KAYS INTERNATIONAL Vs. COLLECTOR OF CUSTOMS

JUDGEMENT

(1.) THESE are two appeals arising out of a common order dated 3 -8 -1986 passed by the Collector of Customs (Preventive), Bombay and as such are being disposed of by one common order. The issue involved is whether penalty is imposable on each of them under Section 112(a) of the Customs Act.

(2.) BRIEFLY stated the facts are that M/s. Swastika Fashions, New Delhi, cleared 37000 Yards in 99 cartons and 13,406 yards in 49 cartons of 100% Polyester fabrics from Customs in August - September, 1984 against Advance licence under Duty Exemption Entitlement Certificate Scheme (DEEC). The goods were cleared by M/s. Saindas Kishandas, Customs House Agent, who were engaged by Shri J.P. Singh, partner of M/s. Kays International and Shri H.S. Wadhwa, representative of Swastika Fashions. Investigation conducted by the Department revealed that Shri J.P. Singh, appellant No. 2, had arranged for import of these goods by opening letter of credit, placing orders with foreign supplier and as letter of authority holder of Swastika Fashions. The Collector, in the impugned order, confiscated the 100% Polyester fabrics measuring 50406 yards valued at Rs. 5,33,640 under Section 111(O) and 111 (P) of the Customs Act and imposed penalty under Section 112 (a) as under : -

(3.) SHRI Harbans Singh, learned Advocate, submitted on behalf of both the appellants that M/s. Kays International, appellant No. I, is a partnership concern having two partners, K.P. Singh and J.P. Singh, appellant No. 2, engaged in the business of import of goods; that they were given a letter of authority by Swastika Fashions to import the impugned goods; that he referred to agreement at page 123 of paper book; that it was stipulated that the goods imported would be subsequently sold by them to Swastika Fashion on high sea sale basis; that their connection with the imported goods ceased to exist after sale on high sea; that this is evident also from the fact that the Bill of Entry was submitted in the name of M/s. Swastika Fashion, who had also addressed letters to the Assistant Collector, Customs confirming the purchase of goods on high sea basis from them; that they had also addressed a similar letter to the Assistant Collector; that the goods have been confiscated under Section 111(P) of the Customs Act which provides for confiscation of the goods for violation of provisions of Chapter IVA; that they did not posses the goods and as such the question of complying with the provisions of Chapter IVA of Customs Act by them does not arise at all and accordingly no penalty can be imposed on them; that it is not the case of the Department that the goods in question were imported illegally as the goods had not been confiscated under Section 111(d) of the Customs Act, though the said Section was invoked in the show cause notice. He also mentioned that the presumption is that M/s. Swastika Fashions came into possession of impugned goods as Bill of Entry was filed by them for clearance of the goods and they have been penalised for violations of post importation conditions. The learned Advocate emphasised that the appellant No. 2 has committed no offence by introducing Wadhwa, who is the person of M/s. Swastika Fashion. He also contended that there is no evidence on record to show that J.P. Singh played a part in subsequent storage of the goods in Bombay and illegal disposal thereof. The learned Advocate finally pleaded that both the firm and the partner could not be penalised and penalty, if imposable, could be imposed only on either of them. He relied upon the decision in Shree Tirumala Udyog and Ors. v. C.C., Bangalore -1998 (77) ECR169 (T), wherein it was held that "the levy of penalty on both the partners and partnership concern separately is not maintainable in law as partnership concern is a compendium of the partners and penalty could be levied, therefore, either on the partnership concern or the partners. By making a reference to Section 140 of the Customs Act, the learned Advocate submitted that wherever legislative wanted to treat the firm as a separate entity, specific provisions have been made; and that penalty cannot be imposed on a partnership firm under Section 112(a) of the Act as it is not a person.