R. JANARDHANAN Vs. CC

JUDGEMENT

(1.) This appeal is filed against Order -in -Original No. 21/2001 -CAU dated 31.1.2001 passed by the Chief Commissioner of Customs, Chennai.

(2.) In C/165/2001, the appellant has imported second -hand printing machine and had sold the same in the local market in violation of actual user condition as laid down in the EXIM Policy. The officers of DRI had taken up the investigation into such imports and misuse of the policy. On search being carried out in the premises of M/s. Orrjay Process and others by the said officers, they found the second -hand printing machines located in those premises and hence they were seized under duly drawn mahazar. The statement of R. Janardhanan was recorded on 1.7.99 who had floated 23 companies in which he had acted as Partner/Director/Proprietor along with his friends/relatives and imported 460 nos. of second -hand printing machines of different varieties. In his statement, he admitted the fact of floating these units and also selling the machines in the local market. The statements of relatives and family members and friends of R. Janardhanan were also recorded. In all these statements, they had admitted that R. Janardhanan had floated the firms and units and financed for importation and for sale of the goods in the market to different buyers. They stated that they had no knowledge of his activity and they were only name lenders. Therefore, the show cause notice dated 24.11.98 was issued to all the 23 persons/firms wherein it was proposed, to confiscate 71 numbers of imported second -hand printing machines valued at Rs. 30,92,439 which were under seizure in terms of Section 111(d) and 111(o) of the Customs Act. The notice proposed that 389 nos. of imported second -hand printing machines valued at Rs. 2,93,74,056 imported and sold in the local market should not be held liable to confiscation under the said provisions of law. The notices also proposed to impose penalty under Section 112(a) of the Customs Act on R. Janardhanan and penalties on other persons. It was also noted and pointed out that vide para 5.4. of the EXIM Policy 1997 -2002 second -hand capital goods having residual life of 5 years may be imported by the actual users without licence subject to actual user condition. Further the second -hand capital goods shall not be transferred, sold or otherwise disposed of within a period of 5 years from the date of import except with a prior permission of Director General Foreign Trade. The importers are required to produce declaration to the effect that the second -hand capital goods being imported have a residual life of 5 years and also should subscribe to a further declaration that they are for actual use. These declarations were to be filed at the time of assessment and clearance of goods before the customs authorities.

(3.) Shri R. Janardhanan in his reply submitted that the policy stipulates that the machines are allowed importation subject to actual user condition; that it is not the case of the department that the machines were disposed of to various other people who are not actual users; that they were sold only to actual users and thus the spirit of the policy condition had been complied with, inasmuch as the persons who imported did not use them but gave to other actual users. He submitted that M/s. Orr Jay Process, M/s. Ambika Printing and M/s. Allied Offset Printers are established units, printing books, calendars and posters; that in respect of other units also the proposals to have the machines installed and do the printing activity were there; that they could not take -off as planned; that over a period of time they were to do actual printing; that the purpose of importation is only for printing and processing and not for selling the machines; that when their units could not take -off, the machines were sold to actual users; that they were under the bona fide belief that selling the machines to another actual user is permissible. Finally, he submitted that of the 460 machines, 389 machines have been disposed of and balance of 71 have been seized by the department and not sold, hence to that extent there is no contravention of the policy; that he has acted in a bona fide manner and imported the machines; that the subsequent disposal to actual users was under the belief that there is no contravention of import laws; that out of the 71 seized machines, 8 machines belong to M/s. Allied Offset Prints and 13 machines to M/s. Diana Reprographics.