Customs, Excise and Gold Tribunal - Mumbai
India Photographic Co. Ltd. vs Collector Of Customs on 19 August, 1994
Equivalent citations: 1995ECR561(TRI.-MUMBAI), 1995(75)ELT551(TRI-MUMBAI)
ORDER P.K. Desai, Member (J)
1. This appeal is directed against the Order-in-Original No. S/10-37/87II, dated 6-4-1987 passed by the Additional Collector of Customs, Bombay, ordering confiscation of the item imported by the appellants valued at Rs. 93,001/- but granting option to the appellants to pay redemption fine of Rs. 20,000/- and also imposing a personal penalty of Rs. 5000/-.
2. The appellants imported 16 Boxes containing 2386 kgs photographic materials and claimed clearance under OGL Appex. 6(5) of AM 1985-88 Policy. The appellants claimed the said import as Letter of Authority holders for National Remote Sensing Agency (NRSA) under the Department of Space, Govt of India. They therefore filed the Bill of Entry in their own name, alongwith necessary documents in relation thereto. One of the objections raised was that the value as shown in the Letter of Authority was not in conformity in the value shown in the Bill of Entry and further objection was raised that they could not be the Letter of Authority holders as the agreement between them and NRSA indicated that it was a transaction of sale by the appellants to the said agency and as such the benefit of Notification No. 424/88-Cus., dated 28-8-1986 was not available. It was also contended that by virtue of Public Notice 159/85, it was not open to them to file B/E in their name if they were the letter of authority holders. Initially a query memo was issued to which the appellants replied by reiterating the stand that they were the Letter of Authority holders. The enquiry was also made at NRSA from where also, it was confirmed that the appellants were the Letter of Authority holders. However, the terms of agreement assumed and reply from NRSA indicated that the appellants were to charge 35% margin of profit which in turn led to infer that the relation between the appellants and NRSA were not of principal and agent but those of seller and purchaser and hence the adjudication was proposed. The appellants waived the Show Cause Notice. Adjudication proceedings were conducted, where it was held that the terms of agreement did not endorse to their plea of their being the Letter of Authority holders for NRSA and hence the impugned order was passed. Vide said order, the value was also loaded by 10% for ascertaining the actual value of the goods.
3. Shri B.M. Parikh, the Ld. Advocate for the appellants, has submitted that the valuation was an issue involved in the adjudication proceedings and though the appeal filed by the appellants also challenges the said findings of the adjudicating authority, he has instructions to submit that the appellants are not pressing the said issue. Considering the submissions made, because the valuation aspect has not been pressed, the appeal is taken as falling within the purview of the Regional Bench and hence the arguments have been heard on merits of the appeal in relation to the order of confiscation of goods and imposition of personal penalty.
4. Shri B.M. Parikh, the Ld. Advocate has submitted that the relations between the appellants and the NRSA are to principal and the agent. He has referred to the documentary evidence which include the Letter of Authority issued by NRSA as also a certificate dated 30-12-1986 clearly declaring the appellants to be their Letter of Authority holders. He has also referred to the Bill of Entry filed which indicated that the goods imported were Government cargo and has also referred to the documents which were enclosed with the said Bill of Entry which included proforma CDE, proforma NMI and other relevant documents indicating that the appellants are no more than a Letter of Authority holder and that the import is for NRSA. He has also referred to the query memo raised by the Customs Department and the replies given thereto including the one from NRSA. He submits that from all those documents the only conclusion that can be drawn is that the appellants were the Letter of Authority holders for NRSA. In his submission, the authority below has been guided away by the inadvertent mention by the NRSA in their letter dated 6-3-1987 that the appellants were to be given 35% cif as profit margin. Referring to the original contract entered into between the NRSA and the appellants, he has pleaded that there is a clear mention about the appellants charging 35% of the cif value as margin and not as margin of profit and the same could be well considered as a commission for them for the services that were to be rendered. Reading the terms of agreement, he has sought to substantiate his said submission. He has also submitted that the appellants have inadvertently denied having charged any commission but that should not be viewed against them in view of the clear documentary evidence indicating the same. He therefore has submitted that the conclusion drawn by the adjudicating authority, of the appellants being not the Letter of Authority holders for NRSA is not sustainable and ought to be set aside. Referring to the other objection namely filing of the Bill of Entry in their own name, contrary to the public notice issued by the Principal Collector bearing No. 159, dated 5-11-1985 requiring filing of Bill of Entry by the importers themselves and not by the Letter of Authority holders, he has referred to the provisions contained in Para 119 of the Handbook of Procedure AM 1985-88 and has submitted that the reservation that applied to the Letter of Authority holders as contained in sub-para (1) of the said para would not apply to the import made by the Government department. He has referred to the sub-para (2) of the said para to substantiate the said submissions. In his submission, therefore, the objection raised and the findings given by the authority below are contrary to the facts and evidence on record and ought to be set aside.
5. Shri Harnek Singh, the Ld. JDR, has however, submitted that the parties themselves have admitted that they were to charge 35% as margin of profit and profit element could arise only when there is a transaction of sale. In that view of the matter, the appellants cannot be styled as the Letter of Authority holder. He has also read the relevant portion of the Order-in-Original. He has further pleaded that if the appellants were merely a Letter of Authority holder, as per Public Notice of the Principal Collector, they ought to have filed Bill of Entry in the name of the original importers which they have not done. This also indicates that the appellants were not acting as a Letter of Authority holder.
6. Considering the submissions made and going through the records with valuation aspect being not challenged, the only ground that requires to be considered is whether the appellants are proved to have been the Letter of Authority holders for NRSA in causing the subject import. Amongst other documents produced, there is an agreement which has been entered into between NRSA and the appellants, where there is a clear mention that the appellants had to act as the Letter of Authority holders and cause import of the items mentioned therein and for the purpose of remuneration, the condition is laid down in para 4 which reads thus :
"It has been discussed and agreed that IPC shall charge 35% of the CIF value of material (consumables only) supplied as their margin, consequent the exemption given for payment of customs duty."
The other conditions incorporated therein also indicate that NRSA have simply entrusted the work of importation and clearance to the appellants and all other liabilities and/or the benefits available have been retained by them. Reading para 4 reproduced above, it only mentions that the appellants would be paid 35% of the cif value as their margin. Reading the word "margin" in the context of the other provisions contained in the said agreement, leads to only conclusion that they were to be paid 35% of the cif value as their remuneration for rendering the services which they were to render. It is not possible to take any view other than the one taken above. Emphasis is laid on the reply given by the NRSA to the query memo raised against them by the Department, where they have mentioned that the appellants had to charge 35% margin of profit on CIF value. The phraseology however appears to have been inadvertently used. If the appellants had to change only 35% out of profit, the NRSA being the actual user of the items imported, were not to put the items imported for sale and could not have therefore derived any profit and if that was a sale between NRSA and the appellant, there should be no question of charging or sharing of part of the profits because, in that case, the entire profit would go to the appellants. The percentage so fixed therefore, is not conducive to the plea that the said percentage was to be given as the margin of profit. On the contrary, it leads to show that the same was by way of remuneration. In view of the specific agreement contained in the memo of agreement, therefore the phraseology used by the NRSA in their letter appears to be inadvertent misstatement and therefore cannot be read that the relationship was of principal to principal between the appellants and the NRSA. All other documents are clearly indicative of the fact that the goods were imported by the appellants for and on behalf of NRSA, as Letter of Authority holder. The NRSA has taken all the actions in procuring duty exemption certificate indicating that the appellants were their Letter of Authority holder. A drawal of a conclusion merely on a solitary statement made at one place during the correspondence with the Department, cannot wipe off the effect of the documents that have been produced on record, which were enclosed with the Bill of Entry and are now produced on record of the proceedings. The conclusion drawn therefore is not in conformity with the factual position and cannot be sustained. No adverse inference can also be raised in filing the Bill of Entry by the appellant in their own name. Para 119(2) of the H .B. of procedure permits the L/A holders for the Govt. department to cause the import for such department. There is no clause which prohibits them from filing the Bill of Entry in their own name. Public Notice 159/85 from the Principal Collector though makes the said requirements, the same does not appear to be in conformity with the policy provisions, as laid down in the Hand Book. The provisions in the Hand Book are not provided for, to be curtailed by the Collector or any other agency and even otherwise, this being a procedural requirement, cannot alter the basic requirement. Even otherwise there is clear evidence of the appellants having acted as a Letter of Authority holder for NRSA and mere non-compliance of this requirement under the public notice, could not render the imported goods as liable to confiscation.
7. Appx. 6(5) of the Policy Book AM 1985-88 permits import of the subject goods by the Research Institute and NRSA falls within the category of those, who are eligible to cause the import under the said provisions. The appellants have merely acted as the Letter of Authority holders. Under these circumstances, the objection raised cannot be sustained and the order of the authority below is therefore set aside. Consequential relief to follow.