Customs, Excise and Gold Tribunal - Tamil Nadu
M.V. Marketing And Supplies vs Commissioner Of Customs (Import) on 8 October, 2004
Equivalent citations: 2005(98)ECC570
ORDER Jeet Ram Kait, Member (T)
1. This appeal is directed against the Order-in-Original No. 1164/2003 dated 27.10.2003 passed by the Commissioner of Customs (Imports) Chennai, by which the Commissioner has rejected the invoice value of Rs. 8,18,063 and enhanced the invoice value to Rs. 22,83,215 besides ordering confiscation of the goods with option to redeem the same on payment of fine of Rs. 5,75,000 in terms of Section 125(1) of the Act. He has also demanded duty of Rs. 52,18,709 under Section 28 of the Customs Act, 1962. He has also imported penalty of Rs. 2,00,000 under Section 112(a) of the Act.
2. Brief facts of the case are that the appellants herein are exporters of ready made garments. They have imported two containers of assorted ready made garments, herein after referred to as goods), by resorting to misdeclaration of quantity, value etc. The office premises of the appellants at Anna Nagar Chennai were searched by the officers of the DRI on 3.6.2003 and documents were recovered under a mahazar. They also recovered certain samples on the same day. Appellants filed Bill of Entry No. 485078 dated 28.4.2003 for the import of 28,702 pieces of goods in two containers giving description as "Stock Lot" seconds of different descriptions and accordingly classifying the goods under sub-heading 62061090, 62042290, 62072110, 62071100,62009100 and 61091000 of the Customs Tariff with 25% adv. as effective rate of basic Customs duty for all The declared value was Rs. 8,18,063 and the duty payable on the same was Rs. 5,51,713. The containers were opened by the Customs officers on 1.5.2003, 3.5.2003 and 9.5.2003. However, no examination report was available on record. Detailed examination of the consignment in the said two containers indicated as under:
(a) Container No PRSU 2216410 contained 23797 pieces of goods (ready made garments-seconds) and the total assessable value worked out to Rs. 6,63,285 and the duty payable worked out to Rs. 11,10,402.
(b) Container No. TEXU 2053204 contained 58415 pieces of goods and the total assessable value worked out to Rs. 16,19,930 and the duty payable worked out to Rs. 41,08,307.
(c) The total quantity of cotton garments in two containers found was 78,612 pieces as against the declared quantity of 28.702. Thus, there was an undeclared quantity of 49,910 pieces of goods.
Therefore, the goods contained in the two containers imported vide bill of Entry No. 485078 dated 28.4.2003 were seized under a Mahazar dated 3.6.2003 for further investigation. As a follow up action, statements were recorded from one G.D. Raja, Manager of the appellants, P. Suresh, the Power of Attorney of the firm and also from one K.R. Vijeya Shankar, who looked after the work of clearance of the goods. It was in these circumstances that show cause notice was issued to the proprietrix of the appellants firm and also to K.R. Vijeya Shankar which culminated in the order of adjudication whereby the adjudicating authority has passed the order as noted in para 1 above.
3. Shri S. Murugappan, learned Counsel appeared for the appellants and referred to the grounds of appeal and submitted that the appellants had specifically prayed for allowing re-export of the goods as they had faced many problems because of the mix up that had happened. He has also submitted that in the present case, the supplier of the goods had agreed for the re-shipments of the goods but the adjudicating authority has held that since the goods are tainted, re-export cannot be permitted. He has pleaded that the appellants cannot be penalised for no fault of theirs since the quantity in excess was supplied by the foreign supplier without the knowledge of the importer and immediately on coming to know of the supply of excess quantity, the foreign supplier had agreed for the re-shipment of the goods. It was in these circumstances that the appellants had prayed for permission to re-export the goods, but their, prayer was turned down by the Commissioner as noted above. He has pleaded that in identical situations re-export of goods has been permitted by the department as well as by the Tribunal, High Courts and the Hon'ble Apex Court. Referring to the judgment of the Hon'ble Apex Court in the case of Commissioner of Customs, Kolkata v. Grand Prime Ltd., 2003 (155) ELT 417, relied upon by the Commissioner to reject their prayer for re-export of the goods, he has invited our attention to paras 16 and 18 of the said judgment and pleaded that one of the issues before the Apex Court was whether the Revenue was entitled to exercise the power under Section 111 of the Customs Act in the facts and circumstances of that case where the importer had cleared five consignments of raw silk free of duty subject to the condition that the imported goods after conversion had to be re-exported and it was held that import of the consignment being in contrary to law, the goods were liable to confiscation. He has submitted that plea of re-export was not taken in that case if the goods were allowed to be re-exported after confiscation. He has pleaded that neither the Tribunal nor the Apex Court ever had the occasion to discuss and decide the aspect of re-export. He has further pleaded that the question whether the goods confiscated and allowed to be redeemed could be re-exported was not before the Tribunal and the Supreme Court. The learned Counsel also invited our attention to the judgment of the Hon'ble Supreme Court in the case of Collector of Customs, Bombay v. Elephanta Oil and Industries, 2003 (152) ELT 257 (SC) where the Deptt. itself has allowed re-export of goods. He has further relied upon the judgment of the Hon'ble Calcutta High Court in the case of Kothari Filaments v. CC (Port), Kolkata, 2003 (155) ELT 26 (Cal.) wherein re-export of goods imported was permitted after payment of redemption fine, without any duty leviable thereon. He has further pleaded that in terms of Section 47 of the Customs Act, duty is incidental to clearance of the goods for home consumption. He has also pressed into service the judgment of the Hon'ble Supreme Court in the case of Siemens Limited v. CC, 1999 (113) ELT 776 (SC) wherein the Court had allowed re-export of the goods without payment of duty. He has also relied upon the judgment of the Larger Bench in the case of A.K. Jewellers v. CC, Mumbai, 2003 (255) ELT 585 wherein also re-export of the imported goods was allowed. The Larger Bench while doing so has relied upon the judgment of the Apex Court in the case of Collector v. Elephanta Oil Industries Ltd., (supra) During the course of hearing, the learned Counsel also cited the order of the CEGAT, Kolkata in the case of Grand Prime Ltd. v. CC, Calcutta, 2001 (137) ELT 795 wherein it was held that when importer had not paid for the goods, exporter continues to be the owner and entitled to re-export the goods.
4. In the light of the above decisions, the learned Counsel submitted that the principle laid down in the above rulings in that re-export of goods is permitted on payment of redemption fine and without payment of duty. "He has also pressed into service the judgment of the Hon'ble Apex Court in the case of Commissioner of Income Tax v. Sun Engineering Works P. Ltd., 1992 (SC-2) GJX-0573-SC, wherein the Hon'ble Apex Court has ruled that "while applying a decision to a later case, the Court must ascertain the true principle laid down by it and not to pick out words or sentences from the judgment, divorced from the context of the question under consideration". He has further submitted that in the present case, there was no mis-declaration as the appellants have declared the goods as per the invoice given by the supplier and, therefore, the goods are not liable for confiscation under Sub-Sections (1) & (m) of Section 111 of the Act. He, therefore, prayed for allowing the prayer for re-export of the goods.
5. Shri V.T.K. Nayanar, learned, JCDR, appeared on behalf of the Revenue and invited our attention to para 21 of the impugned order wherein the adjudicating authority has noted that the importer had misdeclared the goods to evadepayment of duty. The lower authority has also discussed the judgments of the Hon'ble Supreme Court in the case of UOI v. Sampat Raj Dugar (supra) and in the case of CC Kolkata v. Grand Prime Ltd. (supra), while holding that in the present case, since the goods are liable for confiscation, re-export of the goods cannot be permitted. He has invited our attention to para 8 of the judgment of the Supreme Court in the case of Grand Prime Ltd. (supra) wherein the Court has noted that the Customs Act, does not contain any provision regarding re-export of goods. He has also invited our attention to para 19 of the judgment in the case of Sampat Raj Dugar, wherein the Court has discussed about the title to the goods. He has also relied upon the order of the Tribunal in the case of Escorts Herion Ltd. v. CC, Mumbai, 1999 (107) ELT 599 wherein also it is held that there is no provision in the law to permit goods to be re-exported subsequent to their confiscation. He has also relied upon the Larger Bench judgment in the case of Hemant Bhai R. Patel v. CC Ahmedabad, 2003 (153) ELT 226 (Tri) wherein the Larger Bench has held that permission granted for re-export on the basis of a request made by the owner of the goods is outside the purview of the adjudication proceedings in terms of Sections 111, 112 and 125 of the Customs Act, 1962. He has further relied on the decision of the Tribunal in the case of Good Year India Ltd. v. CC, Delhi, 2004 (164) ELT 59 (Tri.-Del.) wherein it was held that under Section 125 of the Act, there is no provision empowering the Collector to re-export the goods. We has further cited the order of the Tribunal in the case of Hongkong Polychem Company v. CC, Madras, 2003 (162) ELT 1088. He has referred to paras 2,11 and 13 thereof and submitted that in the cited case also it was found on investigation that it was a case of fraud on the Revenue by circumventing restrictions and hence not a fit case for allowing reshipment. He has further referred to the order of the West Zonal Bench of the Tribunal in the case of Sedco Forex International Drilling Inc., 2001 (135) ELT 625 wherein in para 33, the Tribunal has discussed Section 125 of the Act, as it existed prior to 1985 and subsequently. He has submitted that in para 34 thereof, the Tribunal has held that the owner of the goods or the person from whose possession or custody the goods were seized, shall be liable to duty and other charges payable. He has submitted that the appeal filed by the party against the order of the Tribunal has been dismissed by the Hon'ble Apex Court as reported in 2002 (141) ELT A-l80. During the Course of hearing the learned JCDR also referred to the judgment of the Hon'ble Supreme Court in the case of CC (Import), Mumbai v. Jagdish Cancer & Research Centre, 2001 (132) ELT 257 (SC) and also the Larger Bench judgment in the case of Kothari Filaments v. CC, (Port), Calcutta, 2002 (144) ELT 80 (Tri-Kolkata). While winding up his arguments he has also invited our attention to Section 12 of the Customs Act, regarding, dutiable goods. He has submitted that in terms of Section 125(2), duty has to be paid where fine in lieu of confiscation of goods is imposed. He, therefore, prayed for upholding the impugned order and rejection of the appeal.
6. In counter, the learned Counsel for the appellants has argued that the order of the Tribunal in the case of Sedco Forex International Drilling Co. (supra) is not applicable to the case under consideration. In the present case the goods are still with the custody of the department. He has also invited our attention to the order of this Bench in the case of Liaquat Ali Hameed v. CC, Chennai, 2003 (156) ELT 863 wherein re-export of the smuggled goods was allowed on payment of fine and penalty. He, therefore, prayed that consistent with the law laid down by the Tribunal, the Hon'ble High Courts and the Hon'ble Apex Court as cited by him, the appellants may be allowed to re-export the goods.
7. We have carefully considered the rival submissions and gone through the case records and perused the various case laws cited by both the sides. We observe that in the present case, the following facts remain undisputed :
(a) There was excess quantity of goods to the extent of 49,910 pieces of garments.
(b) The goods were examined on three days viz. 1st May, 3rd May & 9th May 2003. On 7th May itself, the importer sent message to the supplier stating that there was difference in quantity despatched and that the goods were also different from the ones ordered for.
(c) The supplier ultimately vide message date 11 June 2003 agreed to take back the goods.
(d) The importer has not made payment of the goods and title to the goods has not passed to the importer.
(e) Specific prayer was made by the importer before the adjudicating authority seeking permission to re-export the goods and this fact has been adverted to in para 20 of the impugned order.
(f) The prayer for re-export has been rejected by the adjudicating authority on the ground that goods which are liable for confiscation, cannot be permitted to be re-exported.
8. In the background of the above facts, the issue that arises for determination is whether the prayer for re-export can be allowed, and if allowed, duty is payable in addition to redemption fine and penalty. Examining this issue, we observe that the adjudicating authority has rejected the prayer for re-export of the goods on the ground that the goods were held to be confiscation and while holding so, he has relied on the judgment of the Hon'ble Apex Court in the case of Commissioner of Customs, Kolkata v. Grand Prime Ld., (supra) particularly para 14 thereof. The said para is reproduced below for convenience of reference:
"The points a distinction between the present case and Dugar's case (supra) are that the importer did not disappear in that case. Rather it appeared before the Customs Authorities and claimed the right to take delivery of the goods. The importer in Dugar's case participated in adjudication proceedings before the Customs authorities and during the course of the proceedings and exporter appeared on its own and pleaded that the goods be not confiscated as the title of the goods had not passed. In Dugar's case, there was a valid import licence, while in the present case it is not so. There is forgery on the licence which rendered the licence invalid. Therefore, the import was without a licence. This was prohibited. In Dugar's case this Court had held that none of the clauses of Section 111 of the Customs Act were attracted, the import being under a licence. The import was legal. In the present case, the import is without a valid licence and is clearly in violation of Section 111(d) of the Customs Act. This is a clear distinction between Dugar's case and the present case. Therefore, in our view, Dugar's case can be of no help to the respondent No. 1."
8.1. From the above, it is clear that the Hon'ble Apex Court has distinguished the facts in the case of UOI v. Sampat Raj Dugar, 1993 (41) ECC 183 (SC): 1992 (58) ELT 163 (SC) from the facts of the Grand Prime case and the Apex Court while doing so has clearly noted that in the case of Sampat Raj Dugar, there was a valid licence and as against that in the case of Grand Prime Ltd., there was a forgery on the licence which rendered the licence invalid and the import was without a valid licence and was prohibited. Further, the title of the goods in the Sampat Raj Dugar's case was also not passed to the party therein. Further in that case, the Hon'ble Apex Court has held that none of the provisions of Section 111 of the Customs Act, 1962 was attracted, the import being under a valid licence. It would thus be seen that the Hon'ble Apex Court in the Grand Prime Ltd. (supra) was dealing with a situation where there was a forgery and it was in those circumstances that the Apex Court has held that re-export cannot be permitted. Further, in the said case, the goods in question fell within the restricted items, import of which was permitted subject to certain conditions.
Further, the import in the cited case was in contravention of Sub-section (d) & (o) of Section 111 of the Customs Act, 1962, which deals with import contrary to prohibition, whereas in the present case, the alleged violation is under Sub-sections (1) & (m) of Section 111 ibid, which deals with dutiable or prohibited goods which are not included or are excess in the entry made and does not correspond with the value or any other particulars. We also note that in the case of Grand Prime Ltd., decided by CEGAT, Calcutta reported in 2001 (137) ELT 795 against which the Revenue moved the Hon'ble Supreme Court, CEGAT Calcutta has clearly misunderstood the order passed by the Hon'ble High Court at Calcutta and observed that "The Hon'ble High Court vide order dated 5.7.2000, directed the Tribunal to dispose of the appellant's appeal (Appellants before CEGAT, Calcutta - Grand Prime Ltd.) in the light of the Hon'ble Supreme Court decision in the case of UOI v. Sampat Raj Dugar, 1992 (58) ELT 163 (SC). " whereas in fact, there was no such direction by the Hon'ble High Court at Calcutta to CEGAT, Calcutta to decide case in accordance with Sampat Raj Dugar's case. This position is clear from para 5 of then judgment reported in 2003 (155) ELT 417 (SC), relied upon by the Revenue. Further, in the case of Grand Prime Ltd., the Hon'ble Supreme Court has clearly noted about the fraud and misrepresentation played by the party therein and has also held that there was doubt in their mind about the genuineness of the transaction.
The Hon'ble Apex Court in para 8 of the judgment has made an observation in the context of the facts and circumstances arising in the case of Grand Prime Ltd. that the Customs, Act does not contain any provision regarding re-export of goods and the Apex Court had never said the re-export is not permitted is deserving cases. In fact, in Dugar's case, the Hon'ble Supreme Court itself permitted re-export of goods. It would thus be seen that the facts in the case of Grand Prime Ltd., relied upon by the Commissioner are not in any way similar to the facts in the present case and are clearly distinguishable. Further, issue posed in the Grand Prime case before the Hon'ble Apex Court was whether the Commissioner was entitled to exercise the power under Section 111 of the Act to confiscate the goods, in the context of the facts involved therein, whereas in the present case the-question is whether, re-export is permissible in the context of the facts involved and if permitted, duty is payable, in addition to redemption fine and penalty. We note that in the present case as could be seen from the records the appellants immediately on coming to know of excess quantity of shipment of goods by the supplier, had taken up the matter with the supplier and the supplier on realising their mistake had agreed to take back the goods. The bona fide of the appellants that excess quantity was supplied without their knowledge, is thus established. Therefore, the view taken by the adjudicating authority that the appellants have not properly explained the misdeclaration, in our view, is not correct. Therefore, the reliance placed by the Commissioner in the case of Grand Prime Ltd. to reject the request for re-export is not correct as the facts in the present case are clearly distinguishable, as noted above.
9. We have distinguished the case law relied upon by the adjudicating authority as noted above. Now we proceed to discuss the various other case laws relied upon by both sides in support of their respective plea.
9.1 In the case of Elephanta Oil & Industries Ltd. (supra), relied upon by the appellants, the Hon'ble Supreme Court has rejected the plea of the party therein that once re-export is directed by the Department, redemption fine and penalty cannot be imposed. This was a case where the Department itself directed re-export of the goods. This decision therefore, supports the plea of the appellants that Department has been allowing re-export of imported goods on payment of fine and penalty. In the case of Kothari Filaments v. CC Kolkata (supra), the order of the Tribunal, permitting re-export without payment of duty was upheld by the Hon'ble High Court at Calcutta. This judgment also supports the plea of the appellants. In the case of Siemens limited v. CC, : 1999 (113) ELT 776 (SC), the adjudicating authority itself allowed the assessee to re-export the goods without payment of duty. The Apex Court also ordered refund of Rs. 6.00 lakhs paid by the assessee after the re-export took place. In the case A.K. Jewellers v. CC, Mumbai, it is held in para 10 as under:
"...Re-export is a facility permitting export of goods which have already been permitted to be imported. Except in cases where import is prohibited by law, those goods which have been imported may be permitted to be exported. There is no prohibition on the adjudicating authority from permitting re-export of the goods. It is also held therein that when an adjudicating authority after ordering confiscation of imported goods permits their re-export, he is in effect ordering the redemption of the goods on payment of fine and thereafter permitting them to be re-exported. Each of them is independent and is permitted by law. An order thereby both are combined therefore, it's not contrary to law".
10. From the above it would be seen that what the Larger Bench has ruled is that re-export is permitted on payment of fine, where the import was not prohibited by law. In the present case, the goods involved are not prohibited. The Larger Bench in the cited case has in para 11 also held that in case the assessee is allowed to re-export, the plea that confiscation and redemption fine is not justified, is not correct. In other words, where re-export is allowed redemption fine and penalty are imposable, as held by the Hon'ble Apex Court in the case of CC v. Elephanta Oil & Industries, 2003 (115) ELT 257 (SC). In the case of Escorts Herion Ltd. v. CC, Mumbai, 1999 (107) ELT 599 relied upon by the Revenue, the Tribunal while observing that "Section 125 of the Act, does not specifically provide that an option may be given to redeem the goods for re-export, in the conclusion portion of para 6 of the said order the Tribunal has clearly held as under:
"There is nothing in the law, prohibiting the Collector from re-export of the goods. This long standing practice only simplifies the procedural requirement of a complex and time consuming requirement............"
11. It would thus be seen that the department has been allowing re-export of the imported goods. In the case of Hongkong Polychem Company v. CC, Madras, 2003 (162) ELT 1088 relied upon by the Revenue, we find that the facts in that case are distinguishable from the facts of the present case inasmuch as in the cited case, import of the goods was prohibited and apart from that, goods were imported by a fictitious firm and a bogus SSI certificate was used by the importer and the Tribunal found that it was a case of fraud on the Revenue by circumventing of the restrictions and it was in these, circumstances, the reshipment was not allowed. It goes without saying that the case of an importer who has produced bogus SSI certificate and the import was made by a fictitious firm, cannot be compared with an importer, as in the present case, who on coming to know that there was some mix-up in the import, without loss of time, voluntarily came forward to communicate with the supplier to point out the discrepancy that had happened at the hands of the supplier. In the case of Good Year India Ltd. v. CC, Delhi, 2004 (164) ELT 59, the issue posed was whether the adjudicating authority while permitting the re-export of the goods subject to payment of fine acted within his jurisdiction and the Tribunal held that there was no provision under the Act empowering the Collector to order re-export of the goods.
The Tribunal however permitted to redeem the goods on payment of fine only of Rs. 5,000. There was no order regarding payment of duty. In the case of Kothari Filaments v, CC, (Port) Calcutta, 2002 (144) ELT 80, relied upon by the Revenue, plea was made by the party for quashing the fine and penalties on the ground that the Commissioner has allowed re-export of the goods. That was also case where huge fraud was under way as goods viz. Tetracycline was concealed in a consignment of Lithopone and imported in the garb of Lithopone. The majority order while rejecting the plea for quashing redemption fine and penalty has only made on observation that there was no provision in the Act giving jurisdiction to the Commissioner to grant permission for re-export. The majority order did not rule that re-export was not permissible. Further, in para 22 of the order, it was also noted that there was no different view between the Members of the Original Bench regarding imposition of fine when permission for re-export is given. It would thus be seen that the facts in the cited case and in the present case are clearly distinguishable and thus does not come to the rescue of the Revenue. The facts in the case of Commissioner of Customs, Mumbai v. Jagdish Cancer & Research Centre and relied upon by the Revenue, are distinguishable from the present case inasmuch as in that case, the question of re-export was not involved. That was a case where hospital equipment was imported and the department found that the hospital has violated the conditions stipulated in the Notification regarding duty free import. Likewise, the facts in the case of Sedco Forex International Drilling Inc., 2001 (135) ELT 625, are distinguishable from the facts of the present case, inasmuch as, in that case, the allegation was that import of the Rig into a designated platform PE on 13.1.1998, without filing a Bill of Entry, constituted contravention of the provisions of Sections 30,32,34,46 and 47 of the Customs Act. In the said case, there was no request for re-export of the goods. In the case of Hemant Bhai R. Patel, 2003 (153) ELT 226 (Tri-LB), the question posed before the Tribunal was whether redemption fine and penalty can be imposed when re-export is allowed and the reference was answered by the Larger Bench that it is open to the adjudicating authority to impose redemption fine as well as penalty even when permission was granted for re-export.
12. Having distinguished the various case laws relied upon by the Revenue, we now proceed to refer to the various decisions rendered by the Co-ordinate benches of the Tribunal and also the judgments of High Courts and the Hon'ble Apex Court. In the case of Groves Overseas Pvt. Ltd. v. CC, 1990 (46) ELT 129, goods which were not covered by valid licence was directed to be re-exported on payment of fine. Further, in the case of Skantons (P) Ltd. v. CC, New Delhi 1994 (70) ELT 635, where the goods have been allowed to be re-exported, re-fund of redemption fine paid, was allowed. We further find that the New Delhi Bench of the Tribunal in the case of G.V. International v. CC, Jaipur, 2000 (118) ELT 517 has allowed re-export of the goods which were imported violating ITC provisions and it was also held therein that fine and penalty are imposable when goods are allowed to be re-exported. We also note that the Bangalore Bench of the Tribunal in the case of Unisindo Trading Pvt. Ltd. v. CC, Hyderabad, 2003 (153) ELT 81 has allowed re-shipment of goods on payment of nominal fine, even when some of the goods imported were found to be restricted/banned. We further find that the South Zonal Bench in the case of Alukkas Exporters v. CC, Coimbatore, 2002 (48) RLT 311 has allowed re-export of offending goods on payment of penalty. Further, the Tribunal in the case of Raj Guhan Exports & Imports v. CC, Chennai, 2004 (164) ELT 441 wherein the Department itself allowed re-export of the goods on payment of fine and penalty while upholding the order of Commissioner, the Tribunal has reduced the quantum of penalty. In the case of Venus Gems & Jewellery v. CC, (ACU), New Delhi, 2002 (142) ELT 388, it was held that the importer was entitled to re-export the goods and while holding so, redemption fine and penalty were set side.
In the said decision, the Tribunal has relied on a number of decisions of the Tribunal and also followed the decision in the case of Skantrons Pvt. Ltd. v. CC, 2994 (70) ELT 635. We further find that the Hon'ble High Court at Bombay in the case of Phoenix Overseas P. Ltd. v. UOI, 2003 (162) ELT 25 (Bom.) while nothing that when department has allowed re-export of the goods and after the re-export was effected, the importer cannot turn around and contend that since the goods are re-exported, fine and penalty cannot be imposed. We further note that the East Zonal Bench of the Tribunal in the case of Haidery Tins v. CC (Import), Mumbai, 2002 (145) ELT 562 while allowing re-export of goods on payment of fine has set aside the imposition of penalty. Further, the Hon'ble Madras High Court in the case of Sankar Pandi v. UOI, 2002 (141) ELT 635 (Mad.) has held that in case of improper importation redemption fine was not payable and re-export was allowed on payment of penalty. Further, the Tribunal in the case of Guru Ispat Ltd. v. Commissioner, 2003 (151) ELT 384 (Tri-Kolkata) has allowed re-export of goods without payment of redemption fine and penalty when the goods were wrongly shipped by the foreign supplier and there was no mala fide on the part of assessee as they took steps on detection of wrong shipment. The Special Leave Petition filed by the Commissioner in Civil Appeal No. CC 720 of 2003 against the said decision of the Tribunal has been dismissed by the Hon'ble Apex Court as reported in 2003 (157) ELT page A. 87. In the said case, the Commissioner of Customs, Calcutta allowed the appellants therein to re-export the goods on payment of redemption fine of Rs. 5 lakhs. In addition, he held that if the goods are redeemed for home consumption, the appellants would pay the differential duty of Rs. 1 lakh. It would thus be seen that, in that case, the department itself took the view that payment of duty was required to be made only if the goods were redeemed for home consumption. In the present case also immediately on detection of the wrong shipment by the foreign supplier the appellants have established contact with the supplier regarding the mix up and requested for reshipment and the supplier had agreed for the reshipment. We also note that the Hon'ble Supreme Court in their judgment in the case of Union of India v. J.P. Electronics Ltd., 2004 (167) ELT 129 while dealing with a case of imported goods where the exporter had abandoned the goods and prayed for re-export of the imported goods had ruled that the party will be entitled to re-export the goods if the title had not passed to the importer.
In the present case, the records show that the appellants have not made payment to the supplier and the supplier has agreed to take back the goods as the title has not passed to the importer. We find force in the submission of the learned Counsel for the appellants, as could be seen from the various case laws cited above, the department itself has been permitting re-export of imported goods. The co-ordinate Benches of the Tribunal throughout the country have also been taking a view that permission to re-export the goods is not contrary to law. Therefore, relying on the various decisions rendered by the Tribunal, the High Courts, and the Hon'ble Supreme Court as noted above, we hold that the plea of the Revenue that re-export of the imported goods is not permitted by law, cannot be countenanced and we reject the same. We hold that the appellants are entitled to re-export the goods on payment of fine and penalty. While coming to this conclusion, we have also taken note of the long standing practice of the Deptt. in allowing re-export of imported goods throughout the country as also the consistent view being taken by the various Benches of the Tribunal in consonance with the law laid down by the High Courts and the Apex Court in allowing re-export. In a recent decision in the case of Ajanta Watch Ltd. v. CCE, Ahmedabad, 2004 (171) ELT 350 (Tri-Mumbai) where wrong shipment was sent by the foreign supplier, re-export was allowed by the Commissioner on payment of redemption fine of Rs. 6 lakhs and penalty of Rs. 2.5 Lakhs.
On appeal, the Tribunal while allowing re-export, reduced the redemption fine to a token level of Rs. 25,000 and penalty imposed was set aside. The plea of the Revenue that even if re-export is allowed, the importer has to pay duty, in addition to redemption fine and penalty, cannot be countenanced, because once duty is paid on the goods, it would tantamount to clearance of the goods for home consumption in terms of Section 47 of the Act and once it is cleared for home consumption, that goods get merged with the mass of the goods in the country. Re-export is permitted in a situation where the importer does not want to clear that the goods for home consumption for various reasons and when the goods are permitted to be re-exported, the question of clearance of the goods for home consumption on payment of duty does not arise. Therefore, we are of the considered opinion that duty can be demanded only when the goods are cleared for home consumption and not when they are permitted to be re-exported, on payment of fine and penalty. Before parting with this case, we would also like to observe that, if an importer were to pay duty also (in addition to fine and penalty), on the goods permitted to be re-exported, he need not undergo the various complex and time consuming formalities of re-export again and he is free to dispose of the goods in the domestic market itself, once duty and other charges have been paid on it. In view of what has been discussed above and in the facts and circumstances of the case, we allow re-export of the excess quantity of goods on payment of redemption fine of Rs. 1,00,000 (Rupees one lakh) and impose a penalty of Rs. 25,000 (Rupees twenty-five thousand) which would meet the ends of justice and we order accordingly. The appeal is thus disposed of in the above terms. The appellants are entitled to consequential relief, if any.