DIPEN ENTERPRISES Vs. CC

JUDGEMENT

(1.) M/s Dipen Enterprises (appellants in Appeal No 534/96) are aggrieved by confiscation, by the Commissioner of Customs, of a consignment of 'Video Magnetic Tapes in Hubs' covered by Shipping Bill No. 426772 dated 8.4.94 (with option for redemption on payment of a fine of Rs. 50,000/ -). They are also aggrieved by imposition of personal penalty of Rs. 1 lakh by the Commissioner. Shri Antubhai K. Sheth, partner of M/s Dipen Enterprises, is the appellant in Appeal No. C/535/96 wherein he challenges the personal penalty of Rs. 50,000/ - imposed on him by the Commissioner of Customs.

(2.) The relevant facts of the case are that M/s Dipen Enterprises had imported 'Video Magnetic Tapes in pancakes' in terms of Advance Licence No. 0302672 dated 12.2.92 under the DEEC Scheme (DEEC Book No. 058442 dated 7.4.92) and cleared the goods free of duty under Bill of Entry No 8535 dated 25.2.94 for the purpose of manufacture of Video Magnetic Tapes in hubs, which were to be exported in discharge of export obligation under the said Scheme; that, in discharge of the export obligation, they presented a consignment of what was declared as "Video Magnetic Tapes in hubs" for export under Shipping Bill No 426772 dated 8.4.94; that these goods were detained and examined, whereupon it appeared to Customs authorities that the consignment contained old used and junk video magnetic tapes in hubs of no commercial value and which did not appear to have been made out of the imported raw material (Video Magnetic Tapes in Pancakes); that the Custom House Agent of M/s Dipen Enterprises stated to the SIIB of the Custom House (who investigated the case) that they had filed the Shipping Bill at the instance of Shri Antubhai K. Sheth, partner of the exporting firm; that Shri Sheth, in his statements dated 25.4.94 and 8.11.94 under Section 108 of the Customs Act, admitted that the goods covered by the above Shipping Bill had been purchased by him from various suppliers of old and used hubs and tapes; that Shri Antubhai Sheth further admitted that he had sold off a part of the raw materials imported by his firm in October, 1993 and had thereby earned a profit of Rs. 180/ - to Rs. 190/ - per pancake; that Shri Antubhai K. Seth further admitted that neither his exporting firm nor his supporting manufacturers viz. M/s Dipen Textiles Private Ltd, Palghar, Thane had carried out any manufacturing activity and that the junk tapes alongwith hubs were only purchased by him; that the Central Excise officers who searched the premises of M/s Dipen Textiles Pvt Ltd recovered 63 packages each containing 320 Video Magnetic Tapes in hubs valued at Rs. 9,37,728/ - and detained the same; that Shri A.K. Sheth admitted that the said quantity of Video Magnetic Tapes in hubs had been manufactured by M/s Dipen Textiles at Palghar in May 1994 out of the imported Video Magnetic Tapes in Pancakes; that it appeared to the Department that M/s Dipen Enterprises had removed the raw material from their premises to the premises of M/s Dipen Textiles Pvt Ltd; that Central Excise officers seized the above 63 packages (each containing 320 Video Magnetic Tapes in hubs) under panchnama dated 10.10.94 under Section 110 of the Customs Act; that the DGFT authorities by letter dated 17.10.94 informed the Customs that the Advance Licence and the DEEC book of M/s Dipen Enterprises had been cancelled; that, on account of the cancellation of Advance Licence and DEEC book, the Customs authorities considered the import of the raw material cleared free of duty under three Bills of Entry dated 22.2.93, 8.10.93 and 25.2.94 to be unauthorized as the same were covered by the Negative List of import items under the relevant Exim Policy; that it appeared to the Customs authorities that M/s Dipen Enterprises had deliberately misdeclared the goods covered by Shipping Bill No 426772 dated 8.4.94 to make it appear that the said goods had been manufactured out of raw material (Video Magnetic Tapes in pancakes) cleared under Bill of Entry No 8535 dated 25.2.94; that the said authorities held the view that the misdeclared goods were liable to confiscation under Section 113(d) and (i) of the Customs Act read with Section 3(3) of the Export Trade (Control) Order, 1998; that M/s Dipen Enterprises and Shri A.K. Sheth had rendered themselves liable to penalty under Section 114(i) of the Act.; that, consequent upon cancellation of the Advance Licence and DEEC book, the imported Video Magnetic Tapes in pancakes, which were cleared without payment of Customs duty, became chargeable to duty to the extent of over Rs. 21 lakhs; that M/s Dipen Enterprises and Shri A.K. Sheth were also liable for penalty under Section 112 of the Act; that their CHA, M/s P.N. Shipping Agency, having aided and abetted the attempted fraudulent export of second hand goods by M/s Dipen Enterprises, had rendered themselves liable to penalty under Section 114(i) of the Act; and that a show -cause notice was issued to M/s Dipen Enterprises, M/s Dipen Textiles Pvt Ltd and Shri A.K. Sheth proposing to: -

(3.) The Commissioner of Customs, after considering the written submissions submitted by the noticees in reply to the show -cause notice and after hearing their Counsel, passed the impugned order dated 27.6.96. As regards the raw material, the order held it not liable to confiscation and dropped the demand of duty. The order also held M/s Dipen Textile Pvt Ltd and M/s P.N. Shipping Agency (CHA) not liable to be penalized. However, confiscation was ordered of the 63 packages containing 20160 Video Magnetic Tapes in hubs covered by Shipping Bill No 426772 dated 8.4.94 under Section 113(d) and (i) of the Customs Act with option under Section 125 of the Act for redemption of the goods on payment of a fine of Rs. 50,000/ -. Moreover, personal penalties of Rs. 1 lakh and Rs. 50,000/ - were also imposed on M/s Dipen Enterprises and Shri A.K. Sheth respectively under Section 114(i) of the Customs Act. Hence these appeals of M/s Dipen Enterprises and Shri A.K. Sheth.