By TIOL News Service

MUMBAI, MAY 16, 2014: ON a specific intelligence that a large quantity of 'cloves' by mis-declaring as 'chicpeas' were being smuggled into India,a container was intercepted.

On examination of the goods, it was found that the cloves were also being smuggled along with the chicpeas and as per the IGM the importer is M/s Dhanlaxmi Enterprises (I) who declared the goods as 'Chicpeas' . During the course of investigation it was found that Ravi Divecha had asked DilipGosalia to get I.E.C No. of any firm so that he could import goods in their names. DilipGosalia approached M/s Dhanlaxmi Enterprises (I) , an IEC holder, who lent their IEC to DilipGosalia. During the course of investigation, various statements were recorded and it was found that Pravin Gupta had financed a loan of Rs.5,00,000/- to Ravi Divecha for the importation of the consignments on persuasion of JayeshGosalia (who was a guarantor for the amount).

Proceedings were initiated and penalties were imposed on Pravin Gupta (of Rs.12 lakhs) and on Ravi Divecha(of Rs.15 lakhs) u/s 112(i) of the Customs Act, 1962 by the Commissioner of Customs (Import), NhavaSheva.

Before the CESTAT, the appellants submitted -

+ Although the appellant Pravin Gupta is in the business of exportation of goods he had nothing to do with the consignments in question as he has only financed Rs.5,00,000/-.

+ That the sale proceeds of the consignments were about Rs.25,00,000/- but no documents show that the appellant was the financier for the whole amount in the matter.

+ No Bill of Entry was filed by anybody for claiming the import of the goods and, therefore, the question for mis-declaration of the goods does not arise and resultantly penalty u/s 112 is not imposable.

+ It is alleged that Ravi Divecha is the master mind in the import of the above consignment but there is a statement on record which shows that he was to get only a commission of Rs.50,000/-. Inasmuch as if he is the master mind, then he would have earned more profit in this consignment.

+ Decisions relied upon in support of setting aside penalty are Shiraz Clearing Agencies P. Ltd. 2013-TIOL-1123-CESTAT-MUM, CC vs. Kabul Textiles (LLC) - 2005-TIOL-191-HC-GOA-CUS, AshwinDoshi - 2004 (173) ELT 488 (Tri. Bom), Nalakath Spices Trading Co. - 2007-TIOL-1183-CESTAT-BANG.

The Revenue representative submitted that the IGM misdeclaring the goods as 'Chicpeas' clearly indicated that the importer was M/s. Dhanlakshmi Enterprises and when the importer learnt that the goods were intercepted by DRI, they did not file the Bill of Entry. In the SCN provisions of Section 111(f) and 111(i) of the Customs Act, 1962 are included for imposition of penalty on the appellants; the case laws relied are not relevant to the facts of the case.

The Bench inter alia observed -

+ As per the s.2(26) of Customs Act, an importer is who files the Bill of Entry for importation of the goods and who claims to be the owner of the goods. Admittedly, in this case no Bill of Entry has been filed and nobody claimed to have imported the goods, although the findings of the adjudicating authority state that Shri Ravi Divecha was the master-mind to import the goods. In that case, it cannot be held that Shri Ravi Divecha/ShriPravin Gupta are importers of the impugned goods.

+ It is on record that ShriPravin Gupta has financed a sum of Rs.5,00,000/- to Shri Ravi Divecha on persuasion of ShriJayeshGosalia, who is not an impugned party to the show-cause notice.

+ To finance an importer does not make the appellants importer of the goods.

+ In this case, no Bill of Entry has been filed, therefore, the question of mentioning the name of the financier does not arise. Accordingly, penalty on ShriPravin Gupta is not imposable as per Section 112(i) of the Customs Act, 1962.

+ Further as no Bill of Entry has been filed in the name of Shri Ravi Divecha nor he claimed to be the owner of the goods, penalty is also not warranted.

In fine, the appeals were allowed.

(See 2014-TIOL-781-CESTAT-MUM)