Customs, Excise and Gold Tribunal - Delhi
Mazagon Dock Ltd. vs Collector Of Customs on 21 December, 1989
Equivalent citations: 1990(26)ECC227, 1990ECR423(TRI.-DELHI), 1990(47)ELT620(TRI-DEL)
ORDER Jyoti Balasundaram, Member (J)
1. These appeals involve a common issue and are hence being disposed of by a single order.
2. Appeal No. 3417/87 has been preferred against the order of the Additional Collector of Customs, dated 31-3-1987, confiscating 19,509 empty cement bags short accounted and not re-exported within the stipulated time under Section 111(d), 1110 and 111(o) of the Customs Act, 1962 read with Section 3 of the Import Export Trade (Control) Act, 1947 and imposing a fine of Rs. 5 lakhs in lieu of confiscation.
3. Appeal No. 2381/88-C has been filed against the order dated 17-5-1988 of the Additional Collector of Customs, imposing a duty of Rs. 80,27,787.33 on the 19,509 empty cement bags.
4. The facts of the case are briefly as follows :-
The appellants, M/s. Mazagon Docks Limited, Mangalore, a sub-division of MDL, Bombay, holders of Customs Bonded Warehouse licence and manufacture in a Bonded Warehouse licence (issued for purchasing of raw materials and exporting them out of India after manufacture in bond) imported 8 consignments of cement during the period 14-12-1983 to 15-5-1985 in re-usable and returnable polypropylene bags and warehoused them in terms of Notification No. 97/79-Cus., dated 2-5-1979. The condition stipulated in the notification was that these re-usable and returnable bags were to be re-exported within 6 months from the date of their import. The condition in the import invoice as well as in the contract entered into between the appellants and their authorised suppliers was that the bags are to be returned to the suppliers.
5. From the records of the Customs House and the private bonded warehouse, it was found that, even though the 6 month period for re-export had long expired, only 3,400 empty bags had been re-exported, and that no extension of time-limit for re-export had been sought for and obtained by the appellants. In spite of repeated reminders issued, calling for details of consumption and particulars of disposal of the bags, the appellants did not acknowledge them. Since the appellants had not complied with the conditions of exemption Notification No. 97/79-Cus., dated 2-5-1979, wherein the bags had to be re-exported within a period of 6 months from the date of import thereof (for which a bond had been executed) and as the importation of the bags was not under a valid import licence (in terms of the provisions set out at para 27(4) of the Import & Export Policy (VIII) A.M. 85-88 read with Section 3 of the Import & Export Trade Control Act, 1947 and Section 3 of the Import Trade Control Order, 1955 and the Schedule thereunder), the import was held to be unauthorised.
6. On 14-1-1987, a show cause notice under Section 124 of the Customs Act was issued to the appellants for alleged violation of several provisions of the Customs Act and Import Trade Control Order.
7. After adjudication, the impugned order dated 31-3-1987 was passed, confiscating 19,509 bags short accounted and not re-exported within the prescribed time-limit under Section 111(d), 111(j) and 111(o) of the Customs Act, 1962, read with Section 3 of the Import Export Trade (Control) Act, 1947 and imposing a fine of Rs. 5 lakhs in lieu of confiscation as the goods were not available for confiscation. The order also imposed customs duty on the bags under the Customs Tariff Act, 1975.
8. Aggrieved by this order the appellants filed an appeal before this Tribunal, which directed quantification of the duty demanded. By order dated 17th May, 1988, the duty payable was quantified at Rs. 80,27,787.33 (on the basis of the original valuation at the time of import at 100% basic duty and 35% auxiliary duty under Heading 39.07 of the Customs Tariff Act, 1975).
9. The appeals before us arise from the orders of 31-3-1987 and 17-5-1988.
10. We have heard Shri Elamurugan, learned Counsel for the appellants and Shri V. Chandrasekharan, learned Departmental Representative for the Respondent and carefully considered their submissions.
11. The Additional Collector of Customs, Mangalore by order dated 31-3-1989 has exercised the power of confiscation under Section 111(d), 111(Q) and 111(o) of the Customs Act, 1962 read with Section 3 of the Import Export Trade (Control) Act, 1947 as the goods were imported without cover of a valid import licence, improperly removed from a bonded warehouse and for non-observance of the conditions of the grant of exemption from duty. He has also exercised the powers under Section 125 of giving option to pay fine in lieu of confiscation and has imposed a fine of Rs. 5,00,0007- in lieu of confiscation, since the goods are not available for confiscation.
12. Section 125 can be invoked only when the goods, confiscation of which is authorised by the Customs Act, are available for confiscation. Section 125 reads as follows:
"Section 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 h'eu 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 the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon.
(2) Where any fine in lieu of confiscation of goods is imposed under subsection (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."
The Section pre-supposes the existence of the goods. It is only when the goods, are available that they can be confiscated, and an option may be given to the owner to pay a fine instead of confiscation. Section 125 cannot come into operation in the absence of the improperly imported goods. The proper course of action in such cases, would have been to invoke the bond executed by the appellants (guaranteeing re-export of the bags as per the condition contained in Notification No. 97/79-Cus., dated 2-5-1979) and in the event of non-payment of the bond amount file a civil suit for recovery thereof, against the importers.
13. The power under Section 125 having been exercised wrongly and without jurisdiction, the order dated 31-3-1987 imposing a redemption fine of Rs. 5 lakhs is set aside and C/Appeal No. 3417/88-C is allowed with consequential relief to the appellants.
14. Coming to C/Appeal No. 2381/88-C, we find that the value of 19,509 empty polypropylene bags has been calculated at the rate of US $ 26 per bag, based upon the appellants' own valuation at the time of import. The price of the bags is based upon the supplier's telex which price is reflected in the relevant bill of entry. The telex sent by the foreign supplier quoting the price per bag as US $ 26 is by way of reply to the appellants' telex of 15th December 1983 which reads as follows : "Please telex the value of returnable polypropylene bags immediately since the same is required for Customs Purpose to clear the same". This valuation has been accepted as assessable value under Section 14(1)(a) of the Customs Act, 1962. Learned Counsel for the appellants submits that the value fixed at US $ 26 per bag is in error and urges that the value of Rs. 50/- per bag (as fixed for 210 bags cleared for home consumption) should be accepted or in the alternative, the value of US $ 10 per bag as quoted in the invoice of 2-11-1985 should be taken to be the assessable value.
15. The value of Rs. 50/- per bag cannot be accepted as, in the case of 210 bags cleared for home consumption, they were examined for assessment at the time of clearance and the assessable value was based on their actual condition. This value cannot be adopted in the case of bags not accounted for. The learned Counsel's submission that, alternately, each bag should be valued only at US $ 10 also cannot be accepted. He has argued that the suppliers have quoted the price per bag at US $ 10 in their invoice of 2nd November, 1985 and he contends that the earlier quoted price of US $ 26 is erroneous. However, it is seen that, beyond a bald statement to the effect that the supplier's quotation of US $ 26 per bag is in error, it has not been established how that figure is wrong and should, therefore, be ignored for the purpose of assessable value. There is nothing in the records to indicate that there was any correspondence between the appellants and the foreign suppliers disputing the price of US $ 26 per bag. In fact, this price has been quoted in reply to the appellants' telex asking for the price for the purpose of clearing the Customs cargo. This price has been quoted at the time of import, i.e. at the earliest point of time. Subsequently, the appellants did not raise any dispute with the suppliers regarding the price of the bags. The letter of 2-11-1985 relied upon by the appellants in support of their argument that the price per bag is US $ 10, is in the form of a reminder to the appellants, requesting return of empty jumbo bags to UAE for re-filling according to the terms and conditions of the contract. The letter refers to an earlier letter of 19-5-1985 and several telexes and reads: "since the bags are not being returned, we have no option but to claim compensation." The enclosure to that letter mentions the cost of each bag as US $ 10. This letter has been written at a point of tune much beyond the date of the shipment of the last consignment i.e. 6 months therefrom.
16. On the other hand the Customs authorities have relied upon the appellants' own valuation at the time of import i.e. at the relevant time, based upon the supplier's telex of December, 1983 and the bill of entry. We cannot find fault with this valuation. The Department has rightly arrived at the assessable value of US $ 26 per bag and we see no reason for interference with the order dated 17th May, 1988 of the Additional Collector of Customs, Mangalore, quantifying the duty payable on 19,509 bags not re-exported at Rs. 80,27,787.33.
17. In the result, we uphold the order of 17th May, 1988 on valuation and reject C/Appeal No. 2381/88-C.
18. Regarding the plea of limitation admittedly raised before us by the appellants for the first time, we find that sufficient material has not been placed to enable us to arrive at a finding on this aspect. In the reply of 14-1-1987 to the Show Cause Notice dated 8-11-1986, the appellants have stated that the vast majority of the empty cement bags were cut, rendered unfit for re-use and thrown heaped in the near vicinity of the pipe coating plant from where they were pilfered by intruders and civil works labourers. The reply does not indicate details of the number of bags pilfered from the warehouse. It does not contain particulars of bags given to the pipe coating contractor which were not returned to the appellants. From the records, it is not possible to ascertain how many bags were pilfered from the warehouse itself and how many were actually cleared from the warehouse.
19. Further, no particulars are available to us regarding any extension of time for re-export that may have been granted by the Asst. Collector in terms of the proviso to Notification 97/79-Cus., dated 2-5-1979. The bond executed by the appellants (guaranteeing re-export) is also not before us to enable us to arrive at any conclusion on the issue of limitation. The question whether limitation is applicable at all in this case is also to be examined.
20. In the light of the above discussion we remand the matter to the Assistant Collector for de novo adjudication on the issue of whether the demand for duty on the cement bags is time-barred or within time. The Assistant Collector is directed to pass orders within 3 months from the date of receipt of this order after affording a personal hearing to the appellants.
21. The appeals are disposed of accordingly.