Karnataka High Court
Anil Associates vs Commissioner Of Central Excise on 28 March, 2001
Equivalent citations: 2001(76)ECC320, 2001(130)ELT429(KAR)
Author: R. Gururajan
Bench: R. Gururajan
ORDER
1. We have heard the learned Counsel on both sides in this reference and we propose to confine this order only to one relevant aspect that is really germane as we do not consider it necessary to embark upon any detailed debate with regard to the four questions that have been referred to the court in so far as it is the same issue that has been split up in different forms. Secondly, while the departmental forums were obliged to examine and record findings on all issues that fell for determination such as vexed questions relating to value etc., we find it unnecessary to re-examine those aspects because they are really a factual determination on which the Tribunal is the ultimate fact finding authority. What ultimately survives is the short question as to firstly whether the Tribunal was justified in having accepted the department's view that the importation in question required a specific licence and that the special import licence produced by the party was not valid and secondly whether, assuming the conclusion on the first issue is in the affirmative a personal penalty and redemption fine was warranted.
2. There is absolutely no dispute with regard to the facts in this case, namely that the importer in this case had imported a consignment of Aniseeds which was sought to be cleared through the Customs Authority at Bangalore. We again refrain from going into a considerable debate regarding the value of this consignment because the Additional Commissioner after assessing the material before him has accepted the CIF value at Rs. 2,17,810/- and there is really no ground on which this figure requires to be reviewed. The real dispute centers round the short question as to whether the customs authorities at Bangalore were justified in refusing to permit clearance of this consignment despite the fact that the party possessed a special import licence which cover importation of goods of a prevalent value but which was not a specific licence issued for the import of Aniseed. The importer's learned Counsel submitted before us that his clients had valid grounds to assume that the licence which they possessed would be a valid licence for the present importation and among other aspects, what he submitted was that they have produced documentary evidence of the fact that a similar consignment covered by the same import policy period has been cleared on the basis of a SIL by the customs authorities, at Madras. At the Bar, another document was produced before us indicating that even in the case of a previous order a similar consignment was cleared by the authorities on a SIL and it is his submission that the importers had absolutely no ground to believe that the authorities would hold up this consignment on a technical ground that it require a specific licence.
3. The real difficulty arises from the fact that the entry in question very clearly stipulates, as far this commodity is concerned, that it requires a specific licence which by implication would indicate that the SIL will not cover it. With regard to the repeated contention that the authorities had permitted the clearance of identical commodities during the same period of time on a SIL and that therefore, by virtue of the principle of uniform application of the law, that the petitioners could not be penalised for demanding identical treatment, Mr. Haranahalli, learned Counsel who represents the Department submitted that the Court will have to firmly apply the law and not give effect to the wrong manner in which the authorities have given effect to it. It is his submission that the court will have to take into consideration the possibility of either an error or misapplication of the law for whatever reason and uphold the general principle that one mistake or one error or even a wrong practice cannot create a precedent or a right in an affected party to insist that a wrong precedent should be continued. Undoubtedly this is a well settled principle of law and even though we will certainly take into consideration the fact that perhaps the importers were led to believe that their licence did cover this particular consignment for purposes of penalty etc., it would be incorrect and impossible for us to hold that the customs authority at Bangalore, even assuming that their counter parts at Chennai have committed an error, are precluded from applying the law correctly and that they will have to follow the wrong practice adopted by their counterparts. Consequently it will be necessary for us to uphold the view that the detention of the consignment was justified even if the same turns out to be for virtually technical reasons.
4. We use the expression 'technical reasons' only because of the fact that the Court must take into consideration the fallout of a situation such as the one which has emerged in the present case. If citizens are lead to believe, from the manner in which the authorities have been applying the law, that they are entitled to import the goods in question under a SIL then the citizens would ultimately be caught on the wrong foot if the authorities suddenly take corrective measures or seeking to impose a penalty on them. This is an important fact which we have taken into consideration for the purpose of evaluating several factors, the first is as to whether there was a conscious attempt to evade the law and secondly, if the answer to the first question is in the negative, as to whether this is a case which qualify for a deterrent fine or a lenient one.
5. We have heard both the learned Counsel with regard to this aspect. While it is submitted on behalf of the importers that having regard to the passage of time the value of the goods will be grossly and adversely affected and secondly that the demurrage claims would be massive and thirdly, since the learned Counsel submitted that they had acted in good faith on the assumption that their licence covered this import as otherwise there was nothing that could have precluded them from applying for a specific licence if this fact had been brought to their notice. These are certainly valid arguments whereas on the other hand Mr. Haranahalli, submitted that these submissions are basically belated. He contended that the importers are regularly doing business in these commodities, that they are aware of the various provisions, that they are required to go by the requirements of law and not by the manner in which a particular set of officers may be functioning at any particular port. His submission therefore was that the redemption fine has been drastically scaled down from Rs. 7 lakhs to Rs. 4 lakhs after considering all these contentions and that no case for interference is made out.
6. We have considered everything that has been submitted before us with regard to this aspect and in our considered view, the personal penalty of Rs. 35,000/- which is nominal does not require any interference with. On the other hand taking into consideration the remaining factors particularly the fact that this is not a case where the assessee had no licence and consequently that there is good ground to assume the penalty is highly technical insofar as it covers non-possession of the particular type of import licence only, we do consider that a very nominal redemption fine would meet the ends of justice. In modification of the earlier orders it is directed that the redemption fine shall be modified from Rs. 4 lakhs to Rs. 75,000/-.
7. It is necessary for us to direct that the grievance of the importers is a real one insofar as with the passage of time the deterioration only keeps on multiplying. Consequently, the authorities concerned are directed to release the goods forthwith on the importers paying the penalties as prescribed in this order. A copy of this order to be furnished to the petitioner forthwith.
8. In view of what has been held by us, the reference is answered in favour of the revenue and against the petitioner.