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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 ..... with actual 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' f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ificate was issued in favour of M/s. Choice Laboratories under K.V.S.S. 8.When all the aforesaid four appeals 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the Tribunal by its common order dated 11th March, 2002 dismissed the appeal of M/s. Choice Laboratories as withdrawn.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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Laboratories illegally sold in the open market 108.5 M.T.s. glycerine and 7.2 M.T.s of S.L.S. imported duty free under advance licence granted 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 impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... document executed by the Petitioner, 2.2 M.Ts. of Clove Bud oil were cleared duty free by utilising advance licence of M/s. Choice Laboratories. The said goods were subsequently sold to Colgate Palmolive Ltd. 13.Thus, from the adjudication order 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of actions and they are neither interconnected nor arise out of a single cause of action. Since the importation of all the goods were made under the advance licence granted to M/s. Choice Laboratories, they were made as principal noticee 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of other noticees is flowing from distinct acts, then they cannot be termed as co-noticees. It there are multiple causes of action and the demand raised against the principal noticee and the co-noticee are based on separate and distinct 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 again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted but that benefit was denied to the Petitioner on the ground that the benefit of the scheme is given only to those co-noticees against whom the adjudication is not over and the show cause notice is still pending. On a writ, it was held 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irstly, there is no total settlement and secondly, the penalty levied upon the main noticee and the Petitioner, do not arise from the same matter but arise from different causes of action. Mr. Bulchandani drew our attention to the ratio 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 penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Laboratories and M/s. Choice Laboratories as their Director/partner, when he is not even an office bearer of those two entities. This is a serious offence and the authorities below were justified in showing no leniency upon the Petitioner. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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