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TMI Blog2008 (3) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 111(d) and 111(o) of the Customs Act, 1962 (goods were not physically available for confiscation), confirmed duty demand of Rs. 44,35,996/- payable on the goods on the ground of violation of the provisions of Notification No. 203/92 under which they were imported duty free, for the purpose of utilization in the manufacture of export products, but were instead diverted to the local market, and adjusted deposit of Rs. 18.80 lakhs against the confirmed demand and directed payment of balance duty by the importer, together with interest, and imposed penalties inter alia upon Shri Bhagwanji Trivedi. He has imposed a penalty of Rs. 20 lakhs each upon M/s. H.R. Trading Co. and M/s. Consumer Plastic Pvt. Ltd. and Rs. 20 lakhs on Shri Anil Parikh of M/s. H.R. Trading Co., and Rs. 5 lakhs on Shri Ajay Gandhi of M/s. Consumer Plastics Pvt. Ltd., under Section 112 of the Customs Act, 1962 and Rs. 5 lakhs each on Shri Bharat H. Shah and Shri Rajesh B. Gandhi under the provisions of Section 112 ibid. 2. We have heard both sides. 3. Penalty has been imposed upon the appellants on the ground that they had purchased goods imported duty free and cleared by M/s. Bhagwanji G. Triv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the export obligation of the resultant product manufactured out of the duty free imported goods against the advance licenses and that he had not completed the export obligation; that goods never came in to his possession, control or custody; that he had signed all papers relating to the High Sea Sale agreement, for the purpose of regularization of the import and advance license made against the license issued in his name and these were only paper transactions; that he had received premium of 35% of the license value in cash for the use of the advance license, which was obtained for importing goods duty free and selling the same without completing export obligation. Shri Bhagwanji G. Trivedi admitted his mistake and agreed to pay duty evaded. 6. From the statement of Bharat R. Shah it comes out that he was working as an import export consultant, that one Kirit Shah whom he knew, had in formed him that Shri Bhagwanji G. Trivedi wanted to obtain advance license from DGFT, Mumbai. Shri Kirit Shah gave him the required documents and necessary application signed by Shri Bhagwanji Trivedi; thereafter he (Bharat Shah) submitted the application to DGFT; that he did not know Shri Bha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t he had acted as a broker in the transaction between M/s. Consumer Plastic Pvt. Ltd. and Shri Bhagwanji G. Trivedi; that after utilizing the license he had handed over the same to Shri Rajesh Gandhi; that he had received, Rs. 23 lakhs in instalments through representative of M/s. Consumer Plastic Pvt. Ltd. for making payment to Shri Bhagwanji G. Trivedi; the amount was deposited in the Bank and then cheques were issued in favour of M/s. Consumer Plastic Pvt. Ltd. to give the cover of legitimacy to the transaction. He confirmed that Rs. 12 lakhs was also paid to Shri Bhagwanji G. Trivedi after clearance of the goods and that 52% of the CIF value of the licence was paid as premium for the sale of the licence. 10. Shri Mukesh Shantilal Motani CHA, has confirmed that he received documents for clearance of 40MTs of duty free Titanium Dioxide from one Anil P. Parikh on behalf of M/s. H.R. Trading; that he filed 4 Bills of Entry in the name of Shri Bhagwanji G. Trivedi against advance licence dated 16-8-1994; that as per instructions of Shri Anil P. Parikh he had prepared documents of delivery in favour of Shri Bhagwanji G. Trivedi. 11. Shri Anil P. Parikh partner of M/s. H.R. Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t obligation had been fulfilled by the license holder. (see statement dated 20-09-1995 of Ajay Gandhi) None of the other appellants state that at the time when the transaction took place they were aware of the non-fulfillment of the export obligation by the licence holder. They all state that at the time of investigation they had come to know of the non-fulfillment of the export obligation by the license holder. Such post-facto knowledge is not sufficient for imposition of penalty under Section 112(b). 14. The adjudicating authority has proceeded on the premise that it was inconceivable that a person of the standing of the appellants would not have tried to find out whether the raw material purchased by them was tainted or not. Therefore, the imposition of penalty is based only upon presumption and conjecture, and not on the basis of any proof of knowledge or reasonable belief on their part that they were dealing with goods liable to confiscation. The Commissioner, further, holds that license was subject to actual user conditions which is incorrect-the license was not subject to any such condition. Further, there was no such allegation in the show cause notice. Unlike an actual ..... X X X X Extracts X X X X X X X X Extracts X X X X
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