ORDER
C.N.B. Nair, Member (T)
1. These appeals are directed against a common adjudication order CAO.No. 193/98/CAC/CC/MAM dated 31.7.98 passed by the C.C. (Imp.), Mumbai. Accordingly, they were heard together and are disposed of under this common order.
2. The case relates to import of 17 consignments (280.5 MT) of HDPE under 17 Bills of Entry. These imports were made under DEEC Scheme and goods cleared without payment of duty. The exemption from duty was under an obligation that the imported goods shall be used for production of export goods. However, the goods were upon import, sold in the domestic market without fulfilling the export obligation. The duty so evaded was about Rs. 55 lakhs. Each of the appellants is a part player in that duty evasion. Accordingly, they were imposed penalties under the impugned order. These appeals challenge that order.
3. After noting the above background, we now proceed to take up the appeals.
(I) Shri Nandalal Kishandas Khemani-(Appeal No. C/1077/98-Mum)
4. In the impugned order, a penalty of Rs. 54,93,805/- has been imposed on the appellant along with demand of an equal amount of duty. This is, upon a finding that the appellant was the importer of the goods as the proprietor of M/s Nandlal Shivaldas.. The findings in the case are that the appellant had applied for and obtained the DEEC import licences and the imports were also made in the name of the appellant’s proprietory concern. We may read para 19 of the order which deals with appellant’s involvement in the case:
“19. Nandlal Khemani is the Proprietor of M/s. Nandlal Shivaldas. SCNs have been issued to both the person as well as the company. In his statement, Nandlal Khemani stated that M.D. Ganatra approached him and asked him to apply for Advance licences and arranged for all the documents for getting the Advance licences from Jt.DGFT, Mumbai. He applied for the Licences and got Advance licence Nos. 0309116 and 0308652. Under the said licences, he was entitled to import HDPE. Export obligation was east on him to export articles made of plastic for a FOB value of Rs. 64 lakhs. The imports were made by M/s. Nandlal Shivaldas. The declaration under Rule 10 of the Customs Valuation Rules was signed by the Proprietor of M/s. Nandlal Shivaldas. For all intents and purposes, M/s. Nandlal Shivaldas are the importers. The DEEC Books are also issued in their name. In his statement, N. Khemani admitted that he has handed over the licences to M.D. Ganatra along with other papers for consideration of Rs. 46 lakhs which he deposited in a bank. He obtained Pay Orders to show and establish that he had imported the goods and made the payment to the overseas supplier. Nandlal Khemani further admitted that even though the goods were imported in the name of his firm, he did not know where the goods were disposed of after customs clearance. He admitted that he had not physically taken possession of the goods. According to him, Naresh A. Shah and Minesh Shah are the persons who had cleared the goods duty free from Customs. The goods were sold in the local market by them. No export was made in pursuance of the advance licences under which the imports wore made. He also admitted that he is liable to pay duty on the goods cleared duty free as he is aware of the export obligations cast on the importer in cases where Advance licences have been used to clear the goods duty free. From the documentary evidence available before me and the statements made by various persons concerned. I conclude that M/s. Nandlal Shivaldas are the importers of the goods in question. N. Khemani, himself being the Proprietor of this firm, is responsible for all actions in the name of his Company. Duty, if any can be demanded from him. He is also liable for penal action under Section 112(a) and 114(a) of the Customs Act.”
4. The submissions being made in the appeal are that the penalty has been imposed under Section 114A of the Customs Act, while this Section was not in force at the time of import of the goods. It is also being submitted that Shri Khemani was only a benami person and the import was made by Shri Minesh D. Shah. It is further submitted that he was too poor and had no capacity to pay the penalty or the duty. It is submitted that in the facts of the case, it is unfair to treat him as importer since he was only a broker and benami person.
5. As against the above submissions, the learned SDR would contend that since penalty was attracted under Section 112(a) also it is of no consequence that the penalty was imposed under Section 114(A). He has also submitted that the appellant’s contention regarding poverty and being a benami person, cannot find acceptance, since he has stated during investigation that he had received a premium of Rs. 35 lakhs on account of selling his licences. He has also pointed out that after applying for and obtaining DEEC licences and signing import documents and collecting a huge commission, it is not open to the appellant to disown the imports.
6. We find that licence has been obtained and import made by the appellant’s proprietary firm. The relevant import documents were also signed by him. After such a clear involvement, that too on receipt of a premium of Rs. 35 lakhs it is not open for the appellant to submit that he was innocent and had been made the fall guy. In these circumstances, we are of the view that imposition of penalty on the appellant was justified. However, taking into account the various pleas made by the appellant, we reduce the penalty on him to Rs. 15 lakhs. No variation in the duty demand is called for.
(II) Shri Naresh A. Shah – (Appeal No. C/923/98 – Mum)
7. The impugned order has imposed a penalty of Rs. 5 lakhs on the appellant under Section 112(b) of the Customs Act. The finding in the adjudication order against the appellant as noted in para 21 of the order is as under:
“21. Naresh A. Shah is a licence broker and is the proprietor of M/s Naresh Enterprises. SCNs. Were issued to him and the firm. He in his statement admitted that he purchased the licences in question for a premium of 75% of CIF value. Thereafter, he sold these licences to one Minesh D. Shall of M/s Delux Exports for a profit. The issue to be decided is whether he, as a person who traded advance licences, is liable to penal action or not. As a licence broker, he is full aware that advance licences, unless they are transferred by the licensing authority, cannot be traded. It is only after the export obligation is completed, such licences cannot be bought and sold. In this case, Naresh A. Shah is aware that the export obligation is not completed and therefore, the licence can be utilised and goods imported by only that person in whose name it was issued. Having knowledge of this fact, he preferred to deal with the licence and became a person concerned with smuggled goods, thereby rendering himself liable to penalty under Section 112(b) of the Customs Act.”
The contention of the appellant is that he has not dealt with the imported goods and therefore, he is not liable to penalty under Section 112(b) of the Customs Act. It is being contended that this sub-section relates post-import activities and since the appellant had not dealt with the imported goods no penalty could be imposed on him. He has also contended that his offence, if at all, would be under Import-Export law inasmuch as he has bought and sold DEEC licences.
8. Learned SDR has submitted that this is a case of conspiracy involving many people. There was elaborate conspiracy hatched by the parties to enrich themselves by customs duty evasion. The scheme was to obtain DEEC licences, carry out imports against them without the payment of Customs duty and to sell the imported goods in the market without ever using it for meeting export production. The learned DR has pointed out that the materials on record have clearly shown the role played by each one of them. According to the learned SDR, each of the conspirators has to be subjected to penalty without particular regard to role played by him. He has submitted that distinction between Section 112(a) and 112(b) is not relevant in the facts of the present case inasmuch as all the parties were acting with the common intent to evade customs duty. The learned SDR took us through the materials available against the appellant Shri Naresh A. Shah and emphasized the important role played by him. He has pointed out that according to the appellant himself he had involved himself with the purchase of DEEC licences at a high premium and sold them on an even higher premium. His direct involvement with the clearance and disposal of the goods has also been testified to by the other persons as noted in para 22 of the impugned order. Another party involved in the case namely, Minesh D. Shall has stated that the goods after clearance were sold by Shri Naresh A. Shah to one Shri Ajmera and that Shri Minesh D. Shah had introduced Shri Naresh A. Shah to facilitate the clearance of the goods.
9. Upon perusal of the records and considering the submissions made by both sides we are not able to find any merit in the present appeal. The appellant himself had admitted to buying licences at premium and selling them at a higher premium. We are not able to appreciate his submission that he had no role in the import of the goods but his offence is under Import-Export law for being involved in the buying and selling of DEEC licenses. This is a case of conspiracy and this defence cannot find acceptance. The appellant is admittedly a licence broker. The present DEEC licences were not open for sale. Therefore, the appellant could have no legitimate position as a broker in regard to these licenses. The appellant’s involvement is clearly with evasion of duty and not as a licence broker. The appellant had voluntarily admitted to his involvement and had also deposited on amount of Rs. 11 lakhs towards duty evaded. In a conspiracy case, liability is common and not restricted to the hit role played by each conspirator. Such partitioning of responsibility and guilt go against the legal provision for dealing with conspiracy cases. It is also of no consequence whether penalty has been imposed under Sub-section (b)or (a) of Section 112.
10. In view of what is stated above, we are of the opinion that no interference is called for.
III. Shri Mahesh D. Ganatra – Appeal No. C/1079/98-Mum
11. The finding in the impugned order against the appellant may be read first.
“20. Mahesh D. Ganatra, is the Proprietor of M/s. Devarshi Enterprises. SCNs were issued to both the proprietor and the firm. He admitted that he had known N. Khemani. His version is that it is N. Khemani who wanted to obtain Advance licences. He helped him out in making the necessary application and obtaining the Advance licences in question. He further states that he has purchased the Advance licences so obtained from N. Khemani at a certain premium of CIF value. Thereafter, he seems to have given the licences to one Naresh A. Shah, another licence broker for certain premium. According to him, Naresh A. Shah has in turn sold these licences to one Minesh D. Shah. The defence put forth at the time of personal hearing and in written reply to the SCN says that he has only helped in procuring licences as a licence broker, but has not involved himself in disposing of the imported goods in any manner. His own statement suggests that he has purchased the licences which is non-transferable when issued. As a person who has complete knowledge as to the conditions under which Advance licence is being issued, his very act of procuring those licences by purchasing them from the licence holder, knowing fully well that such an act is in violation of the provisions of Notfn. No. 203/92, renders him liable to penal action under Section 112(b) of the Customs Act. He has not merely purchased the licenses. He actually is a person concerned in dealing in goods which are liable to confiscation having knowledge of that fact and therefore is liable for penalty under Section 112(b) of the Customs Act.”
12. The submission of this appellant is almost the same as that of Shri Naresh A. Shah. It is his contention that as a licence broker he was not liable to punishment under Customs Act. As we have noted in the case of Shri Naresh A. Shah, in a case of conspiracy, liability is common. As noted in the impugned order, the appellant was buying and DEEC selling licences which were not open for sale and purchase at all. This was only to evade duty on the imported goods. The appellant also had substantial financial gain from such dealing. In these circumstances, we find no reason to interfere with the penalty imposed on him.
13. In view of what has been stated above, the appeal of Shri Nandlal Kishandas Khemani is partly allowed by reducing the penalty to Rs. 15 lakhs. Appeals of the other two appellants fail and are rejected.
(Pronounced in Court on 28.5.2004)