1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION CUSTOMS APPEAL NO.42 OF 2009 Ranjeet Sanghvi, of Mumbai inhabitant, carrying on business in the name and style of M/s. Sanghvi Enterprises, a Sole Proprietor thereof having office at 1401/2 Swapna Apartment, Sheth Motisha Lane, Byculla, Mumbai-400010 .....Appellant. v. The Commissioner of Customs (Adjudication) Mumbai having his office New Customs House, Ballard Estate, Mumbai-400 001 ...Respondents. Mr.Prakash Shah i/by PDS Legal, adv. For the Appellant. Mr.R.V.Desai, Sr.Counsel with Mr.R.B.Pardeshi, advs. For the Respondents. CORAM : F.I. REBELLO & J.H. BHATIA, JJ. DATED : 1st July , 2009 JUDGMENT: (PER J.H.BHATIA, J.) 1 Heard the learned counsel for the Parties. Perused the orders passed by the Adjudicating Officer as well as by the Appellate Tribunal. 2 On perusal of the record, it appears that the present appellant, Ranjeet Sanghvi and one Baban Sharma used to import second-hand printing machines in the name of different parties under the 2 “actual user” condition prescribed in the Import policy during the relevant period. However, having so imported such second-hand printing machines, they used to sell to different parties in violation of the said conditions and the import policy. Similarly, they had imported 16 multilith single colour second-hand printing machines from M/s. CJB Printing and Equipment, U.K. in the name of M/s. Classic Pack, a proprietorship concern of one Shailesh Mehta, vide Bill of Entry No. 1588 dated 15.11.1997. However, all those machines were offloaded in the premises of Baban Sharma at 51A, Pragati Industrial Estate, N.M.Joshi Marg, Lower Parel, Mumbai. Later on, during a raid 11 of those 16 printing machines were found to have been stored in the premises of M/s. Fayyaz Binding Works owned by Mohammed Illyas Qureshi. Those 11 machines were from the lot imported in the name of M/s. Classic Pack. Statements of Mohammed Illyas Qureshi, Shailesh Mehta, Baban Sharma and the present appellant, Ranjeet Singhvi came to be recorded. Statement of Shailesh Mehta, proprietor of M/s. Classic Pack revealed that the present appellant and one Baban Sharma had earlier also imported second-hand printing machines from U.K. and he was also informed that such machines could be imported under the actual user condition and could be sold in the market, which gives profit. As 3 Shailesh Mehta did not have sufficient money to import such goods, the present appellant and Baban Sharma offered to arrange finances for importing machines. Shailesh Mehta refused the offer. Thereafter, he was offered a commission of Rs.1 lac if he would allow the import of machinery in the name of his proprietorship concern M/s. Classic Pack. Shailesh Mehta accepted this offer. Later on, the present appellant handed over 4 cheques worth Rs.9.5 lac to Shailesh Mehta in the month of January, 1997. Those cheques were issued by M/s. Ambika Stones in favour of the Classic Pack. Statement of one Girish Mehta revealed that he had issued 4 cheques in favour of M/s. Classic Pack as per the instructions from the present appellant and the cheques were handed over to the present appellant. The present appellant also stood as a guarantor for repayment of that amount. Statement of Shailesh Mehta revealed that the present appellant and Baban Sharma had paid him Rs.5 lac in cash for payment of the customs duty and clearance charges on import of 16 second-hand printing machines. They had also obtained his signatures on several documents for clearance of goods. After clearance of goods, the present appellant and Baban Sharma took possession of machinery and paid an amount of Rs.1 lac to Shailesh Mehta as commission. Machinery was offloaded at the premises of Baban Sharma 4 at Pragati Industrial Estate. Later on, 11 of the printing machines ,which were imported in the name of M/s. Classic Pack, were found stored in the premises of Fayyaz Binding Works. Statement of Baban Sharma under Section 108 also corroborated the story. In his statement under Section 108, the present appellant had admitted most of the above facts. He also admitted that he alongwith Baban Sharma had been to U.K. and had placed an order for import of 16 second-hand printing machines from M/s. CJB Printing and Equipment, U.K. He admitted that he had arranged finances for M/s. Classic Pack by getting 4 cheques of Rs.9.5 lac from the Ambika Stones. He also admitted that he alongwith Baban Sharma had cleared consignment of 16 second-hand printing machines from JNPT Nhava Sheva. His statement revealed that even earlier he had helped Baban Sharma in importing 26 second-hand printing machines. 3 Adjudicating Authority minutely considered the whole material before coming to conclusion that the present appellant, Baban Sharma and others had violated provisions of Foreign Trade (Development & Regulation) Act, 1992 read with Export and Import Policy for the period 1996-97 and thus, they had violated provisions of Section 111(0) of the Customs Act, 1962. In the result, they were held 5 guilty under Section 112(a) and Section 112(b) of the Customs Act, 1962. The present appellant and Baban Sharma, taking into consideration their main role, were awarded penalty of Rs.10 lac each. The Appellate Tribunal also minutely considered the whole material and dismissed the appeal filed by the present appellant, Baban Sharma and Mohammed Illyas Qureshi. 4 Mr.Shah the learned counsel for the appellant vehemently contended that the second-hand printing machines could be freely imported. There was no prohibition on their import nor any exemption of duty was sought on the same and, therefore, there could not be any violation of Section 111(o) of the Customs Act, 1962 by anybody. According to him, if there was no violation of Section 111(o), penalty could not be imposed under Section 112. Infact, in the present appeal, no ground is taken that this point was pressed before the Appellate Tribunal. Even though in the appeal filed before the Appellate Authority, a ground was taken that the provisions of Section 112(a) and (b) are not attracted and there could not be any violation of “actual user condition” by him. It appears that this point was not argued before the Appellate Tribunal. Anyhow, in the interest of justice, we heard Mr.Shah on this point also. Section 111 reads as follows: 6 111. Confiscation of improperly imported goods, etc.- The following goods brought from a place outside India shall be liable to confiscation :- (a) to (n)..................................................... (o) any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer; On careful reading of this provision, it becomes clear that the imported goods shall be liable for confiscation if , (a) the goods are exempted from duty, subject to any condition, or (b) goods are exempted, from any prohibition in respect of the import thereof under the Customs Act or any other law subject to any condition and (c) and that condition has not been observed, unless the non-observance of the condition was sanctioned by the proper officer. 5 It is nobody’s case that goods were exempted from the payment of duty. Even though Mr. Shah contended that there was no prohibition on the import of goods under any law and that second-hand capital goods were freely importable without any condition, we are not satisfied with this contention. Infact, under Section 3 of the Foreign 7 Trade (Development & Regulation) Act, 1992 (‘Foreign Trade Act’ in brief), the Central Government may make provisions for the development and regulation of foreign trade by facilitating import and increasing exports and can also make provisions for prohibiting, restricting or otherwise regulating the import or export of goods, and all goods to which any Order under sub-section (2) applies shall be deemed to be goods the import or export of which has been prohibited under Section 11 of the Customs Act, 1962 and all the provisions of that Act shall have effect accordingly. Under Section 5, the Central Government may, from time to time, formulate and announce by notification in the Official Gazette, the export and import policy and may also, in the like manner, amend that policy. Admittedly, the Government of India formulated and announced the export and import policy for the period from April, 1992 to March, 1997. Clause 25 of the Export and Import Policy provides that all second hand capital goods, having a minimum residual life of 5 years, may be imported by the Actual Users, without a license, subject to “Actual User” condition. The Actual User was also required to furnish to the Customs at the time of clearance of the goods, self-declaration to the effect that the second hand capital goods being imported had minimum residual life of 5 years. In view of these 8 provisions, it is clear that such second-hand capital goods could not be imported unless they were to be imported for actual user by the importer. That itself was a prohibition against import. However, the import would be exempted from the prohibition subject to “Actual User Condition”. If that condition is violated, provisions of S.111(o) of the Customs Act would be attracted. As per paragraph 41 of Chapter V of the Hand-Book of procedure for Export and Import Policy for the period 1996-97, second-hand capital goods imported without an import licence under the actual user condition could not be transferred, sold or otherwise disposed off within a period of 5 years from the date of import except with prior permission of Director General of Foreign Trade. There is no dispute that in this case, 16 second-hand printing machines, which fall in the category of second-hand capital goods, were imported in the name and in favour of the M/s.Classic Pack, which was proprietorship concern of Shailesh Mehta. However, the material collected during the investigation clearly revealed that none of those machines were actually received by M/s. Classic Pack and all of them were offloaded initially at the premises of Baban Sharma and later on, 11 of those machines were found in the premises of Fayyaz Binding Works of Mohammed Illyas Qureshi. Remaining 5 machines out of that lot of 16 printing machines could not 9 be located. It shows that those 5 printing machines were disposed off or transferred illegally. Thus, in the present case, this condition of actual user and the condition of non-transfer of the machinery within five years from the date of import were violated. In view of this, it is clear that there was violation of the condition of actual user attached to the import of second-hand printing machines under the provisions of Export and Import Policy under the Foreign Trade Act and, therefore, the goods were liable to be confiscated under Section 111(o). Under Section 112, any person, who in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under Section 111, or abets the doing or omission of such an act or (b), who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under Section 111, is liable to be penalised. In view of this, we find no fault with the orders passed by the Adjudicating Authority and maintained by the Appellate Tribunal holding the present appellant liable to be penalised under section 112 of the Customs Act, 1962. Therefore, we find no merit in the appeal. 10 6 For the aforesaid reasons, appeal stands dismissed. (J.H. BHATIA,J.) (F.I. REBELLO,J.)