CC Vs. B.B. VERMA, MANAGER, RAJASTHAN

JUDGEMENT

(1.) IN this Appeal preferred by Revenue, the issue involved is whether a penalty under Section 112 of the Customs Act is imposable on Shri B.B. Verma, Manager of M/s. Rajasthan Petro Synthetics Ltd. at the material time.

(2.) BRIEFLY stated the facts are that M/s. Rajasthan Petro Synthetics Ltd. (RPSL) imported Poly Propylene Chips and classified them under sub heading No. 3902.10 of the schedule to the Customs Tariff Act and claimed concessional rate of duty under Notification 227/76 -Cus. The goods were accordingly assessed and clearance thereof was allowed. Subsequent investigation conducted by the Department at the time of further imports made by the Company led to the issue of show cause notice dated 20.10.1989 for classifying the imported goods under sub heading 3204.17 or 3204.49 as colour master batches, for demanding duty amounting to Rs. 47,53,719/ - and for imposing penalty on the Company and Shri B.B. Verma, Respondent, as he masterminded the mischief by deliberate misdeclaration and misclassification of goods in order to pay lower rate of duty. The Collector of Customs, under the impugned order dt. 24.1.1991, confirmed the Customs duty amounting to Rs. 38,45,396/ - holding that the importers suppressed several vital facts with reference to the correct nature of the goods; that importers were aware that the goods imported were master batches which was apparent from the internal correspondence recovered from the importers and literature obtained from the indenting agents. The Collector, however, dropped the proceedings under Section 111(m) of the Customs Act and consequently, no penalty was also imposed on the importers under Section 112(a) of the Customs Act, holding that since goods were subjected to test for classification, it cannot be said that declaring the goods as Polypropylene Dyed chips amounted to misdeclaration.

(3.) SHRI H.K. Jain, Ld. SDR, submitted that from the documents seized from the premises of the importers, it is seen that the suppliers were specifically directed by the importers to delete the word "duty tariff 32.04/17" from the pro -forma invoice and other documents; that though the office correspondence of the importer showed the description of the goods as "Pigments Master Batches", the description given in Bill of Entry was "P.P. Dyed chips"; that this was done with the intention to mislead the Department. He also mentioned that the Appellate Tribunal has already decided the issue as far as the company - importer is concerned as (Rajasthan Petro Synthetics Ltd. v. Collector of Customs, Bombay). The Tribunal, not only rejected the appeal filed by the Importer, the Tribunal allowed the appeal filed by the Revenue by imposing a penalty of Rs. 5 lakhs on M/s. Rajasthan Petro Synthetics Ltd. under Section 112(a) (of) the Customs Act; that the Tribunal agreed with the findings of the Collector, in the impugned order, that the recovered documents established that the importers were aware that the goods were not internationally traded as Polypropylene Chips covered by Chapter 39 but were being described by manufacturers of international repute as preparation of organic and inorganic pigment in Polypropylene Carrier or inorganic or organic speciality pigments, and they, in their inter office correspondence, were describing the goods as Master Batch and they had instructed the suppliers that they should not indicate in the relevant proforma invoices the correct description and classification of the goods. He contended that accordingly penalty is imposable on Mr. B.B. Verma also as he was the brain behind the misdeclaration of the impugned goods.