J.P. Devadhar, J.
1. It is the case of the petitioners that they are entitled to the benefit of Kar Vivad Samadhan Scheme ('KVSS' for short) in view of the fact that the principal noticee namely M/s. Jindal Drilling & Industries ('M/s. Jindals' for short) has filed a declaration under KVSS and the same has been accepted in full and final settlement of the claim. However, it is the case of the Respondents that the penalty levied against the petitioners arises out of a separate and independent cause of action and, therefore, the declaration made by M/s. Jindals under KVSS and accepted by the Revenue cannot and does absolve the petitioners of their liability to pay the penalty.
2. The facts relevant to the present case are that some time in February, 1989, a rig ED-HOLT imported by M/s. Jindals arrived at Bombay. The said rig was imported by M/s. Jindals pursuant to a contract awarded to them by ONGC for charter of a Jack up rig called ED-HOLT. On arrival of the rig, the petitioners, as agents of M/s. Jindals filed Import General Manifest ('IGM' for short) on 2nd February, 1989. In the IGM, the rig was not declared as goods and the declaration made by them was as follows :-
'M.V. Nand Cauveri on tow ED-HOLT for Bombay High'.
As a result of the above declaration, the rig was allowed to be cleared without payment of customs duty. However, on 27th June, 1989 the petitioners on instructions from M/s. Jindals amended the IGM by adding an additional entry and thereupon a Bill of Entry was filed seeking clearance of the rig.
3. On 27th January, 1994 a show cause notice was issued to M/s. Jindals by the Customs authorities calling upon them to show cause as to why the rig should not be confiscated and penalty imposed. On 7th March, 1994 a corrigendum was issued to the said show cause notice increasing the amount of duty payable by M/s. Jindals. On 27th June, 1994 an addendum to the show cause notice was served upon the petitioners for the first time asking them to submit their reply. Accordingly, petitioners filed a preliminary reply to the said show cause notice.
4. By a common order dated 31st August, 1994, the Customs Department imposed penalty under Section 112(a) and (b) of the Customs Act, 1962, levying penalty of Rs. 20 crores on M/s. Jindals in addition to payment of duty of Rs. 35,92,14,466/-. By the said order, penalty of Rs. 5 crores was levied upon the petitioners. The petitioners as well as M/s. Jindals filed appeals against the said order-in-original, but the same were dismissed by CEGAT on 4th December, 1998 [2001 (138) E.L.T. 1335 (Tri.)]. The petitioners thereupon filed Civil Appeal before the Hon'ble Supreme Court against the order passed by the CEGAT. During the pendency of the Civil Appeal filed before the Supreme Court, it was noticed that the importers namely M/s. Jindals had filed a declaration under KVSS and the same has been accepted by the Customs authorities. In view of the acceptance of the declaration by M/s. Jindals, the appeal filed by the petitioners were allowed to be withdrawn with liberty to the petitioners to make representation before the appropriate authorities. Accordingly, petitioners on 14th February, 2000 made a representation to the Customs authorities stating that in view of the acceptance of the declaration filed by M/s. Jindals, immunity be granted to the petitioners from payment of penalty. The representation made by the petitioners was rejected by the Deputy Commissioner of Customs on 12th March, 2000. Hence the present petition.
5. Mr. Rebello, learned Counsel for the petitioners submitted that in the present case the petitioners were acting as agents of M/s. Jindals and had filed the IGM as per the instructions given to them by M/s. Jindals. Subsequently, at the instance of M/s. Jindals, the IGM was amended. Misdeclaration, if any, in the IGM was at the instance of M/s. Jindals. By a common order dated 31st August, 1994, penalty was levied upon the petitioners as well as M/s. Jindals under Section 112(a) and (b) of the Customs Act, 1962. It was submitted that M/s. Jindals were the main noticee under the show cause notice and the petitioners were co-notices. It was submitted that if the penalty levied upon the principal noticee namely, M/s. Jindal is accepted under KVSS, the petitioners being co-notices are absolved of all the liabilities fastened upon the petitioners under the common order dated 31st August, 1994. The Counsel for petitioners relied upon the judgment of the Apex Court in the case of Union of India and Ors. v. Onkar S. Kanwar and Ors. reported in : 2002ECR275(SC) and submitted that in view of the said decision which is squarely applicable to the present case, no penalty can be recovered from the petitioners.
6. Mr. Desai, learned Senior Advocate for the respondents on the other hand submitted that the offence committed by the petitioners was independent of the offence committed by the principal noticee and, therefore, the liability imposed upon the petitioners being independent, the declaration filed by the principal noticee has no relevance to the case of the petitioners. Mr. Desai submitted that in the present case, the petitioners had made a misdeclaration in the IGM and, therefore, the penalty levied upon the petitioners for misdeclaration in the IGM is independent of the penalty levied upon M/s. Jindals for illegal import of the rig. Hence declaration made by M/s. Jindals will not absolve the petitioners of their obligation to pay, the penalty.
7. Mr. Desai submitted that the decision of the Apex Court in the case of Union of India v. Onkar S. Kanwar (supra) is not applicable to the facts of the present case. He submitted that in that case, the liability fastened upon the company and the Directors was joint liability and, therefore, when the declaration made by the company was accepted under KVSS, it was held that the Directors of the company were absolved of their liability. Mr. Desai submitted that the facts of the present case are totally different and hence the above decision is distinguishable on facts. According to Mr. Desai, the decision of this Court in the case of Yogesh Korani v. Union of India delivered on 8-10-2002 : 2003(159)ELT3(Bom) in Writ Petition No. 1458 of 2002 is applicable to the present case.
8. We have heard the Counsel on both sides. In our opinion, the liability fastened upon the petitioners cannot be said to be arising out of independent cause of action. In the present case, the rig was imported by M/s. Jindals and it was the responsibility of M/s. Jindals to file IGM and declare the rig as goods and clear the same by filing Bill of Entry. However, the petitioners, as agents of M/s. Jindals, initially failed to declare in the IGM that the rig is goods, as a result the rig was cleared without payment of duty. Later on the IGM was amended as per the instructions of M/s. Jindals. Under the circumstances, it is clear that the entire action done by the petitioners in the matter of filing IGM was for and on behalf of M/s. Jindals. In the order-in-original, at Para Nos. 15 and 16, it is held that on importation of the rig, essentially and legally, it was obligatory on the part of M/s. Jindals to file a Bill of Entry under Section 46 of the Customs Act and seek clearance on payment of duty. It is farther held that M/s. Jindals obtained clearance of the rig by making a misdeclaration in the IGM in connivance with the petitioners who were acting as agents of the petitioners. It is further held that by suppressing material facts both the importer i.e. M/s. Jindals and the petitioners as agents of M/s. Jindals obtained permission for amendment of IGM. Thus, from the order passed by the adjudicating authority it is clear that the misdeclaration in the IGM and the subsequent amendment of IGM was the joint action of both M/s. Jindals and the petitioners. Therefore, by a common order, penalty was levied against both under Section 112(a) and (b) of the Customs Act.
9. In this view of the matter, it is clear that the petitioners were acting as agents of M/s. Jindal and the entire action of the petitioners was flowing from the authority given to them by M/s. Jindals. Thus, the settlement offered by M/s. Jindals and the act of the petitioners for which they are penalised relate to the same matter. Therefore, settlement of the Main declarant i.e. M/s. Jindals will operate as full and final settlement in the case of the petitioners as well.
10. The decision of the Apex Court in the case of Onkar S. Kanwar (supra) is squarely applicable to the present case and in view of the acceptance of the declaration of M/s. Jindals, no penalty can be recovered from the petitioners. The decision of this Court in the case of Yogesh Korani (supra) is distinguishable on facts as in that the main noticee had not paid tax arrears payable in respect of clove bud oil and that the liability of the co-notice arose from different act than that of the principal noticee. In the present case, we have held that the liability of the principal noticee (M/s. Jindals) and the co-notice (petitioners) flow from the same act and hence the decision of the Apex Court in the case of Onkar S. Kanwar (supra) squarely applies to the facts of the present case.
11. Accordingly, the petition succeeds. Rule is made absolute in terms of prayer Clauses (a) and (b) of the petition with no order as to costs.