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TMI Blog2011 (3) TMI 1192X X X X Extracts X X X X X X X X Extracts X X X X ..... se notices. As rightly pointed out by the learned SDR, breach of condition (v) of Notification No. 80/95-Cus by the appellant attracted Section 111 (o) of the Customs Act and, consequently, the goods imported by him were liable to confiscation. The goods were, no doubt, not physically available for confiscation as they had been cleared duty-free and diverted long back. However, it is not in dispute that the clearance of the goods at Customs was allowed against bond and bank guarantee. That being so, the non-availability of the goods would not stand in the way of the adjudicating authority imposing redemption fine under Section 125 of the Act. The appellant, as importer, cannot claim immunity from penalty after having cleared the goods duty-free under the exemption notification and diverted the same in gross breach of a condition thereof. The appellant, by his conduct, rendered the goods liable to confiscation and rendered himself liable to penalty. Hence the penalty imposed on 'M/s Global Art' under Section 112 of the Act in the Chennai case is, therefore, liable to be sustained in principle. Given the assessable value of the goods to be approximately at Rs 30 lakhs, we r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onduct of the appellant. On the basis of the results of these investigations, two show-cause notices were issued to the appellant, one by the Commissioner of Customs (Mumbai) on 2.7.98 and the other by the Commissioner of Customs, Chennai on 30.6.98. These show-cause notices demanded Customs duty from the appellant under the proviso to Section 28 (1) of the Customs Act together with interest thereon under Notification No. 80/95-Cus and proposed to confiscate the goods under Section 111 (o) of the Act, proposed penalties under Section 114A and Section 112 of the Act. The notices invoked the extended period of limitation on the ground that the appellant had willfully suppressed the factum of non-utilization of the duty-free goods with mala fide intention to evade duty of Customs. The bank guarantee had been encashed by the department way back in Mach 1997. The amount so encashed (Rs 11,66,545/-) was proposed, in the show-cause notices, to be adjusted against the duty and interest demanded and penalty, if any, imposed. 3. The amount of duty demanded in the Mumbai show-cause notice was Rs 2,24,618/- on a quantity of 1280 kgs of 'Mulberry Raw Silk' of CIF value of Rs 7,41,312/-. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to adjust the same against the amount received from encashment of bank guarantee. (b) Since the goods are not available for confiscation, I hold the goods liable for confiscation, therefore, I impose a fine of Rs 25,00,000/- on M/s Global Art in lieu of confiscation of the goods. (c) Having regard to the facts and the circumstances of the case, the legal provisions, the case laws and the role played by different parties, the following penalties are also imposed: (i) M/s Global Art Rs 15,00,000/-. (ii) Sh. Javed Alam Rs 10,00,000/- (iii) Sh. Bimal Kumar Mehra alias Sh. Rajkumar Seth Rs 8,00,000/-." 8. The present appeals are against the above orders of the learned Commissioner of Customs. 9. Heard both sides. The learned counsel for the appellant, at the outset, raises a jurisdictional objection of sorts by submitting that it was not open to the Commissioner of Customs (Adjudication), Mumbai to pass separate orders in adjudication of the two show-cause notices. Referring to para 6 of the Order-in-Original passed by the Commissioner in adjudication of the Chennai show-cause notice, the learned counsel submits that, when the Commissioner took up the Mumbai cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest @ 24% p.a. from the date of clearance of the goods. Subsequently, the department issued a show-cause notice to confiscate the goods under Section 111 (o) of the Customs Act and to impose a penalty on the importer under Section 112 (a) of the Act. These proposals were contested by the assessee. The dispute ultimately arose before the Tribunal. The question before the Tribunal was whether the importer attracted penal liability under Section 112 (a) of the Act. The Tribunal held that the assessee complied with condition (ii) of the notification by discharging duty liability under the bond. It was further held that, when the said condition was complied with, its cause of action viz breach of condition (v) did not survive. In this view, it was held that the assessee was not liable to be penalized under Section 112 of the Act. In the second case, the bank guarantee furnished by the importer/assessee was encashed by the department towards the duty payable on the raw material imported under an advance licence. This happened when the importer failed to discharge export obligation under the scheme. When the dispute between the assessee and the Revenue eventually arose before the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, pointed out that this Mr. Munilal Mehra is the father of the appellant Mr. Bimal Kumar Mehra. In the cited case, Mr. Munilal Mehra was found to have associated himself with diversion of raw materials imported under DEEC Scheme by Mr. Javed Alam. The raw materials, which were imported duty-free, were diverted by the importer instead of being brought to his factory for use in the manufacture of finished goods for export under the said Scheme. On these facts, the diverted goods were held to be liable to confiscation under Section 111 (o) of the Act and Mr. Munilal Mehra liable to be penalized under Section 112 of the Act. The learned SDR claimed strong support from this decision of this Bench rendered in the present appellant's father's case. 14. We have given careful consideration to the submissions. Having already over-ruled the jurisdictional objection raised by the learned counsel, we have now to deal with another argument advanced by the counsel. It was submitted that 'the person chargeable with the duty' in the present case has to be identified first before invoking Section 28 of the Customs Act. It was argued that, in a case like this, wherein the Bills of Entry are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or fine on the alleged ground of payment of duty prior to issuance of show-cause notices. In this context, we have studied the decisions cited by the learned counsel viz Royal Embroidery (supra) and Pattu Exports (supra). In the case of Royal Embroidery (supra), wherein the department invoked the bank guarantee, apparently the amount encashed was instantly adjusted towards duty payable by the assessee. It is also found that the Tribunal in the case of Royal Embroidery followed earlier decisions to the effect that, once the normal rate of duty had been paid by the appellant, there was no question of invoking non-fulfilment of post-import condition of the exemption notification for imposition of fine and penalty. Obviously, the payment of duty at normal rate of duty by M/s Royal Embroidery before issuance of the show-cause notice was a voluntary payment of duty. Thus, we find that the decisions cited by the learned counsel are not applicable to the present case. 16. As rightly pointed out by the learned SDR, breach of condition (v) of Notification No. 80/95-Cus by the appellant attracted Section 111 (o) of the Customs Act and, consequently, the goods imported by him were liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, nor has he showed a copy of the bond executed by the appellant to enable us to ascertain the purposes for which the bond was executed. In this scenario, we are of the considered view that the redemption fine imposed by the learned Commissioner in the Chennai case should be vacated. It is ordered accordingly. 19. Nevertheless, the appellant can have no valid case against the penalties imposed under Section 112 of the Act in the Mumbai and Chennai cases. The appellant, as importer, cannot claim immunity from penalty after having cleared the goods duty-free under the exemption notification and diverted the same in gross breach of a condition thereof. The appellant, by his conduct, rendered the goods liable to confiscation and rendered himself liable to penalty. Hence the penalty imposed on 'M/s Global Art' under Section 112 of the Act in the Chennai case is, therefore, liable to be sustained in principle. The quantum of penalty so imposed is Rs 15 lakhs. Considering the circumstances of this case, we are of the view that this penalty is harsh. Given the assessable value of the goods to be approximately at Rs 30 lakhs, we reduce the penalty to Rs 1,00,000/- (Rupees One lakh on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vocable for levy of interest. It appears, the bond executed by the appellant at the time of import of the goods made him liable to pay, on demand, duty with interest @24% p.a. from the date of clearance of the raw material. Breach of conditions of the notification made the appellant liable to pay the duty with interest in terms of the bond. Therefore, the demand of interest on duty confirmed against the appellant, in the Chennai case, has to be upheld and it is ordered accordingly. 24. In the result: (i) appeal No C/1279/01 is disposed of in the following terms: (a) The demand of duty is upheld; (b) Order holding the goods to be liable to confiscation is sustained; (c) The penalty imposed under Section 114A of the Act is set aside; and (d) The quantum of penalty imposed on the appellant under Section 112 (a) of the Customs Act is reduced to Rs 10,000 (Rupees Ten thousand only). (ii) Appeal No. C/84/03 is disposed of in the following terms: (a) The demand of duty with interest thereon is upheld; (b) The order holding the goods liable to confiscation is upheld, but the redemption fine is set aside; (c) The quantum of penalty imposed on 'M/s Global Art' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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