Custom, Excise & Service Tax Tribunal
Shri Chaitanya Reddy vs Principal Commissioner Of Customs ... on 22 January, 2025
(1)
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Regional Bench - Court No. - II
Customs Appeal No. 30334 of 2024
(Arising out of OIA No.HYD-CUS-000-APP1-161-23-24 dt.28.12.2023 passed by
Commissioner of Customs & Central Tax (Appeals-I), Hyderabad)
Shri Chaitanya Reddy .... Appellant
F-4 Woord, HUDA Enclave, Jubilee Hills,
Hyderabad, Telangana - 500 033
VERSUS
Commissioner of Customs .... Respondent
Hyderabad - Customs GST Bhavan, LB Stadium Road, Basheerbagh, Hyderabad - 500 004 Appearance Shri Y. Sreenivasa Reddy, Advocate for the Appellant. Shri A. Rangadham, Authorized Representative for the Respondent.
Coram: HON'BLE Mr. P.V. SUBBA RAO, MEMBER (TECHNICAL) FINAL ORDER NO. A/30028/2025 Date of Hearing: 22.01.2025 Date of Decision: 22.01.2025 [Order per: P.V. SUBBA RAO] This appeal is filed by Shri Chaitanya Reddy1 to assail the Order-in- Appeal dt.28.12.20232 passed by the Commissioner of Customs & Central Tax (Appeals-I), Hyderabad, whereby, he upheld the order passed by the Additional Commissioner and dismissed the appellant's appeal. The facts of the case are that the officers of Directorate of Revenue Intelligence3 seized a motor bike of Suzuki GSX1400 with Registration No. AP 09 BT 1400 found in possession of the appellant. It is undisputed that it was registered in the name of the appellant in the state of Andhra Pradesh. According to the appellant, he had purchased this bike from a person named Mr. Sunil Lawrence DSA through his friend Shri Krishna Chaitanya for Rs.3,00,000/-. The vehicle was originally registered with Road Transportation Authority 1 Appellant 2 Impugned Order 3 DRI (2) (RTA), Raigad, Maharashtra and the appellant got the vehicle transferred in his name and then registered in the RTA, Hyderabad.
2. On 06.05.2010, DRI seized the bike from the appellant but later on provisionally released it to the appellant on depositing Rs,10,00,000/- in cash and an equal amount in bond. After completing investigation, the officers of DRI issued a Show Cause Notice dt.12.08.20104 stating that it appeared that:
a) The appellant was in possession of the imported bike, which has been brought into India without following statutory provisions and conditions laid down under the Customs law.
b) The imported bike was brought into India by Shri Sunil Lawrence (as per Bill of Entry submitted by the appellant), whose whereabouts are not known to appellant.
c) The copy of Bill of Entry No. 401001 dt.13.06.2006 given by the appellant was found fake on verification by the Assistant Commissioner of Customs, Kolkata and the original Bill of Entry of this number pertained to import of diet coke.
d) Though the appellant deposed that he had purchased the bike from Shri Sunil Lawrence and that it has been brought into this country through Air Cargo Complex, Calcutta, there is no substantial proof of port of entry of the bike as the Bill of Entry submitted by the appellant was not genuine.
e) The appellant was in possession of bike of foreign origin, which had been illegally imported into India and is therefore, a smuggled bike.
f) The bike was liable for confiscation under section 111(d) read with section 111(j)/ 111(i) of the Customs Act, 1962, as the provisions of section 46 and 47 of the Customs Act appear to have not been followed.
g) The appellant was also liable to penalty under section 112(b) of the Customs Act.
3. It was therefore proposed in the SCN as follows:-
a) To confiscate the bike valued at Rs.9,36,144/- under section 111(d) read with 111(j)/ 111(i) of the Customs Act;4
SCN (3)
b) To impose penalty on the appellant under section 112(b) of the Act; and
c) To enforce bank guarantee of Rs.10,00,000/- furnished by the appellant at the time of provisional release towards adjustment of Customs Duty, fines and penalties.
4. The appellant resisted the proposals of the SCN, which were, however, confirmed by the order of the Additional Commissioner dated 06.09.2011 and upheld by the Commissioner (Appeals) by order dared 23.12.2011. On appeal, this Tribunal remanded the matter back to the Additional Commissioner to decide the matter after decision of Hon'ble Supreme Court in the case of Mangali Impex Ltd., on the question of jurisdiction of DRI to issue the SCN. Thereafter, the Additional Commissioner passed a denovo order dated 31.10.2022 upholding the jurisdiction of DRI officers to issue SCN in view of the amendments made by the Finance Act, 2022. This order was upheld by the Commissioner (Appeals) by the impugned order.
5. Learned Counsel for the appellant made the following submissions:-
a) The impugned order was passed without jurisdiction. The customs authorities at Hyderabad have no power to adjudicate the case when the bike was said to have been smuggled through Kolkata port and got registered with RTA, Raigad.
b) DRI failed to prove that the bike is smuggled and since motor bikes are not covered by section 123 of the Customs Act, the burden of proving that they are smuggled lies on the department, which onus has not been discharged.
c) The bike has become part of landmass and cannot be treated as smuggled. If the bike is said to be of smuggled nature, the appellant purchased it only after the motor bike was registered in India.
Thereafter, the bike was registered in the appellant's name for the second time. Accordingly, it has become part of landmass of the country and no documentary evidence of legal import is required and the same cannot be held to be smuggled goods unless contrary is proved by producing positive and tangible evidence by the department.
d) The provisions under which bike was confiscated do not apply. Section 111(d) of the Customs Act deals with prohibited goods and import of (4) motor bikes is not prohibited even according to the denovo Order-in- Original. Confiscation of the vehicles without referring to relevant provisions or referring wrong provisions is illegal and is liable to be set aside.
e) The value adopted by the DRI as Rs.9,36,144/- is without any basis because the appellant had purchased the bike for only Rs.3,00,000/-. No market enquiry was conducted, which should have been done to impose redemption fine under section 125 of the Act.
f) The issue of notice to the buyer/appellant without issuing the same to the importer is illegal.
g) Imposition of penalty of Rs.25,000/- under section 112(b) of the Act is improper as penalty under section 112(b) can be imposed only if the appellant had any knowledge or reason to believe that the bike was liable to confiscation. There is no allegation in the SCN that the appellant had any knowledge.
h) In view of the above, the impugned order may be set aside and the appeal may be allowed.
6. Reliance is placed by the appellant on the following case laws:-
a) Roshiban NR Vs CC, Cochin [2018 (4) TMI 118 - CESTAT Bangalore]
b) BN Sharma Vs CC, Madras [2000 (126) ELT 218 (Mad)]
c) Singh Radio and Electronics Vs CC [1988 (36) ELT 713 (Tri)]
d) Diganth KM Vs CC, Bangalore [2015 (5) TMI 956 - CESTAT Bang.]
e) Shanoob MS Vs CC [2017 (1) TMI 749 - CESAT Bang.]
f) Sant Lal Gupta Vs Modern Cooperative Group Housing Society Ltd [2010 (13) SCC 336 - SC]
g) Shri Sahil Verman Vs CC, New Delhi [2025 (1) TMI 490 - CESTAT New Delhi]
h) Eanam Ahmed Laskar Vs CC (Prev.), Shillong [2022 (7) TMI 248 -
CESTAT Kolkata]
i) New Ashoka Watch Co Vs CC (Prev), New Delhi [2011 (274) ELT 391 (Tri-Del)]
j) Shri Raj Kumar Batra Vs CC (Prev), New Delhi [2022 (12) TMI 19 - CESTAT New Delhi]
k) Motorola India Ltd Vs CC, Bangalore [2001 (138) ELT 870 (Tri-Bang)] (5)
l) Kapsons Industries Pvt Ltd Vs CC, Mumbai [2002 (141) ELT 666 (Tri- Del)]
m) Shri Vyomesh Vinodrai Patel Vs CC, Ahmedabad [2022 (9) TMI 957 -
CESTAT Ahmedabad]
7. Learned authorized representative for the Revenue vehemently supported the impugned order and asserted that it calls for no interference, whatsoever, and made the following submissions:-
a) On 07.04.2010, the officers of DRI found the appellant's bike in his possession and only detained it as the appellant could not produce any documents pertaining to the import of the same only later was it seized.
b) The appellant made a statement on 20.04.2010 that his friend Shri Krishna Chaitanya informed him that the bike was with one person in Mumbai and he was willing to sell it for Rs.3,00,000/- and that he had requested his friend to provide a copy of Bill of Entry, invoice and packing list, etc. His friend have him copies of the documents along with which he got the bike registered in his name at RTA, Hyderabad.
He also submitted copy of Bill of Entry No. 401001 dt.02.06.2008 as proof of import. The bike was purchased from Shri Sunil Lawrence, Maharashtra through his friend Shri Krishna Chaitanya.
c) Summons were issued to Shri Sunil Lawrence at the given address and they were returned with remarks "incomplete address". The copy of the purported Bill of Entry was sent by the DRI to the Customs authorities, Kolkata and it was found to be fake. The bike was provisionally released on execution of bond for Rs.10,00,000/- and bank guarantee for Rs.10,00,000/-.
d) The purpose of law is not to allow an offender to sneak out of the meshes of law as held by Hon'ble Supreme Court in the case of Balram Kumawat Vs UOI and Others [2003 (8) TMI 221 - SC].
e) The appellant submitted false answers and documents which provides circumstantial evidence. Reliance is placed on the decision in the case of Kuldeep Singh & Ors Vs State of Rajasthan [2000 (5) SCC 7].
f) Shri Sunil Lawrence was not traceable at the address and the summons sent to him were returned with remarks "incomplete address". Shri Krishna Chaitanya, the friend of the appellant, is said to (6) be dead. The only evidence about the import of the bike was a Bill of Entry produced by the appellant which is found to be forged. Therefore, the appellant is fully liable for providing false information.
g) Fraud vitiates all solemn acts.
h) As a buyer, the appellant was required to exercise due diligence and the principle of "caveat emptor" applies.
i) In view of the above, the appeal may be dismissed and the impugned order may be upheld.
8. Learned AR relies on the following case laws:-
a) Chetan Singh Vs CCE, C & ST, Hyderabad-II [2017 (348) ELT 701 (Tri- Hyd)]
b) Sri Nadeem Salauddin Thakur Vs Pr. CC, Hyderabad [Final Order No.A/30004/2025 dt.07.01.2025 (CESTAT-Hyderabad)]
9. I have gone through the facts of the case and considered the submissions made by both sides. Insofar as the question of jurisdiction is concerned, the appellant had produced a copy of Bill of Entry purported to have been filed in Kolkata Air Cargo complex, which was found to be fake. There are no other legal documents to show how the bike was imported into India. Therefore, it is inconceivable that Kolkata Customs will have any jurisdiction over this case. In fact, in this case, there is no proposal for assessment or demand of duty. The question of jurisdiction of the port will arise when goods are imported through a port and the duty has been assessed and the duty so assessed has to be modified.
10. The only proposal in this case is to deprive the appellant of his property viz., his bike on the allegation that it has been smuggled into India. The property was seized from the possession of the appellant in Hyderabad. The property was registered in the name of the appellant by RTA, Hyderabad. Therefore, I do not find any reason to hold that any officer other than the officers of Hyderabad Customs will have any jurisdiction over to decide the matter. The only question is whether the bike was liable to be confiscated and whether the appellant was liable to pay penalty under section 112(b) or not. I, therefore, find in favour of the Revenue and against the appellant on the question of jurisdiction.
(7)11. Learned Counsel for the appellant also challenged the SCN on the ground that Shri Sunil Lawrence has not been made a noticee at all. It is his submission that when Shri Sunil Lawrence was the original importer, who is supposed to have imported it illegally into India, he should have been made a noticee in this case and not just the appellant. Learned authorized representative submits that Shri Sunil Lawrence was not traceable at the address given by the appellant. The identity of Shri Sunil Lawrence was also not known to the appellant and the person through whom the bike was purchased from Shri Sunil Lawrence is no more. So, there was no way to find who Shri Sunil Lawrence was and where he lived and if he had smuggled the bike into India.
12. I find that, insofar as this case is concerned, the proposal is only to deprive the appellant of his property and therefore, SCN was issued. The proposal was also issued to impose penalty on the appellant. The mere fact that some action has not been taken against any other person, such as Shri Sunil Lawrence, does not negate the validity of this SCN or the consequential orders.
13. Coming to the question of confiscation, the proposal in the SCN and the confiscation in the Order-in-Original (denovo) as upheld by the impugned order is confiscation of bike under section 111(d) read with 111(j)/ 111(i), which read as follows:-
"111. Confiscation of improperly imported goods, etc.:-
The following goods brought from a place outside India shall be liable to confiscation:-
(d) any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force;
(i) any dutiable or prohibited goods found concealed in any manner in any package either before or after the unloading thereof;
(j) any dutiable or prohibited goods removed or attempted to be removed from a customs area or a warehouse without the permission of the proper officer or contrary to the terms of such permission;"
14. A plain reading of section 111(d) shows that goods which are imported contrary to any prohibition imposed by or under the Customs Act or any other law for the time being in force are liable for confiscation. No provision of any other law for the time being in force has been cited in the SCN. As far (8) as the prohibition under the Customs Act is concerned, the relevant provision for this is section 11, which reads as follows:-
"11. Power to prohibit importation or exportation of goods.
(1) If the Central Government is satisfied that it is necessary so to do for any of the purposes specified in sub-section (2), it may, by notification in the Official Gazette, prohibit either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification, the import or export of goods of any specified description.
(2) The purposes referred to in sub-section (1) are the following:
(3) Any prohibition or restriction or obligation relating to import or export of any goods or class of goods or clearance thereof provided in any other law for the time being in force, or any rule or regulation made or any order or notification issued thereunder, shall be executed under the provisions of that Act only if such prohibition or restriction or obligation is notified under the provisions of this Act, subject to such exceptions, modifications or adaptations as the Central Government deems fit.
(a) the maintenance of the security of India;
(b) the maintenance of public order and standards of decency or morality;
(c) the prevention of smuggling;
(d) the prevention of shortage of goods of any description;
(e) the conservation of foreign exchange and the safeguarding of balance of payments;
(f) the prevention of injury to the economy of the country by the uncontrolled import or export of gold or silver;
(g) the prevention of surplus of any agricultural product or the product of fisheries;
(h) the maintenance of standards for the classification, grading or marketing of goods in international trade;
(i) the establishment of any industry;
(j) the prevention of serious injury to domestic production of goods of any description;
(k) the protection of human, animal or plant life or health;
(l) the protection of national treasures of artistic, historic or archaeological value;
(m) the conservation of exhaustible natural resources;
(n) the protection of patents, trademarks and copyrights;
(o) the prevention of deceptive practices;
(p) the carrying on of foreign trade in any goods by the State, or by a Corporation owned or controlled by the State to the exclusion, complete or partial, of citizens of India;
(q) the fulfilment of obligations under the Charter of the United Nations for the maintenance of international peace and security;
(r) the implementation of any treaty, agreement or convention with any country;
(s) the compliance of imported goods with any laws which are applicable to similar goods produced or manufactured in India;
(t) the prevention of dissemination of documents containing any matter which is likely to prejudicially affect friendly relations with any foreign State or is derogatory to national prestige; (u) the prevention of the contravention of any law for the time being in force; and
(v) any other purpose conducive to the interests of the general public."(9)
15. There is no submission by either side or allegation in the SCN that the import of bikes was prohibited in the Customs Act. Learned AR for Revenue submits that import of any goods without following due process and bringing them through the notified customs ports and airports is prohibited. Therefore, the bike which was imported without following the due process, must be treated as prohibited good.
16. I find that the term 'prohibited goods' is defined in section 2(33) as follows:-
"(33) "prohibited goods" means any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with."
17. From this section, it is clear that prohibited goods under the Customs Act are only such goods whose import or export is prohibited and not those goods where the appropriate procedures have not been followed. The SCN refers to section 46 and 47 of the Customs Act. Section 46 requires the importer of any goods to file a bill of entry and section 47 provides for proper officer to issue "out of charge" on the bill of entry. Neither of these provisions deals with any prohibitions.
18. While it is irregular and contrary to law to import goods, i.e., bring goods into India from a place outside India without following the due processes, such violations would not make the goods "prohibited goods"
under the Customs Act. In fact, if any goods are imported or attempted to be imported other than through the customs ports or airports or land customs station, such goods will be liable for confiscation under section 111(b) of the Customs Act. Therefore, in this case, confiscation under section 111(d) cannot be sustained.
19. Section 111(i) deals with goods which are found concealed in any package either before or after unloading thereof. There is no allegation that the bike in dispute was concealed in any manner, let alone, any evidence to this effect. In fact, it was registered with the RTA, Hyderabad in the name of the appellant. Therefore, confiscation under Section 111(i) cannot be sustained.
(10)20. Section 111(j) deals with the goods, which are removed or attempted to be removed, from customs area or warehouse without permission of proper officer or contrary to the terms of such permission. In this case, there is no evidence or allegation that the bike was removed from customs area without any permission. Therefore, confiscation under Section 111(j) also cannot be sustained.
21. I find none of the three clauses of section 111 under which the bike was confiscated apply. For this reason alone, the confiscation of the bike needs to be set aside and I do so. Consequently, penalty under Section 112(b) which is dependent on goods being liable to confiscation under Section 111 also cannot be sustained.
22. I also find section 112(b) provides for penalty for knowingly carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing any goods. There is nothing in this case to show or establish that the appellant had any knowledge that the bike was liable for confiscation. At any rate, once the confiscation under section 111 is set aside, the penalty under section 112 also needs to be set aside.
23. In view of the above, I allow the appeal and set aside the impugned order with consequential relief to the appellant.
(Dictated and pronounced in the open Court) (P.V. SUBBA RAO) MEMBER (TECHNICAL) Veda