Shri Ashwin Agarwal vs Commissioner Of Customs & Excise, ...
- CitationAppeal No. : C/416,425-428,431/2007
Ratio decidendi
The rule this decision rests on
Where a person is shown to be the principal architect and main beneficiary of the diversion of duty-free imported goods into the local market, a penalty on him is justified, and the quantum of penalty is assessed by reference to the value of the diverted goods and the customs duty evaded. A broker or commission agent who arranges the sale of goods diverted from duty-free imports may be penalised only if he is shown to have had knowledge that the goods were not duty-paid; where the record establishes that he was paid only a nominal commission and the penalty imposed is excessive in relation to the gain, the penalty is to be reduced accordingly. A buyer who purchases goods from an importer in cash, without bills or invoices, is to be taken to have had knowledge that the goods were not duty-paid, and a penalty for such purchase is warranted.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
(Arising out of OIO-09/COMMR/2007 dated 17.09.2007, passed by Commissioner of Customs, Ahmedabad)
1. Shri Ashwin Agarwal : Appellant (s) 2. Shri Surendra Pyarelal Balani 3. Shri Bharatbhai S. Shah 4. Shri Bhanu Mulchand Harwani 5. Shri Vinodsingh Harisingh Rathore 6. Shri Rameshbhai Dayaram Punjabi
VERSUS
Commissioner of Customs & Excise, Ahmedabad : Respondent (s)
Represented by :
For Appellant (s) : Shri M.H. Sukheja, Advocate
For Respondent (s) : Shri Alok Srivastava, Authorised Representative
For approval and signature :
Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Hon'ble Member (Technical)
1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No 3 Whether their Lordships wish to see the fair copy of the Order?
Seen 4 Whether Order is to be circulated to the Departmental authorities?
Yes
CORAM :
Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Hon'ble Member (Technical)
Date of Hearing / Decision : 24.06.2015
ORDER No. A/10854-10859/2015 Dated 24.06.2015
Per : Mr. P.K. Das;
These appeals are arising out a common order and therefore all are taken up together for disposal.
2. The relevant facts of the case, in brief, are that One M/s. Seema Exports (India), Ahmedabad (hereinafter referred to as Importer) imported Polyester fabrics without payment of duty, for manufacturing finished goods to be exported. During investigation, it was found that the importer diverted the duty free imported material in the local market. A show cause notice dated 02.5.2006 was issued to the importer, Shri Ashwin Agarwal, Power of Attorney holder of M/s. Add International, who was master-mind of illegal diversion of duty free imported materials and others. By the impugned order, the adjudicating authority confirmed the demand of Customs duty alongwith interest and imposed penalty of equal amount of duty on the importer and also imposed penalty of Rs. 30 Lakh on Shri Ashwin Agarwal and penalties of Rs. 5 Lakh on Shri Surendra Pyarelal Balani, known as Rajubhai Dalal, a broker. A further penalty of Rs. one lakh each was imposed under Section 112 of the Customs Act, 1962 on the buyers namely, Shri Bharatbhai S. Shah, Shri Bhanu Mulchand Harwani, Shri Vinodsingh Harisingh Rathore and Shri Rameshbhai Dayaram Punjabi.
3. Learned Authorised Representative for the Revenue submits that it appears from the stay order, the importer had not filed any appeal. None appears on behalf of buyers. Shri M.H. Sukheja, learned Advocate appeared on behalf of Shri Surendra Pyarelal Balani (Broker). As the matter is old one and nobody turned-up on behalf of the other appellants and there is no application for adjournment, we proceed to decide the appeals on merits.
4. After hearing both the sides and on perusal of the records, we find that Shri Ashwin Agarwal is the main architect of the fraud for diversion of the duty free goods in the local market. He has admitted in various statements that he had involved in diversion and delivery of the duty free materials to the buyers as well as procurements these goods from Dubai based suppliers. It appears from the records that the importer had not filed any appeal. Shri Ashwin Agarwal is the main beneficiary and therefore, imposition of penalty on Shri Ashwin Agarwal is warranted. It is seen that the importer diverted the duty free materials of 92773.5 Meter involving customs duty of Rs. 49,17,526/- alongwith interest and therefore, quantum of penalty of Rs. 30,00,000/- imposed on Shri Ashwin Agarwal the main beneficiary, is justified.
5. Learned Advocate appearing on behalf of Shri Surendra Pyarelal Balani known as Shri Rajubhai Dalal, drew the attention of the Bench to the statement of Shri Surendra Pyarelal Balani. It appears from the record that Shri Surendra Pyarelal Balani acted as a commission agent of the importer for selling duty free materials on commission of 1% of the sale price, in respect of 20000 Meters. On a query from the Bench, the learned Authorised Representative for the Revenue submits that as per the impugned order, the value of 20000Meter of imported material, at the rate of Rs. 60-65 per meter, would be about Rs. 12Lakhs and the amount of commission earned by Shri Surendra Pyarelal Balani would be about Rs. 12,000/-. Learned Advocate submits that Shri Surendra Pyarelal Balani had not received any amount in this transaction, as the department had initiated action against the importer and the buyers. He further submits that he was not aware of the illegal diversion of the goods. There is no evidence on record that he had the knowledge of diversion of the goods. There are various decisions of the Tribunal that penalty cannot be imposed without any knowledge.
6. Learned Authorised Representative for the Revenue submits that all the buyers have purchased duty free material on cash basis, without any documents and therefore they had the knowledge of diversion of duty free imported material and penalty on buyers are warranted.
7. We find that Shri Surendra Pyarelal Balani alias Rajubhai Dalal in his statement accepted that he had arranged the sale of duty free material to the buyers without any bills or invoices. However, we agree with the submission of the learned Advocate that the appellant may get a sum of Rs. 12,000/- as commission and therefore, the quantum of penalty is excessive. Regarding imposition of penalty on the buyers for purchase of duty free goods from the importer illegally without any bills and invoices and payment made in cash, it is clearly evident that buyers had knowledge that goods were not duty paid and imposition of penalty is warranted.
8. In view of the above discussion, we upheld imposition of penalty on Shri Ashwin Agarwal and the appeal filed by the appellant is rejected. The penalty on the other appellants are reduced to Rs. 10,000/- (Rupees ten thousand only) each. The Appeals filed by the other appellants are disposed of, in the above terms.
(Dictated and pronounced in the Court)
(P.M. Saleem) (P.K. Das) Member (Technical) Member (Judicial) ..KL
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