BANK OF MADURA LTD Vs. COLLECTOR OF CUSTOMS
LAWS(CE)-1986-1-3
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on January 07,1986

Appellant
VERSUS
Respondents

JUDGEMENT

S. Kalyanam, Member J. - (1.)SINCE the issues arising for determination in the above appeals are common and are inter-connected, the above appeals are consolidated together and disposed of by a common order. The Bank of Madura, appellants in appeal No. 304 and 305/84, have preferred the appeals respectively against the order of the Collector of Customs, Madras, imposing a fine of Rs. 3 lakhs and Rs. 4 lakhs under Section 125 of the Customs Act, 1962, hereinafter referred to as the Act. The Collector of Customs, Madras, is the appellant in the rest of the appeals preferred before the Tribunal in pursuance of the statutory direction of the Central Board of Excise and Customs under Section 129D(1) of the Act for enhancement of the quantum of fine imposed on the Bank of Madura under the impugned order and for imposition of penalty on responded Vinod Kumar in appeal No. 254/85.
(2.)M/s. : A.M. Ahmed & Company, Custom House Agents, Madras, filed Bill of Entry No. 3085 dated 25.3.1982 for clearance of a consignment of 750.18 M-Ts. of hot rolled mild steel channels, joints and angles valued at Rs. 19,94,466/- c.i.f. imported in the name of M/s. Kanna Industries, respondents in appeal No. 253/85, from Romania. On 8.4.1982, M/s. A.M. Ahmed & Company also filed another Bill of Entry No. 843 for clearance of 516.140 M.Ts of hot relied mild steel plates, valued at Rs. 14,29,555/- c.i.f., imported in the name of M/s. Hanson Enterprises, Patel Marg, Ghaziabad. The imported goods were sought to be cleared under O.G.L. Appendix 10 item 2 of the Import Trade Control Policy for 1981-82 on the strength of S.S.I. certificates issued in the name of the respective parties. The Customs Department received intelligence that the goods were actually imported by Vinod Kumar, Respondent in Appeal No. 254/85 by making use of a printed letter-head of M/s. Kanna Industries, Madras and by forging the signatures of the proprietor of that firm, V.K. Marimuthu. Actual varification of M/s. Kanna Industries revealed that it was a very small factory having only one sheet rolling machine, one gas cylinder and some tools, for which import of a huge quantity of mild steel joints, channels and angles would be of no use. V.K. Marimuthu, proprietor of M/s. Kanna Industries, in his statement dated 11.8.82 recorded by the Income-tax authorities, confessed to the fact that he had a S.S.I. certificate No. 18/07/31245/PMT/SSI and his industry was a small one doing job work and as he was in need of money, at the instance of respondent Vinod Kumar, he made over his SSI certificate of Kanna Industries alongwith some letter heads of his firm signed in blank to Vinod Kumar for a consideration of Rs. 3000/- to enable Vinod Kumar to make use of the letterheads and import the goods in question for his use. Marimuthu further admitted that he did not import any steel items nor did he have the financial capacity for importing such a huge quantity of steel items and that he never opened any current account at all in the name of M/s. Kanna Industries, Madras, with Bank of Madura. He also disowned the signatures in the Bill of Entry and other related documents. Marimuthu corroborated this version in his statement dated 10.9.1982 recorded by the Customs Officers. It was also found that the Bank of Madura in their letter No. FO/KI/553/82 addressed to M/s. A.M. Ahmed and Co., while forwarding the documents pertaining to the consignment in question had stated that the documents were forwarded through one Ashok of the importing firm. A scrutiny of the ledger accounts of the Clearing agents, A.M. Ahmed & Co., revealed that M/s. Kishore, Mautu and Ashok are the persons who used to come on behalf of respondent Vinod Kumar. During enquiries it was ascertained by the Department that the said persons, viz. Kishore, Muthu and Ashok were employees of respondent Vinod Kumar and that Vinod Kumar, Proprietor of M/s. Vinod Kumar and Co., 19, Sembudass Street, Madras, was actually financing and arranging the import of the steel items. Enquiries with the Bank of Madura revealed that the Bank had issued a letter of Credit No. 121 dated 29.10.1981 for Rs. 22,44,000/- in favour of M/s. Kanna Industries against which the goods were imported and that the current account of M/s. Kanna Industries, Madras, had been opened with the Bank on the basis of an introduction of one Ram Kishore, proprietor of M/s. Hansons Enterprises, Patel Marg, Ghaziabad, who in turn had been introduced to the Bank by respondent Vinod Kumar. As stated earlier V.K. Marimuthu, Proprietor of M/s. Kanna Industries, in his statement referred to supra, denied having ever opened any current account in the Bank of Madura, much; less knowing any one by name Ram Kishore, proprietor of M/s. Hansons Enterprises, Ghaziabad. A letter of the Bank dated 24.10.1981 to the effect that M/s. Kanna Industries Madras, is an allied concern of M/s. Vinod Kumar and Co., was also recovered and letter of credits were found to have been issued by the Bank in favour of M/s. Kanna Industries on the basis of a letter of guarantee executed by Vinod Kumar for Rs. 46,20,000/- without charging any margin. Enquiries also revealed that M/s. Hansons Enterprises as well as Ram Kishore, the alleged proprietor for whom the consignment covered by Bill of Entry No. 843 viz. 516.140 MTs of hot rolled mild steel plates was imported, were found to be bogus, fictitious and non-existent parties. Investigation also revealed that Vinod Kumar had introduced the non-existent fictitious Ram Kishore of non-existent Hansons Enterprises to the Bank of Madura and the Bank had opened a current account in the name of the fictitious firm M/s. Hansons Enterprises on the footing of the introduction of Vinod Kumar. It was also fount that Vinod Kumar, one of the respondents herein, had master minded the entire operation and had imported the goods in question on the footing of fabricated and manipulated SSI certificates under OGL. It is in these circumstances after further investigation and detailed enquiries and verification and scrutiny of various records, proceedings were instituted against the Bank of Madura and all other persons concerned which ultimately resulted in the impugned orders now appealed against.
Dealing with the adjudication in respect of the consignment covered by Bill of Entry No. 3085 dated 25.3.1982 for clearance of a consignment of 750.18 M.Ts. of hot rolled mild steel channels, joints and angles imported in the name of M/s. Kanna Industries, Madras, the Collector of Customs, Madras, by his order dated 28.7.84, ordered confiscation of the same under Section 111(d) of the Customs Act, 1962, read with Section 3(2) of the Imports and Exports (Control) Act, 1947, as amended, but, however, permitted the Bank of Madura to exercise an option of redemption of the same on payment of a fine of Rs. 4 lakhs under Section 125 of the Act, holding the Bank a joint holder of licence possessing title to the goods. The Collector also imposed as penalty of Rs. 10,000/- on Marimuthu of M/s. Kanna Industries, under Section 112 of the Act and exonerated Vinod Kumar of the charge under Section 112 of the Act. Likewise, the Collector of Customs, Madras, by the impugned order dated 28.7.84 referred to supra, imposed a fine of Rs. 3 lakhs on the Bank of Madura giving them an option to redeem the confiscated consignment of 516.140 M.Ts. of hot rolled steel plates and exonerated Vinod Kumar. The Board by exercising jurisdiction under Section 129D(1) of the Act, after examining the legality, correctness and propriety of the order of the Collector of Customs, Madras, referred to supra, directed the collector of Customs to file appeals for enhancement of the fine imposed on the Bank of Madura and imposition of penalty on the Bank of Madura as well as on Vinod Kumar and others. The Bank of Madura, as stated above, have filed independent appeals questioning the legality of the levy of fine on them by the Collector of Customs, Madras, under the impugned orders.

(3.)THE main question that would arise for consideration in the instant case is whether the imported goods under confiscation are entitled to be cleared under Open General Licence by the Bank of Madura as joint holder of licence on payment of duty alone and whether the goods imported are liable to confiscation under law and if so, the quantum of fine in lieu of confiscation imposed under the impugned orders on the Bank of Madura is just proper or woule call for further enhancement. It may be noted in this context that excepting the Bank of Madura, the other respondents in the appeal preferred by the Collector of Customs, Madras, remained ex parte.


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