Calcutta High Court
Commissioenr Of Customs (Preventive) ... vs Md. I. Waris on 4 March, 2009
Author: Pinaki Chandra Ghose
Bench: Pinaki Chandra Ghose
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CUSTA No. 21 of 2008
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
COMMISSIOENR OF CUSTOMS (PREVENTIVE) WEST Plaintiff/Petitioner/Applicant
BENGAL
Versus
MD. I. WARIS Defendant/Respondent
BEFORE:
The Hon'ble JUSTICE PINAKI CHANDRA GHOSE The Hon'ble JUSTICE RUDRENDRA NATH BANERJEE Date : 4th March, 2009.
The Court : This appeal is directed against an order passed by the Customs, Excise and Service Tax Appellate Tribunal, Kolkata whereby the Learned Tribunal held as follows :
" However, considering the fact that the Department has not been able to dispose of the sandal wood lying in their custody for a long period of 14 years and the same were legally purchased from the Karnataka State Government Forest Department, this particular case warrants lenient consideration. Accordingly, I allow redemption of the confiscated sandal wood valued at Rs.64.00 lakhs (Rupees Sixty lakhs) on a fine of Rs.8.00 lakhs (Rupees eight lakhs) only subject to the condition that the appellants on release of the same would reprocess the goods into finished sandal wood and export the same within three months from the date of release of the goods in dispute. Penalty of Rs.5.00 lakhs imposed on the appellant firm is reduced to Rs.2.00 lakhs (Rupees two lakhs) and since no specific involvement of the appellant partner has been brought out, penalty on him is set aside."
The facts of the case are briefly as follows:-
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The respondent is a partnership firm, which is registered under the Registrar of Firms having its registered office mentioned in the petition. The appellant is engaged in the business of manufacturing machine made sandal wood knife handle, paper weights etc. and exporting the same to its foreign buyers. Admittedly, the respondent purchased the sandal wood from the Karnataka Government Forest Department. The respondent purchased legally the said goods from the Karnataka Government Forest Department and thereafter tried to export semi-finished, unfinished sandal wood products and at the time of such attempt to export the goods, the goods were seized by the Customs authorities. The steps were taken by the authorities and at one point of time the adjudicating authority after fulfilling the provisions of law gave hearing to the respondent and passed an order against the respondent.
Being aggrieved, the respondent filed an appeal before the Tribunal and it was the case before the Tribunal that the semi-finished and unfinished sandal wood pieces had been confiscated by the Customs authority and penalty had been imposed on the firm and on one of the partners of the said firm. It has been stated that there was no fault on the part of the partner or on the part of the firm. The authorized signatory is responsible for violation of the Customs Law as it was submitted that he was not authorized to enter for exporting the entry goods but to keep them finished products in Kolkata and thereafter should have exported the same as it is permitted under the provisions of law and/or the policies. In this background of the factual matrix, it was urged before the Tribunal that the Tribunal should consider the case leniently in case of imposition of penalty 3 and no separate penalty should be imposed on the partner of the firm in question. The Tribunal after considering the facts and circumstances of the case and after hearing the parties came to the conclusion that the prohibited goods have been involved in export and since the person who signed the shipping bills was duly authorised by the firm and the partners cannot absolved totally from the penal consequences. Therefore, the confiscation of the prohibited sandal wood is in order and the Tribunal passed the order accordingly.
Being aggrieved from the said order this appeal has been preferred by the Department and the appeal was admitted by this Court on the following questions of law:
"1. Whether, the sandal wood which falls under the category of prohibited goods covered under Negative List, Part = I, Sl. No. 9 of Chapter-XVI, of EXIM Policy, 1991-1997 should not have been released to exporter for exportation?
2. Whether the seized sandal wood were liable for absolute confiscation under Section 13(D)(I) and (e) of the customs Act, 1962?
3. Whether, the CESTAT should have allowed release of sandal wood, export of which is prohibited, to the exporter upon redemption fine of Rs.8 lakhs against a value of Rs.64 lakhs in the year 1994?"
Mr. Bose appearing in support of the appeal contended before us that the short question arises for determination by this Hon'ble Court is whether 4 an exporter, who has been held guilty of exporting 'prohibiting goods' should be allowed to have the goods redeemed upon payment of fine and penalty and in the event the answer is in the affirmative. He raised the second question which is whether the exporter who has been held guilty for exporting prohibited goods should be allowed to redeem the same on a meager fine of Rs. 8 lakhs and penalty of Rs. 2 lakhs against the market value of goods assessed at Rs. 64 lakhs and on the basis of the valuation made in 1994.
Mr. Bose also drew our attention to the several provisions of law including Foreign Trade (Development and Regulation) Act, 1992 in particular the following rules were placed before us for our consideration :-
"11. Contravention of provisions of this Act, rules, orders and export and import policy (1) No export or import shall be made by any person except in accordance with the provisions of this Act, the rules and the orders made thereunder and the export and import policy for the time being in force.
(2) Where any person makes or abets or attempts to make any export or import contravention of any provision of this Act or any rules or orders made thereunder or the export and import policy, he shall be liable to a penalty not exceeding one thousand rupees or five times the value of the goods in respect of which any contravention is made or attempted to be made, whichever is more.5
(5) Where any contravention of any provision of this Act or any rules or orders made thereunder or the export and import policy has been, is being, or is attempted to be, made, the goods together with any package, covering or receptacle and any conveyances shall, subject to such requirements and conditions as may be prescribed, be liable to confiscation by the Adjudicating Authority."
He further drew our attention to the Notification which was issued by the Authority known as policy and which has been notified under Section 5 of the said Act. It is also to be noted as we have been able to find out from the said Notification that application and duration of the said policy was came into force w.e.f. 1st April, 1992 and has been specifically stated shall remain in force for a period of 5 years that is upto 31st March, 1997.
Mr. Bose pointed out before us that it has been specifically mentioned in the General provision regarding exports and imports under the said Notification that the prohibited goods has been specifically mentioned that shall not be imported or exported under Clause 11. It has also been specifically stated under Clause 10 that the goods which would appear in the Negative List restricted for export and it is contained in the said policy.
According to Mr. Bose the term 'prohibited' has not been defined either in the Foreign Trade (Development and Regulation Act) 1992 or under the Import & Export Policy 1992-97. However, definition has been given in respect of the word 'prohibited' under the Customs Act. Section 2(33) of the 6 Customs Act defines prohibited goods to mean goods, the import and export of which is subject to any prohibition under the Customs Act or any other law for the time being in force. He further pointed out that Section 11 contains the power to prohibit either absolutely or subject to conditions the import or export of goods.
In the facts and circumstances of the case the Commissioner of Customs (Preventive), having regard to the fact that the goods attempted to be exported were Sandal Wood and not finished products and thereby it attracts, according to Mr. Bose, under 'prohibited items of Part I' of Chapter XVI of Import & Export Policy for the year 1992-97. He further submitted that the Commissioner has exercised his power to prohibit absolutely the export of such goods. The CESTAT by the impugned order has, however, directed the redemption of such prohibited goods and according to Mr. Bose that cannot be done even after taking into account which has even been made under section 125 of the Customs Act.
Section 125 of the Customs Act reads as follows:
"125. Option to pay fine in lieu of confiscation.-(1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods [or, where such owner is not known, the person from whose possession or custody such goods have been seized,] an option to pay in lieu of confiscation such fine as the said officer thinks fit:
Provided that, without prejudice to the provisions of the proviso to sub-section (2) of section 115, such fine shall not exceed 7 the market price of the foods confiscated, less in the case of imported goods the duty chargeable thereon.
[(2) Where any fine in lieu of confiscation of goods is posed under sub-section (1), the owner of such goods or the person referred to in sub-section (1), shall, in addition, be liable to any duty and charges payable in respect of such goods]."
He further tried to contend before us that in the said section it has been specifically used the word 'prohibited' that prohibition has to be read in conjunction to the word 'negative list' as has been framed under the said policy and therefore he submitted further that that is the reason why in section 11 it has been stated with regard to prohibition on importation and exportation of goods and specifically stated that prohibited either absolutely or otherwise or subject to such condition has been specifically mentioned in the said Section 11 of the said Act. That is the reason Mr. Bose tried to convince us that the word which has been used by the legislators under Section 125 as `prohibited' has to be read as prohibited absolutely.
In our considered opinion the Court cannot insert any word in the statute. The legislators think fit and proper and legislation has been passed by the said pillar of the democracy, the Court cannot insert any word which should be taken into account as sought to be used by the legislators.
Accordingly, in our considered opinion, which has not been used in Section 125 cannot be inserted by us or can be read as submitted by Mr. Bose to be read by us. We feel that the option which has been given under Section 125 in respect of the prohibited goods for redemption of the goods in question at the time of confiscation cannot be taken away by the Court for inserting a particular word therein. Therefore, in our considered opinion we do 8 not find any substance in respect of such submission as has been made by Mr. Bose on this point. On the contrary we feel that the power has been given by the legislators to a particular authority to act in a particular manner and the said particular authority must act accordingly and not at all otherwise.
Therefore, in our considered opinion that the Tribunal right to pass such order by giving an option to pay fine in lieu of confiscation of goods as has been directed to be done by them.
So far as the point no.2 is concerned, the discretion as exercised by the Tribunal for awarding the penalty in favour of the respondent firm as well as for the partners, we feel such discretion which has been specifically dealt with by the authority the Tribunal should not have any authority to sit on appeal on the said question and it is not within the domain of the Tribunal to come to such conclusion to reduce the amount as has been sought to the done in the facts and circumstances of the case without properly testing the discretion applied by the said authorities. Hence, in our considered opinion that part of the order so passed by the Tribunal cannot prevail at this stage and has to be set aside.
We only impose penalty as directed to be paid by the firm as well as by the partner has been adjudicated upon by the said authority has to be paid and accordingly that part of the order of the Learned Tribunal is set aside and the order which has been passed by the said authorities has been upheld by us to that extent. Upon payment of the amount as directed by the authority the goods should be released within a period of six weeks from the date of communication of this order.
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The appeal is, therefore, partly allowed. It is not necessary for us to answer the questions separately.
All parties concerned are to act on a xerox signed copy of this order on the usual undertakings.
Urgent xerox certified copy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.
(PINAKI CHANDRA GHOSE, J.) (RUDRENDRA NATH BANERJEE, J.) km/