Madras High Court
Commissioner Of Customs vs M/S. Ashu Exports on 1 April, 2009
Bench: Prabha Sridevan, T.S. Sivagnanam
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE: 01-04-2009 CORAM: THE HONOURABLE MRS. JUSTICE PRABHA SRIDEVAN AND THE HONOURABLE MR. JUSTICE T.S. SIVAGNANAM C.M.A.No.1753 of 2005 Commissioner of Customs Chennai ... Appellant Vs. M/s. Ashu Exports ... Respondent Civil Miscellaneous Appeal against the order dated 15-06-2004 made in final order No.516/2004 on the file of Customs, Excise and Service Tax Appellate Tribunal, Southern Regional Branch, Chennai 6 which was served upon the appellant on 06-07-2004 reversing the order dated 10-09-2003 made in Order in Original No.994/2003-SHB on the file of Commissioner of Customs (Exports) Chennai to set aside the same. For appellant :: Mr. A.P. Peter Gunasekar, Senior Central Govt. Standing Counsel For respondents :: Mr. K.M. Nagesh JUDGMENT
(Judgment of the Court is made by Prabha Sridevan,J.) The respondent had filed three shipping Bills under the DEPB Scheme for export of the goods declared as 100% polyester dyeing fabric. They had also furnished a declaration in terms of Section 50(2) of the Customs Act, 1962 attesting to the correctness of the details furnished in the shipping bills and had given a declaration to the effect that they will not claim any duty drawback or benefit of duty for the licence under the duty exemption scheme. When the goods were presented for examination to the Docks Officers on 26-06-2003,it was found that all the cartons contained very inferior quality of Dyed Fabrics. Shipments of the goods were not allowed and the case was referred to the Special Intelligence and Investigation Branch (SIIB) of this Custom House for further investigation. A show cause notice was issued and the representative of the respondent accepted the value and also the mis-declaration and waived the issue of show cause of notice and requested that the adjudication order may be passed. It was held that there was a wilful attempt to export inferior quality fabrics in the guise of 100% polyester dyed fabrics by misdeclaring the value of goods and therefore, the goods were ordered to be confiscated with the option to redeem the goods on payment of fine and penalty of a sum of Rs.10,00,000/- also imposed.
2. Against that, an appeal was filed to the Customs, Excise and Service Tax Appellate Tribunal. The Tribunal held that since clause (ii) of Section 113 is a penal provision for an exporter of goods, attempting exportation, by indulging in misdeclaration of particulars with the ulterior purpose of claiming higher drawback under Section 75 of the Customs Act and since the goods in question were not of the said category that cannot be confiscated. Therefore, the Customs, Excise and Service Tax Appellate Tribunal set aside the order of confiscation and penalty. Against that, the present civil miscellaneous appeal has been filed on the following substantial questions of law:
(1) Whether the Appellate Tribunal has not committed an error of law in failing to take into consideration the words "dutiable or prohibited goods" are omitted in Section 113 of the Customs Act 1962 with effect from 14-05-2003 by Finance Act, 2003(32/2003) (2) Whether the Appellate Tribunal has not committed an error of law in not taking into consideration the over valued goods are to be treated as "prohibited goods" within the meaning of prohibited goods under section 2(33) of Customs Act 1962 and such over valued goods are attempted to be exported out of India are liable for confiscation under section 113(d) and 113(ii) of the Customs Act 1962?
3. The learned Senior Central Government Standing Counsel submitted that the Tribunal erred in holding that since the goods were not prohibited goods, the notice under Section 113 was not warranted. The learned counsel submitted that the words "dutiable or prohibited" goods were omitted in section 113 of Customs Act 1962 by the Finance Act, 2003(32 of 2003) with effect from 14-05-2003 and this was overlooked by the Tribunal and the learned Senior Central Government Standing counsel also submitted that when there is acceptance on behalf of the respondent that there was misdeclaration, the overvaluation itself would render the goods to be treated as prohibited goods within the meaning of the relevant section and when such overvalued goods are attempted to be exported out of India are liable to confiscation. The learned counsel raised a preliminary issue of maintainable issue and referred to 2004 165 ELT 34 (P&H) (Commissioner of C.Ex., Chandigarh Vs. Punjab Recorders Ltd.), 2003 (155) ELT 423 (SC) (Om Prakash Bhatia Vs. Commissioner of Customs, Delhi) and 2008 (226) E.L.T. 178 (Commissioner of Customs, Mumbai Vs. Classique Enterprises).
4. We find that the Department rests its case on Section 113(d) and 113 (ii) and they read as follows:
"(d) any goods attempted to be exported or brought within the limits of any customs area for the purpose of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force;
...
(ii) any goods entered for exportation under claim for drawback which do not correspond in any material particular with any information furnished by the exporter or manufacturer under this Act in relation to the fixation of rate of drawback under section 75;"
5. The omission of the words "dutiable or prohibited" are with reference to Sections 113(e), (g) and (h) and therefore, substantial question of law No.1 does not require to be answered since these are not sections on which the notice was issued.
6. The second question was with regard to the under-valuation of the goods and in the decisions referred to, it was held that the valuation issue directly relates to the issue whether or not the authorities were justified in holding that the respondents had undervalued the goods for the purposes of assessment of duty and that this question shall be raised by filing a statutory appeal before the Supreme Court.
7. In 2004 (165) E.L.T. 34 (P & H) it is held as follows:
"The assessee is engaged in the manufacture of Uninterrupted Power Supply System(UPS). The Officers of the Central Excise visited the factory premises of the petitioner on 16-12-1994 and found that during the period from 20-3-1992 to 13-7-1992. The assessee had cleared Lead Acid Batteries valued at Rs.9,07,600 involving duty amounting to Rs.98,838.50. In other words it was found that the assessee had not paid excise duty on the value of the Lead Acid Batteries were part and parcel of the UPS system and that the assessee had not paid the Excise duty on the value of the batteries and, therefore, a demand of duty for the aforesaid period was justified. In other words the finding is that the assesee had under-valued the goods for the purposes of payment of Excise duty. No doubt this finding has been recorded against the assessee and the assessee has not challenged the same but in view of the provisions of Section 35H read with Section 35L of the Central Excise Act, 1944, we are clearly of the view that a question pertaining to the value of goods for purposes of assessment was involved before the Tribunal and, therefore, this reference petition filed by the Department is not maintainable in this Court and that an appeal would lie only to the Supreme Court. The Department has filed the present petition seeking reference of a question pertaining to the levy of penalty. Since the reference petition is not maintainable, the issue will have to be decided by the Apex Court.
Consequently, the petition is rejected."
8. In these circumstances, we accept the objection raised by the learned counsel for the respondent on the grounds of maintainability. We dismiss this appeal as not maintainable. The department however, is at liberty to move the Supreme court if it is so advised. No order as to costs.
(P.S.D.,J.) (T.S.S.,J.) 01-04-2009 glp To The Commissioner of Customs Chennai PRABHA SRIDEVAN,J.
and T.S. SIVAGNANAM,J.
glp C.M.A.No.1753 of 2005 01-04-2009