ORDER
Gowri Shankar, Member (T)
1. These three appeals are against the common order of the Collector of Customs, Bombay imposing penalties under Clause (a) of Section 112 of the Act inter alia of Rs. 10 lakhs on Ashok C. Shah, Rs. 10 lakhs on Vinodkumar Jatia and Rs. 5 lakhs on H.R Dagha & Company The order of the Collector confiscating the sale proceeds of the imported goods is not challenged by any of the appellant before us.
2. The two bills of entries presented for warehousing the goods imported into Bombay showed the importer to be A.V. Impex, 22, Belvedere Road, Mazgaon, Bombay. The proprietor of this firm is Ashok C. Shah. The department found that the goods were correctly described as defective low carbon sheets in one case and coils in the other. It however, found that the value of the goods was misdeclared, being much lower than that ought to be. It also found that the import licence required for their clearance was not produced. It is not the case of anybody before us that the value was not misdeclared or that the required import licence was produced. The confiscation of the sale proceeds of the goods by the Collector is thus confirmed.
3. In his order, the Collector finds (this is also not disputed) that the declaration on the bills of entry related to the goods has been signed by Ashok C. Shah, and payment was made for the goods from the bank account of A.V. Impex opened with Punjab & Sind Bank, Masjid Bunder, Bombay by Ashok C. Shah. He says that although A.V Impex and therefore Ashok Shah is the importer on the record, the actual importer of the goods is Rajkumar Jatia, brother of Vinodkumar Jatia at Singapore, to whom the goods were original consigned by their supplier at Japan. He also finds that Vinodkumar Jatia, appellant in appeal C/121/95 abetted the import. He also finds that Ashok Shah took steps such as appointing customs house agent for clearing the goods.
4. Rajkumar Jatia is not in appeal before us.
5. The finding of fact by the Collector with regard to Ashok Shah is not question before us by his counsel. It is not disputed that Ashok Shah signed the bills of entry and opened the bank account. The contention is that he was not aware of what was imported and that he did not intend to import the goods unauthorisedly or did not make knowingly any false declaration. Vinodkumar Jatia and Ashok Shah were friends from their school days. Ashok Shah’s firm also supplied talcum and soapstone to Bell Ceramics owned by Ramesh Jatia, brother of Vinodkumar Jatia and Rajkumar Jatia. Vinodkumar Jatia asked Ashok Shah to ‘lend his name’ for import of some goods, which he did not want to impi in his own name because he had ‘some taxation problem’. He told Ashok Shah that there was no illegality. Ashok Shah, believing in good faith and his assurance agreed to do so. He signed some blank sheets of paper at Vinodkumar Jatia’s instance without realising that anything illegal was being planted. He also opened the bank account on a bona fide belief that there was nothing wrong in it, only in order to accommodate Vinodkumar Jatia. The counsel emphasises that although the goods arrived in Bombay in September, Ashok Shah signed in blank sheets of paper in December thus pointing to his bona fide.
6. These are the same arguments that were advanced before the Collector. We are not in a position to disagree with the finding of the Collector that Ashok Shah could not so easily have been cajoled into his activities unaware of the true facts. When Ashok Shah singed these papers he was 28 years old. It is stated that he was assisting his brother in the conduct of his family business of purchase and sale of minerals. Ashok Shah used to be actively involved in the purchase of minerals, he would inspect them for their quality, negotiate the price, etc. He was thus not a stranger to the would of commerce and trade. He had also opened the bank account in the name of the firm AV Impex, and operated it. Deposits were made into it and withdrawals made from it for paying for the import in question. The account was opened on 4th December, 1989 and payments to the extent of US $ 90,000 were also made by debit to this account. We find it difficult to believe that any grown person, especially one who is familiar with commerce and trade should sign blankly papers, open bank account and transact large sums of money for the sake of friendship. It is not contended that Ashok Shah was not a man with average intelligence. He is reasonably well versed with business and trade. The contention that Ashok Shah was not at all aware of the transactions in the bank account is unacceptable. No withdrawal could be made from it without his signature. He would have been kept informed by the bank of the state of the account from time to time. We have no hesitation in accepting the Collector’s finding rejecting his contention that he acted in good faith and he was unaware of the consequences of his action. WE also note that no steps were taken by Ashok Shah to inform the department of what he says was the real position, to retract from his actions or distance himself from them before the proceedings began.
7. We next turn to H R Dagha & Co, appellant in appeal C/122/95, the custom house agent. The Collector notes that while the custom house agent contended that he was appointed by Ashok Shah to clear the goods, Ashok Shah denies this and agrees that this is a word of one person against another. He, however, finds that the custom house agent received no payment from Ashok Shah, which would have been the case if Ashok Shah engaged him. He notes the existence of a letter of A.V Impex to the custom house. This letter was in reply to a letter of the Special Investigation Branch. By this letter, it submits that copies of 20 import licence, transfer letters and import documents. The Collector accepts Shah’s plea that he never signed this letter because the signature on the letter is patently not that of Shah. He notes that the custom house agent was unable to explain how, and from whom he obtained this letter or copies of the licence. He finds that the licences were obtained by Vinodkumar Jatia. He concludes that there is sufficient circumstantial evidence to show that the custom house agent acted, not on behalf of Shah but at the behest of Jatia and notes that the importer was not Shah but Jatia. He finds corroboration to this conclusion in the fact that the custom house agent wrote to the department asking for conversion of the warehousing bill of entry into home consumption bill of entry without obtaining instructions from Shah.
8. The arguments of the counsel for the custom house agent is that it has not been clearly established that he was aware that for the custom the value of the goods was wrongly declared or that the licences were not valid to cover their import. We also emphasise that the custom house agent had a past clean record in the past.
9. We are not concerned with the past history of the custom house agent. We are concerned with the liability to penalty with respect to transactions before us. It is not possible, on considering the evidence, to conclude that the custom house agent was engaged by, or responding to the instructions of Ashok Shah. Muljee R. Loda, a partner of the firm has said that Ashok Shah was brought to him by Vinodkumar Jatia, for whom he used to earlier clear goods. He has said that Ashok Shah had come to his office in the past with Vinodkumar Jatia; that is why he took up the job. That, however, does not explain why he did not take from Ashok Shah the authority that is required under the licensing regulations and which further, he would have taken as a matter of common prudence. Nor there is any statement by him that Vinodkumar Jatia undertook to reimburse the expenses that he incurred. He would have incurred some expenses towards filing of the bill of entry, arranging for the examination of the goods, etc. It is reasonable to conclude that if he were dealing with a new client he would have taken some advance from that client. He has not done so. The fact that the letter to the SUB was not signed by Ashok Shah, and the absence of authority letter for conversion of warehousing bill of entry into home consumption bill of entry are also significant. If the custom house agent were acting in the normal course of business for Ashok Shah, he would have been able to explain all this. A consideration of all these facts compel us to conclude that he was working for Vinodkumar Jatia.
10. These facts are however insufficient to conclude that the custom house agent was aware of the undervaluation. The value shown in the bill of entry would have been in the knowledge of the actual importer. The fact that custom house agent filed the bill of entry in the custom house does not in fact mean that he was privy to this knowledge. Investigations made by the department do not show any specific evidence in support of this view or the existence of the sufficient circumstantial evidence that would justify such an inference. In our view, therefore, there is insufficient evidence for imposition of penalty upon H.R Dagha & Company It is equally our view that the conduct of the custom house agent was required to be examined with reference to the provisions of the Customs House Agents Regulation 1985. In our prima facie view, there has been contravention of many of these provisions. Therefore while we allow the appeal and set aside the penalty imposed on the custom house agent, we would recommend to the Commissioner to enquire into this aspect to take appropriate action.
11. Before deciding upon the last question of liability to penalty on Vinodkumar Jatia, it is necessary to narrate the sequence of the events relating to placement of the order for the goods and their importation. The supplier of the goods is Seiwa Trading Company Limited, Tokyo. The supply of the goods were first ordered by Heyking Limited, Hong Kong which was controlled by Rajkumar Jatia, Vinodkumar Jatia’s brother. The letter of credit opened at the instance of Rajkumar Jatia for the payment of the supply did not contain the name of the specific/consignee, consignee being to the order. At some sub(sic)quent stage the bills of lading for the two consignments were endorsed by the supplier to Credit Agricole, and thereafter by Credit Agricole to Punjab & Sind Bank, Masjid Bunder A/c A.V Impex. The goods were initially paid for by Heyking. The payments made from the Punjab & Sind Bank was made not to the supplier but to Heyking. The Commissioner in fact on these facts held that it was Rajkumar Jatia who was the importer of goods. He finds that Vinodkumar Jatia abetted the import.
12. The evidence upon which he relies is as follows: Firstly the fact that the goods were supplied by Rajkumar Jatia, Vinodkumar Jatia’s brother. Secondly the statement of M.A. Hoosain & Brothers, the identing agents for the Japanese supplier. Thirdly, the statement of the Kartar Singh Khalsa, Manager of the Punjab & Sind Bank and fourthly the conduct of Vinodkumar Jatia. M.A. Hoosain in a statement dated 21.4.1991 when asked to say with whom he engaged for sale of the material, said, “Initially the offer was made to Rajkumar Jatia. Subsequently I had personal meetings as well as telephonic discussions regarding this deal with R.K. Jatia only and till the time of the finalisation of the deal all the negotiations and discussions were held with Rajkumar Jatia.” Rajkumar Jatia confirmed the order only verbally. Subsequent discussions on various occasions were held with him by Rajkumar Jatia, or in his absence, by Vinodkumar Jatia. If Rajkumar Jatia was not available Vinodkumar Jatia also used to discuss on this matter. It is on the basis of this answer that the Commissioner points involvement of Vinodkumar Jatia. His counsel points out that the statement was categorical that up to the stage of finalisation of deal it was Rajkumar Jatia belonging to Heyking and only subsequently Vinodkumar Jatia came to the picture. He refers to the second statement dated 24.4.1991 of Hoosain, were in response to some questions he said that the name of Mani, Manager of Heyking of Hong Kong was given to him by Vinodkumar Jatia and the date of shipment of the consignment.
13. In our view, these two replies of Hoosain by no means establish that Hoosain had not dealt with Vinodkumar Jatia in this regard. He has clearly said that subsequent to the finalisation of the deal he was dealing with Vinodkumar Jatia. What exactly the term finalisation of the deal refers to is not clear. We have however to keep in mind that the confiscation of the goods is under Clause (m) of Section 111 of the Act on the ground that the bills entry filed showed a wrong value. That was done two months after the goods arrived in India. The question, if Vinodkumar Jatia helped Ashok Shah in procuring the goods why he should after the goods arrived in India, continue to have discussions with Hoosain and on whose behalf has to be answered.
14. The Commissioner places considerable emphasis upon the numerous acts that Vinodkumar Jatia undertook which facilitated importation of the goods. Ashok Shah in his statement attributed all his acts as having been done at the behest of Vinodkumar Jatia. The Commissioner again rightly in our view, has doubts about the extent to which his statement of Ashok Shah can be relied upon against Vinodkumar Jatia. But this does not in our view mean that no reliance at all can be placed upon his statement. Ashok Shah in his statement incriminated himself, and points to Vinodkumar Jatia. He does not deny that he signed the documents although he professes that he does not know the implications of that act. These points in our view signify Vinodkumar Jatia’s knowing involvement in the importation and filing of wrong declaration. It is fruitless to say that he did all this for Ashok Shah. It is the same statement that Ashok Shah which we have not accepted. We do not see different consideration should apply to Vinodkumar Jatia. It sustain credibility to say that purely as a matter of friendship Vinodkumar Jatia helped to open bank account, arrange to procure licences, arrange custom house agent, deal with indenting agent, all for the same of his friendship with Ashok Shah. The alternative assumption which is more plausible has to be accepted. This is that he did these acts to help his brother who had financed and was responsible for the importation. Doubtless, cross-examination of Kartar Singh Khalsa, the Manager of Punjab and Sindh Bank who said that Jatia’s employees used to make enquiries regarding the documents were accepted or net, was not provided. Even after discounting this statement there is sufficient evidence to show active and continuing involvement of Vinodkumar Jatia in the transaction which cannot be explained only by him only as a friendship and desire to help Ashok Shah.
15. A plea was made both on behalf of Ashok Shah and Vinodkumar Jatia that penalty was too high and required redemption. The value of the goods is Rs. 25 lakhs and duty sought to be evaded is Rs. 5 lakhs. Taking these aspects into account and taking into consideration the penalty imposed on Rajkumar Jatia, we reduce the penalty to Rs. 7.5 lakhs each.
16. Appeal C/122/95 allowed and appeals C/115/95-Bom and C/121/95-Bom are allowed in part.