LAWS(CE)-2006-1-246

V. SANKARAN Vs. CC

Decided On January 12, 2006
V. Sankaran Appellant
V/S
Cc Respondents

JUDGEMENT

(1.) THE prayer in this application is for waiver of predeposit and stay of recovery in respect of penalty of Rs. 5 lakhs imposed on the applicant under Section 112 of the Customs Act, 1966 by the Commissioner of Customs. After examining the records and hearing both sides, I note that the applicant (appellant) is engaged in trading DEPB licences. His modus operandi is to canvass buyers by showing them xerox copies of such licences obtained from the vendors. The original licence is eventually delivered to the buyer, who will file it alone with Bill of Entry at the time of customs clearance of the goods covered by the licence. In the present case, M/s DCW acted upon such a licence purchased by them from the appellant and obtained duty -free clearance of the goods covered thereunder. The department later on found that the licence was fake and accordingly a case was booked against the importer and other persons (like the appellant) involved in trading activity. As part of the investigations, statements were recorded from the importer and others including the appellant and one Shri Chandran, from whom the appellant had purchased the relevant licence. Chandran, in his statement stated inter alia that the appellant was aware of the fake nature of the licence. This statement was recorded while he was in prison. Once out of prison, he retracted the statement. In his statement, the appellant referred to the original statement of Chandran and stated that it was lie. The show cause notice issued by the Department proposed penalties on the importer and the other persons under Section 112. In so far as the appellant and others involved in the trading activity are concerned, it was alleged that they had knowingly indulged in the transfer/sale of DEPB licence or had acted as broker for the sale of fake DEPB licence. The adjudicating authority found the appellant and others to be abettors of the importer's offence of having availed duty exemption on the basis of fake licence. Hence the above penalty.

(2.) THE learned Commissioner imposed the above penalty, having found that the appellant had abetted M/s DCW. Learned Sr. Advocate has pointedly argued that penalty cannot be sustained on such finding inasmuch as it was not found that the appellant had abetted any offence of the importer knowing that the licence sold by him to the importer was fake. No such knowledge was alleged in the show -cause notice, nor was it found in the impugned order. Hence, according the learned Counsel, the appellant has a strong case against penalty. Learned JCDR has submitted that the facts alleged in the show -cause notice constitute the offence of abetment against the appellant and others who indulged in trading DEPB licences.

(3.) AFTER giving careful consideration to the submissions, I find that the show -cause notice which proposed penalty on the appellant did not clearly allege abetment against him for invocation of penal provisions. There must be clear allegation of offence as well as clear proof thereof. Prima facie, the finding of abetment recorded by the Commissioner may not stand the test of law. However, the circumstances of the case cannot be ignored altogether. Chandran clearly stated that he had sold fake licence to the appellant and that the latter was aware of the fake nature of the licence. Retraction of this statement is too belated to be accepted. Prima facie Chandran's original statement stands with evidentiary value. It is also pertinent to note that Chandran was not sought to be cross -examined by the appellant. Again, noticeably, the appellant did not choose to intimate the fake nature of the licence to the licensing authority even after admittedly having come to know such nature as early as in June 2004. For the present, I direct the appellant to predeposit an amount of Rs. 1 lakh (Rupees One lakh) within four weeks and report compliance on 22.2.2006.