New Delhi, Sep 21 (UNI) The Supreme Court has found leading shoe manufacturing company Phoenix International Limited guilty of indulging in subterfuge/fictitious arrangement which was intended to deceive the Customs Department and also play fraud on para 156(A) of the Export Import (EXIM) policy 1992-1997.
A bench comprising Justices S H Kapadia and B Sudershan Reddy in the judgement pronounced yesterday said, ''it is M/s Phoenix International Limited (PIL) which ultimately manufactured synthetic shoes. Therefore, the entire manufacturing activity was carried out by M/s PIL.
Therefore, it is clear that the above device of importation of one item by M/s PIL and three items by M/s PIND( Phoenix Industries Limited) was a subterfuge/fictitious arrangement intended to deceive the department and fraud on para 156 (A) of the EXIM policy 1992-1997.
''We, therefore, set aside the impugned judgement of the tribunal.
We hold that the respondents were guilty of violating para 156(A) of the EXIM policy 1992-1997; that the respondents were liable to be assessed under tariff heading 64.04 and accordingly they were liable to pay customs at 50 per cent plus CVD at 15 per cent at ad valorem; that the respondents were not entitled to the benefit of concessional rate of duty under notification number 45/94-CUS dated March 1, 1994 and that the department was right in invoking rule 8 of the Customs Valuation Rules,'' the bench said.
''Accordingly we remit only the question of requantification of differential duty, redemption fine and penalties payable by the respondents herein, to the Commissiioner of Customs, Inland Container Deport, Tughlakabad, New Delhi who will decide the said issue in accordance with law.'' PIL had imported 5151 pairs of shoes while soles were imported by PIND. PIL extended interest free loans of Rs 11.7 crore and Rs 7.7 crore. PIL manufactured shoes for Reebok International Limited.
The department issued two notices to PIL alleging that the shoes were imported in semi-knocked down(SKD) condition and hence the company was not entitled to concessions of EXIM policy.
The apex court set aside the judgement of the tribunal and allowed the appeal of Commissioner of Customs, New Delhi.