Madras High Court
M/S.First Track Traders vs The Commissioner Of Customs on 1 March, 2012
Author: V.Dhanapalan
Bench: V.Dhanapalan
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 01/03/2012 CORAM THE HONOURABLE MR.JUSTICE.V.DHANAPALAN WP.(MD) No.13300 of 2011 and M.P.(MD).No.1 of 2011 M/s.First Track Traders, rep.by its Proprietor, S.Rajapathi ... Petitioner Vs 1.The Commissioner of Customs, (Seaport-Imports), Customs House, New Harbour Estate, Tuticorin. 2.The Additional Commissioner of Customs, (Seaport-Imports), Customs House, New Harbour Estate, Tuticorin. 3.The Deputy Director, Tuticorin Regional Unit, Directorate of Revenue Intelligence, 22,South Beach Road, Roche Colony, Tuticorin-628 001. ... Respondents This Writ Petition filed under Section 226 of the Constitution of India to issue a Writ of Mandamus to direct the respondents herein to provisionally assess and clear the consignment comprising of 104 units of old and used secondhand Digital Multifunction Print and Copying Machines and 10 units of old and used secondhand photocopying machines covered by Bill of Entry No.3394138 dated 03.05.2011 without insisting for a licence for its import in terms of the Foreign Trade Policy read with Foreign Trade (Development and Regulation) Rules, upon the petitioner paying the applicable duties of customs of the enhanced value as determined by the chartered engineer. !For Petitioner ... M/s.N.Viswanathan ^For Respondents... Mr.R.Aravindan Standing Counsel ****** :ORDER
This Writ Petition has been filed for a direction to the respondents herein to provisionally assess and clear the consignment comprising of 104 units of old and used secondhand Digital Multifunction Print and Copying Machines and 10 units of old and used secondhand photocopying machines (henceforth called as 'imported goods') covered by Bill of Entry No.3394138 dated 03.05.2011 without insisting for a licence for its import in terms of the Foreign Trade Policy read with Foreign Trade (Development and Regulation) Rules, upon the petitioner paying the applicable duties of customs of the enhanced value as determined by the chartered engineer.
2. The facts of the case, in a nutshell, are as follows:-
a) The petitioner concern has been engaged in the import and trading of secondhand digital multifunction printing and copying machines as also the secondhand photocopier machines and its accessories, parts and consumables. For carrying out the said business, the petitioner has been provided with Import and Export Code No.410042277 (for short 'IEC') issued by the office of the Zonal JDGFT, Chennai. During the course of its business, it has imported a consignment comprising of 104 units of old & used Digital Multifunction Printing and Copying Machines of various models and 10 units of old and used second hand photocopying machines from the overseas supplier viz. M/s. Jade Group Ltd. (Br) Sharjah, UAE, covered by Invoice No.5113 dated 07.04.2011 for a total CIF value of USD 24750 and filed the above stated Bill of Entry bearing No.3394138 as early as on
03.05.2011 with the assessment group concerned at the Tuticorin Custom House and sought the clearance of the same.
b) Even though a Bill of entry was filed by the petitioner herein for the clearance of the impugned goods as early as on 03.05.2011, the respondents have not assessed the subject bills of entry. Added further, a Chartered Engineer, by name Er. P.Senthoor Pandian, Tuticorin, having examined the goods and had given his report dated 09.05.2011, confirming to the description of the goods as found in the invoice filed by the petitioner herein and valuing the goods marginally higher than the one declared by the petitioner herein, corroborating the correctness of the declaration made by the petitioner before the customs no diligent steps were initiated by the respondents herein to assess and clear the goods at an early date in terms of the provisions contained in the Customs Act, and the regulations made thereunder, overlooking the circular no.42/2001 issued by CBEC, New Delhi, providing for speedy clearance of goods imported. 3
c) In the mean time, the Directorate of Revenue Intelligence, the 3rd respondent herein, took up investigation in the matter against the petitioner concerned, concerning the import of subject goods. He was also summoned by the Directorate of Revenue Intelligence, (in short'DRI') and a statement under Section 108 of the Customs Act was recorded from him, which was exculpatory in nature. While so, the third respondent arranged for an invoice of higher a value, for which, the petitioner sent a notice through his Advocate reiterating the facts about the genuineness of the import of the subject goods and that there is no attempt of any mis-declaration or undervaluation whatsoever on his part concerning the import of the impugned goods. Since the petitioner did not accept the proposals made by the 3rd respondent, he was driven from pillar to post and made to suffer immensely by the respondents by not assessing the subject goods and to permit clearance of the goods even after the chartered engineer has examined the goods and given his report to the department. The petitioner contends that once the chartered engineer report has been obtained, there cannot be any impediment for the respondent department to get the goods assessed and cleared on payment of appropriate duty. But, the same has not been done by the respondent department for certain extraneous and irrelevant considerations.
d) The petitioner further submits that the import of the second hand photocopiers and also secondhand digital multifunction print & copying machines are being permitted through the Tuticorin, Chennai, as well as the other ports for the last two decades. He further submits that from December 2006, the Customs Tariff Act was amended in terms of which a new subheading bearing no. No.8441 3100 was inserted / introduced for the digital multifunction print and copying machines, while the photocopier machines were shifted and introduced under CTH No.8443 3930 of the said Tariff Act from erstwhile Tariff heading of 90091200. Thus, the classification of the two goods in question in terms of the Customs Tariff Act itself recognized them to be quite distinct and different. He further submits that the Foreign Trade policy also recognized the position by adopting the different classifications for the above two machines in question in the ITC classifications of Export and Import Items by the DGFT, Ministry of Commerce and Industry, Department of Commerce.
e) Prior to the separate classification of the digital multifunction printing and copying machines, dispute was raised with regard to the free importability of the old and used second hand Dig photo-copier being imported through all the ports in India including the port at Chennai on the ground that these goods cannot be treated to be capital goods within the meaning of the import Export policy. The issued in question was taken before the Hon'ble Apex Court by the Customs Department was decided in favour of the importers by the Apex Court holding that the said goods are capital goods and are therefore freely importable into India by confirming the decision of the Hon'ble Larger Bench of the Tribunal. The Ministry of Commerce pursuant to the said judgment of the Hon'ble Apex Court while accepting that these goods are second hand capital goods, however, imposed a restriction on the import of the old and used second hand photocopiers alone by issue of a notification bearing no 31/2005 RE dt. 19.10.2005 by amending para 2.17 of the Foreign trade policy.
f).Since the second hand digital multifunction print and copying machines came to be classified differently and as the nature of the machines were also quite distinct and different from a photocopier, the petitioner herein as well as other similarly placed importers contested the claim of the Customs that the said goods being similar to a photocopier would also attract the restriction under para 2.17 of the Policy. Since the authorities did not allow the clearance of the subject goods without adjudging the fine and penalty, holding that these machines are restricted for import, the petitioner as well as others were forced to approach this Court seeking release of the goods without insisting for the said licence. The order directing the release of the goods by making some deposit was challenged by the Revenue Department before the Hon'ble Division Bench of this Court, which directed the release of the goods on payment of the applicable duties on the enhanced value and cash deposit of 25% of the said enhanced value. The said judgment was followed in several writ petitions filed for the release of such goods. It is also submitted that the same condition was imposed even for release of secondhand photocopier machines by this Hon'ble Court consequent to one of the importer challenging the jurisdiction of the Director General of Foreign Trade to issue the notification restricting the import of the said goods, which order was also confirmed by the Hon'ble First Court on an appeal by the revenue, which order has become final as no appeal against the said order has been preferred. Against the order of learned single Judge, it went on appeal, which also got dismissed by the Hon'ble First Bench of the Madras High Court in W.A.Nos.l 190 to 1194 of 2011 with a specific direction to release the goods. The said respondent had accordingly released the goods with a detention certificate as agreed to by him in the contempt proceedings. The Division Bench of Customs, Excise & Service Tax Appellate Tribunal, South Zonal Bench at Bangalore, had recently passed final order Nos.405 to 416 of 2011 dated 29.06.11, holding that the action of the Customs authorities in confiscating the goods viz. old and used digital multifunction print and copying machines under Sec.111(d) of the Customs Act for non-production of a licence under para 2.17 of the policy is contrary to law and accordingly set aside such confiscation while holding that the "digital multifunction print and copier machines" cannot be termed as photocopiers to attract the bar of para 2.17 of the FTP. The petitioner accordingly submits that the disputed controversy has now been put to an end by the Apex body under the Customs Act, and it is reliably learnt that the operation of the said order has not so far been stayed or annulled by any higher appellate court.
g). The action of the respondents in not assessing and permitting the clearance of the subject goods of the petitioner for over seven months is highly arbitrary and beyond all reasonableness, causing undue financial hardship to them in the form of mounting demurrage and container detention charges besides causing loss of business, which is quite unnatural and an arbitrary action, which should not be allowed to sustain and it is quite contrary and defying the instructions issued by the Central Board of Excise & Customs, New Delhi in their Circular bearing No.42/2001-Cus dated 31.07.2001, which requires speedy clearance of the imported goods in order to avoid payment of detention and demurrage charges. The respondents have also failed to understand that the goods under import is not in the category of prohibited goods and therefore, there cannot be any impediment for the respondents to proceed with assessment and clearance of goods. The respondents have not realized their responsibilities as a quasi judicial public authority to expedite action in the speedy clearance of the goods imported by the petitioner, at least on a provisional basis in terms of section 18 of the Customs Act, following the instructions laid down in Circular no.42/2001-Cus dt.31.07.2001 by the Govt, of India, Ministry of Finance, (Dept. of Revenue), Central Board of Excise & Customs, New Delhi, if they have any reservations in this matter.
h). There are no justifiable reasons attributed by the department for non-assessment of the subject goods and permit clearance thereof, inspite of the fact that the very same respondent have|permitted clearance of the subject goods, pursuant to the orders of the Hon'ble High Court of Madras at Madurai Bench in W.P(MD).No.1344/2011 dated 30.09.2011 W.P(MD).Nos.11503, 11510, 11608 of 2011 dated 19.10.2011 permitting clearance of the subject goods on the petitioner depositing 25% on the enhanced value apart from the actual duties payable on the enhanced value and also by executing a personal bond for the remaining differential duty with liberty to the respondents to proceed with adjudication in accordance with law. The petitioner further submits that inspite of the orders of this Court, wherein the 1st and 2nd respondents herein were also a party to the proceedings therein, the respondents have not made any attempt to proceed further with the assessment and clearance of the subject consignment of the petitioner, inspite of the fact that there is no objection whatsoever recorded by the officials, coupled with the fact that the chartered engineer has inspected and given his report nothing objectionable, except for a marginal increase in the declared value, which was also accepted by the petitioner herein without prejudice to his rights to proceed in a manner known to law.
i). The apprehension of the petitioner is not unfounded for the reasons that even provisional assessment and release of goods sought was not considered inspite of the existence of the instructions of the Central Board of Excise & Customs, New Delhi which are squarely binding on the respondents herein, and the goods are simply lying at the container freight station, with mounting demurrage and container detention and storage charges, besides other incidental charges, detrimental to the interest of the importers like the petitioner. The petitioner further submits that even though the discretion to resort to provisional assessment rests with the proper officers of the Customs, such discretion has to be exercised in a bona fide manner and not for collateral purposes or in colourable exercise of such powers. The petitioner is advised to submit that provisional assessment has to be made on the basis of Sec.18 of the Customs Act read with the Customs (Provisional Duty Assessment) Regulations, 1963.
j). In this regard, the petitioner has been regularly approaching the respondents for an early clearance, but he has been driven from pillar to post and representation have not been conceded to. The petitioner submits that since the representations of the petitioner including other importers did not evoke any response, the petitioner having no other efficacious remedy is constrained to approach this Court by way of writ petition, by invoking the jurisdiction of this Court vested with it under Art.226 of the Constitution of India, for a suitable remedy for the relief stated earlier.
3. A counter affidavit has been filed on behalf of the respondents, in which, it is stated as follows:-
3.1. The second respondent herein is the officer supervising the investigation who is empowered to supervise the investigation of cases of commercial frauds pertaining to the goods being imported at the Sea Port of Tuticorin. A specific intelligence was received by the Director of Revenue Intelligence, Tuticorin that the restricted old and used photocopier machines are imported through Tuticorin Sea Port without proper import licence. The officers of Directorate of Revenue Intelligence intercepted the consignment covered under the Bill of Entry No.3394138 dated 03.05.2011. It was also ascertained that the said Bill of Entry was filed by M/s Rahul Transports, Tuticorin having the Custom House Agent License No.AJFPP0732JCH001 on behalf of an importer M/s First Track Traders, at No. 126/6, Valluvar Nagar Red Hills Road, Villivakkam, Chennai. The importer is having IEC No.0410042277 and Income Tax PAN No.AUPPR7664CFT. The supplier firm was shown as M/s Jade Group Limited (BR), PO Box No.8124 - Sharjah - UAE, is 5113 dated 07.04.2011. Since the imported material is of old and used nature, the said consignment was subjected to the examination of a Chartered Engineer. On 07.05.2011, the goods were inspected by one P.Senthoor Pandian, a Chartered Engineer and Valuer at 178/6, Palayamkottai Road, Tuticorin. In his detailed valuation report, dated 09.05.2011, the said Chartered Engineer valued the goods as USD 26150 as against the declared value of USD 24750. According to the report, there were two types of Photocopier machines in the said consignment. There are 104 numbers of multifunction (print and copying) machines and 10 numbers of photocopier machines. There are two types of classifications involved. The Multifunctional (print and copying) Machines are classifiable under Chapter Heading No.84433100 and the Photocopier Machines are classifiable under Chapter Heading No.8443 3920 or 84433930. The importer through the CHA classified all the machines under 8443920 which related to Photocopier Machines which requires import license.
3.2. In order to ascertain the facts from the Importer, Sri.S.Rajapathi, the Importer Exporter Code (IEC) holder on whose behalf the said bill of entry was filed by the CHA, was summoned under Section 108 of the Customs Act, 1962. The said Sri. S.Rajapathi, Proprietor of M/s First Tract Traders was summoned to give evidence and produce documents such as Purchase Order, Payment details and other correspondences with the supplier abroad. In response to the summons, Sri.S.Rajapathi appeared on 20.05.2011 as scheduled and gave a voluntary statement under Section 108 of the Customs Act. It is further stated in the counter affidavit that a month back, one Mohamad Hasan, who in Dubai, informed the petitioner that xerox machines were sent in Sri.S.Rajapathi's Company name; that he had not received the invoice, packing list from the said Mohamad Hasan, and he had not arranged CHA for filing the Bill of Entry; that Shri Mohamad Hasan might have engaged his relative/friends for the customs documentation and he was totally unaware of the import consignment & documents; that he contacted Shri Mohammad Hasan and informed his intention to appear before the investigating officer; that he also informed his intention that he would disown the consignment; that Shri Mohamed Hasan promised to come to India to appear before the investigating officers of Customs; that except giving IEC, he had no connection with this import consignment. The residential address in India, of the so called Sri.Mohamed Hasan was not known to him. The said Sri.Mohamed Hasan also has not yet appeared before the Investigating Officer of DRI, Tuticorin.
3.3. While the matter stood thus, one Sri.N.Viswanathan, an Advocate and Former Assistant Commissioner of Customs & Central Excise, at Flat N0.8-A, "RAMS" No.26, South Mada Street, Srinagar Colony, Saidapet, Chennai vide his letter dated 21.06.2011 on the basis of instructions from Sri.S.Rajapathi of M/s.First Track Traders, as a Counsel represented to the Deputy Director, Directorate of Revenue Intelligence, Tuticorin to release the goods provisionally; that he also made allegations that his client was pressurized to bring Sri.Mohamed Hasan or to file the original bill with one crore value; that his client was also pressurized to give further report on the value aspects. However, the said Counsel has also so far neither appeared on behalf of the original importer nor produced the documents called for from the importer.
3.4. Thus, the original importer Sri.Mohamed Hasan failed to appear before the investigating officer to claim the ownership and to produce necessary license to prove the licit nature of the imported goods. The value is another aspect which needs to be clarified in the absence of scientific opinion lacking on the part of the Chartered Engineer. The Chartered Engineer certified all the 114 machines as Xerox Machines whereas the category of import items are found to be Multifunctional (Copying & Printing) Machines and Photocopier Machines as admitted in the petition. The importer has to furnish the details and the import goods are to be subjected to further assessment through other more qualified technical persons.
3.5. It is submitted that the petitioner has not retracted the statement given before the Investigating Officer under Section 108 of the Customs Act, 1962 on 20.05.2011 wherein, he denied the ownership of the import goods. Hence, the facts remain the same. Since the original importer has not turned up to claim the ownership, the goods are to be treated as abandoned and to be dealt with accordingly. The claimant has to prove his financial capacity to receive the goods. The goods are not to be assessed in the name of a person who totally denied the ownership of the goods. The real importer has to prove the ownership and then, he has to account for the value and also the legal aspect of production of import license.
3.6. Further, in the counter affidavit it is stated that the importer is one as per Section 2 (26) of the Customs Act, 1962 that the "importer", in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes any owner or any person holding himself out to be the importer. In this case, the petitioner denied his ownership of the goods before the Statutory Authorities at the time the imported goods are under the process of assessment and clearance and hence, he is not to be considered as an importer. In as much as the imported goods are attempted to be cleared by undervaluing and also without valid import license, the said goods are liable for confiscation under Section 111(d) and 111(m) of the Customs Act,1962.
4. The first and foremost contention of the learned counsel for the petitioner is that the petitioner is a person holding himself to be an importer as furnished under Section 26 of the Customs Act,1962. Therefore, when the petitioner has produced necessary documents such as bill of entry, invoice of the goods, packing list and bill of lading, it is not proper for the respondents to keep the goods without assessment or even for provisional assessment to clear the consignment. He would further contend that the petitioner is having been issued with IEC Code and is an assessee of the income tax with PAN card in favour of establishing his rights to import the goods.
4.1. The learned counsel for the petitioner, in his written arguments, submits that the goods imported by him is not in any way prohibited or banned and are freely importable into India; that the Department itself having appointed the Chartered Engineer for examining the impugned goods and the said Engineer having valued the goods as early as on 09.05.2011, the officers ought not to have held back the clearance of the goods for the last 9 months which is highly improper and arbitrary. Therefore, the action of the authorities is contrary to circular No.42/2001 dated 31.7.2001 issued by the Ministry, which circular as per the judgment of the Hon'ble Supreme court is binding on them; that he is the owner of the goods and is liable to remit the value for the goods to the overseas supplier; that the invoice issued by the overseas supplier, packing list, bill of lading all issued in his name which documents he had filed along with the Bill of Entry clearly evidences his title to the goods leaving no room for the authorities to take any contrary stand and that the petitioner also admittedly holds the Import Export Code (IEC) and Income Tax PAN Card issued in his favour establishing his right to import the goods. 4.2. Further, the only reason for initiating investigation is the import of the goods without a licence. When the goods are importable without a licence, as per the decision of the Bangalore Tribunal in the case of M/s.Shivam International and another Vs. CC,Cochin, in A.No.2477 to 2488 of 2010, dated 26.05.2011 and in view of the Minutes of the high level meeting held by the Ministry of Environment & Forest (copy furnished during hearing), the whole action said to have been taken by them causing the long delay is totally unsupported and vitiated. The respondents have not denied the contents of the retraction letter dated 21.6.2011 except for claiming that the petitioner's counsel neither personally appeared before them on behalf of the original importer nor produced the documents called for.
4.3. The only basic contention raised in the counter that the petitioner had informed his intention to disown the goods and therefore, he has no locus standi to import the goods is also not proper or legal and cannot be sustained on merits. The statement made by the petitioner that he would disown the goods was due to the fact that the authorities are proposing to increase the value of the goods to Rupees one crore which would ultimately result in the petitioner being made liable for a very huge duty liability and not in the ordinary course. The petitioner further submits that without prejudice to his contention that he is the owner of the impugned goods and therefore, rightfully entitled to import the goods; that the other ground on locus standi taken by the respondents is also not sustainable for the following reasons. Sec. 2 (26) of the Customs Act not only recognizes the owner as an importer, but also any person holding himself to be such importer. In fact, in para 19 of the judgment of the Hon'ble Supreme court in the case of UOl Vs Sampat Raj Dugar reported in 1992 (58) E.L.T. 163 (S.C.), it is held that ink to the goods imported has no relevance to the interpretation of the term "importer" defined under Sec. 2 (26) of the Customs Act, which would squarely vacate the above objection taken by the respondents. Further, the observations of the Hon'ble Division Bench of the Bombay High court in its judgment reported in 2009 (248) K L T 166 (Bom) also supports the case Of the petitioner. Further, the Ahmedabad Bench of the Tribunal also has held the issue in favour of the petitioner vide its decision reported in 2007 (217) E L T 570, which would negative the claim of the respondents. This decision is also squarely binding on the respondents.
4.4. It is impermissible to state that the goods are waste attracting the provisions of the Hazardous Wastes Rules, as it only amounted to improving the case of the revenue 21 and that this Court may consider provisions contained in regulation 6 (I) of the Handling of Cargo in Customs Area Regulations, 2009 and the judgment of the Hon'ble Delhi High Court reported in 1988 (37) E.L.T. 512 (Bom) as well as the Full Bench of this Hon'ble High Court in the case reported in 1980 (6) E L T 128 (Mad) and also in the case reported in 2009 (244) E L T 15 (Mad) which on appeal had resulted in the customs being saddled with the entire demurrage charges vide judgment of the Hon'ble Madras High Court and for issuance of a consequential direction to the customs to bear the costs of demurrage incurred on the goods on account of its long storage due to the inaction of the authorities for not obeying the instructions of their own Ministry.
5. In support of his contentions, learned counsel for the petitioner has cited the following decisions of the Court:-
5.1. In Union of India Vs Sampat Raj Dugar reported in 1992 (58) E.L.T. 163 (S.C.), in para 19, it is held as follows:-
"19. We may first consider the question of title to the said goods. If we keep aside the provisions of law relied upon by the appellants viz., definition of 'importer' in Section 2(26) of the Customs Act, Clause 5(3)(ii| of the Imports (Control) Order as well as para 26(iv) of the Import-Export Policy, the position is quite simple. Since the second respondent did not pay for and receive the documents of the title she did not become the owner of the said goods, which means that the first respondent continued to be the owner. How do the aforesaid provisions make any difference to this position? The definition of'importer1 in Section 2(26) of the Customs Act is not really relevant to the question of title. It only defines the expression 'importer'. The first respondent, does not claim to be the importer. The provision upon which strong reliance is placed by the appellants in this behalf is the one contained in Clause 5(3) (ii) of the imports (Control) Order. Sub-clause (1) of Clause 5 specifies conditions which can be attached to an import licence at the time of its grant. Sub-clause (2) says that a licence granted under the Order shall be subject to the conditions specified in Fifth Schedule to the Order. Sub-clause (3) sets out three other conditions mentioned as (i), (ii) and (iii) which shall attach to every1 import licence granted under the Order. First of these conditions says that the import licence shall be non-transferable except under the written permission of the Licensing Authority or other competent Authority. Condition (ii) - which is the provision relevant herein says that the goods for the import of which a licence is granted "shall be the property of the licensee at the time of import and thereafter upto the time of clearance through customs.** This condition, however, does not apply to STC, MMTC and other similar institutions entrusted with canalization of imports. It also does not apply to certain eligible export houses, trading houses and public sector agencies mentioned in the second proviso. Condition (iii) says that the goods for which the import licence is granted shall be new goods unless otherwise mentioned in the licence. Now coming back to the Condition (ii), the question is what does it mean and what is the object underlying it when it says that the imported goods shall be the property of the licensee from the time of import till they are cleared through customs. It is necessary to notice the language of the sub-clause. It says "it shall be deemed to be a condition of every such licence that - the goods for the import of which a licence is granted shall be the property of the licensee at the time of import and thereafter up to the time of clearance through Customs."
The Rule making authority (Central Government), which issued the order, must be presumed to be aware of the fact that in many cases, the importer is not the owner of the goods imported at the time of their import and that he becomes their owner only at a later stage, i.e., when he pays for and obtains the relevant documents. Why did the Central Govt, yet declare that such goods shall be the property of the licensee from the lime of import? For appreciating this, one has to ascertain the object underlying the said provision. The interpretation to be placed upon, the provision should be consistent with and should be designed to achieve such object. In this context, it should also be remembered that expressions like 'Property of and 'Vest' do not have a single universal meaning. Their content varies with the context. The aphorism that a word is not a crystal and that it takes its colour from the context is no less true in the case of these words. In our opinion the object underlying Condition
(ii) in Clause 5 (3) is to ensure a proper implementation of the Imports (Control) Order and the Imports and Exports (Control) Act,1947. The idea is to hold the licensee responsible for anything and everything that happens from the time of import till they are cleared through Customs. The exporter is outside the country, while the importer, i.e., the licensee is in India. It is at the instance of the licensee that the goods are imported into this country. Whether or not he is the owner of such goods in law, the Imports (Control) Order creates a fiction that he shall be deemed to be the owner of the such goods from the time of their import till they are cleared through Customs. This fiction is created for the proper and effective implementation of the said order and the Imports and Exports (Control) Act. The fiction however cannot be carried beyond that. It cannot be employed to attribute ownership of the imported goods to the importer even in a ease where he abandons them, that is, in a situation where he does not pay for and receive the documents of title. It may be that for such act of abandonment, action may be taken against him for suspension/cancellation of licence. May be, some other proceedings can also be taken against him. But certainly he cannot be treated as the owner of the goods even in such a case. Holding otherwise would place the exporter in a very difficult position; he loses the goods without receiving the payment and his only remedy is to sue the importer for the price of goods and for such damage as he may have suffered. This would not be conducive to international trade. We can well imagine situations where for one or other reason, an importer chooses or fails to pay for and take delivery of the imported goods. He just abandons them. (We may reiterate that we are speaking of a case where the import is not contrary to law). It is only with such a situation that we arc concerned in this case and our decision is also confined only to such a situation. Condition (ii) in sub- clause (3) of Clause 5, in our opinion, does not operate to deprive the exporter of his title to said goods in such a situation.
5.2. In Shree Shilpa Industries Vs. Commissioner of Customs, Raigad reported in 2009(248) E.L.T.166(Bom), it is held as follows:-
"4..........At the hearing of this appeal on behalf of the appellant learned counsel submits that the appellants were not the owners of the goods and that the owners of the goods in fact were M/s.Annapurna Apparels Pvt.Ltd. It is submitted that on a reading of Section 2(26) of the Customs Act,1962, it would be clear that once the owners are known no duty could have been imposed on the appellant herein. Learned Counsel also placed reliance on the judgment of this Court in 1992 (58) E.L.T. 163 (S.C.), cited supra.
5.On the other hand on behalf of the Revenue learned counsel submits that the appellants were the importers, who had filed the bill of entry and had paid customs duty as per their admission as reflected in the reply to the show cause notice and also filed declaration in terms of Section 46 of the Customs Act. Under these circumstances, it is set out that there is no substantial question of law arising in this appeal and accordingly, the appeal should be dismissed.
6.Having heard learned counsel we are of the opinion that there is no merit in this Appeal. In the first instance, the bill of entry was filed by the appellant herein. Under section 46 of the Act the importer apart from other things in terms of sub-section (4) has to subscribe a declaration as to the truth of the contents of such a bill of entry. In the bill of entry admittedly, the appellant herein had not disclosed that there were not the owners of the goods. Mere fact that on subsequent investigation the revenue came across material showing violation of the provisions of Customs Act and Rules would not result in holding that the person who had paid the duty and filed bill of entry cannot be held to be the owner. In the case of Sampat Raj Dugar, this Court was considered the issue Section 2(26) in the context of confiscation. That judgment really would not apply to the issue which is before us for our consideration."
5.3. In Brij Mohan Sood Vs. CC.Kandla, reported in 2007-(217) ELT 570 (Tri-Ahmd), in parA 5, it is held as follows:-
"5. We agree with the above contention of the ld.DR. The financier of the goods or the owners of the same do not become importers and any liability which may arise would fall upon the person who has filed the bill of entry for clearance of goods and in whose name the goods have been imported. As such by rejecting the above contention of the ld.Advocate, we proceed to decide the appeal on merits."
6. On the other hand, the learned counsel for the respondents would submit that the petitioner is not an importer as defined in the provisions of the Act. In fact, one Mohammed Hasan is the owner of the consignment and not the petitioner, as claimed by him in the Writ Petition. The said Mohammed Hasan informed the authorities concerned that he would disown the consignment and appear before the officers concerned. He draws the attention of this Court that as per Section 2(26) of the Customs Act,1962, "importer" in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes any owner or any person holding himself to be the importer. Whereas, in the present case, he himself denied his ownership of the goods before the statutory authority by making a statement and he has not retracted the statement given before the Investigating Officer under Section 108 of the Customs Act,1962. He also draws attention to Section 108 of the Act, wherein, power is vested with the authorities to summon persons to give evidence and produce documents. Therefore, the claim of the petitioner is legally unsustainable.
6.1. The learned counsel for the respondents would further contend that Section 108 proceedings are criminal in nature. Therefore, the concerned person alone has to come before the authorities concerned and give evidence. Since the original importer has not turned up to claim the ownership, the goods are to be treated as abandoned and to be dealt with accordingly. The goods can never be assessed in the name of a person who totally denied the ownership of the goods. The real owner has to prove the ownership of the goods in question. In this case, the petitioner himself has denied the ownership of the goods before the authorities concerned. In as much as the imported goods are attempted to be cleared by undervaluing and also without valid import licence the said goods are liable for confiscation under Section 111(d) and 111(m) of the Customs Act, 1952. Therefore, this petition is liable to be dismissed.
6.2. In support of his contention, the learned counsel for the respondents has relied on the following decisions:-
a) In (1999) 3 SCC 614, T.C.Mathai and another Vs. District and Sessions Judges, Thiruvanathapuram, Kerala, in para 15, it is held as follows:-
"15. Section 2 of the Power of Attorney Act cannot override the specific provision of a statue which requires that a particular act should be done by a party-in-person. When the code requires the appearance of an accused in a court is is no compliance with it if a power-of-attorney holder appears for him. It is a different thing that a party can be permitted to appear through counsel. Chapter XVI of the Code empowers the Magistrate to issue summons or warrant for the appearance of the accused. Section 205 of the Code empowers the Magistrate to dispense with "the personal attendance of the accused, and permit him to appear by his pleader" if he he sees reasons to do so. Section 273 of the Code speaks of the powers of the Court to record evidence in the presence of the pleader of the accused, in cases when personal attendance of the accused is dispensed with. But in no case can the appearance of the accused be made through a power of attorney holder. So the contention of the appellant based on the instrument of power of attorney is of no avail in this case.
b) In CDJ 2011 Ker HC 486, Abdul Razak Vs Union of Inda, rep.by the Secretary and Others, in paras 4 and 5, it is held as follows:-
"4.The appellant filed appeal against the confiscation order and penalty levied. Even though penalty amount was reduced to Rs.8,000/- confiscation was sustained in appeal and the revision filed before the Government was also unsuccessful. Therefore, the appellant filed the Writ Petition contended that Section 125 of the Act does not provide for absolute confiscation of goods which are not contrabands, and since gold is not a contraband item the appellant is entitled to have the goods released on payment of redemption fine and duty. The learned single Judge however did not go into the question as to whether goods other than prohibited goods are liable to be released on payment of redemption find and duty, if the importer opts so, as smuggle the goods without declaring it before the Customs and thereafter conceding that the goods do not belong to him and that the goods particularly being a carrier, the learned single Judge declined to grant relief in exercise of the discretionary jurisdiction of the High Court under Article 226 of the Constitution of India.
5.Before us learned counsel for the appellant contended that Section 125 does not provide for confiscation of goods other than prohibited goods, and according to him, importers' conduct has no significance for considering whether the option exercised by importers to release the goods on payment of redemption fine and duty should be allowed or not. While the learned counsel for the appellant relied on the provisions of the Foreign Trade (Development and Regulation) Act,1992, and Foreign Trade (Exemption from application of Rules in certain cases) Order, 1993 to contend that gold is not a prohibited goods which can be released on payment of redemption find and duty, learned Standing Counsel appearing for the Department relied on the judgment of the Supreme Court in Om Prakash Bhatia Vs. Commissioner of Customs, Delhi, reported in 2003 (155) E.L.T.423, and contended that when import is permissible on satisfaction of certain conditions, the violation of the same will make the goods imported as prohibited goods within the meaning of Section 2(33) of the Act, which reads as follows:-
"2(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"
After hearing both sides and after considering the statutory provisions, we do not think that appellant, as a matter of right, can claim release of the goods on payment of redemption fine and duty. Even though gold as such is not a prohibited item and can be imported, such import is subject to lot of restrictions including the necessity to declare the goods on arrival at the Customs Station and make payment of duty at the rate prescribed. There is no needs for us in this case to consider the conditions on which import is permissible and whether the conditions are satisfied because the appellant attempted to smuggle out the goods by concealing the same in emergency light, mixie, grinder and care horns etc., and hence the goods so brought is prohibitory goods as there is clear violation of the statutory provisions for the normal import of gold. Further, as per the statement given by the appellant under Section 108 of the Act, he is only a carrier, i.e. professional smuggler smuglling goods on behalf of others for consideration. We, therefore, do not find any merit in the appellants case that he has the right to get the confiscated gold released on payment of redemption fine and duty under Section 125 of the Act. The Writ Appeal is therefore dismissed."
7. I have heard the learned counsel on either side and perused the documents available on record.
8. A perusal of the facts of this case would reveal that the petitioner Concern has been engaged in the import and trading of digital multifunction printing and copying machines as also the photocopier machines and its accessories, parts and consumables. During the course of its business, it has imported a consignment comprising of 104 units of old and used Digital Multifunction Printing and Copying Machines of various models and 10 units of old and used photocopying machines from the overseas supplier viz. M/s. Jade Group Ltd. (Br) Sharjah, UAE, covered by Invoice No.5113 dated 07.04.2011 for a total CIF value of USD 24750 and filed the above stated Bill of Entry bearing No.3394138 as early as on 03.05.2011 with the assessment group concerned at the Tuticorin Custom House and sought the clearance of the same. Even though a Bill of entry was filed by the petitioner herein for the clearance of the impugned goods as early as on 03.05.11, the respondents have not assessed the subject bills of entry. A Chartered Engineer, by name Er. P.Senthoor Pandian, Tuticorin, examined the goods and had given his report dated 09.05.2011, confirming to the description of the goods as found in the invoice filed by the petitioner herein and valued the goods marginally higher than the one declared by the petitioner herein, before the Customs and no diligent steps were initiated by the respondents herein to assess and clear the goods at an early date in terms of the provisions contained in the Customs Act, and the regulations made thereunder, overlooking the circular no.42/2001 issued by CBEC, New Delhi, providing for speedy clearance of goods imported. In the meantime, the Directorate of Revenue Intelligence, the 3rd respondent herein, took up investigation in the matter against the petitioner concerned, concerning the import of subject goods. He was also summoned by the Directorate of Revenue Intelligence, and a statement under Section 108 of the Customs Act was recorded from him, which was exculpatory in nature. While so, the third respondent arranged for a invoice of higher value, for which, the petitioner sent a notice through his advocate. The petitioner contends that once the chartered engineer report has been obtained, there cannot be any impediment for the respondent department to get the goods assessed and cleared on payment of appropriate duty. But, the same has not been done by the respondent department for certain extraneous and irrelevant considerations. Hence, the petitioner is before this Court. Whereas, the Revenue Department's contention is that as per Section 2(26) of the Customs Act,1962, "importer" in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes any owner or any person holding himself out to be the importer. In the present case, he himself denied his ownership of the goods before the statutory authority by making a statement and he has not retracted the statement given before the Investigating Officer under Section 108 of the Customs Act,1962. Therefore, he is not entitled to get the goods in question. Further, in as much as the imported goods are attempted to be cleared by undervaluing and also without valid import licence the said goods are liable for confiscation under Section 111(d) and 111(m) of the Customs Act, 1952.
9. After analysing the above position, the question that arises for consideration is whether the petitioner's claim to assess and clear consignment as a person holding himself out to be importer can be considered in this Writ Petition?
10. Before going to the root of the matter, let me consider Section 2(26) of the Act. As per the said Act, "importer" in relation to any goods at any time between the importation and the time when they are cleared for home consumption, includes any owner or any person holding himself out to be the importer. While so, while the authorities insisted for proper documentation to clear the consignment, a statement was made by the petitioner on 20.05.2011, before the authorities concerned stating that he was unaware of the import consignment and documents; that he contacted the said Mohammad Hasan and informed his intention to appear before the investigating officer; that he also informed his intention that he would disown the consignment; that the said Mohammed Hasan promised to come to India to appear before the investigating officers of Customs and that except giving IEC, he had no connection with this import consignment. As on date, the said statement made by him is in force. As such, it is not proper for him to claim now as if there was cohersion and he was made to depose before the respondents.
11. It is a settled legal position that once a statement is made under Section 108 of the Act, it is done in the case of prosecution, unless it is retracted or cancelled, the petitioner's claim for assessment or provisional assessment cannot be considered. The reliance made by the learned counsel for the petitioner will not have support to the present peculiar facts and circumstances of the case and therefore, he cannot have any advantage of those decisions cited supra.
12. Analyzing all the factors involved in this case and after considering the statutory provisions, I am of the opinion that the petitioner, as a matter of right, cannot claim release of the goods as long as the statement made by him is still in force. Further, as per Section 108 of the Act, the Customs authorities have rightly summoned persons to give evidence and produce documents. Based on which, the claim of the petitioner is negatived. When a person is unable to establish the ownership of the goods, needless to say, the respondents vest with the power to reject the claim of the petitioner.
13. For the foregoing reasons and discussions, I am of the considered view that mere production of Bill of Entry, Invoice of the goods, packing list and Bill of Lading, by the petitioner, that itself, will not give any right over the property, unless the petitioner establishes his ownership in a manner known to law. Thus, it is for the petitioner to go before the authorities concerned and take all necessary steps to retract the statement made by him on 20.05.2011 and prove that he is the person holding out to be an importer. In these circumstances, the claim of the petitioner has no merit consideration. However, if the petitioner proves his ownership by retracting the statement before the authorities concerned, if he is able to establish his right as a person holding out to be an importer, he can go before the authorities concerned for assessing the consignment and release of his goods. Needless to say, the burden is on the petitioner to prove his ownership and release the goods as required by law. In such event, it is for the respondents to consider the same on its own merits and in accordance with law and pass appropriate orders.
With the above observations and direction, this Writ Petition stands disposed of accordingly. No costs.
ssm To
1.The Commissioner of Customs, (Seaport-Imports), Customs House, New Harbour Estate, Tuticorin.
2.The Additional Commissioner of Customs, (Seaport-Imports), Customs House, New Harbour Estate, Tuticorin.
3.The Deputy Director, Tuticorin Regional Unit, Directorate of Revenue Intelligence, 22,South Beach Road, Roche Colony, Tuticorin-628 001.