Bombay High Court
M/S Su.Jewels Exim Pvt.Ltd. And Another vs Union Of India And Others on 9 March, 2010
Author: Vijay Daga
Bench: V.C.Daga, K.K.Tated
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kps
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.286/2010
M/s SU.Jewels Exim Pvt.Ltd. and another. ..Petitioners
-Versus-
Union of India and others. ..Respondents
...........
Mr.S.U.Kamdar, Senior Counsel with Mr.N.M. Shah, for the
Petitioners.
Mr.Vijay Kantharia with Mr.J.B.Mishra, for the Respondents.
ig ..........
CORAM : V.C.DAGA & K.K.TATED, JJ.
Date : 09th March, 2010.
Judgment (Per Vijay Daga, J):
1 Heard.
2 Perused the petition.
3 Rule, returnable forthwith.
4 By consent the matter is heard finally.
The facts:
5 The Petitioner No.1 is a private limited company and the Petitioner No.2 is one of the Directors of the Petitioner No.1 carrying on business of import and export of the rough, uncut, polished and manufactured diamonds. The Petitioners, in due course of their business, imported various rough and uncut ::: Downloaded on - 09/06/2013 15:41:19 ::: *2* diamonds from Sri Sentik General Trading FZE, Dubai, UAE. The said diamonds were received under the various invoices during the period from April to May, 2003. On presentation of the necessary bills of entry and other documents, the said diamonds were cleared for home consumption.
6 The Customs Department issued a show-cause notice dated 29.12.2003 to the Petitioners under Section 124 of the Customs Act, 1962 inter-alia; calling upon the Petitioners to show cause why action should not be initiated against them for confiscation of the said diamonds as well as levying penalty.
7 The Petitioners replied to the show cause notice. The Commissioner of Customs, Mumbai after adjudication passed an order-in-original dated 28.02.2007 imposing penalty under Section 112(a) of the Customs Act, 1962. Operative part of the said order dated 28.02.2007 reads thus:-
"4.1 I order confiscation of Diamonds as detailed at Sr.No.IV to XVI of Annexure E to the Panchanama collectively weighing 561150.17 carats with total invoice value of US $7237297.70 equivalent to India Rs.34,75,80,439/- under the provisions Section 111(d) & (m) of the Customs Act, 1962 read with Rule 11(1) of the Foreign Trade (Regulations) Rules, 1993. However, I observe that the same have been cleared and are not physically available. I keep this fact in mind while determining the penalty.
4.2 I order confiscation of Diamonds as detailed at Sr.No.I, II, III and XVII to XXIII of Annexure E to the ::: Downloaded on - 09/06/2013 15:41:19 ::: *3* Panchanama collectively weighing 603100.00 carats with total invoice value of US $6999062.34 equivalent to Indian Rs.33,33,87,693/- under the provisions of Section 111(d) and (m) of the Customs Act, 1962 read with Rule 11(1) of the Foreign Trade (Regulation) Rules 1993. Since they are not available for confiscation, I keep this fact in mind while imposing the penalty.
4.3 I order confiscation of 45912 carats of rough diamonds valued at US $200237.00 equivalent to India Rs.96,87,265/- imported vide Bill of Entry No.101271 dated 27.03.2003 under the provisions of Section 111(d) & (m) of the Customs Act, 1962 read with Rule 11(1) of the Foreign Trade (Regulations) Rule 1993. Since they are not available for confiscation, I keep this fact in mind while imposing the penalty.
4.4 I order absolute confiscation of 424043.35 carats of rough diamonds whose declared value was US $5867761.19 equivalent to India Rs. 27,63,71,552.04 imported vide Bill of Entry Nos. 101380, 101403, 101391, 10410, 101398, 101386 all dated 19.06.2003 under the provisions of Section 111(d) & (m) of the Customs Act, 1962 read with Rule 11(1) of the Foreign Trade (Regulations) Rule 1993.
4.5 I order absolute confiscation of 40711 carats of rough diamonds valued at Rs.10,02,463.27 recovered from the Bhat wadi office of Hukmichand Jain under the provisions of Section 111(d) & (m) of the Customs Act, 1962 read with Rule 11(1) of the Foreign Trade (Regulations) Rule 1993. Since they are not available for confiscation.
4.6 I order confiscation of 91824.00 carats of rough diamonds valued at US $341446.00 equivalent to Indian Rs.1,65,18,815/- imported vide Bill of Entry No.3100284/05.03.2003 and 3100828/17.03.2003 by M/s Sancheti Jewels on behalf of Sri Hukmichand Jain under the provisions of Section 111(d) & (m) of the Customs Act, 1962 read with Rule 11(1) of the Foreign Trade (Regulations) Rule 1993. Since they are not available for confiscation, I keep this fact in mind ::: Downloaded on - 09/06/2013 15:41:19 ::: *4* while imposing the penalty.
4.7 I impose penalty of Rs.1,00,00,000/- (Rupees one Crore only) on Shri Hukmichand Jain under the provisions of Section 112(a), the Customs Act, 1962.
4.8 I impose penalty of Rs.5,00,000/- (Rupees Five Lakhs only) on Shri Mohanlal Jain under the provisions of Section 112(a) of the Customs Act, 1962.
4.9 I impose penalty of Rs.2,00,000/- (Rupees two lakhs only) on Shri Anil Damodar Gharat under the provisions of Section 112(a) of the Customs Act, 1962.
4.10 I impose penalty of Rs.5,00,000/- (Rupees Five Lakhs only) each on Sri Vrajendra Thakker and Sri Yogesh Sancheti of M/s Sancheti Jewels under the provisions of Section 112(a) of the Customs Act, 1962.
This order is issued without any prejudice to any other action that may be taken under this Act or under any other Act which is in force."
8 Being aggrieved by the aforesaid order dated 28.02.2007, the Petitioners preferred an appeal before the Customs, Excise & Service Tax Appellate Tribunal (WZB), Mumbai. In the said appeal, the Petitioners preferred an application praying for stay of the recovery of penalty and claimed waiver of pre-deposit. The Appellate Tribunal vide its order dated 17.09.2007 stayed the recovery and also waived the pre-deposit of penalty.
9 The Petitioners repeatedly requested the Respondents to return their bills of entry and other documents in respect of the Case No.SD/INT/AIU/36-APDSTF/2003 so as to make remittances.
::: Downloaded on - 09/06/2013 15:41:19 :::*5* Inspite of several requests, the Respondents failed and neglected to return the same. The Petitioners by letter dated 14.02.2009 again requested the Assistant Commissioner of Customs, Air Intelligence Unit, Mumbai to return the copies of the bills of entry and other documents immediately. Along with the said letter, the Petitioners also forwarded the copy of the order dated 17.09.2007 passed by the Appellate Tribunal for their reference. However, the Respondents by letter dated 05.03.2009 rejected the Petitioners' request for return of the copies of bills of entry and other documents. Hence, the Petitioners have preferred the present Writ Petition under Article 226 of the Constitution of India. The Petitioners are seeking direction against the Respondents to return the copies of the bills of entry (Exchange Control copies) and other relevant documents which are required to be produced under the provisions of the FEMA for the purpose of effecting payment to the foreign suppliers in respect of the goods which were already imported and cleared by the Petitioners.
Submissions:
10 Mr.Kamdar, learned Senior Counsel appearing for the Petitioners submits that the Respondents have no authority to detain their bills of entry and other documents in respect of the ::: Downloaded on - 09/06/2013 15:41:19 ::: *6* goods imported by the Petitioners. He further submits that the Commissioner of Customs in the order-in-original has, specifically, observed that the goods were already cleared and therefore, the same were physically not available for seizure, as such penalty was imposed on the Petitioners. He further submits that the order-in-
original dated 28.02.2007 is challenged before the Appellate Tribunal at the instance of the Petitioners and the operation thereof has been stayed. According to him, there is no appeal preferred on behalf of the Respondents challenging adverse part of the order-in-
original dated 28.02.2007, as such it has become final and conclusive against the Respondents. In his submission, if the appeal is dismissed by the Tribunal, the Petitioners at the most will have to pay penalty as imposed by the Commissioner of Customs. No further adverse order can be passed against the Petitioners. He, therefore, submits that there is no reason to detain the Petitioners' bills of entry and other documents. He further submits that all these documents are urgently required by the Petitioners to fulfill the payment obligations in respect of rough and uncut diamonds imported and cleared by them.
11 Per contra, Mr.Kantharia, learned counsel appearing on behalf of the Respondents/Revenue vehemently opposed the prayer made in the present Writ Petition. In his submission this petition is ::: Downloaded on - 09/06/2013 15:41:19 ::: *7* totally misconceived and does not disclose any cause of action as such the petition cannot be entertained by this Court. He further submits that the Petitioners approached this Court after lapse of six years from the date of letter dated 05.02.2004 addressed to the Petitioner No.2 by the Joint Commissioner of Customs categorically clarifying that bills of entry (exchange control copies) could not be returned to them at this stage. He further submits that the present petition is liable to be dismissed for non joinder of necessary party.
According to him, in the facts and circumstances of the case and findings recorded by the Commissioner of Customs in the order-in-
original dated 28.02.2007, the Director of Enforcement is necessary party to the present petition. He further submits that the office of the Commissioner of Customs wrote a letter dated 08.01.2008 to the Deputy Director (Directorate of Enforcement) to initiate investigation into the import of rough and uncut diamonds by the Petitioners, therefore, the Director of Enforcement is the necessary party in the present case. He further submits that the Petitioners over valued the imported goods. By this modus they want to export extra Indian currency without disclosing it in their books of accounts. According to him, in view of these facts and circumstances, the petition is liable to be dismissed with costs.
::: Downloaded on - 09/06/2013 15:41:19 :::*8* Consideration:
12 Having heard both parties, it is to be noted that the Commissioner of Customs imposed penalty on the Petitioners vide its order-in-original dated 28.02.2007. The said order-in-original is a subject matter of challenge at the instance of the Petitioners before the Appellate Tribunal. The Appellate Tribunal vide its order dated 17.09.2007 has stayed the effect, operation and implementation of the order-in-original dated 28.02.2007. It is pertinent to note that the Respondents did not file any appeal against the order-in-original dated 28.02.2007 to challenge the findings adverse to them. If the Petitioners appeal is dismissed, at the most they will be liable to pay penalty imposed by the Commissioner of Customs. No further adverse order can be passed against the Petitioners.
13 It is needless to mention here that the jurisdiction of the Appellate Tribunal should, in the absence of express words in the statute, be governed by the subject matter of the appeal.
14 In the case of V.Ramaswamy Iyengar Vs. CIT, (1960) 40 ITR 377 wherein the Appellate Tribunal directed the Assessing Authority to make fresh assessment; on appeal by the Assessee to the High Court against the said order of Tribunal, the High Court held that where the whole or part of an order has not been ::: Downloaded on - 09/06/2013 15:41:19 ::: *9* appealed against, it would be final; and where there is an appeal against a part of an order, the Appellate Authority would have no jurisdiction, in the absence of statutory provision, to interfere with the other part which does not form the subject matter of the appeal. Where a statute confers a right to appeal to an Appellate Authority, its powers and functions are limited by the terms of that statute.
15 Similarly, in the case of Puranmal Radhakishan & Company Vs. CIT (1957) 31 ITR 294 (Bom), it was held that in an appeal by an Assessee to the Appellate Tribunal, it is not open to the Tribunal to raise any ground which will work adversely to the Appellant and pass an order which makes his position worse than what it was under the order appealed against, if the Department has not appealed from such order. The word "thereon" in the expression "may pass such order thereon as it thinks fit" means on the grounds raised in the appeal, and the words of the section are not wide enough to include a power to enhance an assessment without an appeal by the Revenue.
16 If one turns to the provisions of Section 129 of the Customs Act, 1962, the Tribunal has no jurisdiction to pass an order, so as to permit a ground to be raised by the Respondent which, if allowed, would made the position of the Appellant worse ::: Downloaded on - 09/06/2013 15:41:19 ::: *10* than what it was before. An appellant cannot be worse off by being in appeal before the Tribunal. Thus, looking to the appellate jurisdiction of the Tribunal, the submissions made by Mr.Kantharia appearing for the Revenue cannot be accepted. No adverse order can be passed against the Petitioners in the appeal pending before the Appellate Authority as already observed herein above.
17 Considered on the above touchstone. The bills of entry and other documents cannot be detained by the Respondents merely because the appeal is pending for final disposal before the Appellate Tribunal. The appeal preferred by the Petitioners is only against imposition of penalty. The learned counsel for the Respondents was unable to show any provision in law indicating that the Revenue is entitled to detain the documents till the hearing and final disposal of the appeal preferred by the Petitioners.
Therefore, we do not find any substance in the stand taken by the Revenue in refusing to return the Petitioners' bills of entry and other documents.
18 The objection raised by the learned counsel for the Respondents about non-joinder of necessary parties is not sustainable in the facts of the present case because the Petitioners are seeking relief only against the present Respondents. Though the Respondents have written a letter dated 08.01.2004 to the Deputy ::: Downloaded on - 09/06/2013 15:41:19 ::: *11* Director (Directorate of Enforcement) to initiate investigation into the import of rough and uncut diamonds by the M/s Luster Impex Pvt.Ltd., however, that will give rise to a separate cause of action as and when initiated but this cannot result in refusal to return documents.
19 In view of the above mentioned facts and circumstances of the case, we hereby direct the Respondents to return the bills of entry (Exchange Control copies) and other documents pertaining to the case No. SD/INT/AIU/36-APDSTF/2003 to the Petitioners within a period of two weeks from the date of communication of this order.
20 Rule is made absolute in terms of this order with no order as to costs.
(K.K.TATED, J.) (V.C.DAGA, J.)
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