Custom, Excise & Service Tax Tribunal
Rare Crafts Overseas vs Commissioner Of Customs, Chennai on 12 August, 2010
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No.C/1/2010
[Arising out of Order O.S.No18/2006-DIU dt. 23.10.2009 passed by the Commissioner of Customs (Seaport), Chennai]
For approval and signature:
Honble Ms.JYOTI BALASUNDARAM, Vice-President
1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? :
2. Whether it should be released under Rule 27 of the
CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? :
3. Whether the Member wishes to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
Rare Crafts Overseas
Appellants
Versus
Commissioner of Customs, Chennai
Respondent
Appearance:
Shri B.Satish Sundar, Advocate Shri S.Krishnanandh, Advocate Shri A.B.Niranjan Babu, SDR For the Appellants For the Respondent CORAM:
Honble Ms.Jyoti Balasundaram, Vice-President Date of hearing : 26.7.2010 Date of pronouncement : 12.8.2010 Final Order No.____________ Vide the impugned order, the Commissioner of Customs (Export-Seaport) has held that Commissioner of Customs, Chennai has jurisdiction to issue show-cause notice dt. 27.3.2007 under the provisions of Section 124 of the Customs Act 1962 for confiscation of export cargo of red sanders wood in the guise of handicrafts to Singapore (red sanders wood is prohibited for export under the provisions of the Customs Act read with Schedule II of Export Policy and value added products of above wood are restricted for export under licence issued by DGFT subject to certificate from the Principal Chief Conservator of Forests of the State from where the stocks were procured as well as other requirements under CITES), proposing confiscation of items made of Padak and proposing imposition of penalty on the exporter, partnership firm and its partners and others.
2. The Commissioners finding is reproduced herein below :-
In terms of
i) Sec 4 of Customs Act 1962, the Central Government may appoint such persons as it thinks fit to be officers of Customs
ii) Vide notification 15/2002 Cus (N.T) Dated 07.03.2002 the areas of jurisdiction of Commissioner, Addl or Joint Commissioners and Dy. or Asst. Commissioners of Customs are notified. The territorial jurisdiction in respect of Commissioners (Export) Seaport is mentioned at S.No.7 under column 2.
iii) Sec 50 of the Customs Act62 -
(1) The exporter of any goods shall make entry thereof by presenting to the proper officer in the case of goods to be exported in a vessel or aircraft, a shipping bill, and in the case of goods to be exported by land, a bill of export in the prescribed form
2) The exporter of any goods, while presenting a shipping bill or bill of export shall at the foot thereof make and subscribe to a declaration as to the truth of its contents.
iv) Sec 51 of Customs Act 1962, where the proper officer is satisfied that any goods entered for export are not prohibited goods and the exporter has paid the duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance and loading of the goods for exportation.
v) Procedures for Transshipment of cargo are given in chapter 11 of CBECs Customs manual of instructions issued on 11.09.2001.
Under the heading Movement of export cargo from port/ICD/CFS to gateway Port vide:
Para 23 The export cargo, after its clearance at a Port/ICD/CFS, may be carried in sealed containers to the gateway Port for export. Broadly, the procedure in this regard is as follows :
a)
b)
c)
d)
e)
f) At the gateway port, the containers are normally allowed to be exported under Customs supervision after checking the seals. In case seals are intact and documents are in order, no further examination of goods is undertaken. The Preventive Officer supervising the export of container endorses the port of shipment in both the transference copies. Steamer agent has to file EGM in duplicate.
g)
h)
vi) Circular No.6/2002-Cus dated 23.01.2002 whereby export goods stuffed and sealed in ICBC case also be examined, specially when there is specific intelligence.
vii) Under Section7 of the Act under notification No.52/2006-Cus (NT), Chennai Seaport has been designated as Customs Area.
viii) Section 141 of CA1962 all conveyances and goods in Customs areas shall, for the purpose of enforcing the provisions of this Act, be subject to the control officers of Customs.
Now, as per section 51 these are two aspects that a proper officer has to decide, one permitting clearance and the other loading of goods for exportation.
In the present case, the proper officer of Bangalore Customs has given only the Let Export Order meaning thereby permitted clearance for export. However, the second part i.e. loading of goods, order was not given by him. In terms of Para 23 (f) of Movement of Export Cargo from post/ICD/CFS to gateway Port it is the P.O. at gateway port who gives such an order.
Thus claim of the exporter that Let Export order of Bangalore reached its finality once given by them, is neither tenable not enforceable, as the jurisdiction to give allowed for shipment order i.e. loading of goods lies with the Chennai Customs, Chennai being the gateway port. Further, circular No.6/2002-Cus dated 23.01.2002 allows examination of export containers sealed at ICDs of when there is specific intelligence. Moreover, as per section 2 (18) of CA1962 export, with its grammatical variation and cognate expressions means taking out of India to a place outside India. Accordingly, the act of export and clearance thereon complete only when the same is passed for shipment or allowed to be coaled into vessel taking out of India. Section 141 of CA1962 provides control over all conveyance and goods in Customs area for the purpose of enforcing the provisions of this Act. Vide notification No.52/2006-Cus (NT), Chennai Seaport has been designated as Customs Area.
Chennai Customs which is invested with power to stop and examine the permitted loading of export goods for the purpose of enforcing the provision of the Customs Act 1962, has both territorial and functional jurisdiction over the functioning of Port of loading i.e. Chennai Seaport.
Thus, in this case, the act of export has not been completed and the seizure was made before completion of the export formalities. In this case the Red Sander are prohibited items and there is a possibility of substitution of goods en-route even after let export was given. Since it is an outright case of illegal export being detected based on intelligence, the seizure, issue of show cause notice and further adjudication proceedings are by conformity within the ambit of jurisdiction of this Chennai Customs (Sea) Commissionerate.
3. The challenge by the appellants to the above order is on the ground that the shipping bill covering the goods was filed in Bangalore and let export order in terms of Section 51 of the Customs Act was passed by the proper officer at Bangalore.
4. I have heard both sides. The case law relied upon by the ld. counsel for the appellants namely Union of India Vs Ram Narain Bishwanath [1997 (96) ELT 224 (SC)] and A.Subburaj Vs Union of India [2000 (125) ELT 375] are distinguishable. The first case cited (supra) related to assessed goods and not goods attempted to be smuggled out of India under Section 113 of the Customs Act, 1962. In the second decision, the court held that the officer who gave the let export order cannot revise his order. The Central Government Standing Counsel for the Revenue was not able to show any provisions to the contrary. However, in the present case, the attempt to export the goods has been alleged to be in contravention of Section 113 and thus liable for confiscation at the exit port viz. Chennai. The issue in this case stands decided by the decision of the Division Bench of the Honble Madras High Court in Madanlal Steel Industries Vs UOI [1991 (56) ELT 705 (Mad.)]. The court has held that confiscation proceedings are not controlled by clearance of goods for home consumption or export under Section 47 or Section 51 of the Customs Act. The court has held that ordinarily no action to confiscate the goods cleared for home consumption will be taken but there are exceptions, and action to confiscate the goods does not depend upon clearance of the goods for home consumption or export, but on conditions enumerated under Section 111 as regards improperly imported goods and Section 113 as regards the goods attempted to be improperly exported. The relevant extract of the High Courts order is reproduced herein below :-
4.Coming to the confiscation, we may notice the observations of the Supreme Court in Collector of Customs v. Boormull (AIR 1974 Supreme Court 859) in which it has been pointed out that a proceeding for confiscation is one in rem rather than one in personam, like e.g., penalty under Section 112 of the Act, one in relation to the goods rather than in relation to the person in any way concerned. Further, in Frankfurther v. W.L. Exner (1947 Ch. D. 629), it was said:
Confiscation is an act of appropriation of private property for State or Sovereign use and usually been the result of the doing by the owner of some prohibited act. The seizure and appropriation of property as a punishment for breach of the law whether municipal or international was held to be confiscation. There are other authorities also who have taken the view, however, like the Calcutta Court, that a confiscation proceeding shall not be controlled by a provision like one under Section 47 or Section 51 of the Act and that it would be incorrect to say that for initiating a confiscation proceeding, it would be necessary to find out whether the goods have been duly cleared by the Customs or not. Such a view has been expressed by a Special Bench of the Customs Tribunal in the case of N. Devidas and Company v. Collector of Customs, Bombay [1987 (29) E.L.T. 247] and by the North Regional Bench of the Customs Tribunal in the case of R.K. Industries v. Collector of Customs and Central Excise [1989 (39) E.L.T. 316]. They have stated in no uncertain words that clearance under Section 47 of the Act cannot oust the jurisdiction of the Customs authorities to confiscate goods under Section 111 of the Act, if later on it is found that the conditions, subject to which the goods were permitted to be imported were not fulfilled or complied with. Consensus of judicial opinion thus is; (1) that an order for clearance of the goods for home consumption is a quasi-judicial order and some sort of finality has to be attached to it. Ordinarily, no action to confiscate such goods which are cleared for home consumption will be taken but there may be exceptions to it, such as those indicated in the Delhi Court judgment in the case of Jain Shudh Vanaspati Ltd. and Others v. Union of India and Others [1982 (10) E.L.T. 43] supra; and (2) that an action to confiscate goods does not depend on clearance of the goods for home consumption or export, but on conditions enumerated under Sec. 111 of the Act in so far as improperly imported goods are concerned and Sec. 113 of the Act in so far as goods attempted to be improperly exported are concerned. As in the case of goods already exported, it cannot be said that there was no attempt to improperly export, with respect to goods already cleared for home consumption also, it will not be possible to say that they have not been improperly imported.
5. Courts which have taken the view that an order under Section 47 of the Act is final and on the face of such an order in favour of the importer action to confiscate the goods cleared for home consumption cannot be taken, have also taken notice of the exceptions that may arise and even goods cleared in such circumstances can be subjected to confiscation. The Delhi Courts judgment supra has taken notice of these exceptional circumstances saying, The finality cannot be disturbed unless the Department successfully shows that there was fraud or deliberate suppression. Both the Bombay Court and the Delhi Court in the cases of Union of India v. Popular Dyechem [1987 (28) E.L.T. 63] and Jain Shudh Vanaspati Ltd. and Others v. Union of India and Others [1982 (10) E.L.T. 43] supra, however, have not taken notice that the seizure and confiscation are acts in rem unlike any penal action under the Act itself being one in relation to the goods rather than in relation to the person and such proceedings, however, depend not on anything else, but the reasonable belief of the proper officer that the goods are liable to confiscation, whether for the reason of being improperly imported goods or for the reason of improper export. Such a belief may be found to be reasonable for the reasons of fraud or suppression, as noticed by the Delhi Court in Jain Shudh Vanaspati Ltd. and Others v. Union of India and Others [1982 (10) E.L.T. 43] supra, or such other reasons or such other grounds which render the import or the export illegal and liable to confiscation. It would be only in the notice under Section 124 of the Act that grounds would be disclosed and then only it would be possible to know whether there has been any fraud, suppression of fact and/or any other invalidity in the import or export, or not.
6. Both the Bombay Court judgment in the case of Union of India v. Popular Dyechem [1987 (28) E.L.T. 63] and the Delhi Court judgment in the case of Jain Shudh Vanaspati Ltd. and Others v. Union of India and Others [1982 (10) E.L.T. 43], on their peculiar facts, are good for taking notice of the order under Section 47 of the Act and saying accordingly that unless that order was set aside, no proceeding for confiscation should have been taken. It is difficult, however, to accept this as a law, as once there is a clearance under Section 47 and/or Section 51 of the Act is ordered, unless that order is set aside, the proper officer cannot act on his reasonable belief under Sections 110, 111 or 113 of the Act. The Calcutta Full Bench judgment in the case of Euresian Equipments & Chemicals v. Collector of Customs [AIR 1980 Calcutta 188 = 1980 (6) E.L.T. 138 (Cal.)] has, in substance, pronounced that such proper officers satisfaction for confiscation proceedings shall remain unaffected by the order of the proper officer permitting the clearance of goods under Section 51 of the Act. That view is in consonance with the basis of the belief that goods have been improperly imported or exported and such belief being in relation to the goods and in rem, it will not be correct to read in the orders under Section 47 or Section 51 of the Act any inhibition upon the jurisdiction of the proper officer to act under Sections 110, 111 and 113 of the Act. The petitioner/appellant came to this Court challenging the seizure without waiting for the notice under Section 124 of the Act. Such materials upon which it will be possible to predicate whether there are reasons for misrepresentation or fraud in importing or exporting of any prohibited goods or dutiable goods in violation of the conditions under which such import or export is permissible, will be available only in the notice, which, as we have already noticed, has to contain the grounds on which the proposal to confiscate is based, to afford an opportunity to the importer or the exporter or any other person from whose custody such goods are seized, to make a representation in writing and thereafter heard. We thus find that it is not a fit case in which this Court can declare the seizure invalid.
5. In the case of Commissioner of Customs, Bangalore Vs Vikram Jain [2009 (244) ELT 504 (Kar.)], the Honble Karnataka High Court has held that since the goods in question, although imported at Calcutta and cleared therefrom, were seized in Bangalore, show-cause notice issued answerable to Commissioner of Customs, Bangalore is valid as proceedings for confiscation being an action in rem, proper officer having jurisdiction over situs of goods had the authority to initiate proceedings.
6. The decision of the Larger Bench of the Tribunal in CCE Cochin Vs Arvind Export (P) Ltd. [2001 (130) ELT 54] also deals with assessed goods and is, therefore, distinguishable from the facts of the present case.
7. Following the ratio of the Madanlal Steel Industries and Vikram Jain decisions supra, I hold that the Commissioner had jurisdiction to issue the show-cause notice, uphold the impugned order and reject the appeal.
(Pronounced in open court on 12.8.2010) (JYOTI BALASUNDARAM) VICE-PRESIDENT gs 2