ORDER
T.K. Jayaraman, Member (T)
1. The appellant has filed this appeal against the OIO No. 32/2000 dated 20.09.2000 passed by the Commissioner of Customs, Bangalore.
2. In the impugned order, the Commissioner has imposed a penalty of Rs. 20,000/- on the appellant under Section 112 of the Customs Act, 1962. The appellant is seriously challenging the imposition of the penalty.
3. Shri Kiran S. Javali, the learned Advocate, appeared on behalf of the appellant and Shri Ganesh Havanur, the learned SDR, for the Revenue.
4. The learned Advocate urged the following points:
(i) The Commissioner has imposed penalty under Section 112 on the appellant without bringing out clearly the reasons.
(ii) The Show Cause Notice issued to the appellant and others has relied on the statements of S/Shri Lalit Jain; H. Bhaskar, Inspector; the appellant Shri Vikram Jain. There was an investigation in connection with certain irregularities alleged to have been committed by M/s. MNS Exports (P) Ltd. In that case, the appellant was implicated. The charge against the appellant was that he was the mastermind behind certain imports in the name of 100% EOUs and the export of the same consignments to Singapore in order to obtain DEEC Licence fraudulently. In the course of the investigation connection with M/s. MNS Exports (P) Ltd., it was revealed that M/s. Kanika Apparels also imported certain items and handed over the same to the appellant. Show Cause Notice has been issued also to M/s. Kanika Apparels and its Proprietor Lalit Jain. The contention of the Revenue is that the appellant Shri Vikram Jain along with H. Bhaskar, Inspector of Customs, is the mastermind behind the illegal acts. Therefore, the Commissioner has imposed penalty on the appellant. The penalty is not sustainable for the reason that the same person cannot be punished more than once for the same offence. Since the Show Cause Notice has arisen in respect of the common investigation, separate Show Cause Notices could not have been permitted. The Show Cause Notice mainly relied on the statements of the above mentioned persons. The statement of Lalit Jain dated 1.9.1999 does not refer to the appellant at all. In the statement dated 22.9.1999, nowhere does Lalit Jain state that he had delivered the goods to Mr. Vikram Jain. It is not the contention of Lalit Jain in specific terms that he had delivered the goods to Vikram Jain. The factum of goods having been received by Vikram Jain is not established. Even Shri H. Bhaskar, in his statement, has stated: “I am not aware how the goods were delivered to Vikram Jain as I have not taken delivery of the said goods from M/s. Kanika Apparels.” Hence, the above statements are not worthy of being relied upon for purposes of levy of penalty on the appellant. The Adjudicating Authority has relied upon the order passed in the matter of M/s. MNS Exports (P) Ltd., to decide the proceedings initiated by the present Show Cause Notice dated 21.02.2000. He could not have relied upon that order without affording an opportunity to the appellant to make his submissions in this regard. The appellant having not been put to notice of the intention of the respondent, the order would amount to exceeding the charges in the Show Cause Notice and the relied upon documents and consequently, penalty is not sustainable. The learned Advocate pointed out that the decision of the Tribunal in the matter of MNS Exports has no bearing for purposes of deciding the present proceedings. There is no charge to hold the appellant as the importer. There is no demand of duty on the appellant. There is no confiscation. Hence, no penalty is imposable. In the absence of an order of confiscation, penalty under Section 112 is not leviable.
5. Shri Ganesh Havanur, the learned SDR, urged the point that Shri Vikram Jain is the mastermind behind the import of certain items in the name of 100% EOU and exporting the same in order to obtain fradulant advance licence. The statements of Shri Lalit Jain, H. Bhaskar and the appellant himself confirm the same. There is definitely involvement of Shri Vikram Jain in the illegal activity. Hence, penalty has rightly been imposed. He urged the Bench to uphold the OIO.
6. We have gone through the records of the case very carefully. The Show Cause Notice requires the appellant to show cause why penalty under Section 112 of the Customs Act should not be imposed on him for having colluded with the importer to defraud the government exchequer. When a person indulges in clandestine activity by adopting certain modus operandi involving a number of firms/companies, the proceedings in respect of one company/unit will definitely have a bearing on the proceedings in another. In other words, we cannot say that the proceedings in the case of M/s. MNS Exports (P) Ltd. will not have any bearing at all in the proceedings against M/s. Kanika Apparels especially when Shri H. Bhaskar, Inspector and the appellant had been instrumental in perpetrating the fraud. Shri Lalit Jain, Authorised Signatory of M/s. Kanika Apparels, in his statement dated 22.09.1999, has stated that a person sitting in Superintendent of Customs Office (Vikram Jain) whom he identified was the person who had come to his factory (M/s. Kanika Apparels) to collect duty free imported fabric which was cleared from Customs and brought to his factory. He has further stated that he refused to hand over the said material to him because H. Bhaskar, Inspector of Customs, in-charge of the factory was not present Shri Vikram Jain, later called over mobile to H. Bhaskar to come over to the factory. Later, H. Bhaskar came to the factory and persuaded Shri Lalit Jain to hand over the goods and told him not to worry as nothing would happen to him. He was further supposed to have said, I have made arrangements at all places and no records will be traced. Lalit Jain further states “Since he convinced me that nothing would happen to me, I agreed to hand over the duty free goods to Vikram Jain”. From the above, it is very clear that Shri Lalit Jain, Authorised Singnatory of M/s. Kanika Apparels agreed to hand over the goods imported for the 100% EOU to Vikram Jain. Does it not indicate the involvement of Shri Vikram Jain in the episode? There is absolutely no reason why Lalit Jain should implicate the appellant without any reason. He had also identified Vikram Jain. In the face of such statement, it is very difficult to hold that Shri Vikram Jain has absolutely no role in the episode and is innocent. There may not be details in the statements relied on regarding the handing over of the goods to Vikram Jain but, the fact that he approached Lalit Jain to get the materials is brought out clearly in the statement of Lalit Jain. The statement of Lalit Jain that he had agreed to hand over the goods is also very significant. From this and also from the statement of Shri H. Bhaskar, one comes to the inescapable conclusion that Shri Vikram Jain is involved in the entire episode. In fact, Shri H. Bhaskar, in his statement dated 22.09.1999, stated the following:
You have also questioned me whether any imports have been made in any other 100% EOU’s name and after clearance from the Customs taken delivery by you and handed it over to Shri Vikram Jain of M/s. Texworth International, Bangalore using the modus operandi adopted in r/o. the clearances made in the name of M/s. MNS Exports Pvt. Ltd., Bangalore, for which I wished to state that I have not taken delivery of the goods. However, the goods must have been taken by Shri Vikram Jain and this was told to me by Vikram recently and he further told me that the same modus operandi as in the case of M/s. MNS was used in the name of M/s. Kanika Apparels for clearing the goods, duty free, and also as well as for clearing the goods in the name of M/s. Next Fashion Creators also.
Therefore, the allegation in the Show Cause Notice that Shri Vikram Jain colluded with the importer to defraud the Government exchequer is not without any basis. It is not correct to say that because the goods have not been confiscated, no penalty can be imposed. In fact, the Commissioner, in his order, has held that the goods are liable for confiscation. Since the goods were not available, he has not given a confiscation order. As the goods are held liable to be confiscation, that finding is sufficient to hold that the persons involved are liable to penalty under Section 112 of the Customs Act. The Commissioner has clearly brought out the role of Vikram Jain in his order. Therefore, we do not find any merit in this appeal and the same is rejected.
(Pronounced in open Court on 10 APR 2006)