Cus - Allegation of having acted as a mere conduit for generation of documents to show that watch movements and parts were genuinely imported would not attract provisions of s. 112 - Penalty set aside: CESTAT
By TIOL News Service
MUMBAI, AUG 17, 2016: IT is the case of Revenue that M/s Rajendra Jain Watch is unable to establish that watch movements, button cells for watches, digital watches, digital watch etc. of foreign origin had been licitly imported and that using the details available with M/s J & J Electronics, M/s Rajendra Jain Watch obtained invoices and other documentation to purport local procurement of illegally imported goods. From the records, it also appeared that even M/s J & J Electronics was unable to provide any evidence of the import of the said goods. Moreover, Shri Jatinder Singh admitted to facilitating M/s Rajendra Jain Watch, Mumbai by issue of invoice and documents purporting to transport of the same.
Vide the impugned order, the goods totally valued at Rs.31,03,090/- were confiscated u/s 111 of the Customs Act, 1962 besides imposing a penalty of Rs.2,00,000/- each under section 112(a) of the Customs Act, 1962 on the two appellants.
The appellant Rajendra Jain submitted that watch movements are freely importable as ‘Open General Licence' item and the requirement of discharging of onus was an antiquated legacy of an era of restrictions on import of sensitive goods; the requirement to prove the legal import is anachronistic and, therefore, penalty needs to be set aside. It is also canvassed on behalf of Jatinder Singh that the allegation of goods not being passed through them would render them beyond the scope of any action under section 112 of the Customs Act, 1962.
The AR emphasized that the burden of proof envisaged in section 123 needs to be established by the person from whom the goods are seized and, therefore, the order needs to be upheld.
The CESTAT inter alia observed -
++ It would appear that the goods in question are covered by section 123 of the Customs Act, 1962 and that the appellant has been unable to link the importation of the goods with any bill of entry. Accordingly, notwithstanding the proof furnished or nature of the documents produced, all of which merely relate to sale and purchase within India itself, it is but logical to conclude that the onus in section 123 has not been discharged at all. Accordingly watch movements and other watch parts of foreign origin cannot be considered to be licitly imported in compliance with the procedure laid down in the Customs Act, 1962. The goods have, therefore, correctly been held to be liable to confiscation.
++ The said goods were disposed prior to the confiscation and the sale proceeds appropriated. There is, thus, no scope for any further action other than to endorse the propriety of confiscation by the original authority. The penal provisions under section 112 of Customs Act, 1962 can be invoked.
++ It appears that Rajendra Jain was the person from whom the goods were seized and the onus of proof regarding legality of imports of the said goods not having been discharged leading to confiscability, the person from whom these were seized cannot claim any mitigating circumstances in the absence of a bill of entry relating the seized goods to duty payment. Therefore, the imposition of penalty under section 112 on Shri Rajendra Jain cannot be faulted.
++ The other appellant, Jatinder Singh, who is the owner of M/s GS Watch Company has allegedly not handled the goods at all. This is the finding of the lower authority and is clearly enunciated in the show cause notice. In the absence of having any connection with the confiscated goods, the question of imposing penalty under section 112 may not arise.
++ Section 112 of the Customs Act, 1962 enables imposition of penalty on those dealing with or having dealt with the goods liable for confiscation under section 111. A clear reading of this provision would establish that it would necessarily require some connection with goods are liable to confiscation under section 111 to justify imposition of penalty. The allegation of having acted as a mere conduit for generation of documents to show that the watch movements and parts were genuinely imported would not attract the provisions of section 112.
The appeal filed by Rajendra Jain was rejected and that by Jatinder Singh was allowed by setting aside the penalty of Rs. 2 lakhs.
(See 2016-TIOL-2080-CESTAT-MUM)
