Goods Not Prohibited Under Foreign Trade Policy Still Require Valid IEC; Import Using Bogus Codes Impermissible: CESTAT

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that goods not prohibited under foreign trade policy still require valid IEC (Importer Exporter Codes), import using bogus codes is impermissible. Dr. Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member) observed that there is nothing in the FTDR Act (The Foreign Trade (Development and Regulation) Act, 1992 which provides for any IEC holder to lend his IEC to somebody else or for anyone to import goods borrowing someone else's IEC. Section 7 of the Foreign Trade (Development and Regulation) Act, 1992, provides that no person shall make any import or export without obtaining an Importer Exporter Code (IEC) Number granted by the Director General of Foreign Trade or authorized officer. In this case, Vineet Gupta is a partner of M/s. Achiever International/appellant who imported goods i.e., DVDRs in the name of M/s. Achiever International and also in the names of the other IEC holders which were created and managed by Vineet Gupta. It was alleged that the assessee had imported goods using the IEC in the names of other firms. It was found that the firms in whose name's goods were imported did not exist at all at the addresses given in the importer exporter codes (IEC) issued in their names. A show cause notice was issued to Vineet Gupta proposing to confiscate the goods under section 111(d) of the Customs Act, 1962. Accordingly, the order was passed by the adjudicating authority deciding the proposals in the SCN imposing penalty of Rs. 25,00,000/- on Vineet Gupta under Section 112. The assessee does not deny that it had imported goods using the IEC in the names of other firms but submitted that other firms 'had lent' their IECs and it had imported the goods using those IECs. The department argued that all the goods which were imported in the name of the fictitious firms by Vineet Gupta using fraudulently obtained IECs were imported in violation of the prohibitions under sections 7 and 11 of the FTDR Act. The Tribunal stated that if the assessee had obeyed the provisions of FTDR Act and imported goods using its own IEC, there would have been no case for the department nor any SCN. The SCN was issued only because the assessee had imported goods violating the provisions of sections 7&11 of the FTDR Act which fact is also admitted in the appeal before us saying 'that the IEC holders had lent their IECs to the assessee.' This argument is like someone driving on the wrong side of the road claiming that he should not be penalized because he had not gained anything by breaking the law and could have as well driven on the correct side, added the bench. The Tribunal observed that if the DVDs and CDRs were imported following the provisions of FTDR Act, they could have been imported freely. Merely because the goods are not restricted or prohibited as per the foreign trade policy, it does not mean that they can be imported without an IEC or using IECs issued in the names of some other fictitious firms, opined the bench. In view of the above, the Tribunal upheld the penalty imposed on the assessee. Case Title: M/s. Achiever International v. Commissioner of Customs – Delhi II Case Number: Customs Appeal No. 248 of 2012 Counsel for Respondent/ Department: Girijesh Kumar Click Here To Read/Download The Order

Goods Not Prohibited Under Foreign Trade Policy Still Require Valid IEC; Import Using Bogus Codes Impermissible: CESTAT

Mehak Dhiman

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