Customs, Excise and Gold Tribunal - Mumbai
Orient Arts & Crafts vs Commr. Of Cus. (Prev.) on 27 March, 2003
Equivalent citations: 2003(155)ELT168(TRI-MUMBAI)
ORDER S.S. Sekhon, Member (T)
1. (a) M/s. Orient Arts & Crafts. Bhadohi, Varanasi, U.P., are a partnership firm engaged in manufacture and export of handmade woollen carpets, etc., registered as a Small Scale Industrial Unit and recognised as an Export House. Somewhere in the year 1991, some general information appears to have been received by the Customs authorities, about misuse of Import/Export Pass Books, issued to the manufacturers of carpets, etc., and accordingly, the Marine and Preventive Wing of the Commissioner (Preventive), Mumbai took up investigations into the imports made by the appellants against an Import-Export Pass Book No. 0011522, dated 2-2-89. The statements of partner of M/s. New Bright Shipping Services, were recorded who is alleged to have admitted to be acting as Clearing Agents for several carpet manufacturers and gave details of clearance made for and on behalf of various carpet manufacturers and has claimed to have dealt with, in all, ten consignments for the appellants, out of which six are reported to have been cleared and handed over to one Mr. Pravinchandra Shah, whereas four other consignments were lying in docks awaiting clearance. He stated that all the importers used to send the original documents directly but other supporting documents were being supplied by Mr. Pravinchandra Shah, who also paid the CHA charges and other expenses in cash and gave instructions as to delivery of the goods or dispatch to the godowns. All such importers including Mr. Badruddin Ansari of the appellants-firm, had given standing instructions to deliver all consignments of dyes, formic acid and PVA to the said Mr. Pravinchandra Shah of M/s. Vipul Dyes. No documentary evidence to substantiate that any instructions were received from the appellants, or that he had actually effected delivery of the consignments to said Mr. Pravinchandra Shah, are alleged to have been produced. Mr. Pravinchandra Babubhai Shah of M/s. Vipul Dyes is reported to have admitted having purchased DEEC Pass Books from various carpet manufacturers, including the appellants, on payment of premium so far as import of formic acid, PVA and Dyes are concerned, and is reported to have received goods under four consignments of the appellants. No such DEEC Pass Books were produced by him. Mr. Pravinchandra Shah subsequently has retracted his statement. No statement of Mr. Surerndra Dubey, the alleged broker through whom the Pass Books were said to have been purchased by Mr. Pravinchandra Shah, appears to have been recorded. Mr. Prakash Sakulnarayan Dubey of M/s. Super Road Fines, who allegedly issued the bogus transport receipts, is reported to have accepted issuance of the Lorry Receipts and he has reportedly given the numbers and dates for issue of such receipts. Four consignments imported by the appellants lying in Docks, were seized and are still awaiting release.
(b) The appellants were served with a show cause notice dated 28-8-91 issued by the Assistant Collector of Customs Marine and Preventive Wing, Mumbai alleging import and diversion of six consignments (four of which are the subject-matter here and two other of earlier period) consequently demanding duty of Rs. 39,99,930.50. The Notice also proposed confiscation of four consignments that were seized lying in the Docks. The adjudicating authority, the Additional Collector of Customs (Preventive), Mumbai, vide his Order No. 135/92, dated 4-8-1992 overruled the appellants submissions and confirmed the demand and also ordered confiscation of the seized goods in addition to imposing personal penalties. The appellants preferred appeal against the said order, raising amongst others, the ground as to validity of the show cause notice, where extended period was invoked and consequential validity of the adjudication proceedings. The Collector of Customs (Appeals), Mumbai upheld the said contention and set aside the order and allowed the appeal. Simultaneously, he granted permission to the department to issue a fresh show cause notice, invoking extended period, if otherwise permissible.
(c) A fresh show cause notice dated 4-3-1994 was issued to the appellants by the Commissioner of Customs (Prev.), Mumbai making the same allegation as before and relying upon the same evidence which had been relied upon earlier. Based on the details furnished by the appellants to the Collector of Customs (Preventive), Mumbai in the fresh adjudication, about due transport of the consignments on various different dates, through various transporters, the adjudicating authority seems to have got some further enquiry made, but intimation of such enquiry and the alleged outcome thereof, was not brought to the Notice of the appellants and the appellants were not given any opportunity to provide any explanation or to establish the contrary. The fresh adjudicating authority thereafter passed the impugned order, wherein while dropping the demand to the extent of Rs. 10,25,854/- for two consignments, he has confirmed the demand for the balance amount of Rs. 29,74,086.50 on the 4 consignments pending clearance and also ordered confiscation of these seized consignments under Section 111(d) of the Act with an option to pay fine of Rs. 2,00,000/- in lieu of confiscation and a penalty of Rs. 5,00,000/- has been imposed on the appellants under Section 112(b)(i) and (ii) of the Act. Being aggrieved by the impugned order, the appellants filed this appeal.
2. After hearing both the sides and considering the submissions, we find that -
(a) The Collector of Customs (Appeals) while setting aside the order of the Additional Collector of Customs (Preventive), Mumbai had upheld as under :-
"I find that in the show cause notice, the demand has been raised under Section 28 of the Customs Act, 1962. Although Section 28 is not mentioned in show cause notice. The fact remains that duty demanded under Customs Act, 1962, and under Customs Act there is Section 28 only to demand duty. Section 28 pertains to issue of notice for demand of duties not levied, short-levied, or erroneously refunded. State in brief, the position prior to 14th May, 1992 was that the show cause notice itself for the extended period the period more than six months can be issued only by the proper officer and the proper officer in view of the clear wording of Section 28 was the Collector of Customs. In the instant case, the show cause notice has been issued by the Asstt. Collector. The proper officer to issue the show cause notice during the relevant period was the Collector of Customs and not the Asstt. Collector. The Asstt. Collector could have issued the show cause notice if the short-levy or non-levy was within six months. In the instant case the show cause notice has been issued after six months of the relevant date. As the show cause notice is issued after six months after the Order of clearance of goods given by the proper Officer. Although not specifically stated, it appears that the totality of the show cause notice indicates that there is clear suppression and mis-statement for availing Notfn. No. 117/88-Cus., dated 30th March, 1988. That being the case, the show cause notice should have been issued by the Collector of Customs. In view of this clear legal position and also in view of the order of the CEGAT which is applicable in this case referred to above, I decide that in view of undisputed position that alleged evasion of duty is consequent to diverting the imported raw material and the demand has been issued after six months, the show cause notice issued by the Asstt. Collector is not legally valid. During the material time, the Asstt. Collector had no jurisdiction to issue such a show cause notice to invoke the extended period on allegation of duty evasion. In view of the above matter, the Order of Adjudication No. 135/92 is set aside. The Department shall however have the liberty to read judicate the case by issuing a proper show cause notice, if otherwise permissible under the taw."
(Emphasis supplied) The present proceedings were initiated pursuant to the show cause notice dated 4-4-94 which was issued by Collector of Customs (Preventive), Mumbai. The perusal of the show cause notice issued in the earlier proceedings namely show cause notice dated 28-8-91 issued by the Assistant Collector of Customs (Prev.) Marine and Preventive Wing, Mumbai and the present show cause notice resulting the present impugned order, indicates on facts, there is no new material in the second show cause notice issued by the Collector of Customs (Preventive) for the same period and only the extended period for and a demand under Section 28 of the Customs Act is invoked, on account of wilful misstatement and suppression of facts by them i.e. M/s. Orient Arts and Crafts in collusion with other notices; while first show cause notice was for the normal period without invoking the extended period as it appears in the findings of the Collector of Customs (Appeals), Mumbai (supra). Since a second show cause notice, on identical facts only invoking the extended period was not held to be valid by the Tribunal in the case of Delux Carpet Co. and Ors. v. CC (Prev.), Mumbai reported in 2002 (146) E.L.T. 80 (T) = 2002 (52) RLT 234 (CEGAT-Mum.), we do not hold the same, following the said decision. A proceeding continued on basis of an invalid notice is bad ab initio.
(b) The appellants have taken the plea questing the jurisdiction of Collector of Customs (Preventive), Mumbai to issue demands as proper officer and to determine the assessments on the Bills of Entry, which have been filed and for the consignments covered by the same were pending clearance in Docks but which were seized by Officers of the Marine and Preventive Wing of the Collector of Customs (Preventive), Mumbai. They have relied on the following case laws :
(i) Manohar Bros. (CACITORS) v. Collector of Customs-II, Bombay [1998 (98) E.L.T. 821]
(ii) Sharad Himatlal Daftary v. Collector of Customs [1988 (36) E.L.T. 468 (Cal.)]
(iii) Informatika Software v. CC (P), Calcutta [1997 (73) ECR 348 (Tribunal)]
(iv) Ramnarain Biswanath v. UOI [1988 (34) E.L.T. 202 (S.C.)] (v) Canepo Textiles Put. Ltd. v. State of Haryana [1992 (84) STC 88]
(vi) Grand Slam International v. Collector of Customs [1992 (57) E.L.T. 161 (Tribunal)]
(vii) CCE v. Poona Rollers [1997 (89) E.L.T. 604]
(viii) Shri Balaji Rice Mills Co. v. Commissioner of Taxes [1984 (55) STC 292 Andhra Pradesh]
(ix) UOI v. Ram Narain Biswanath [1997 (96) E.L.T. 224 (S.C.)] We find there is substantial force in the arguments on jurisdiction as made by the learned C.A. for the appellants. The demands of duty under Section 28 of the Customs Act, 1962 have to be made by the proper officer and not by any Officer of Customs, since proper officer of Customs was designated by law. Interpretation on jurisdiction, as arrived at by the learned Adjudicator to assume the jurisdiction in this case, as per his findings are as under -
"It is not disputed by M/s. Orient Arts and Crafts that by virtue of Notification No. 250/83, the Commissioner of Customs (Prev.), Mumbai is appointed as Commissioner of Customs, Mumbai in the areas comprising the districts of Mumbai, Thane and Kolaba. Thus it is evident that a concurrent jurisdiction is vested with the Commissioner in respect of Mumbai Port situated in Mumbai district. In the Customs Act, 1962, smuggling is defined as any act or omission which renders the goods liable to confiscation under the provisions of the Act. In his case, M/s. Orient Arts and Crafts have been charged with trafficking of the goods imported and cleared free of duty in violation of the provisions of exemption Notification No. 117/88, dated 30-3-1988 and fabrication of documents to show receipt and consumption in their premises. These acts and omissions thus rendered the goods liable for confiscation under the provisions of the Customs Act, 1962 and the Customs (Preventive) Commission-erate created for the purpose of prevention of smuggling and detection of cases of smuggling including commercial frauds is thus competent to investigate and adjudicate the case. The order No. 87/95-A in the case of M/s. M.D. International pertained to a case decided by the Commissioner of Customs (Preventive), Mumbai and the jurisdiction of this Commissionerate was upheld by the Hon'ble Tribunal. In the light of charges against M/s. Orient Art and Crafts it cannot be said that import having been caused against passbook, the offence could not be investigated or adjudicated by the Preventive Commissionerate. In the light of above position that the charges against M/s. Orient Arts and Crafts amount to smuggling, the judgment in the case of Sharad Himatlal Daftri v. Commissioner of Customs, Calcutta, 1988 (36) E.L.T. 468 is inapplicable to the present case. Shri K Srinivasan, Consultant has also cited the cases of M/s. Metro Exports, 1988 (14) ECR 169, M/s. M.K. Fisheries, 1989 (41) E.L.T. 408, M/s. Ramnarayan Vishwanath, 1988 (34) E.L.T. 202, I find that the issue decided by the Hon'ble Tribunal in those cases is clearly distinguishable with the factual position in this case. While those cases involved issues where the cases were sought to be decided by Commissioners other than the Commissioner in whose jurisdiction the goods were cleared in the present case the Commissioner (Prev.) is specially vested."
These catene of decisions relied upon by the appellants lead us to conclude that determination of demand of duty under Section 28 of the Customs Act, 1962 is not made by the 'proper officer' as per law, same therefore is not upheld. We also rely on the decision in the case of Pune Rollers as reported in 1997 (89) E.L.T. 604 and Bakeman's Home Products Pvt. Ltd. v. CC as reported in 1997 (95) E.L.T. 278 to hold the demands to be not determined by the 'proper officer' for the goods cleared and also for the goods under clearance covered by the Bills of Entry, which were yet to be assessed.
(c) The theory of "committee of courts" postulates that when there are two or more courts having parallel jurisdiction over the same matter, as in the present case, i.e. the Commissioner of Customs in whose jurisdiction, the Bills of Entry were filed, assessed and cleared and the Commissioner of Customs (Prev.), Mumbai who derived his concurrent parallel jurisdiction by virtue of an appointment vide Notification No. 250/83 to exercise the powers of a Customs Officer then in such case the jurisdiction of the second and any other authority are deemed to be ousted, when any one of the authorities having a concurrent parallel jurisdiction has taken cognizance of a particular issue. In this case, the Officers of Customs of Customs House, Mumbai had taken cognizance of the imports and had passed orders of assessment. They, therefore were the proper officers to determine, whether the conditions tinder which they allowed the earlier clearances were complied with or not and thereafter take suitable action of liability under Section 111(o) and duty demands under Section 125 of the Customs Act, 1962. They were also the 'proper officers' for the assessment of consignment for which the Bills of Entry were filed, which were pending clearance in the Mumbai Customs Port House Docks area on which orders tinder Section 47 were yet to be passed. While we have no hesitation to uphold the view that the Collector of Customs (Prev.), Mumbai and officers have jurisdiction to investigate into the matter of smuggling, the question of determination of liabilities under Section 111(o) and consequent demands and orders for original assessment of the goods required to be made on the Bills of Entry, cannot be usurped by them. In this connection, it is found, that a Division Bench of the High Court of Punjab and Haryana at Chandigarh in the case of Kenapo Textiles Pvt. Ltd. and Anr. v. State of Haryana and Ors. [1992 (84) STC 88] has upheld this concept of community of court. In this case, the Excise and Taxation Officer, Faridabad was the assessing authority, who had taken up the case for assessment of Sales Tax in respect of the two petitioners, while such proceedings were pending before the aforesaid officer, one Excise and Taxation Officer was designated as Excise and Taxation Officer-cum-Assessing Authority (Anti-Evasion Squad) for entire State of Haryana, including Faridabad. This Anti-Evasion Squad Officer, issued notice to the petitioners to finalise the assessment against them. The jurisdiction of this Anti-Evasion Squad Officer was challenged. The Punjab and Haryana High Court, while upholding the authority of the Notification granting concurrent parallel jurisdiction to Anti-Evasion Squad to make assessments, recorded the following propositions of the law -
"1. Under the Act, the District Excise and Taxation Officer-cum-Assessing Authority would have jurisdiction to make the assessment.
2. In case the State Government issues a notification in exercise of the powers conferred by Section 3 and Clause (a) of Section 2 of the Act, the officer so appointed shall also have the jurisdiction to frame the assessment.
3. In case any one of the aforesaid two officers starts the assessment proceedings, the other officer shall not be entitled to start the same and the moment the officer who started the proceedings; later on get the information that the proceedings have already been started by the other officer, he will have to stay his hands. However, the authority named in Rule 7 will have the jurisdiction to transfer the pending proceedings to the other officer and until such an order is passed, the officer who started the proceedings first will continue to have jurisdiction to frame the assessment and the other officer will not have the jurisdiction to do so. If this rule is not followed, there is likelihood of conflict of opinion between officers of co-ordinate jurisdiction and in law such a course would be avoided as far as possible."
(Emphasis supplied) The Tribunal in the case of Ramnarain Biswanath - 1988 (34) E.L.T. 202, which has been upheld by the Apex Court, had held -
"80......In fact if one Collector starts disregarding the action taken by another, chaotic conditions will prevail and a citizen would never be at rest. This could not be the intention of the legislature or the Government or even the Department of Revenue itself for that matter."
and in that case did not uphold the jurisdiction of Collector of Customs, Calcutta to charge duty on goods assessed and cleared through Paradeep Port, when goods were seized in Calcutta Collector's jurisdiction after clearance from Paradeep Port. No submission or case law was made or relied before us, by the Departmental Representative. Bound by the law as laid down by the Supreme Court and following these binding decisions, it has to be concluded that the Commissioner of Customs (Prev.) cannot derive authority to take over the goods covered by Bills of Entry and to make assessment thereon when they were pending before the proper officer of the Commissionerate of Customs of Mumbai Customs House, without taking recourse to the transfer of the such cases to the Commissioner of Customs (Prev.) on the orders of the Central Board and Excise of the Customs. No such transfer order was produced. In this view of the matter, when the Commissioner of Customs (Prev.) had no jurisdiction in this case to order of the assessment of pending Bills of Entry, we cannot uphold the liability of confiscation arrived at under Section 111(o) or 111(b) of the Customs Act, 1962.
(d) Since we find the second show cause notice issued is not valid for demanding the duty and it is not upheld, the demand is set aside. Consequent orders for confiscation cannot be upheld. They are required to be set aside. The Bills of Entry which have not been assessed by 'a proper officer' shall have to be remitted to such proper officer, for passing an order of assessment on the pending Bills of Entry. In the proceedings of the assessment on the pending Bills of Entry, the proper officer of Customs under the Collector of Customs, Mumbai can take such material as would be relevant, to assess those imports. The liability for penalty and orders for confiscation of the goods imported as covered by these Bills of Entry are required to be set aside. The appellants will similarly be free to make such submissions before the proper officer of Commissionerate of Customs, Mumbai where the Bills of Entry have been filed and who is to assess them.
3. In view of our above findings, duty demands and penalty set aside. Bills of Entry pending assessment to be assessed by the proper officer. Appeal is disposed of in the above terms.