Customs, Excise and Gold Tribunal - Delhi
Sudesh Kumar Arora vs Collector Of Customs on 22 October, 1992
Equivalent citations: 1993ECR55(TRI.-DELHI), 1993(65)ELT491(TRI-DEL)
ORDER
Harish Chander, President
1. Shri Sudesh Kumar Arora has filed an appeal being aggrieved from the order passed by Collector of Customs (Appeals), Bombay. Shri N. Ramanathan, the learned consultant, has appeared for the appellant and pleaded that the appellant had imported a new Honda Civic 1300 CC, 1987 Model car fitted with disability controls, for the clearance of which the appellant had filed a bill of Entry No. 10334 dated 27-8-1987. He had also claimed the benefit of the Ad hoc exemption Order No. 254 dated 25-9-1986 which was issued for 1 No. Honda Civic 1300 CC 1987 Model petrol engine car with automatic transmission and disability controls. In the order passed by the Government, three conditions were there - (1) Stearing grip (2) Automatic brake lock (3) Automatic transmission. Shri Ramanathan has pleaded that an automatic brake lock and automatic transmission were there but the stearing grip was stolen by somebody on its way. He has pleaded that he does not claim the benefit of the notification though the control stearing grip which was imported later was duly shown to the Collector (Appeals). Shri Ramanathan drew the attention of the Bench to the invoice which appears at page 17 of the paper book and has pleaded that as per invoice the value declared was US $ 5,000.00 C.I.F. and this value was invariably accepted by the Revenue authorities in all the similar cases imported by different disabled persons. Shri Ramanathan has pleaded that in the present matter the value adopted by the adjudicating authority was based on the world car catalogue price at Rs. 97,857/- after deduction of taxes of VAT and 15% trade discount. Shri Ramanathan has pleaded that the value in terms of world car catalogue price is correct but in the present matter the value should have been accepted at US $ 5,000.00 as declared, otherwise it will amount to discrimination for the present appellant. Coming to the imposition of the sustained penalty of Rs. 5,000/-, Shri Ramanathan has pleaded that there is a legal infirmity in the imposition of penalty as in the order there is no mention whether the penalty was imposed under Section 112(a) or 112(b). He also has argued that the penalty proceedings are quasi criminal proceedings and charge has to be specific. In support of his argument, he has cited a decision of the Madras High Court in the case of B. Lakshmichand v. Government of India reported in 1983 (12) E.L.T. 322 (Mad.) and the same view appear to have been...by the Hon'ble High Court of Bombay in the case of Gokak Patel Volkart Ltd. v. Union of India reported in 1991 (56) E.L.T. 56 (Bom). The Tribunal had followed the earlier decision in the case of Collector of Customs & Central Excise, Chandigarh v. Ajit Singh and Anr. reported in 1987 (32) E.L.T. 769 (Tribunal). Shri Ramanathan has pleaded that the penalty of Rs. 5,000/- need be quashed. On the redemption fine, Shri Ramanathan has pleaded that the adjudicating authority had imposed a redemption fine of Rs. 1,94,000/- whereas the Collector (Appeals) has reduced it to Rs. 1 Lakh. Shri Ramanathan has further pleaded that the bona fides of the appellant should not be doubted as there is complete absence of element of mens rea and the appellant has taken the ad hoc exemption under Section 25(2) of the Customs Act, 1962. There is no mala fide on the part of the appellant and the appellant had very faithfully paid the customs duty, penalty and fine. Shri Ramanathan has pleaded that while imposing redemption fine some criteria has to be adopted for the levy of penalty. In support of his argument he cited a judgment in the case of Dolphin Laboratories, Calcutta v. Collector of Customs, Calcutta, reported in 1987 (29) E.L.T. 243 (Tribunal). He also cited a Bombay High Court judgment in the case of Union of India and Ors. v. Glaxo Laboratories Ltd., reported in 1984 (17) E.L.T. 284 (Bom). Shri Ramanathan has prayed for the acceptance of the appeal.
2. Shri Ram Parkash, the learned SDR, who has appeared for the respondent, has pleaded that for availing of the ad hoc exemption under Section 25 (2) of the Customs Act the appellant has to satisfy all the conditions which were imposed while issuing the ad hoc exemption order by the Government of India. Shri Ram Parkash has stated that since the appellant did not satisfy the condition number one, that is, steering grip, the benefit of the notification of ad hoc exemption cannot be extended and also there is violation of I.T.C. Regulations by the appellant. He also has pleaded that the appellant could have imported the car upto a value of Rs. 65,000/-, whereas the value of the car imported was Rs. 97,857/-, the value which has to be adopted in terms of provisions of Section 14 of the Customs Act, 1962. Shri Ram Parkash has also stated that the Collector (Appeals) had given sufficient relief to the appellant and further relief is called for and prayed for the rejection of the appeal.
3. Shri Ramanathan, in reply, has again pleaded that in the complete absence of element of mens rea, there is no justification for enhancing the value, sustaining of redemption fine of Rs One Lakh and penalty of Rs. 5000/-. He pleaded for the acceptance of the appeal.
4. We have heared both the sides and gone through the facts and circumstances of the case. Coming to the valuation aspect, we would like to observe that this Tribunal has taken a persistent view that value to be adopted for the imported cars is to be the world car catalogue price less 15% trade discount. The Tribunal in the case of B.J. Singh v. Collector of Customs reported in 1990 (45) E.L.T. 474 (Tribunal) in para 5 to 7 has observed as under :-
"5. We have heared both the sides and have gone through the facts and circumstances of the case. The facts are not disputed. The appellant had imported Mercedes Car from West German. It is a settled law that the value has to be taken in terms of provisions of Section 14(1)(a) of the Customs Act, 1962 is reproduced below:-
"the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in the course of international trade, where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or offer for sale :
[Provided that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of Entry is presented under Section 46, or a shipping bill or bill of export, as the case may be, is presented under Section 50]"
6. The appellant had declared the value in invoice at 27,228.10 DM. The price of the car was 29, 941.30 DM, and had claimed 10% discount for diplomat. The additional evidence filed by the appellant admitted by the Tribunal at German Marks 25,650/~ inclusive of 14% Sales Tax. The Tribunal has taken a constant view that the value of the car has to be assessed on the basis of world car catalogue price of the same model less 15% discount. In the present matter we have permitted the additional evidence. The genuineness of the same has not been doubted by the respondent but still the revenue authorities not gone through the same. In the case of Dr. Prem Kumar v. Collector of Customs, Bombay in Appeal No. C. 526/85-B2 Order No. 2/89-B2 dated 6th January, 1989 the Tribunal had taken the similar view. Para No. 3 from the said judgment is reproduced below:-
"The appellant contended before us that the invoice price was not a discounted price. The learned Representative of the Department maintained, on the basis of his experience in the Customs department, that the invoice price to the export passengers (like the present appellant) was a discounted price. He, therefore, opposed the grant of any further discount to the appellant. However, he had no objection to the car being assessed at the manufacturer's net price to wholesale dealers in the course of international trade. But there could be no further 15% discount on the already net wholesale price. 15% discount was given on the retailers' list price.
We have had the benefit of experience of dealing with a larger number of cases of valuation and assessment of imported cars. It is well within our knowledge that the general practice of the Customs department is to base the valuation on the World Car Catalogue Price and give 15% discount thereon. The idea is to get at the price at which the like goods are ordinarily sold in wholesale in the course of international trade, as required by Section 14 (1) (a) of the Customs Act, 1962. Resort is had to the individual invoice prices of the passengers only if the world car catalogue price of the model is not available. We order that the same basis should be followed in the case of the present appellant also and his car re-assessed on the basis of the World Car Catalogue Price or the same model less 15% discount. On our asking, the appellant was not in a position to show us the World Car Catalogue Price but he maintained that the said price was available with the Custom House. In case the World Car Catalogue Price is not available with the Custom House, the customs may ascertain the manufacturer's net price to wholesale dealers in the course of international trade in any other manner. If this course is also not feasible, the assessment may be maintained at the appellant's invoice price. There is no question of granting the 15% discount on the individual export passenger's invoice price.
7. The learned SDR had raised an objection that the provisions of Section 27 are mandatory and raising of this plea at this stage will amount to the enlargement of the refund claim. We would like to observe in the matter before us. There was no refund claim before the lower authorities. The appellant had challenged the order passed by the Assistant Collector and the same was confirmed by the Collector (Appeals) and the same is now before us. Whatever may be the order, the consequential effect has to be given to the order so passed. Accordingly, we are of the view that provisions of Section 27 of the Customs Act, 1962 are not applicable in this case because there is no refund application from the appellant. In view of our above discussion we order that the car should be reassessed on the basis of the World Car Catalogue Price of the same model less 15% trade discount. During the course of arguments Shri Sogani, the learned Consultant had argued that he does not press his plea for higher depreciation . Accordingly, we are not passing any order on the same. Accordingly, we direct the lower authorities to give consequential effect to this order. In the result the appeal is partly allowed."
5. The Tribunal in the case of Satya Prakash Agnihotri v. Collector of Customs reported in 1990 (47) E.L.T. 614 (Tribunal) had reaffirmed the view taken in B.J. Singh case - 1990 (45) E.L.T. 474 (Tribunal) and held that "the revenue authorities to assess the car on the basis of the Wolrd Car Catalogue Price of the same model less 15% discount. The appellant had declared the value as per the value of the second-hand car invoice less 4% depreciation. This reflects the innocence of the appellants. There appears to be complete absence of the element of mens rea. We do not find any justification in the levy of penalty. The order imposing a penalty of Rs. One lakh is quashed. With these observations, the appeal is allowed. We further order that if the appellant had imported any accessory, the value of the same should be added for the purpose of assessable value. The revenue authorities are directed to give consequential effect to this order".
6. During the course of arguments, Shri Ramanathan had fairly stated that the value adopted by the Revenue authorities was the World Car Catalogue price less admissible discounts. In view of the above discussion, we do not find any infirmity in the order passed by the lower authorities on the valuation aspect. Coming on the sustained penality of Rs. 5,000/-, we would like to reproduce the operative part of the order passed by the Deputy Collector :-
"I, therefore, in exercise of the powers conferred upon me under Section 122 of the Customs Act, 1962 order that the goods in question shall be confiscated under Section 111(d) & (m) of the Customs Act, 1962, as the car has been misdeclared to be fitted with disability controls. I, however, give the importers an option under Section 125 of the Customs Act, 1962, to pay in lieu of such confiscation a fine of Rs. 1,94,000/- (Rupees one lakh ninety four thousand only) and clear the goods into town. I also impose a penalty of Rs. 20,000/-(Rupees twenty thousand only) on the importer under Section 112 of the Customs Act, 1962.I further deny the benefit of the ad hoc exemption order and order that the duty be charged at prescribed rates on the entire value of the car".
A perusal of the order shows that there is no mention whether the penalty was imposed under Section 112(a) or 112(b) of the Customs Act. The Tribunal had occasion to deal with the case of Balvir Singh v. Collector of Customs reported in 1991 (56) E.L.T. 64 (Tribunal). Para 32 of the said judgment is reproduced below :-
"32. I have heard the learned JDR and have gone through the records. On internal page 2 of the Order-in-Original it is mentioned that he had waived the issue of the show cause notice and also there was a request for early decision. The Assistant Collector had imposed a penalty of Rs. 10,000.00 under Section 112 of the Customs Act, 1962. In the order-in-original there is no mention whether he had imposed penalty under Section 112(a) or 112(b) of the Customs Act, 1962. For the proper appreciation of the correct legal position, Section 112(a) and (b) of the Customs Act, 1962 is reproduced below :
"112. Penalty for improper importation of goods etc. -Any person -
(a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under 'Section III, or abets the doing or omission of such an act, or
(b) who acquires possession of or is any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under Section III, shall be liable -
(i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding five times the value of the goods or one thousand rupees, whichever is the greater;
(ii) in the case of dutiable goods, other than prohibited goods, to a penalty not exceeding five times the duty sought to be evaded on such goods or one thousand rupees, whichever is the greater;
(iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage; in the declaration made under Section 77 (in either case hereafter in this section referred to as the declared value) is higher than the value, thereof, to a penalty not exceeding five times the difference between the declared value and the value thereof or one thousand rupees, whichever is the greater;
(iv) in the case of goods falling both under Clauses (i) and (iii), to a penalty not exceeding five times the value of the goods or five times the difference between the declared value and the value thereof or one thousand rupees, whichever is the highest;
(v) in the case of goods falling both under Clauses (ii) and (iii), to a penalty not exceeding five times of the difference between the declared value and the value thereof or one thousand rupees, whichever is the highest".
A simple perusal of a Section 11(a) and (b) shows that offences under Section 112(a) and (b) are different. On the appellant a penalty of Rs. 10,000.00 has been imposed, which is the subject matter of the appeal before us. Hon'ble Madras High Court in the case of B. Lakshmichand v. Government of India reported in 1983 (12) ELT 322 (Mad.) had held that the charges against the accused should be clear and not ambiguous. Para No. 2 from the said judgment is reproduced below;
"2. Mr. K.C. Rajappa, learned Counsel for the petitioner made an attempt to canvass the merits of the case; but ultimately and rightly was content to make a legal submission in that there is no indication in the proceedings initiated and the orders ultimately passed by the authorities under the Act as to whether the penalty is being imposed either under Clause (a) or (b) of S.112 of the Act and this would vitiate the orders passed. On an appraisal of the submission made by the learned Counsel along with the provisions of the Act and the relevant judicial pronouncements I am inclined to sustain the plea put forth on behalf of the petitioner. Clauses (a) and (b) of S.112 of the Act read as follows :
"112. Penalty for improper importation of goods etc. - Any person - (a) who, in relation to any goods does or omits to do any act which act or omission woud render such goods liable to confiscation under Section 111, or abets the doing or omission of such an act, or
(b) who acquires possession of or is in any way concerned in carrying, removing or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under Section 111 ...."
Clauses (i) to (v) which then follow deal with the classes of penalties, depending on the categories of goods. A plain reading of the above clauses makes it clear that they are distinct and separate. There is a possibility that the act complained of could fall within both the categories; but if the penal action is proposed to be taken and proceedings are prosecuted and if they should culminate ultimately in the imposition of penalty, then the authorities must be clear in their mind as to whether either of the above clauses would apply or both would apply. The Supreme Court with reference to S.167 (8a,), of the Sea Customs Act, 1878, held in Gianchand v. State of Punjab - AIR 1962 SC 469 that in the absence of any valid statutory provision in that behalf the onus of establishing the essential ingredients under that provision, necessary to bring home the offence to an accused is on the prosecution. Obviously the stress was on the essential ingredients which go to make up, the offence. There cannot be a misconception or ambiguity with reference to the offence complained of because that would cast a cloud of doubt as to the essential ingredients and naturally the discharge of the burden of proof would be stifled. Proceedings should not be allowed to be prosecuted on vague basis and comouflaged hypothesis and prejudice must be presumed to have been caused to the accused in these circumstances. Clause (a) of S.112 of the Act contemplates the doing of an act or omitting to do an act in relation to any goods, which act or omission would render such goods liable to confiscation under Section 111, or abetting the doing or omission of such an act. Clause (b) of Section 112 of the Act lays down that any person who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping or concealing, selling or purchasing, or is any other manner dealing with any goods which he knows or has reason to believe or liable to confiscation under Section 111, shall be liable to penalty as per the clauses set out. Section 112(b) of the Act would be attracted only if the person has been concerned in the offence of importation or exportation of goods which are, for the time being, prohibited or restricted. If that clause is attracted, there should be specific reference to it in the proceedings initiated and the findings rendered, and if there is a failure to do so, the order of penalty cannot be sustained. When the penal provisions are invoked and proceedings are prosecuted for the purpose of imposition of penalty, the matter should not be dealt with in the sphere of ambiguity. There should be precision in the application of the provisions of the Act and it cannot be done in a camouflage manner. There should be specific allegations even in the show cause notice and as well as in the subsequent proceedings and the ultimate orders to be passed by the authorities under the Act as to which of the clauses are attracted and as stated above, there is a possibility that on the facts of a particular case, both the caluses could also be attracted. In the absence of such specific allegations and specific findings, it is not possible to sustain the proceedings and the ultimate orders passed thereon. If the Customs authorities take recourse to any of the clauses dealing with the penalty, their order must further indicate the amount of duty payable in respect of the goods in question which was not paid".
The Tribunal had followed the said decision of the Madras High Court in the case of Collector of Customs and Central Excise, Chandigarh v. Ajit Singh and Anr. reported in 1987 (32) ELT 769. Para No. 12 from the said judgment is reproduced below:-
"12 Coming now to the imposition of penalty, we observe that in the order appealed against, the Additional Collector has failed to mention specifically the clause of Section 112, under which orders are passed. On this issue, the judgment of the Madras High Court in the case of B. Lakshmichand - 1983 (12) E.L.T. 322 (Mad.), which has been cited by the learned Advocate, is directly on the point. It has been held by the Madras High Court that if the penal action is proposed to be taken and proceedings initiated which are likely to culminate in the imposition of penalty, then the authorities must be clear in mind as to whether Clause (a) or clause (b) of Section 112 will apply or both, and the order must make specific reference to the provisions failing which the order of penalty is not sustainable".
Hon'ble Supreme Court in the case of Thakur Amar Singh v. State of Rajasthan reported in AIR 1955 SC 504 had held that when a particular authority or a public officer or a person entrusted is to perform a public duty under a statute, non-performance of such statutory duty cannot be explained away only by setting up a plea of estoppel. Relevant extract from para No. 74 of the said judgment is reproduced below :
"74...And even if such assurance had been given, it would certainly not have been binding on the Government, because its powers of resumption are regulated by the statute, and must be exercised in accordance with its provisions. The Act confers no authority on the Government to grant exemption from resumption, and an undertaking not to resume will be invalid, and there can be estoppel against a statute".
In the matter before me, the appellant had waived the issue of the show cause notice. In the case of Collector of Customs and Central Excise, Chandigarh and Anr. v. Ajit Singh and Anr. reported in 1987 (32) E.L.T. 769(Tribunal) in para No. 12 it has been mentioned that: "Coming now to the imposition of penalty, we observe that in the order appealed against, the Additional Collector has failed to mention specifically the clause of Section 112 under which orders are passed". In the matter before me also, the Assistant Collector has passed the orders as under:-
"In the result, goods and currency seized from him is ordered to be confiscated absolutely. In view of the consideration urged and the fact that he has been penalised by the court, I take a lenient view and impose on him a nominal penalty of Rs. 10,000.00 (Rupees ten thousand only) under Section 112 of the Customs Act, 1962".
The facts of the present matter are on all force similar to the matter in the case of Collector of Customs and Central Excise, Chandigarh and Anr. v. Ajit Singh and Anr. (supra) and in that case the Tribunal had followed the Madras High Court reported in 1983 (12) ELT 322. Accordingly, I am of the view that while passing the adjudication order, the adjudicating authority should have mentioned whether the penalty is being imposed under Section 112(a) or (b). Accordingly, I agree with the view of the Judicial Member. The matter to be placed before the Bench for passing appropriate orders".
7. In view of the earlier decision of the Tribunal and of the Madras High Court in the case of B. Lakshmichand v. Government of India (supra), we are of the view that there is no justification for the levy of penalty under Section 112. The sustained penalty of Rs. 5,000/- is quashed.
8. Coming to the Redemption Fine, we have taken note of the decision of the Tribunal in the case of Dolphin Laboratories Calcutta v. Collector of Customs, Calcutta reported in 1987 (29) E.L.T. 243 (Tribunal). Shri Ram Parkash had argued that there was violation of the ITC Regualations as the car value exceeds Rs. 65,000/- and there is no valid import licence. In the present matter there is no valid import licence rather there is an ad hoc exemption order under Section 25 (2) dated 25-9-1986. Keeping in view the fact that the ad hoc exemption order was passed in favour of the appellant being a handicapped person and the appellant has paid the full duty amount of the assessed value keeping in view the gravity of the offence in view of the decision of the Hon'ble Supreme Court in the case of Arvind Mohan Sinha v. Amulya Kumar Biswas reported in AIR 1974 SC 1818 where it has been observed that "The broad principal that punishment must be proportioned to the offence is or ought to be of universal application save where the statute bars the excercise of judicial discretion either in awarding punishment or in releasing an offender on probation in lieu of sentencing him forthwith. The words of Section 4(1)'of the Probation of Offenders Act are wise and would evidently include offences under the Customs Act and the Gold (Control) Rules", to meet the ends of justice we further reduce the Redemption Fine to Rs. 50,000/- (Fifty Thousand only). In the result, the appeal is partly allowed, and thus the appellant is entitled to releif of Rs. 50,000/- of penalty and Rs. 50,000/- on account of Redemption Fine and the Valuation aspect is rejected. During the course of arguments, Shri Ramanathan has conceded that he is not claiming the benefit under Section 25(2) of the ad hoc exemption order as the appellant does not satisfy the condition of that order. Accordingly, we are not passing any order on this. Accordingly, the Revenue authorities are directed to give consequential relief to the appellant.