ORDER
P.G. Chacko
Appeals Nos. C/599, 600 & 614/1998:-
1. These appeals are against the order dated 20.11.87 of the Collector of Customs whereby two consignments from USA of Acrylic Plastic Scrap consigned to M/s. Mascot Metal Traders, Jamnagar as per Item No. 85 of Import General Manifest [IGM] No. 2947 and Item No. 341 of IGM No. 3069 (Bills of Lading Nos. 13347 and NYC-13613 respectively) were absolutely confiscated under Section 111(d) of the Customs Act r/w. Section 3(2) of the Imports & Exports (Control) Act and penalties of Rs. 1,90,000/-, Rs. 50,000/- and Rs. 50,000/- were imposed on Shri Devang R. Vora (appellant in Appeal No. C/614/88), M/s. Pushpak Chemicals Pvt. Ltd. (appellant in C/600/88) and M/s. Nuchema Plast (appellant in C/599/88). The impugned order was in adjudication of Show-Cause Notice [SCN] dated 21.10.86 wherein, on the basis of investigations, the Directorate of Revenue Intelligence [DRI] had alleged, inter alia, that Shri Vora had imported the goods in the name of M/s. Mascot Metal Traders (who allegedly, did not quality to be Actual User for claiming clearance of the goods under Open General Licence) with deliberate intent to get the goods cleared subsequently in the name of some non-existent firm under the provisions of OGL; that, in the absence of any valid import licence covering the subject goods, the importation was unauthorised and the same rendered the goods liable to confiscation under Section 111(d) of the Customs Act; and that Shri Vora as also M/s. Pushpak Chemicals Pvt. Ltd. and M/s. Nuchemo Plast, who had allegedly aided and abetted the commissions of Shri Vora, were liable to penal action under Section 112 of the Act. The Collector found the allegations to have been proved and hence passed the impugned order.
2. The allegations in the SCN were based on facts disclosed by scrutiny of import documents, examination of the goods and statements (recorded under Section 108 of the Customs Act) of the persons named below:-
(i) Shri S. Venkatesh, Employee,
Volkart Fleming Shipping & Services Ltd., Bombay.
(ii) Shri R.N. Parker, Manager,
Express Cargo Movers.
(iii) Shri Shantilal J. Jain, Director,
Pushpak Chemicals Pvt. Ltd., Bombay
(iv) Shri Kantilal V. Joshi, Proprietor,
Mascot Metal Traders, Jamnagar
(v) Shri Prakash Bhandare (P.H. Bhandare), Partner
Nuchemo Plast, Panvel.
(vi) Shri G.H. Bhandare, Manger,
Naresh Udyog, Panvel
Brother of Shri Prakash Bhandare)
(vii) Shri Suresh Bhatia, Accountant-cum-Manager,
Varsha Plastics Pvt. Ltd., Bombay, a sister concern of
Pushpak Chemicals Pvt. Ltd., Bombay.
(viii) Shri R.K. Gupta, Officer, Bank of Maharashtra
(Overseas Centre), Bombay.
(ix) Shri S. Naidu, Officer, Central Bank of India,
Bombay.
(x) Shri Devang R. Vora (Appellant).
3. The two consignments had landed at Bombay Port in 1986. The one covered by IGM No. 2947 had been declared to contain 20.52 MTs and the other covered by IGM No. 3069 had been declared as containing 18.695 MTs, both of Acrylic Plastic Scrap. [The declaration as to qualitative description of the goods was, later on, found to be correct in chemical test of samples in the Custom House Laboratory, while marginal excesses of weight were found on weighments.] The import documents showed that both the consignments had been originally consigned to M/s. Mascot Metal Traders [in short, MASCOT], that The Steamer Agents viz. M/s. Volkart Fleming Shipping & Services Ltd. [in short, VOLKART] applied for change of consignee in the IGMs from MASCOT to M/s. Nuchemo Plast [in short, NUCHEMO] and that, subsequently, they applied for a change from NUCHEMO to M/s. Pushpak Chemicals Pvt. Ltd. [in short, PUSHPAK] in respect of the consignments. The story would get completed, one way or the other, with the facts stated by the persons named in para (2) above.
4.1 Shri Kantilal Joshi of MASCOT stated that they were only indentors/commission agents and did not have any factory or SSI registration for manufacture of any goods and hence they were not eligible for import of any item as Actual Users under OGL. He had received two arrival notices in respect of consignments of synthetic resin shipped from USA by M/s. Sordelli Plastic Inc., New York. His enquiries with the shippers as to how the consignments happened to be shipped in MASCOT’s name were unanswered. Shri Joshi expressed the belief that such consignments could be arranged only by Shri Devang Vora through his brother Shri Vijay Vora who was the owner of Sordelli Plastic Inc. Shri Joshi further stated that Devang Vora had told him that he would get the consignee’s name in the import documents changed to other importers who could clear the goods as actual users in the normal course. Shri Joshi further stated that, during 1984-85, Shri Vora’s firm viz. M/s. Rasiklal Tribhovandas & Co., Bombay, had imported scrap through him and that he had given them a few blank signed letter heads of his firm (MASCOT) for the purpose of preparing declarations required for such importations. Shri Joshi added that Shri Vora might had made use of such letter heads for placing orders for import of the subject goods in the name of MASCOT.
4.2 Shri Prakash Bhandare of NUCHEMO stated that Shri Devang Vora had approached him with a request to help him by clearing the consignments in the name of NUCHEMO and that he (Sh. Vora) claimed to have duplicate set of documents for offering the goods to NUCHEMO at the same price. Shri Bhandare further stated that Shri Devang Vora had also asked him to provide final sales contract which was to be predated to show that the subject shipment was pursuant to such contract. Shri Bhandare accordingly signed the sales contract, whereupon the duplicate set of import documents relating to the two consignments were given to him by Shri Devang Vora. Shri Vora also advised Shri Bhandare to contact one Shri Bhatia with whose help Shri Bhandare could clear the goods. Shri Bhandare further stated that Shri Vora had told him that Shri Bhatia would introduce him to some clearing agent. Shri Prakash Bhandare, further, stated that NUCHEMO could not clear the goods as Shri Devang Vora wanted them to bear 50% of the container detention charges.
4.3 Shri G.H. Bhandare, brother of Shri Prakash Bhandare, stated that he had told Shri Devang Vora that he might require acrylic plastic scrap for use either in his factory (Naresh Udyog) or in his brother’s (NUCHEMO), that he was told by Shri Vora that some consignments of acrylic plastic scrap were available with him and that he (Shri G.H. Bhandare) asked him to contact his brother (Shri Prakash Bhandare). Shri G.H. Bhandare further stated, that upon receipt of bank documents, he or his brother had informed Bank of Maharashtra that they would be retiring the documents shortly. In the meanwhile, his brother had given the duplicate set of documents to the clearing agents viz. M/s. Express Cargo Movers fro preparing Bills of Entry etc. Shri G.H. Bhandare further stated that his advice was sought by his brother on Shri Devang Vora’s demand that 50% of the container detention charges be borne by NUCHEMO. He advised his brother of forego the deal, and afterwards came to know that the consignments had been directed to PUSHPAK.
4.4 Shri Venkatesh of VOLKART stated that they had prepared the IGM on the basis of the Freight Import Manifest received from their principals, that M/s. Express Cargo Movers had produced the foreign supplier’s invoices and sought amendment of consignee’s name and that accordingly they prepared the applications for changing the consignee’s name from MASCOT to NUCHEMO. Shri Venkatesh further stated that they later received a letter from NUCHEMO, which said that they were in no way concerned with the consignments. Shri Venkatesh also quoted M/s. Express Cargo Movers as having stated that they had received the original documents duly discharged in the name of PUSHPAK by Central Bank of India.
4.5 Shri R.N. Parkar of Express Cargo Movers stated that import documents of both the consignments were handed over to them by Shri G.H. Bhandare, representing his brother’s firm NUCHEMO, that they prepared Bill of Entry but did not file the same as the original documents were not received from NUCHEMO and that subsequently they received the original documents from PUSHPAK with instruction to file Bill of Entry.
4.6 Shri Shantilal Jain of PUSHPAK stated that, in February 1986 they had received enquiries from the foreign suppliers as to whether they were interested in the goods, that they were in need of the raw material and hence offered to buy the goods, that they were no longer interested in clearing the consignments although they had retired the documents from their bankers, and that he (Sh. Jain) knew Shri Devang Vora for six to seven years.
4.7 Shri Suresh Bhatia of Varsha Plastics stated that he had introduced M/s. Express Cargo Movers to Shri P.H. Bhandare for clearing the subject consignments, that he knew Shri Devang Vora who very often visited Shri Shantilal J. Jain, Director of both VARSHA and PUSHPAK, and that he had retired the import-documents from Central Bank of India is directed by Shri Jain and submitted the same to Shri Jain.
4.8 Shri R.K. Gupta of Bank of Maharashtra stated that they had received two sets of import documents drawn on NUCHEMO, from the foreign supplier’s Bank at Singapore, that they subsequently received instructions from the collection Bank to replace the documents with revised set of documents drawn on PUSHPAK, that they also received ‘no objection’ letter from NUCHEMO and that, accordingly, both sets of documents were sent to Central Bank of India. Shri S. Naidu of Central Bank of India confirmed receipt of the documents from Bank of Maharashtra. He also stated that the bank had sent intimation to PUSHPAK for retirement of the documents, that one Shri Bhatia representing PUSHPAK came to the bank and retired the documents on payment of bill and that the bank had endorsed the Bills of Lading in the name of PUSHPAK.
4.9 Shri Devang Vora stated that he knew Shri Kantilal Joshi of MASCOT. When questioned as to whether he had discussed with Shri Joshi regarding import of any consignments of acrylic plastic scrap or had booked any such consignments in the name of MASCOT, Shri Vora gave evasive answers. To the question whether he had received blank/signed letter heads of MASCOT for the purpose of import or any other purpose, his answer was : “to the best of any knowledge, no”.
5. We have examined the impugned order and the grounds of these appeals and have also considered the submissions of both sides.
6. Shri D.R. Vora (appellant in C/614/88) and M/s. Pushpak Chemicals (P) Ltd. (appellants in C/600/88) have challenged the Collector’s order mainly on the ground of violation of the principles of natural justice. This ground, however, is not there in the appeal (C/599/88) of M/s. Nuchemo Plast. D.R. Vora’s appeal states that his requests for adjournments of personal hearing “for valid reasons” were disregarded by the Collector and that he had not been given any opportunity to cross-examine witnesses. The appeal, however, does not spell out the reasons for seeking adjournments, nor is it discernible from the appeal as to whether and when the appellant had asked for any opportunity to cross-examine any witness. His plea of negation of natural justice is, therefore, rejected at the outset. The gist of allegations against the appellant in the show-cause notice was that he had deliberately caused unauthorised importation of the subject goods thereby rendering the goods liable to confiscation under Section 111(d) of the Customs Act. The appellant has no case that he did not receive the notice. Admittedly, he has never replied to the notice. The above allegation against him will, therefore, be held to have been conceded. The goods viz. acrylic plastic scrap was, undisputedly, an industrial raw material freely importable by actual (industrial) users. However, where the importer did not satisfy the actual user condition, any importation of the goods without specific licence was unauthorised in law and attracted Section 111(d) of the Customs Act for confiscation. As the allegation that the appellant had rendered the goods liable to confiscation under Section 111(d) stands undenied, he is liable to penalty under Section 112 of the Act. In this appeal, there is no challenge as to the quantum of penalty either. In the result, appeal No. C/614/88 is dismissed.
7. It has been noted by the adjudicating authority that M/s. Pushpak Chemicals (P) Ltd. had also not replied to the show-cause notice nor appeared for personal hearing. In their appeal, they have admitted receipt of the notice and copies of the documents relied upon in the notice. They have, however, complained that, though on 21.9.87 (date of adjournment hearing) they were told by the Collector that another date would be fixed for hearing, no notice was issued to them for any such hearing and the Collector passed the impugned order against them ex parte. It has also been stated by them that they had no opportunity to file written submissions with the Collector. But these grievances of the appellants have not been substantiated to our satisfaction. Therefore we would hold that there was no breach of natural justice by the adjudicating authority in the appellants case. The finding against them is that they aided/abetted D.R. Vora in the unauthorised importation of the goods, by lending their name as actual users to enable him to clear the goods under OGL. This finding has not been successfully contested in the appeal. Therefore, the penal liability of the appellants shall remain. We need not interfere in the quantum of the penalty imposed by the Collector as there is no challenge as to them same in this appeal. Appeal No. C/600/88 is also rejected.
8. The finding against M/s. Nuchemo Plast is also that they abetted D.R. Vora in the unauthorised importation and attracted the penalty under Section 112 of the Act. We find that this finding is not supported by the evidence in the case. M/s. Nuchemo, a SSI unit engaged in the manufacture of acrylic sheets etc., were in need of acrylic plastic scrap as raw material. When D.R. Vora contacted them and offered to transfer the import documents of the subject consignments to them at the same invoice price, they agreed for the same and took steps through Clearing/Steamer Agents for noting the consignments and further processing of papers. But, subsequently, when D.R. Vora raised a new claim for 50% of container detention charges from the appellants, the latter withdrew from the deal and advised their Clearing/Steamer Agents, Bankers and Port Trust authorities accordingly. Subsequent to this development, the consignments were noted in the name of M/s. Pushpak Chemicals (P) Ltd. These are facts borne on the record of this case and have not been disputed by any of the appellants. Though, at one point of time, M/s. Nuchemo Plast were on the verge of lending their name to D.R. Vora for clearing the goods, they soon saved themselves by voluntarily withdrawing from the deal with him, whereafter they had nothing to do with the goods. It cannot be said that the appellants aided or abetted D.R. Vora’s attempt to clear the goods unauthorisedly. Their case is altogether different from that of M/s. Pushpak Chemicals, in whose name the consignments were noted and Bills of Entry filed. There is a ground raised in this appeal that the appellants were not even aware of importation of the goods till they were contacted by D.R. Vora and that, when they became aware, they were given to believe that the goods had been lawfully imported. In other words, they had no mens rea. This plea appears to have the support of the available evidence in the case. The impugned order has not brought out anything to the contrary. In the result, we set aside the penalty on the appellants and allow their appeal (C/599/88).
Appeal No. C/500/88
9. The appellant, Shri Devang R. Vora, in this appeal, has challenged another order passed by the Collector of Customs, wherein a penalty of Rs. 3,88,000/- was imposed on Shri Vora under Section 112 of the Customs Act on the ground that he had rendered himselves liable to such penalty by effecting unauthorised importation of three consignments of High Density Polyethylene (HDPE) attracting the confiscation provision of Section 111(d) of the Act.
10. The show-cause notices (SCNs), which were adjudicated upon as per the above order of the Collector, had alleged that the appellant had imported three consignments of HDPE and sought clearance thereof under OGL under Bills of Entry filed in the name of M/s. Naresh Udyog who had no facility to use the goods and did not fulfill the actual user condition for the importation under OGL. It was further alleged that the appellant’s intention was to sell the goods in the market after clearance at the Customs. The SCNs held the goods to be liable to confiscation under Section 111(d) and the appellant to be liable to penalty under Section 112 of the Customs Act. The allegations were denied. The adjudicating authority found, on the basis of statements recorded under Section 108 of the Act, that the goods were actually imported by the appellant. It was found that placing order for the goods, effecting shipment, making payment for retiring import documents, giving the documents to CHA and directing him to warehouse the goods were all done by the appellant. It was further found that M/s. Naresh Udyog in whose name the Bills of Entry were filed were not an actual industrial user of the goods.
11. We find that the appellant has not cited any evidence to disprove the above findings. He has not been able to show that he was not the importer of the goods. Where goods, freely importable under OGL on actual user condition, were imported without fulfilling the condition, such goods would be held to have been imported illegally unless specific import licence was produced by the importer. No such licence was produced in this case. Hence, in this case, the goods were rightly held to be liable to confiscation under Section 111(d) of the Customs Act. As the importer of the goods, the appellant attracted the penal liability clause of Section 112 of the Act. We do not find any infirmity in the order of the Collector against the appellant. The appeal is dismissed.