Customs, Excise and Gold Tribunal - Mumbai
Universal Steel Agencies And Ors. vs Commissioner Of Customs on 5 March, 2001
Equivalent citations: 2001(75)ECC685, 2001(138)ELT360(TRI-MUMBAI)
ORDER Gowri Shankar, Member (T)
1. Delay in filing the appeals by the partners, since the appeal by the importer having already filed in time, is condoned.
2. We are concerned with a total of 24 appeals filed by the importers and individual connected with them and five appeals by the department. The appeals relate to import of goods declared to be mild steel low carbon steel sheets and strips. In every case, they were declared to be mild steel cold rolled strips/sheets of defects. Examination of each of the consignments showed them to be electrical grade cold rolled grain oriented steel sheets. The values declared varied from US $ 215 to 270 per tonne. In his order, the Commissioner has enhanced the value to US $ 450 CIF per tonne for sheets and US $ 400 CIF per tonne for strips, based upon the value of contemporaneous imports at Bombay Customs House. He has held that the goods are validly covered by REP licences produced by the importers for import of items in Appendix 3 Part B of 1985-88 Policy. He has, in a number of cases, imposed penalties under Section 112 of the Act in lieu of confiscation, noting that the goods were not available for confiscation. Where the goods were available, he has ordered their confiscation with an option to redeem on payment of fine. In some case, he imposed penalties on partners and authorised representatives. The appeals by the importers, their partners and authorised representatives are against this part of the order enhancing the value and imposing penalties. The five appeals by the department seek to enhance the value to US$ 1085 per tonne for both strips and sheets and for a finding that the licences were not validly covered for the import.
3. The Tribunal had in Shalimar Agencies v. CC , its unreported orders in appeal C/190/92A in CC v. Impex Trading Corporation, order 190 and 191/92A and in appeal C/191/92A in CC v. Vishal Enterprises considered valuation of such goods. The notices issued to the importers proposed enhancement of value to US $ 1085 per tonne based on the declared value of silicon grade or electrical grade imported by M/s. Electa India. In its order in Shalimar Agencies v. CC , the Tribunal had declined to accept this value for two reasons. The first was that it had not been established that the goods imported by the appellant before it were electrical grade. The second was that the imports made by Electrica India were of French manufacture, whereas the goods imported by the appellant were of US origin. Mr. VS. Nankani, the counsel for the appellants says that the goods under consideration are not electrical grade. He however points out that the Collector has accepted that the goods were defective, whereas the goods imported by Electa India declared to be defective but on examination were found to be prime. The goods under consideration are also of US origin. Therefore, the goods imported by Electa India being French origin, are neither identical nor similar and their valuation cannot be applicable to the present case. The decision of the Tribunal in Honesty Traders v. CC 1990 (29) ELT 534, cited by the departmental representative, does not take a view that the country of origin is immaterial as the departmental representative contends. That view was taken by one of the member, a Member (Technical), and is not the view of the Bench. On this ground, we do not find that the enhancement of value is justifiable.
4. We are also not able to accept the claim of the importers that the declared value must be accepted. The Collector has given specific instances of export of contemporaneous to the imports under consideration, of identical goods at Bombay, to justify his increase in the enhancement. The counsel for the importers was not able to show these imports were not contemporaneous or of goods dissimilar to the goods under consider (sic).
5. In coming to his conclusion that the import licences produced were acceptable, the Collector has been guided by a clarification dated 1442.1988 issued by the Chief Controller of Imports and Exports to an importer. The department's appeal challenges the propriety of this. It contends that subsequently in a meeting of the Clarification Committee, the Chief Controller of Imports and Exports clarified on 16.3.1989 that while such electrical grade CRGO sheets which fall under Entry No. 13 of Appendix 3 Part B, their eligibility was to be decided in accordance with whether they were required for manufacture of the end product. Since the end product, in the case of all the licences under consideration is marine containers, in the manufacturer of which electrical grade was not required, the import is not covered by the licence.
6. A copy of this clarification of this licensing authority has not been produced. The order of the Board, on which the appeal is based, says that it has "come to its attention" that such a clarification was issued. We are not able to find any reference in the policy or the hand book to any clarification committee nor is either side able to enlighten us about the committee. It seems possible that this clarification was given in the matter of regulation to grant of licence that is to say to the opinion of the licensing authority. Assuming this clarification to be validity issued, there are still objections in accepting it. Firstly, it does not appear have been made available to the Collector before he passed the order. He does not refer to it. It therefore would not be proper to rely upon it now, it being material that has surfaced later. Secondly, the Courts have ruled against establishing a nexus between the imported product and export product in the case of Appendix 17 REP licences. In Bussa Overseas and Properties Ltd. , the Bombay High Court said "Therefore it could be reasonably inferred that the object of the Scheme (REP licence) is not merely to provide a percentage of some, of, or all the raw-material used by registered exporters in the products exported, but also to augment their income by way of sale of REP licences issued in their favour." The Madras High Court's judgment in Salem Stainless Steel Suppliers v. CC held that a transferee of a REP licence is not required to establish the nexus between the imported product and its usage in the export product. The importers before us all had produced transferred licences. We are therefore unable to accept any of the department's appeals and dismiss them.
7. There remains the question of penalty. The Collector has in cases where the goods were not available for confiscation, imposed penalties in lieu of redemption fine. Such a course of action is not permissible. The Collector was entitled to fix a redemption fine and to recover it in terms of the bond that must have been executed when the goods were cleared pending adjudication. However, the provisions of Section 112 of the Act cannot be used as a substitute for those of Section 111 of the Act. Therefore, we set aside the penalties imposed in lieu of confiscation. However, we are not able to interfere with penalties imposed on partners or authorised representative on account of misdeclaration of value. We do not find those penalties to be disproportionate, except in one case, in appeal C/712/92, the penalty of Rs. 10.00 lakhs for import of goods valued at Rs. 38.00 lakhs approx is not in keeping with the ratio that he has adopted in other orders. In view of this and other relevant factors, we reduce the penalty from Rs. 10.00 lakhs to Rs. 5.00 lakhs.
8. Appeals are accordingly disposed of. Consequential relief according to law.