An entity that does not file a Bill of Entry or seek physical clearance is not an 'importer' under Section 2(26) of the Customs Act, though it remains liable for penalties under Section 112 if it facilitates illegal imports through the misuse of non-transferable licences or fraudulent financial instruments.

Per Mr. VASA SESHAGIRI RAO

These two appeals, Appeal No. C/212/2002 filed by M/s. Exim Silks (India) Pvt. Ltd. and Appeal No. C/211/2002 filed by M/s. Exim Aides, arise out of Order-in-Original No. 12/2002 dated 27.01.2002 and Order-in-Original No. 20/2002 dated 13.02.2002 respectively passed by the Commissioner of Customs, Chennai. Though basing on separate Show Cause Notices and different Bills of Entry, both matters arise from a common SIIB investigation into alleged misuse of the DEEC Scheme in 1996 which involves overlapping evidence and statutory provisions. The appeals were dismissed on 23.05.2003 for non-compliance with pre-deposit under Section 129E of the Customs Act, 1962. The Hon’ble High Court of Madras, by common order dated 13.08.2024 in W.P. Nos. 22687 and 22688 of 2003, set aside the dismissal and restored the appeals subject to deposit of Rs.15 lakhs in each case. Upon compliance, the appeals are being heard together on merits for disposal by this common order.

1.2 In Appeal No. C/212/2002 (Exim Silks India Pvt. Ltd.), the subject import concerns Bill of Entry No. 23450 dated 14.05.1996 filed by M/s. Sreesilk Imports “A/c Exim Silks (India) Pvt. Ltd.” for clearance of 8133.73 kg (135 bales) declared as Dupion Silk under Notification No. 80/95-Cus.

1.3 In Appeal No. C/211/2002 (Exim Aides), the subject import concerns Bill of Entry No. 41041 dated 19.08.1996 filed by M/s. Sreenidhi Impex “A/c Exim Aides” for clearance of 8028.69 kg (135 bales) declared as Dupion Silk under the same notification. The department alleged that a portion of the consignments consisted of Mulberry Raw Silk and that non-transferable advance licences were misused. Statements under Section 108 were recorded from the partners of Sreesilk Imports and Sreenidhi Impex, Shri R. Sadagopan (connected with both appellants), bank officials and licence brokers. It is undisputed that both the appellants executed end-use bonds and furnished bank guarantees for clearance under Notification No. 80/95-Cus. The Adjudicating Authority has confirmed differential duty under the proviso to Section 28 (1), ordered confiscation under Sections 111(d), (m) and (o), imposed redemption fine under Section 125 and penalties under Sections 112 resulting in the present appeals.

2. The Ld. Advocate Mr. N. Viswanathan appeared on behalf of the Appellant and advanced detailed submissions in support of the Appeals and the Ld. Authorized Representative Mr. Anoop Singh appeared for the Revenue and defended the findings in the Impugned Order.

3. The Learned Advocate appearing for the Appellant made the following submissions which are that: -

i. the impugned Orders-in-Original suffer from a fundamental legal error in treating the appellants as “importers” within the meaning of Section 2(26) of the Customs Act, 1962.

ii. It was argued that in both cases the Bills of Entry were filed by M/s. Sreesilk Imports and M/s. Sreenidhi Impex respectively, who subscribed to the statutory declarations under Section 46 and physically cleared the goods for home consumption.

iii. The appellants neither filed the Bills of Entry nor took delivery of the goods.

iv. The Section 108 statements of Shri R. Suresh clearly admit that Sreesilk Imports were the actual importers and were responsible for the clearance and alleged misdeclaration.

v. The appellants’ role was confined to furnishing advance licences, end-use bonds and bank guarantees, and such furnishing by itself does not render them liable to duty under Section 28 .

vi. It was further contended that misdeclaration, if any, was attributable solely to the filing firms, and even the adjudicating authority recorded that the appellants may not have been aware of the alleged inclusion of Mulberry Raw Silk in the garb of dupion silk.

vii. Denial of benefit of Notification No. 80/95-Cus was also challenged on the gro