1. In all these appeals common question of law and facts are involved, hence they are all taken up together for disposal as per law.
2. The appellants Shri V. K. Dubey is represented by four legal heirs brought on record as per Misc. Order of the Tribunal in No. (sic), dated 13-2-1992.
3. These appeals arise from the order-in-original No. 35/86 dated 22-12-1986 passed by the Collector of Customs, New Delhi ordering for confiscation of imported materials under Section III(d) and (m) of the Customs Act, 1962. Further he has granted an option to redeem the said goods on payment of redemption fine of Rs. 10,00,000/-. He has also imposed penalty on Mr. Kailash Chand, Prop. M/s. Magpie Elechem Pvt.
Ltd. of Rs. 5,00,000/- and on Shri V. K. Dubey penalty of Rs.5,00,000/- has been imposed under Section 112 of the Customs Act, 1962. Further he has ordered that upon M/s. Magpie Elechem Pvt. Ltd. electing to redeem the seized goods which are confiscated, the same will be cleared on payment of Customs duty on the value of imports taken as Rs. 11,72,046/- as per the value shown in the order as the appraised value.
4. The facts of the case are that in pursuance of a specific information that M/s. Magpie Elechem Pvt. Ltd. were importing Plain Paper Copier in SKD condition and were indulging in gross under-valuation of their import consignments and were also clearing brand new completely assembled photocopiers as trade samples at incredibly low CIF value a close watch was kept by the officers of DRI at ICD, Pragati Maidan & CWC, Import Cargo Unit, Gur-gaon Road, New Delhi to intercept the consignments of the said importer. The . goods were found to have arrived by Container No. IEAU- 2467277 at ICD, Pragati Maidan and vide YMB No. 098-4465 2635 at the CWC Import Cargo Unit, New Delhi. The container at ICD Pragati Maidan was examined by the DRI Officers in the presence of Shri V. K. Dubey, Liason Officer of M/s. Magpie Elechem Pvt. Ltd. and representative of the CHA. The container covered 20 sets of Plain Paper Photocopier in SKD condition of Model Panasonic FP-2520 and 2 fully assembled Plain Paper Copier of Model Panasonic FP-1520 for which the following B/Es were filed by the importers :----------------------------------------------------------------------S.B/ENo. Items Declared valueNo.1.
594 dated 40 bottles of toner, 40 bottles of Rs. 23,844.00 13-9-1985 developer 20 drums of selenium2.
595 dated 10 sets of Electro magnetic clutch & Rs. 54,168.00 13-9-1985 clutch plates, 10 sets of roller3.
596 dated two fully assembled Plain Paper Rs. NCV 13-9-1985 Copier Panasonic Model FP-1520 with4.
597 dated 10 sets of electro-magnetic clutch Rs. 54,168.00 13-9-1985 plates, 10 sets roller chains and5.
598 dated Printed Circuits Board, 20 sets.
Rs. 16,188.00 13-9-1985 The above goods were seized on 4-10-1985 by the DRI Officers under Section 110 of the Customs Act, 1962 under a reasonable belief that the same were liable to confiscation under the provisions of the Customs Act, 1962.
5. The consignments detailed of which are given below were examined at the CWC Gurgaon Road, New Delhi on 14-10-1985 by the DRI Officers in the presence of Independent witnesses :----------------------------------------------------------------------S.No. B/ENo. Items Value declared---------------------------------------------------------------------1.
37024 dated 13 sets of Plastic moul- Rs. 13,303.00 13-8-1985 ded/extruded components.2.
37025 dated 13 sets of PCB & 13 sets of Rs.67,270.00 13-8-1985 Roller Chains and components The above goods were also seized by the DRI Officers under Section 110 of the Customs Act, 1962 under a reasonable belief that the same were liable to confiscation under the provisions of the Customs Act, 1962.
6. Shri V. K. Dubey Prop, of M/s. Electra Systems, 2695, D. B. Gupta Road, Karol Bagh, New Delhi who was working as a liason officer for M/s. Magpie Elechem Pvt. Ltd., Alwar in his statement dated 4-10-1985 recorded under Section 108 of the Customs Act, 1962 inter alia stated that he had been to Hongkong three-four times during the last two years and was acquainted with Shri J.S. Shroff of M/s. Framjee & Co. Ltd., Hongkong and after verifying the rates, he finalised the contract for M/s. Magpie Elechem Pvt. Ltd., Alwar and he arranged finances for the import from one Shri D. B. Marwah who lives in East Patel Nager, New Delhi and other friends and by taking advance against sales from M/s.
Alphabetics Pvt. Ltd., 6 - Bahadurshah Zafar Marg, New Delhi. He also stated that he had earlier cleared 10 Plain Paper Copiers which were sold to M/s. Alphabetics Pvt.Ltd., New Delhi; that for the import of the earlier consignments Shri D.B. Marwah had financed the imports and the present consignment was financed by M/s. Magpie Elechem Pvt. Ltd. He also stated that he would be getting Rs. 7000/- per plain paper copier for arranging the clearance. A large number of incriminating documents which were in the custody of Shri V. K. Dubey were taken over by the DRI Officers as the same were considered relevant and useful to the enquires conducted in the case.
7. The factory premises of M/s. Magpie Elechem Pvt. Ltd. at F-53 M.I.A., Alwar, Rajasthan were searched by the DRI Officers on 5-10-85.
The search revealed that the said factory premises had no infra-structure needed for manufacture/assembly of Photo copying machines. No contraband or incriminating documents were found there.
8. Shri Rakesh Khanna, One of the employees of M/s. Mansarover Steel Ind. Pvt. Ltd., A-15 M.I.A., Alwar in his statement dated. 5-10-1985 recorded under Section 108 of the Customs Act, 1962 inter alia, stated that M/s. Magpie Elechem Pvt. Ltd., Alwar is approximately 100 yards away from their factory and that he had never seen and worker working in the premises of M/s. Magpie Elechem Pvt.Ltd. and that he had never seen any Plain Paper Copier being assembled there during the last one year.
9. Enquires were conducted by DRI from Director of Industries, Govt. of Rajasthan who vide their letter F.I (254) Elect/Udyog/85/57, dated 6/13-1-1986 informed that M/s. Magpie Elechem Pvt. Ltd., Alwar have no power connection and no infrastructure needed for assemblying or testing of Plain Paper Photocopiers. Further enquiries conducted revealed that electricity is a pre-requisite environment condition and is essential for dust free production to protect sophisticated components and equipments.
10. Shri Kailash Chander Khaneja, Prop, of M/s. Magpie Elechem Pvt.
Ltd., Alwar in his statement dated 18-10-1985 recorded under Section 108 of the Customs Act 1962 inter alia, stated that since the factory could not be started, they got the provisional SSI Registration Certificate extended till 20-8-1985; that they had not employed any technical/qualified persons skilled or non-skilled for manufacture/assembly of Plain Paper Photocopier till date; that he had met Shri V. K. Dubey and gave him letter of Authority to place orders, arrange remittance of finance and clear the goods through Customs as he himself had neither the technical expertise nor the requisite finance.
On being asked about the two letters dated.7-2-1985 written by M/s.
Impex India Corporation, 43/22 East Patel Nagar, New Delhi addressed to M/s. Electra Systems which were recovered on the search of the office premises of the former, stating that M/s. Impex India Corporation will charge 60% of the CIF as over all service charges besides Rs. 2000/- per Plain Paper Copier, as consultancy charges. Shri Khaneja stated that he had no knowledge of this type of agreement/understanding as all formalities of the imports were carried out by Shri V. K. Dubey.
11. Shri D. B. Marwah, Prop, of M/s. Impex (India) Corporation, 43/22 East Patel Nagar, New Delhi in his statements dated 6-2-1986 and 7-2-1986 recorded under Section 108 of the Customs Act, 1962 inter alia, stated that he was introduced to M/s. Magpie Elechem Pvt. Ltd. through Shri V. K. Dubey; that he had never seen the factory premises; that he had no knowledge if M/s. Magpie Elechem Pvt. Ltd. had employed any skilled or non-skilled persons for the manufacture/assembly of PBC; that he had invested a sum of Rs. One Lakh for the import of the goods.
He, however, admitted the existence of two letters dated 7-2-1985 written by his firm to M/s. Electra Systems; that he had received Rs. 25,000/- from M/s. Electra Systems as part payment of his service charges and no payments were received from M/s. Magpie Elechem Pvt.
Ltd. He further deposed that service and consultancy charges should constitute part of the CIF value for the purpose of assessment. He further stated that by virtue of his knowledge and from the experience of the past, he was aware that complete machines when offered for sale in SKD conditions were usually quoted at a discount of 40% of the wholesale price.
12. On the basis of investigations conducted by the DRI, it appears that the CIF value of Plain Paper Copier imported by M/s. Magpie Elechem Pvt. Ltd., as declared by them in the Bill of Entries in terms of Section 46 of the Customs Act, 1962 was not genuine for the purpose of assessment as enunciated in Section 14(a) of the Customs Act, 1962.
13. On the basis of prices of Plain Paper Copier as published by DATAPRO RESEARCH CORPORATION DELRAN, NJ 08075 USA, the CIF value of one kit of PPC would workout as under :- CIF Value in Indian Rupees (Ex.Rate @ 1 US $ = Rs. 12.48)....
Rs. 19,743.00 14. The importers did not declare any value of the two fully assembled Photocopiers Model Penasonic FP-1520 covered by B/E 596 dated 13-9-1985. Enquires conducted by DRI revealed that the value of the two fully assembled would work out at Rs. 35,000/- per piece CIF as these are also accompanied by additional accessories.
15. On the basis of the facts set out in the preceding paras the total CIF value of the goods under import would work out as under :------------------------------------------------------Model No.CIF value Qty imported Ascertained declared.
value (CIF)-----------------------------------------------------Penasonic Rs. 7481/-per 20 sets Rs. 42220/-FP-2520 kit per kitPenasonic Rs. 6197/-per 13 sets Rs. 19743/-FP-1300 kit per kit 16. In the light of the above, it reveals that the actual CIF value of each kit of Model Penasonic PF-2520 is 5.69 time more of the declared value. Similarly the CIF value of PPC Model Penasonic FP-1300 is 3.2 time more of the declared value. Accordingly the CIF value of the each B/E would work out as under:-S.No.B/E No. CIF Value Model Enhanced Remarks declared Value1.
594 dated Rs.23844/- FP-2520 Rs.135672/- Value enhanc- 13-9-1985 ed by 5.69 times2.
595 dated Rs.54168/- FP-2520 Rs.308215/- -do- 13-9-19853.
597 dated Rs.54168/- FP-2520 Rs.308215/- -do- 13-9-19854.
598 dated Rs.16188/- FP-2520 Rs.92110/- -do- 13-8-19855.
37024 dated Rs.13303/- FP-1300 Rs.42570/- Value enhanc- 13-8-1985 ed by 3.2 times6.
37025 dated Rs.67270/- FP-1300 Rs.215264/- -do- 13-8-19857.
596 dated Rs. NCV FP-1520 Rs.70000/- - 13-9-1985 17. The import of raw material and components of photocopier is permissible only to the actual users (Industrial) in terms of Item No.1 of Appendix 6 of Import Policy AM 1985-88. As M/s. Magpie Elechem Pvt. Ltd. have no factory for manufacture /assembly of photocopiers and as such they can't be construed to be the actual users (Industrial) in terms of ITC Policy AM 1985-88. As such the aforesaid goods under Import require a specific Import License to cover their import. M/s.
Magpie Elechem Pvt. Ltd. failed to produce a valid Import Licence to cover the import of the aforesaid goods.
18. Import of Plain Paper Copiers and components thereof from a foreign territory into India except under and in accordance with a valid import Licence /CCP is prohibited under Clause 3(1) of the Import (Control) Order, 1955 issued under Section 3 & 4A of the Imports & Exports (Control) Act, 1947 which prohibitions by virtue of Section 3(2) of the Act ibid are deemed to have been imposed under Section 11 of the Customs Act, 1962. Any such goods imported into India in violation of the aforesaid restrictions/prohibitions are liable to confiscation under Section III(d) of the Customs Act, 1962.
19. Any goods which do not correspond in respect of value or any other particular with the entry made under Section 46 of the Customs Act, 1962 are liable to confiscation under Section III(m) of the Customs Act, 1962.
20. Any person(s) who, in relation to any goods, does or omits to do act which acts or omission render such goods liable to confiscation under Section 111 or is concerned in purchasing, selling, removing, depositing, harbouring, keeping or in any other manner dealing with such goods which he knews or had reasons to believe are liable to confiscation under Section III of the Customs Act, 1962, is himself liable to penal action under Section 112 of the Customs Act, 1962.
21. It appeared that :- M/s. Magpie Elechem Pvt. Ltd.; its proprietor Shri Kailash Chandra Khaneja and Shri V. K. Dubey have imported the 33 sets of Plain Paper Copiers in SKD condition and 2 Plain Paper Copiers in fully assembled condition collectively valued at Rs. 11,72,046/- in violation of the aforesaid prohibitions imposed on the import thereof and also did not declare the correct CIF value of the aforesaid goods required under Section 46 of the Customs Act, 1962 rendering them liable to confiscation under Section lll(d) and S/Shri Kailash Chander Khaneja, V.K- Dubey by their acts of omission and commission have also rendered themselves liable to penal action under Section 112 of the Customs Act, 1962.
22. As such, M/s. Magpie Elechem Pvt. Ltd., D-137, Anand Vihar, Delhi-92, Shri Kailash Chander Khaneja and Shri V. K. Dubey, 2695, D.B.Gupta Road, Karol Bagh, New Delhi were called upon to show cause to the Collector of Customs, New Delhi as to why:- (i) The seized goods should not be confiscated under Section lll(d) & lll(m) of the Customs Act, 1962 and why the value of the seized goods should not be enhanced from Rs. 2,28,941/- to Rs. 11,72,046/-; (ii) The Customs duty leviable on the enhanced value of Rs. 11,72,046 / - should not be charged from them and (iii) why penal action under Section 112 of the Customs Act, 1962 should not be taken against them.
23. The Learned Collector after careful consideration of the pleas raised before him had held that M/s. Impex (India) Corporation were using the name of M/s. Magpie Elechem Pvt. Ltd., Alwar and paying for the services of Shri V.K. Dubey as a contact man in importing and selling photocopiers in SKD and CKD condition. He has held that M/s.
Magpie Elechem Pvt. Ltd. even till date had neither any infrastructure nor any labour employed to assemble the photocopiers, not to speak of manufacturing the same. All of them were put together created a facade of obtaining registration in the name of M/s. Magpie Elechem Pvt. Ltd. and Central Excise License showing one odd clearance from Central Excise after complying with the Central Excise Licence Rules and payment of duty in order to perpetuate the fraud. He has held that there is nothing in that smokescreen of M/s. Magpie Elechem Pvt. Ltd. to even remotely suggest any activity whatsoever having taken place towards assembling or manufacturing of photocopying machines. He has held that all concerned are taking shelter of the superficial technicalities to make the statement that they were actual users and the activity was lawful. He has held that from the facts of the case it is quite clear that M/s. Electra System were responsible for assembling of the units through Shri V. K. Dubey who was receiving a fat commission for arranging the import clearance and sale of the photocopiers to which M/s. Impex (India) Corporation sent financial backing and M/s. Magpie Elechem Pvt. Ltd. were lending their name.
Therefore, he has held that the total activity is absolutely fraudulent and the question of holding that M/s. Magpie Elechem Pvt. Ltd. were the actual users is offensive to commonsense.
24. As regards the valuation adopted he has held the department adopted a margin of 40% to appraise the value and hence the same is reasonable and fair, in view of the dubious activity maintained by the importers alongwith their associates and more particularly in view of the hefty commission of Rs. 10,000/- per piece given to Shri V. K. Dubey who explains the dubiousness of the deal. In that view he has upheld the prices arrived at as fair and reasonable and hence he passed the final order.
25. We have heard the Learned Advocate, Shri G. L. Rawal for the appellants and the Learned DR, Shri K. K. Jha, for the Revenue.
26. The Learned Advocate took us through the records and the various submissions made by the appellants before the Collector. He pointed out to certificate issued by the Department of Industries and submitted that the appellants were actual user of the imported items under OGL Licence. They had been manufacturing the photocopiers and paying Excise duty thereon. Therefore, it is his contention that the subsequent report obtained by the investigating agencies from the General Manager of Department of Industries that there was no infrastructure in the appellant's company with adequate machinery should not be relied. It is his contention that the actual user condition laid down in the Import Policy is satisfied by virtue of the SSI Certificate issued by the Department of Industries and that the Customs Authorities cannot go behind the licence and the Registration Certificate, which clearly ".
demonstrates that the appellants' company was actual user manufacturing the Plain Paper Copiers. It is his submission that the Hon'ble Supreme Court's judgment rendered in the case of Sharp Business Machines Pvt.
Ltd. v. Collector of Customs: as reported in 1990 (49) E.L.T. 640 is distinguishable and not applicable to the facts of the present case as the goods in the Sharp Business Machines Pvi. Ltd.'s case were found to be not concurring with the licence whereas in the present case there was no controversy with regard to the licence aspect but only controversy raised by the department is with regard to the actual user (industrial). This aspect is clearly certified by the appellants holding a certificate and carrying on manufacturing activity in its factory. In this context, he relied on the judgment rendered by the Hon'ble Supreme Court in the case of M/s. East India Commercial Co.
Ltd. v. Collector of Customs as reported in AIR 1962 SC 1893 para 32, wherein the Hon'ble Supreme Court has taken a view that where an importer holds a certificate, that would by itself satisfy the industrial user condition and that the Customs Authorities could not get any jurisdiction to challenge such a certificate. It is his submission that Customs Authorities cannot go behind the certificate issued by any competent authority and also when Excise duty is being paid on the final goods manufactured and cleared on payment of duty from the factory. He submitted that the appellants had been importing the same goods on earlier occasions which have been accepted by the department. The value had also been accepted. There was nothing new, which has happened within 3 months from the previous import to hold that the prices were different. He submitted that the goods had been imported from Hongkong, while the department had taken the domestic prices on items manufactured in America for comparing the prices. It is his submission that it is against the principles of valuation laid down in the Customs Act and Customs valuation Rules in as much as that the value of comparable goods alone is required to be taken into consideration. He also pointed out that the goods not having from the America, therefore, the departments' comparison with the retail prices of the USA is unsustainable in law. In this regard the Learned Advocate has relied on the ratio of the judgments rendered in the case of (i) M/s. Vimpex Dye Chem v. Collector of Customs decided by the Tribunal as per Final Order No. 327/89-C, dated. 18-7-1989.Takara Electronics, v. Collector of Customs - Final Order No. 607/1985-A dated 6-8-1985Nikon Systems (P) Ltd. v. Collector of Customs - 1989 (42) E.L.T. 598 iv. Shah Tools & Bearing Co. v. Collector of Customs - 1992 (62) E.L.T. 815 v. The Commissioner of Income Tax v. Anwar AH - AIR 1970 SC 1782Pragati Press v. Collector of Customs -1994 (72) E.L.T. 620 Para 5.2 at page 626 27. As regards the imposition of penalty, the Learned Advocate submits that there was nothing malicious on the part of the appellants in importing the goods and there was no clandestine suppression of value or removal of goods. Therefore, there was no cause for imposing the penalty in the matter. In regard to the imposition of redemption fine, the Learned Advocate submits that the Learned Collector has not given any reasons for imposing the redemption fine. It is his submission that redemption fine is not imposable in every case and mere warning for any lapse on the part of the importer, has been justifiable. This was the view expressed by Calcutta High Court in the case of Pradeep Ch. Saha v. Additional Collector of Customs, 525. He also submits that reasons have to be given for imposing redemption fine and in this regard relies on the judgment rendered in the case of Ashwin Vanaspati Industries (P) Limited v. Collector of Customs, 28. The Learned DR arguing for the Revenue submitted that the department had established the appellants being not an actual industrial user. They were not having necessary machinery for manufacturing the final goods. Modus operandi had been brought out by the Revenue during the course of investigation and the appellants had admitted in their statements about the manner in which they were carrying on business clandestinely, and the same had been fully discussed by the Learned Collector. He also pointed out that for the purpose of actual industrial user, the importer should have all necessary technical know-how for manufacturing and clearing the final product. The appellants had imported goods in SKD condition and the same had been sold through the broker, Shri V. K. Dubey who had been paid Rs. 10,000/- for the said goods. He also pointed out that the General Manager of the Department of Industries had visited the factory and had not found any machinery and there was no electrical connection and neither any skilled or non-skilled workers were employed.
Therefore, it is his submission that certificate issued by the General Manager with regard to no manufacturing activity being carried out in the importer's factory, is sufficient evidence to hold that the importer had not satisfied actual user industrial for which licence for import had been issued. Therefore, the claim for OGL actual user industrial does not survive. He submits that the judgment rendered in the case of Sharp Business Machines Pvt. Ltd. is totally applicable to the entire facts and circumstances of the case, in as much as that it was the same case of import of photocopier. In that case the importer was registered SSI having a factory but as they had not utilised the goods by actual user industrial and had sold the same. Therefore, the Hon'ble Supreme Court had upheld the Revenue's contention and had imposed fine and penalty in the matter. He also points out that valuation had been done as per Valuation Rules of 1963. The Collector while denying the valuation had granted 40% discount in actual price.
Therefore, the prices arrived at is a correct price. He pointed out that the declared price was Rs. 2,28,941/- and the enhanced price was to the extent of Rs. 11,72,046/-. The Learned DR further submitted that merely because the Revenue had allowed the previous consignments is no ground for not proceeding against the importers, as there was no res adjudica in the taxation matter. As regards the imposition of penalty, the Learned DR submitted that the same is justifiable and in this regard he relied on the ratio of the following judgments :-P. K. Himatsingka & Co. v. Collector of Customs, [1996 (81) E.L.T. 350]Concord International (P) Ltd. v. Collector of Customs, [1996 (81) E.L.T. 135]Shiv Shakti Enterprises v. Collector of Customs, [1991 (52) E.L.T. 439] 29. We have carefully considered the submissions made by both the sides and have perused the records. The question that arises for consideration in these appeals is as to whether the appellants have satisfied the actual user industrial condition for which the licence had been granted to manufacture the goods as per the licence. It has been alleged that the appellants had been importing Plain Paper Copiers in SKD condition and clearing brand new completely assembled photocopier as trade samples at incredibly low GIF value. The appellants had filed the Bill of Entry covering 20 sets of Plain Paper Photocopier in SKD condition of Model Penasonic FP-2520 and 2 fully assembled Plain Paper Copier of Model Penasonic FP-1520 for which they had filed the said Bill of Entries on the declared price as already noted above. Shri V.K. Dubey who was working as a liason officer admitted, his role in finalising the contract, arranging the finance and in obtaining Plain Paper Copiers and about his getting Rs. 7,000/- per plain paper copier for arranging the clearance. The DRI Officers had also seized several incriminating documents from the said V K Dubey. The departmental officials on reference to the General Manager of the Directorate of Industries were informed by a letter dated 6-1-1986/31-1-1986 that there was no power connection and no infrastructure needed for manufacture/assembly of photocopying machines. The old machinery available at the premises had no relevance with the Plain Paper Copier. The statement of Shri Rakesh Khanna working as Foundry Forman at M/s. Mansarovar Steel Industries Pvt. Ltd. was recorded by the officials. In his statement he has stated that there is another firm namely, M/s. Magpie Elechem Pvt. Ltd. He had no workers working in M/s. Magpie Elechem Pvt. Ltd. located about 100 yards from their factory. He has informed that he has never seen any Plain Paper Photocopier being assembled or loaded from or unloaded at M/s. Magpie Elechem Pvt. Ltd. The panchnama of the factory drawn by the officials also disclosed that the whole of the factory was found to have been unused for months together. The machinery which was found lying there unused has been noted in the panchnama, which was full of dust and lying unused for a long time. The machinery was found to be quite an old one. The factory was not air-conditioned and most of the glasses of the factory were found broken. There was no Central Excise records found in the factory. The statement of Shri Kailash Chandra Khaneja was also recorded. In his statement he has stated that the provisional certificate granted to him on 23-2-1984 as the factory could not be started. This licence was further extended to 26-2-1985 upto 20-8-1985. He has stated that the previous owner of the factory was manufacturing some motor parts. The machinery which was lying in the said factory of M/s. Magpie Elechem Pvt. Ltd. like welding machines, Electric grinder, auto transformer, coil waiding machine etc.
had been installed by the earlier owners. He has not added any infrastructure in the factory. He admitted not having employed any technical qualified person skilled or non-skilled workers for manufacture/assembly of Plain Paper Photocopier till date. He admitted meeting with Shri V. K. Dubey who had informed him that since they were holding SSI registration and also import licence for import of Plain Paper Copier and since the licence was expiring within 3 months. He would arrange the finance and help for sale of the same by giving letter of authority dated 9-2-1985. He admitted about an agreement entered into by Shri V. K. Dubey along with M/s. Impex (India) Corporation and M/s. Electra Systems with regard to purchase of these imported items. The letter discloses that Impex India will charge service charges to the tune of 60% on the CIF value of the goods imported besides a sum of Rs. 2000/- per photocopier machine as consultancy charges. The letter also stipulates investment on imports upto Rs. 2 lakhs to Rs. 2.5 lakhs by M/s. Impex (India) Corporation. On going through these letter he told the investigating authorities that he had no knowledge of this type of agreement/understanding as all formalities like arranging finance had been done by Shri V.K. Dubey. He also admitted about the modus operandi adopted for importing these goods for sale to Implex (India) Corporation. The entire evidence on record clearly demonstrates that the appellants were not having factory for manufacture of the goods for which licence had been granted. The licence had been granted for actual user industrial for which the existence of the factory for manufacture of the goods for which licence has been granted is a requirement. The said requirement had not been fulfilled. The appellants had admitted about the goods being sold through the broker, Shri V.K. Dubey to several other traders on huge profits. Therefore, the allegation brought out in the show cause notice is that the appellants had violated the actual user condition and the same cleared on OGL has been established by the Revenue. Therefore, the order for confiscation under Section lll(d) and lll(m) of the Customs Act, 1962 is maintainable.
30. The second question which arises in these appeals for consideration is as to whether the department has proved the allegation of under-valuation. It is seen that the department has compared the prices with those of the retail prices of some other model imported from USA.It is a fundamental principle of valuation that the value of comparable goods alone at the time and place of the importation are required to be taken for considering the allegation of under-valuation. In this case the goods had been imported from Hongkong. The department had accepted the prices declared by the appellants on imports on earlier occasions.
It has been demonstrated by the learned Advocate that the prices compared are not of the same goods and from the same place, and the country of origin is different. In that view of the matter, it is very clear from the record that the Revenue has not proved the case of under-valuation in the present matter.
31. As regards the imposition of fine and penalty it has to be observed that the goods can be confiscated for violation of Import & Export Policy, as the importer is not an 'actual user industrial'. The only consideration which has to be seen is as to whether the goods can be confiscated and fine imposable. We are of the considered opinion that as there is a [violation] of the provisions of law the goods are liable for confiscation. We notice that the imposition of redemption fine of Rs. 10,00,000/- is not justified in the matter. The declared value of the goods is said to be Rs. 2,28,941/-. As we had held that the enhanced value is not on the basis of comparable prices, we hold that the appellants are entitled for reduction in the redemption fine.
Taking into consideration overall facts and circumstances of the case and citations referred to by the appellants, we reduce the redemption fine to Rs. 2,00,000/-. As regards the question of penalty, we notice that the appellants have admitted about their connivance and modus operandi adopted by them for violating the law. Therefore, the Revenue has made out a very clear case for imposition of fine and penalty. The Collector has imposed penalty of Rs. 5,00,000/- on Shri Kailash Chandra Khaneja, prop. M/s. Magpie Elechem Pvt. Ltd. and penalty of Rs. 5,00,000/- on Shri V.K. Dubey. As the Revenue has not established the allegation of under-valuation in the case and there is no attempt to evade duty, therefore, in the facts and circumstances of the case, the penalty on Shri Kailash Chandra Khaneja for violating the other terms of the licence as per law is reduced to Rs. 1,00,000/-. As regards Shri V.K. Dubey, we notice that Shri V.K. Dubey was a young man and he died suddenly leaving behind large number of legal heirs who are minors. He has left an aged mother and a young wife. In the facts and circumstances of the case, the penalty ori/Shri V.K. Dubey is set aside.Shiv Shakti Enterprises v. Collector of Customs, as-reported in 1991 (52) E.L.T. 439, the Tribunal upheld the confiscation of goods under Section 111 (d) and 111 (m) of the Customs Act, and under Section 11 read with Section 3(2) of Import and Exports (Control) Act, 1947 and the allegation of misdeclaration of the description of the goods, and the goods not being covered by import licence. The Tribunal also upheld the imposition of penalty of Rs. 1,00,000/- under Section 112 of the Customs Act and the value of goods were misdeclared with a view to evade ITC restriction.Sharp Business Machines Pvt. Ltd. v. Collector of Customs, as reported in 1990 (49) E.L.T. 640, the Hon'ble Supreme Court held that the importer had imported Plain Paper Copiers in SKD/CDK form in the guise of parts and accessories under phased manufactured scheme of import by the appellants. The Hon'ble Supreme Court upheld the imposition of confiscation and penalty under Section lll(d) and (m) and 112 of the Customs Act. In this case the appellants were having a registered small scale unit. However, there was allegation of violation of the import policy, and on such violation imposition of fine and penalty has been justified. We notice that this case is squarely applicable to the facts of the present case and we require to follow the same. We are not able to distinguish this case as contended by the Learned Advocate.Pradeep Ch. Saha v. Additional Collector of Customs, as reported in 1993 (68) E.L.T. 525, the Hon'ble Calcutta High Court had noticed that the order of the Collector passed under Section 129 D(2) determines the market price prevailing on the date of adjudication. It has been held that the date of adjudication is not material and it is the date of importation, which is crucial date for the purpose of assessment of the assessable value as well as for quantifying the redemption fine. Therefore, in this context, the High Court held that the authorities had proceeded under wrong premise, which cannot be sustained having regard to the relevant provisions of the Act and the Rules. In this context, High Court held that there is no warrant for the proposition that in every case maximum redemption fine has been imposed in the context proviso to Section 125 which states that redemption fine shall not exceed market price of goods confiscated. On reading of judgment, it is clear that the same is distinguishable and not applicable to the facts of the present case.
35. The Learned Advocate relied on the judgment rendered in the case of The Commissioner of Income Tax v. Anwar Ali, as reported in AIR 1970 SC1782, wherein the Hon'ble Supreme Court held that proceedings under Section 28 of the Income Tax Act are of a penal nature and the burden is on the Revenue to prove that the receipt of the amount in dispute constitutes the income of the assessee. We notice that this citation is not at all relevant for the present case.
36. In the case of East India Commercial Co. Ltd. v. Collector of Customs, as reported in AIR 1962 SC 1893, it is noticed by the Hon'ble Supreme Court that the licence to import the goods was subject to condition not to sell goods imported. The goods imported had been received and delivery taken after paying customs duty. Subsequently there was breach of condition and the Revenue had issued show cause notice to licence holders to show cause against the confiscation of the goods. The petitioners had taken the contention that there was no breach of licence and in this context the jurisdiction to file the writ petition has been challenged. The Hon'ble Supreme Court had held that writ application was competent as breach of condition in licence was not breach of order under Act, hence the issue of notice was held to be without jurisdiction. We notice that this judgment is totally in applicable to the present case. On investigation, it has been clearly established that the appellants were not an actual user and they did not have any facility to manufacture as the licence had expired. The appellants had been approached by the broker and M/s. Impex (India) Corporation for getting the licence transferred in their names for importing the goods. Therefore, admittedly there was a clear violation of the licence and hence the Revenue has established their allegation in the present case, hence this judgment is not applicable to the facts of the present case.Nikon Systems (P) Ltd. v. Collector of Customs, as reported in 1989 (42) E.L.T. 598, the Tribunal had found that the imported goods had satisfied the actual user licence and hence had granted the relief. In the present case there is no such satisfaction of licence hence this judgment is not applicable to the facts of the present case.Shah Tools & Bearing Co. v. Collector of Customs, as reported in 1992 (62) E.L.T. 815, the Tribunal had taken into consideration the assessee working on the basis of practice in view of the bonafide belief of the importer. The Tribunal held that penalty is not imposable in the circumstances of the case. We notice that this judgment is clearly distinguishable and not applicable to the facts of the present case.Pragati Press v. Collector of Customs, as reported in 1994 (72) E.L.T. 620, the case dealt with valuation of second-hand machinery. In the circumstances, the Tribunal held that the fine and penalty was not imposable in view of the importers' bonafide. This judgment is also clearly distinguishable and not applicable to the facts of the present case.
40. In the circumstances, the appeals are disposed of in the above terms.