manufactured goods ready for use without need for any further alteration. Shri Uppal also admitted that descriptions given in the invoices and the bills of entry were inadequate and could not be said to be useful for ascertaining the nature of the goods actually imported. In his statement recorded before the Assistant Director, DRI, Madras on 16-5-1986, Shri Uppal stated that written order and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -1986 were not permissible to be imported under OGL Appendix-6 of I.T.C. Policy, 1985-88 as those were fully finished goods; (vi) Shri Jatinder Uppal, who represented all the five firms, could not produce valid import licence in respect of complete articles imported under the 7 bills of entry referred to supra, such electronic consumer goods being listed as restricted items under Appendix 2, Part-B, Sl. No. 112 of the Import Policy, 1985-88; (vii) The description of the goods in the 7 bills of entry mentioned in sub-para (i) hereinabove as electronic components amounted to mis-declaration since the goods imported were electronic consumer goods in SKD condition. (viii) Examination reports of all the 10 bills of Entry showed that excess quantities over and above the declared quantities had been imported and the declared value thereof was much less than the actual value. (ix) By the aforesaid mis-declaration of description, quantity and value of the goods, the importers attempted to evade customs duty to the tune of Rs. 90,70,021.00, vide details given in paragraph 32 of the impugned order. 4. A show cause notice was, therefore, issued on 14-11-1986 to Shri Jatinder Uppal an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of US $ 18,900 since the quantity found was double the quantity declared. (iii) Confiscation of Electronic Audio tapes imported under Bill of entry No. D-768 dated 17-3-1986 under Section 111(m) of the Customs Act with redemption fine of Rs. 20,000/- as the quantity found was double the quantity declared. (iv) Imposed a penalty of Rupees one lac under Section 112(a) of the Customs Act, 1962 on Shri Jatinder Uppal as he engineered the import of all the consignments in question. (v) As regards the five firms, the Collector held that they were also legally liable to penalty under Section 112(a) of the Customs Act, but he did not impose any penalty on them for the reason that Shri Jatinder Uppal was the motivating force and the entire imports had been engineered by him. 6. By the present appeals, the appellants have challenged the aforesaid order of the Collector. 7. We have heard the arguments of Shri K. Srinivasan, learned Consultant for the appellants and Smt. Dolly Saxena, learned S.D.R. for the respondent. 8. Shri Srinivasan has argued that the importers of the goods were M/s. Monica Enterprises, M/s. Alconic International Merchandise, M/s. Shivam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has been held by the Collector that out of the 5 importing firms, M/s. Alconic International Merchandise and M/s. Amber Electronics were in existence, whereas the other three firms were not functionally existing. Officers of the Directorate of Revenue Intelligence contacted Smt. Suman Rajpal, wife of the owner of the premises hired by M/s. Monika Enterprises. Regarding M/s. Shivam Electronics, Officers contacted Jagdish Lal, a neighbour. Regarding M/s. Cosmopolitan Electronics, they contacted Shri V.B. Saxena, a resident of the premises. Smt. Suman Rajpal and her husband were Government employees. They rented the house. Municipal taxes of rented house go up and hence, no rent receipt was issued to the appellants. M/s. Monica Enterprises and M/s. Cosmopolitan Electronics changed their addresses in March, 1986 and on 1-2-1986 respectively. Shifting from the original premises was approved by the Director of Industries. The importing firms had separate Small Scale Industry Regulation Certificates which were issued by the Registration authorities after verification. They had separate sales-tax registration number, Corporation licence and importers' Code number. L-4 licences were issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... They imported the components of electronic goods without any mala fide intention. According to the learned Consultant, the confiscation of the goods under Section 111(d) of the Customs Act, is not legal and proper. He has relied on paragraph-13 of the judgment of Bombay High Court reported in 1981 (8) E.L.T. 235 (Bom.) in the case of Lokash Chemical Works v. M.S. Mehta, Collector of Customs (Preventive) and Others, Bombay in support of his argument that the imported goods were not prohibited goods as those were either covered by the import licence or Open General Licence. 10. The next point argued by Shri Srinivasan is the application of Section 111(l) of the Customs Act for confiscating the goods. He has argued that the Collector has invoked this provision on the ground that excess goods were found on examination of the consignment. He has stated that triplicate copies of the bill of entry were taken over by the Officers of the Directorate of Revenue Intelligence on 18-3-1986. The goods were assessed on 17-3-1986. On 21-3-1986 telex message was received by the appellants from the foreign suppliers in which it was stated that excess goods were wrongly shipped. On 24-3-1986 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of the documents sent by the foreign suppliers. As soon as they came to know about the shipment of the excess goods, they brought it to the notice of the Assistant Collector. Therefore, they should not be charged for mis-declaration of value of the goods. 12. In the light of the foregoing arguments, the learned Consultant has stated that the goods were not liable to confiscation under Section 111(d), (1) & (m) of the Customs Act. He summarised his arguments by saying that the goods were imported by 5 different importers under different bills of lading and invoices, and separate bills of entry were filed by each importer. They had separate small scale industry registration certificate, central excise licence, sales-tax registration, municipal licence and the importers' Code number. They satisfied the conditions of Open General Licence. The Collector has no jurisdiction to go beyond this and hold that the importers were not separate importers. According to the learned Consultant, the confiscation and redemption fine is bad in law. 13. Regarding penalty imposed on Shri Jatinder Uppal, the learned Consultant has argued that there was no charge of abetment against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-I of the Import (Control) Order, 1955, is about the description of the items in that Schedule and not for the interpretation of Appendix-6 (O.G.L.) or Import Licence. 16. We have considered the records placed before us and the arguments of both sides. The Collector has dealt with 5 issues in the adjudication order and the same are as follows : - (i) Whether the goods imported in the name of : - (a) M/s. Shivam Electronics under Bill of Entry No. D-764 and D-765 both dated 17-3-1986, (b) M/s. Amber Electronics, M/s. Monica Enterprises and M/s. Alconic International Merchandise, under Bills of Entry Numbers D-780 dated 17-3-1986, D-773 dt. 17-3-1986 and D-771 dt. 17-3-1986 respectively, and (c) M/s. Monica Enterprises under Bill of Entry No. D-816 dated 17-3-1986 and D-767 dt. 17-3-1986, constitute fully finished consumer electronic items in SKD condition, namely, cassette car stereo players, stereo radio cassette recorders, which are prohibited for import and are, therefore, liable for confiscation? Whether they, being finished consumer goods in SKD condition, the value declared by the importers as for components is acceptable? (Specific details of these allegations ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3-1986 by M/s. Amber Electronics; (ii) D-771 dt. 17-3-1986 by M/s. Alconic International Merchandise; and (iii) D-773 dated 17-3-86 by M/s. Monica Enterprises. This exhibit has come out as a packed (in carton) Sanyo Stereo Radio Cassette Recorder Model M-7010 K, which can be readily offered for sale as consumer unit. Exhibit 3 has been assembled out of goods imported under B/E 764/765 both dated 17-3-1986 by M/s. Shivam Electronics. This item is also in the form of original packed Sanyo Red sound high power car stereo player Model FT 420 M. All these 3 exhibits also bear the chassis number on the carton, which tallied with the chassis number of the electronic items. The Japanese manufacturer's name/brand particulars are available on the cartons as well as on the items. In other words, the Exhibits if they are presented for display for sale in India would lead any consumer in India to purchase them only as of Sanyo (Japanese) electronic items and not as those manufactured or assembled by the importers. When the samples were shown to the counsel and the parties and their specific comments were invited, they contended that these are not imported as such, but have been ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble device for circumventing the policy, such colourable devices have been frowned upon by the Supreme Court in the case of Mc Dowell Company Ltd. v. Commercial Tax Officer, reported in Excise and Customs cases 1985, Vol. 5, Page 259. Though this decision is in regard to a taxation matter, the principle set out by the Supreme Court is quite clear, namely, that any attempt at colourable device with fraudulent motive of circumventing the law should not have legal sanction. The importers have also made another plea, that each firm is a distinct legal entity and the imports made by them should not be clubbed together and even with regard to a single importer, imports made in 2 different consignments covered by 2 different bills of entry cannot be clubbed together and products assembled out of the goods imported under more than one bill of entry should not be held against them. To bring home this point, they have cited the judgment of the Supreme Court in Union of India v. Tarachand Gupta. On this plea, I may observe that the proforma invoices produced by Mr. Uppal during the personal hearing to support the valuation aspect of his case clearly indicate that these invoices show the impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tronic products in Sanyo factory packed cartons showing the original manufacturer's name, model number, brand etc. These are highly sensitive items and are notified for possession and dealing even under Section 11B of the Customs Act, 1962. They are prohibited for import vide S. No. 122 of Appx. 2 Part B of the Import & Export Policy, 1985-88. I, therefore, hold that the goods imported are liable for confiscation under Sec. 111(d) of the Customs Act, 1962 read with Sec. 3(2) of the Imports & Exports (Control) Act, 1947." 18. Collector has concluded the first issue against the appellants. He has held that the goods imported under Bills of Entry No. D-764 and D-765 dated 17-3-1986 in the name of M/s. Shivam Electronics, Nos. D-780, D-771 and D-773, all dated 17-3-1986 in the names of M/s. Amber Electronics, M/s. Monica Enterprises and M/s. Alconic International Merchandise and Nos. D-816 and D-767 dated 17-3-1986 in the name of M/s. Monica Enterprises are factory packed electronic consumer goods fully manufactured and imported in SKD condition and not component parts; the import of these electronics goods is prohibited vide serial No. 122 of Appendix-2, Part B of the Import & E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Entries 294 and 295 of the said Section, part and Schedule of the Import Policy have been discussed by Hon'ble Supreme Court in Paragraph 10, 12 and 13 of the judgment reported in 1983 (13) E.L.T. 1456 (S.C.) = AIR 1971 S.C. 1558. Those paragraphs are reproduced below : - "10. Entries 294 and 295 of Section 11 of Part IV of Sch. I of the Import Trade Control Policy for the period July-December, 1956 are in this connection the relevant entries. Entry 294 deals with import of motor cycles and scooters. Remark (ii) in its column No. 6 lays down that "Licences granted under this item will not be valid for the import of motor cycles/scooters in a completely knocked down condition". Remark (iii) however, provides that applications from approved manufacturers for import of motor cycles/scooters in C.K.D. condition will be considered ad hoc by the Chief Controller, Imports in consultation with Development Wing. Entry 295 deals with "Articles (other than rubber tyres and tubes) adapted for use as parts and accessories of motor cycles and scooters, except such articles as are adapted for use as parts and accessories of motor cars". Entry 41 in Part V deals with imports of rubber tyre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition. The first two could not be imported and were in fact not imported because that could not be done under the licence in respect of goods covered by Entry 295 which expressly prohibited their import and a separate licence under Entry 41 of Part V would be necessary. The third, namely, saddles were not amongst the goods imported. No doubt, there was, firstly, a finding by the Collector that a trade practice prevailed under which motor cycles and scooters without tyres, tubes and saddles could be sold. Secondly, the tyres and tubes could be had in the market here and so also saddles, so that if an importer desired, he could have sold these goods as motor cycles and scooters in C.K.D. condition. The argument was that since there was a restriction in Entry 294 against imports of motor cycles and scooters in C.K.D. condition, the importer could not be allowed to do indirectly what he could not do directly." In the said case, while, holding that the imported goods were covered by the licence, the Hon'ble Supreme Court observed as follows : "24. The respondents' licence admittedly authorised them to import goods covered by entry 295. They could, therefore, legitimately import, on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh he had embarked upon the enquiry with jurisdiction. In our view that was precisely what the Collector did. This is, therefore, not one of those cases where between two competing entries the statutory authority applied one or the other, though in error, and where a civil Court cannot interfere." The respondents in that case imported only parts and accessories of mopeds against an import licence, without tyres, tubes and saddles. Without tyres and tubes motor cycles and scooters are not complete articles. Therefore, it could not be said in that case that the respondents imported mopeds in S.K.D. condition. In para 13 of the judgment, the Hon'ble Supreme Court observed "Apart from that, the goods in question did not admittedly contain tyres, tubes and saddles, so that it was impossible to say that they constituted motor cycles and scooters in C.K.D. condition." In the present case, the consumer electronic goods were imported in S.K.D. condition and the same were assembled by Shri Shabir Ahmed into finished electronic consumer products. Before the Collector, the appellants accepted the position that when the components are put together, they emerge in that form. Their only plea was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e colour T.V. sets were imported, which were not covered by the additional licences and REP licences produced. In the present case, the facts are basically different. Only one order was placed by Shri Jatinder Uppal for the entire goods imported in the names of five firms. Out of the five firms, three were not found to exist at the given addresses at the time of investigation by the Customs authorities. Proforma invoices were in the name of only one firm, viz., M/s. Alconic International Merchandise (Mr. Uppal). All the bills of entries were filed by the Custom House Agents at the instance of Shri Uppal. After assessment and payment of duty, duplicate copies of all the bills of entry were taken over by him from the Clearing Agents. Shri Uppal could not produce any letter of authority on behalf of the firms to place orders on their behalf and take all necessary action to import the goods. All the facts of the present case are distinguishable from the case of M/s. Mitsuny Electronic Works (supra), the judgment of the Hon'ble Calcutta High Court is not applicable to the case before us. 22. Shri Srinivasan has also relied on the decision of Western Regional Bench of this Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olled by close relations of the appellants. The Collector held that the bolts and nuts imported by the appellants were in reality the components of the prohibited article and imposed penalty on them. The matter ultimately came before the Hon'ble Supreme Court, who held that (i) importing components of a prohibited article was importing the prohibited article, and (ii) the evidence that washers imported by the relations of the appellants was considered by the Collector as evidence to confirm his conclusion that the nuts and bolts imported by them were in reality the components of the prohibited article. In the said case, the Hon'ble Supreme Court observed, inter alia, as follows : - "It appears to us that it does not stand to reason that a component part which has no use other than as a component of an article whose importation is prohibited is not included in a ban or restriction as regards the importation of that article. Expressed in other terms, we cannot accede to the position that it is the intention of the rule that the importers are permitted to do indirectly what they are forbidden to do directly, and that it permits the importation separately of components which have no u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature. We, therefore, do not consider it necessary to discuss this point. 26. Regarding issue No. (ii), the Collector has stated in para 74 of the impugned order that during personal hearing, the samples of toys were shown to the defence and they conceded that those were fully manufactured toys and not components. The goods being consumer goods, their import was prohibited under serial No. 122 of Appendix 2, Part-B of Import and Export Policy for 1985-88, and they could not be imported under Open General Licence. The toys imported under bill of entry No. D-772 dated 17-3-1986 have been correctly confiscated by the Collector under Section 111(d) of the Customs Act read with Section 3(2) of the Imports and Exports (Control) Act, 1947. 27. In paragraph 75 of the impugned order, the Collector has discussed the point regarding shipment of excess goods than those declared in the bills of entry. The appellants' plea before Collector was that the fact of excess shipment came to notice of the foreign supplier based on the auditor's scrutiny. Collector has not accepted this plea. He has observed that the Directorate of Revenue Intelligence started enquiry on 18-3-1986 and Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f entry. During the hearing before us, Shri Srinivasan stated that M/s. Monica Enterprises and M/s. Cosmopolitan Electronics changed the addresses in March, 1986 and 11-2-1986 respectively. Nothing was said by him about the change of address, if any, of M/s. Shivam Electronics. M/s. Cosmopolitan Electronics did not have any L-4 licence. The wife of the landlord of the premises hired in the name of M/s. Monica Enterprises, in her statement, stated that there was no such factory or office of the said firm in that premises. So far as M/s. Shivam Electronics are concerned, Shri Jagdish Lal, a neighbour of premises No. 6904, Nabi Karim, Pahar Ganj, New Delhi stated that no factory or manufacturing unit was functioning at the premises and that one Sudharsan Kumar was residing there were a bachelor. Similarly, in his statement dated 31-3-1986, Shri V.B. Saxena of A-2/217, Paschim Vihar stated that no firm or factory having any assembly unit in the name of M/s. Cosmopolitan Electronics was existing at that address. The landlord stated that M/s. Cosmopolitan Electronics vacated the premises in December, 1985. The above statements have not been successfully rebutted. If the addresses were ge ..... X X X X Extracts X X X X X X X X Extracts X X X X
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