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TMI Blog2002 (10) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... tual user conditions and could not be sold to third parties and the duty free goods imported under the said licences were required to be used in the manufacture of export items. Investigations carried out by the Customs Authorities revealed that M/s. Choice Laboratories had illegally sold glycerine and Sodium Lauryl Sulphate (SLS) imported and cleared without payment of duty under the aforesaid advance licences in the open market, to various parties. The investigation carried out by the Customs Authorities further revealed that one such advance licence obtained by M/s. Choice Laboratories was sold to the Petitioner on 25% premium and thereafter 1998 kgs of peppermint oil was cleared duty free on the basis of the aforesaid advance licence and sold to third parties. It was also noticed that the Petitioner had sold the said advance licence to M/s. Ratilal Hemraj for a premium of 35% and a consignment of 2.22 M.Ts. of Clove Bud oil was cleared duty free on the basis of the said advance licence and sold to M/s. Colgate Palmolive Ltd. During the course of investigation, statement of various persons, including the Petitioner were recorded u/s. 108 of the Customs Act, 1962 ('Act' for short ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals were taken up for final hearing by CEGAT, M/s. Choice Laboratories produced the aforesaid certificate issued under K.V.S.S. and on the basis of the said certificate, the Tribunal by its common order dated 11th March, 2002 dismissed the appeal of M/s. Choice Laboratories as withdrawn. By the said order dated 11th March, 2002, CEGAT confirmed the liability of the customs duty on Clove Bud Oil and also redemption fine and personal penalty levied on M/s. Ratilal Hemraj. By the said order, appeal filed by the Petitioner was also dismissed by holding that the benefit of K.V.S.S. granted to M/s. Choice Laboratories will not be available to the Petitioner, as his role continued even after the role of M/s. Choice Laboratories stopped. Challenging the said order, this petition has been filed. 9.In this writ petition, we are only concerned with the legality of the order of CEGAT in so far as it confirms the penalty of Rs. 15,00,000/- imposed by the Commissioner of Customs upon Shri Yogesh Korani, the Petitioner herein. 10.Mr. Bulchandani, learned Counsel appearing on behalf of the Petitioners broadly submitted two fold arguments. Firstly, according to him, when the principle noticee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to them knowing fully well that the said goods could not be sold in the open market. (b) M/s. Choice Laboratories illegally sold to the Petitioner one advance licence at a premium of 25%. (c) On purchase of the said advance licence, the Petitioner got prepared fictitious documents of High Seas Sale allegedly between M/s. Fresh Laboratories and M/s. Choice Laboratories and cleared 1998 Kgs. of peppermint oil without payment of duty by utilising the advance licence purchased by him from M/s. Choice Laboratories. The Petitioner has admitted in his statement recorded under Section 108 of the Customs Act (page 34 of the compilation) that infact he had negotiated for import of 1998 Kgs. of peppermint oil in the name of M/s. Fresh Laboratories but on purchasing advance licence from M/s. Choice Laboratories, he got prepared bogus documents of High Seas Sale between M/s. Fresh Laboratories and M/s. Choice Laboratories so as to clear 1998 Kgs. of peppermint oil imported by M/s. Fresh Laboratories in the name of M/s. Choice Laboratories without payment of duty. The Petitioner even admitted (page 34 of the compilation) that the alleged High Seas Sale contract was prepared b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the Commissioner of Customs, it is evident that the illegal sale of glycerine and S.L.S. was done exclusively by M/s. Choice Laboratories and the Petitioner was not concerned with it. After the sale of advance licence by M/s. Choice Laboratories to the Petitioner, clearance of peppermint oil and Clove Bud oil were obtained by the Petitioner by producing fictitious, fraudulent and bogus High Seas Sale contract and M/s. Choice Laboratories had no hand in such fraudulent clearances. The claim of M/s. Choice Laboratories that they had authorised the petitions to import peppermint oil has been disbelieved and held to be an afterthought. In any event, admittedly, M/s. Choice Laboratories were not concerned with the import of Clove Bud Oil. With these findings, the Commissioner of Customs ordered confiscation of 108.5 M.Ts. of glycerine and 7.2 M.Ts. of S.L.S. and ordered M/s. Choice Laboratories to pay the customs duty in respect of the same. As regards the peppermint oil is concerned, even though M/s. Choice Laboratories were not party to its clearance on the basis of fraudulent and bogus High Seas Sale contract, since the clearance of 1998 Kgs. of peppermint oil was claimed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the show cause notice and all other parties, including the Petitioner, were added as co-noticees. The Commissioner of Customs has levied heavy penalty of Rs. 15,00,000/- upon the Petitioner because the Petitioner in spite of being a qualified Chartered Accountant, had shown contemptuous disregard for law and indulged in sale and purchase of non transferable licence and goods for greed to earn money and more than that in seeking clearance of peppermint oil and Clove Bud oil, the Petitioner has gone to the extent of creating fictitious documents of High Seas Sale and signing documents on behalf of M/s. Fresh Laboratories and M/s. Choice Laboratories as Director/Partner, when he was not even an office bearer or representative of those two entities. The Petitioner has been severely punished and no leniency has been shown for his mala fide conduct and contemptuous disregard for law. 16.It is pertinent to note that under Section 88(f)(ii) of the K.V.S.S., settlement is available only on payment of fifty percent tax arrears due and payable on the date of making declaration under Section 88 of the K.V.S.S. In the present case, the Commissioner of Customs by his order dated 11-9-1995 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct causes of action, then the benefit of K.V.S.S. availed by the principal noticee will not be available to such co-noticees. 18.Kar Vivad Samadhan Scheme, 1998 was announced by the Government basically on account of considerable revenue being locked up in a large number of litigations pending at different levels for a long period of time. Therefore, with a view to declogg the system and enable the Government to realise the reasonable amount due to it much earlier, the said scheme was announced. K.V.S.S. does not define as to who is a co-noticee. However, from the provisions of the Scheme read as a whole and the trade notices issued by various Commissionerates, it becomes evident that where for the irregularities committed by the principal noticee, action is also sought to be taken against the Director, Office bearer, employees, supplier, etc. and the principal noticee settles the dispute under K.V.S.S. then, fine and penalty proposed/levied against all co-noticees shall abate. In the present case, after the sale of advance licence to the Petitioner at a premium of 25%. M/s. Choice Laboratories were not concerned and were not even having any knowledge about the goods being cleare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that when the show cause notice against the co-noticee was adjudicated but appeal was pending, such co-noticee is entitled to the benefit granted to the principal noticee under K.V.S.S. In the present case, the facts are entirely different. The benefit of K.V.S.S. granted to M/s. Choice Laboratories is denied to the Petitioner because firstly, the tax arrears due and payable on confiscated Clove Bud oil has not been settled by the main noticee under K.V.S.S. and secondly, the penalty levied upon the main noticee and the Petitioner arise from separate, distinct and independent causes of action. Therefore, in the absence of settlement of tax arrears due and payable on Clove Bud oil, the penalty levied upon the Petitioner (inter alia for illegal clearance of Clove Bud oil) cannot be said to be covered under K.V.S.S. 20.Mr. Bulchandani brought to our notice that the above decision of the Kerala High Court was carried in appeal and the Apex Court by its Judgment dated 27-9-2002 in Civil Appeal No. 6260-6265 of 2000 (Union of India v. Onkar S. Kanwar Ors.) [2002 (145) E.L.T. 266 (S.C.)] has upheld the decision of the Kerala High Court. Relying upon the said decision of the Apex C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tio laid down by the Apex Court in the above case to the effect that if two views are possible, then the view which is in favour of the assessee must be adopted. In our opinion, in the instant case where there is only partial settlement and the penalty levied upon the main noticee and the Petitioner are based on separate causes of action, the only view that can be taken in the instant case, is that the settlement of the main noticee will not be available to the Petitioner. 21.Mr. Bulchandani then relied upon the unreported decision of this Court dated 22-2-2000 in the case Gaurang Mehta v. Union of India (W.P. No. 1339 of 1999) and the subsequent implementation order passed by the Tribunal in that case reported in [2000 (122) E.L.T. 853 (Tribunal)]. From the aforesaid order of this Court and the Tribunal, it can be seen that in that case, the Commissioner of Customs had confirmed the demand of Rs. 2,03,11,672/- against M/s. Wimco Ltd. and imposed penalty of Rs. 2 crores on M/s. Wimco, penalty of Rs. 1 crore on Shri Jatia, Vice Chairman Wimco and Rs. 50 lakhs on Gaurang Mehta. On appeal, the Tribunal directed the deposits of varying amounts as precondition for hearing appeals. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner. The Petitioner was solely responsible for executing fictitious and bogus High Sea Sale Contract and none other parties to the show cause notice were involved in that act. In the instant case, although the customs duty ordered to be recovered on goods were cleared under a common advance licence granted to M/s. Choice Laboratories the penalty levied upon M/s. Choice Laboratories and the Petitioner arise from different causes of action. The liability to pay penalty is not joint but several. The offence committed by the Petitioner is totally independent and far more serious than the acts of the principle noticee and other persons involved and hence the case of the Petitioner cannot be considered on par with the main noticee. Accordingly, heavy penalty levied upon the Petitioner is justified and cannot be said to be harsh or excessive. 23.The Apex Court in the case of Swarn Singh and Another v. State of Punjab and Others reported in AIR 1976 Supreme Court, 232, held that Certiorari jurisdiction can be exercised only for correcting errors of jurisdiction committed by interior courts or tribunals. A writ of Certiorari can be issued only in exercise of supervisory jurisdiction w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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