Judgment:
1. All the above captioned appeals have been preferred by the appellants against the common impugned order in original of the Commissioner of Customs, Amritsar dated 23.2.2000 vide which he had imposed penalty and fine of various amounts, as detailed therein on them.
2. The facts leading to the filing of these appeals may briefly be stated as under: 3. Shri Kamal Kapoor and Shri Krishan Kapoor, appellants Nos.(1) and (2) imported second hand knitting machines in the name of their firms M/s.Venus Industries appellants No.(11) and M/s.Shree Ambaji Textile (appellant No.10) respectively. As per the provisions of para 5.4 of the EXIM Policy 1997-2002, in force at that time such machines could be imported without licence by the actual users. However, the condition imposed under para 5.4 of the Hand Book of Procedure was that those machines could not be transferred/sold or otherwise disposed of within the period of five years from the date of import without the prior permission of DGFT. Kamal Kapoor, appellant No.(1) imported in all 26 second hand knitting machines, in the name of firm M/s.Venus Industries which was the sole proprietorship of his wife Smt. Shashi Kapoor and he sold those machines to various persons in violation of para 5.4 of the EXIM Policy 1997-2002, as he never sought prior permission from the DGFT for that purpose. Similarly, Krishan Kapoor, appellant No.2 who was the sole proprietor of the firm Shree Ambaji Textile, appellant No.10 and Director of M/s.Beauty Knitting (P) Ltd. (appellant No.5), imported 7 second hand knitting machines and he also disposed of the same without seeking prior permission of the DGFT in violation of the provisions of para 5.4 of the EXIM Policy. The other appellants No.(3), (4), (6) to (9) were purchasers of those machines from Kamal Kapoor (appellant No.1). On conducting raid on the basis of the intelligence the machines were seized by the officers of the Central Excise from those purchasers. Show cause notice was issued to all the appellants wherein the penalties and fines were proposed to be imposed on them for having contravened the provisions of para 5.4 of the EXIM Policy, besides confiscation of the seized machines. They all contested the correctness of that show cause notice. Appellants Nos.(1), (2), (10) and (11) denies the sale of the second hand knitting machines, altogether while appellants Nos.(4) and (6) to (9) claimed themselves to be bonafide purchasers of the machines.
4. The Commissioner, through impugned order had imposed penalty of Rs.15 lakhs and Rs.5 lakhs on appellants No.(1) and (2) respectively.
He had also imposed penalty of Rs.1.5 lakhs and twice fine of Rs.75000/- each on appellants No.(3). Similarly, on appellants Nos.(8) & (9) fine of Rs.80,000/- each had been imposed while on appellants Nos.(6) & (7), fine of Rs.2,50,000/- each had been confirmed. On appellant No.5 twice fine of Rs.2,50,000/- each, had been imposed by the Commissioner.
5. All the appellants being aggrieved by the abovesaid order of the Commissioner have filed the present appeals.
8. Appellant No.(1), Kamal Kapoor as an authorised signatory of his wife Smt. Shashi Kapoor who was the sole proprietor of the firm M/s.Venus Industries (appellant No.11) imported 26 hand knitting machines in the name of that firm. While appellant No.(2). Krishan Kapoor as a sole proprietor of the firm M/s.Shree Ambaji Textile (appellant No.10) and Director of the firm M/s.Beauty Knittings (appellant No.(5) imported seven second hand machines. The disposal of all those machines by both of them was alleged to had been made without prior permission of the DGFT in violation of para 5.4 of the EXIM Policy as per allegations in the show cause notice. All those machines were seized during the raid by the Central Excise Staff. However, the Commissioner vacated the seizure in respect of 14 machines imported by appellant No.(1) in the name of M/s.Venus Industries and 5 machines imported by appellant No.(2) in the name of his firm M/s.Shree Ambaji Textile (appellant No.10). He had ordered the confiscation of the remaining imported seized machines i.e. 12 of appellant no.(1) and 2 of appellant No.(2).
9. So far as the sale of imported machines to appellants/buyers nos.
(6) to (9) by M/s.Venus Industries (appellant no.11) through Kamal Kapoor(appellant No.1) is concerned the same has not been disputed before us. Moreover, all these appellants/buyers had claimed themselves to be bonafide buyers and actual users of the machines. However, Kuldeep Singh, appellant No.3, buyers had disputed the purchase of machines which were found installed in his premises at the time raid.
According to him, he rented his premises in which machines were found to the firm M/s.Venus Industries (appellant No.11). But his version had been rightly not accepted by the Commissioner as Kamal Kapoor, appellant no.1 in his statement had admitted the sale of the the machines to him.
10. Therefore, there was thus clear cut violation of para 5.4 of the EXIM Policy by the firm M/s.Venus Industries, appellant no.11 a sole proprietorship concern of Smt. Shashi Kapoor, wife of Kamal Kapoor (appellant no.1) who acted her authorised signatory and effected sale of the 12 out of 26, imported second hand machines to appellants Nos.(3), (4) and (6) to (9).
11. Krishan Kapoor (appellant no.2) as a sole proprietor of his firm M/s.Ambaji Textile (appellant No.10) is alleged to had sold 2 out of total 7 imported second hand machines to firm M/s.Beauty Knittings (appellants No.5). He no doubt, denied during the adjudication proceedings of having effected such a sale but his denial was not accepted by the learned Commissioner as those machines were found installed in the premises of the firm M/s.Beauty Knitting at the time of raid and his explanation that this installation was made by him for want of space in the premises of his own firm M/s.Shree Ambaji Textile (appellant no.10) was not found to be plausible and satisfactory. We do not find any reason to disagree with these findings of the Commissioner. It has not been disputed that the imported second machines were required to be installed in the premises which was declared before the Customs authorities at the time of import. The premises of M/s.Beauty Knittings, appellant was never declared or disclosed in the declaration at the time of import as the place of installation of the imported machines by Krishan Kapoor (appellant No.2). He obviously committed violation of para 5.4 of the EXIM Policy.
12. This takes us to the question as to whether the penalty and fine imposed on all the above referred appellants nos. (1) to (9) by the Commissioner is proper, reasonable and not exorbitant excessive or harsh.
13. A penalty of Rs.15 lakhs had been imposed by the Commissioner on Kamal Kapoor (appellant no.1). But he only acted at the time of import and sale as an authorised signatory of his wife Smt. Shashi Kapoor who was sole proprietor of the firm M/s.Venus Industries (appellant no.11) in whose name the machines were imported. The Commissioner had not imposed any penalty on smt. Shashi Kapoor or her firm M/s.Venus Industries. Even the violation of para 5.4 of the EXIM Policy made by appellant no.1 was technical as he only failed to take prior permission of the DGFT before making sale of the machines. The sale had been made to actual users who even themselves could import such machines.
Therefore, keeping in view all the facts and circumstances the amount of penalty imposed on him is quite exorbitant and excessive. We accordingly reduce the same to Rs.1.5 lakhs (Rupees one lakh and fifty thousand only).
14. Similarly, the amount of penalty of Rs.5 lakhs (Rupees five lakhs) imposed on Shri Krishan Kapoor (appellant No.2) who installed 2 out of 7 imported machines at the premises of M/s.Beauty Knittings (appellants No.5), which he did not disclose in the declaration at that time of import instead of at the premises of his own firm M/s.Ambaji Textile (appellant No.10) is quite excessive. The breach committed by him was also of a technical nature which did not warrant keeping in view the facts and circumstances of the case, imposition of penalty of Rs.5 lakhs (Rupees five lakhs) on him. All other 5 machines were found to had been installed at a proper place and not sold to anybody else by him. Therefore, we reduce the penalty amount of Rs.50,000/-(Rupees fifty thousand) on appellant no.2.
15. So far as the imposition of fine of various amounts detailed above on appellants Nos.(3), (4) and (6) to (9) is concerned, the same is our view could not be ordered. They had purchased the machines in good faith on payment of price. They all were bonafide purchasers. There is knowledge about the ineligibility of their seller, Kamal Kapoor (appellant No.1) to effect the sale of those machines to them. There is also no material on record to suggest if they were in any manner related to him and were not the actual user of the machines. Therefore, neither the confiscation of the machines nor fine in lie thereof could be legally imposed on them by the learned Commissioner for having not committed breach of para 5.4 of the EXIM Policy or any other rule/condition of the said Policy.
16. Similarly, the confiscation and imposition of fine on appellant No.(5) M/s.Beauty Knittings could not be ordered as only two machines were found installed in the premises of that firm which were imported by Krishan Kumar (appellant No.2) as proprietor of M/s.Shree Ambaji Textile (appellant No.10). Krishan Kapoor was also the Director of the firm, M/s.Beauty Knittings and the violation committed by him was that he instead of installing those machines at a declared place installed the same at the premises of another firm. He had been penalised for that breach as penalty had been imposed on him but no fine in lieu of confiscation of the could be imposed on M/s.Beauty Knittings (appellants no.5) for having not committed any breach of any rule.
17. No penalty or fine had been imposed by the Commissioner on firm M/s.Shree Ambaji Textile (appellant No.10) and M/s.Venus Industries (appellant No.11). Therefore, appeals by these appellants are legally not maintainable as no order giving them any cause of action to file the appeals has been passed by the Commissioner against them.
18. Before parting with the arguments the learned counsel for the appellants, however, contested the jurisdiction of the commissioner of Customs to pass the impugned order. According to him the proceedings could be drawn against the appellants only by the DGFT on account of breach of para 5.4 of the EXIM Policy but not by the Commissioner of Customs as the imported machines were got cleared on payment of appropriate Customs duty and no concession in the duty under any notification or provisions of the Customs Act was availed by the importers (appellants Nos.1 and 2). But in our view this contention of the counsel is misconceived and not liable to be accepted. The import of the second hand machines was made by the appellants Nos.(1) and (2) under the EXIM Policy and undertaking was given by them at the time of import, to the Customs authorities that they would abide by the terms of the EXIM Policy. Since the breach of that undertaking had been committed by them the Customs authorities had every jurisdiction to proceed against them and the other appellants. Therefore, the impugned order passed by the Commissioner of Customs cannot be said to be without jurisdiction.
19. In the light of the discussion made above, the impugned order of the Commissioner is modified against appellants no.(1) & (2) by reducing the penalty on them to Rs.1.5 lakhs (Rupees one lakh and fifty thousand) and Rs.50,000/-(Rupees fifty thousand) respectively and the appeals of these appellants stand partly accepted, while the impugned order against appellants (3) to (9) is set aside and their appeals bearing Nos.C/174, 172, 180, 175, 179, 173 & 171/2000-NB(D), stand allowed with consequential relief, if any, permissible under the law.
However, appeals of the appellants Nos.(10) and (11) bearing Nos.C/170 & 176/200-NB(D) are ordered to be dismissed.